>> paul: ben bernke says the economy could art growing soon, buthe recovery could be slow because so many amecans don't have jobs. we get some analysis on th bernanke outok from former fed bank president robert mcteer >> susie: existing he sales surge as buyers ck up bargains and take advanta of the first ti buyer tax credit. e news caps a volatile week wall stree and sends stocks to fresh highs for the year. >> paul: tonight's "rket motor" guest sees dow 10,000 by the endf the year. he's mark skousen, etor of "fecasts and strategies." >> susie: deers are expecting a rush othis last weekend for cash f clunkers deals, but at happens next with clunker claimsnd future sales. >> pl: i'm paul kangas. >> susie: and i'm sue gharib. this is ightly business port" for friday, august 21.

"night business report" is made possible by: this programas made possible by contributions to your p station fromiewers like you. thank you. captioni sponsored by wpbt >> susiegood evening, evyone. ben rnanke said today the prospes for economic growth in the u.s. appr to be "good," and those comments triggered stock market ral. speaking at a conference i jackson ho, wyoming, the federareserve chairman gave a more upbeat forecast compad to the fed'statement last week after a central bank polic meetg.

but bernankelso warned of "ctical challenges". specifically, bernankeaid financial firms face "significant losses,businesses and coumers are experiencing difficulty in geing credit, the economic recovery will b "relatively slow," ande expects gradual recovery in employment. bernanke defended the actis takeby the fed during the financial cris, saying they averd an "imminent collapse" of the financial sysm. joining us nowith more analysisrobert mcteer, former present of the federal reserve bank of dall and currently distinguished fellow at e tional center for policy analysis. nice to see you the program agai >> thank you, susie, good to be with you. >> susie: is ben bernanke right about the economic outlook? >> well, i hope so. and probabl i thk there's a good chance we'll get a positive g.d. number for the current quarter,

primarily, though, bauseof ventory rebounds and the sh for clunke. i'm not real confident that that can be sustaine i think the consumer h real headwinds that he' facing, and if he's going to be doing any saving in e future, consumption's ing to be weak fo time. so if wetart a recovery, i think it going to be a weak recovery, and it cou be a false sta. >> susie: e you saying that you do not agree with bernanke's assessment that the u.s. economy is coming out of the recession? >> i think it'- it's abo to emerge. whether it's going t emerge stroly enough for ito be stainable is-- is what i worry about. >> susie: well, a t of the another re, because you were talking out the consumer, has to do with umployment, and, you know, people wan to know whens hiring going to beginin big way. day, bernanke says that the will be a gradual dline in the unployment rate.

what does that mean? >>ell, i think, you kw, the ployment rate is 9. i still suspect it's going to go above 10. and the losses in employment have improved,ut by historical andards they're still pretty large. think we're in for a few me mohs of deiningmployment and that's going to ke the consum-- declining empyment, sing unemployment. >> susie: i want to me sure i understood that. go ahead. so you expect a few more months of that. >>eah, i think the employment rate benefitted lastonth from lot of ople droppingut of the labor force. as thingstart to pick up, they'llet back the lab force and art looking, and ey'll be countedas unemployment. the unemployment rate, i thin is going to se, at leasto 10%. susie: you talke a momen ago about consumption and that

consumptionjust isn't there. we kw when people don't have jobs or when they'reorried about losing tir jobs they're not going spend money and the same thingoes withusinesses being cautus during this te uncertainty. what do yothink it's going to take to boost consumption? do you think w need another stimulus package? well, i don' think we're very good at stimulus packas. maybe we should get the inese to lend us theirtimulus packag i think there' going to be stulus in the economy, but wouldn't have another formal imulus package. that one was much too unfocused, scatter shot, and itust really probably did some good, but i'm not sure it did enough good to justify the cost. i think the fs' actions and of the money supply, along wit the treasury expansion of borrowing will provi some. fiscal a monetary stimulus. we don need special progr, i dot think. >> sie: what else can be done to give a boost of growth?

where is that growth going to come fro is it st going to be normal market forces? >> yeah. see, the problem is the coumer for manyears did not have to save because the consumer thought of his ring 401(k)s and his rising home values as saving, andthat's gone away and turnedhe other way. soow the consumer rlly does ed to save, but if he does, it's bador the economy. it's a paradox. the more they try to save the more they weaken the economy, and make savingore difficult. so that's why i think it will be sluggi. >> susie: bernanke's speech todasounded a lot lik a job audition. doou think that president obama wil reconfirm theed airman for another term? >> yeah. i do think that mr. rnanke would ha given the samepeech ev if his term wasn't comg up.

hower, i think he's done a magnificentob. he's bee innovative a creative. ere was no rule book forhat 've had, and he had to make it up as he went alongnd i think he did a fabulous job. he deserves to be reappointed. ani think he probably will be. susie: all right, well, thank you so much for cing on the program. very interestedn what you d to say abo the economy. thk you so much. >>hank you. >> susie: my est night robert mcteer of the nional nter for policy analys and former president of t federal rerve bank of llas. >> paul: the fed chief's optism combined with good news on houng to send stocks to their highest lels this year. but as erika millereports, onomic optimism isn't the on reasonany on wall street are in a buying mood. >> reporter: wilprints... brig orange... and plaids. inresting clothing picks are obably what come to mind when you hear the term "sho interest it's also a widely wched

measure market psychology. overhe past few weeks, short interest has decned sharply, suggesting more bears e being scared ay. that's just one of many asons stratest mike ryan thinks stocks wilhead higher. obviously, the more short interest the is, the more cash there is on the sideline the more support for the mart the is. as the mket continues to grind higher, you coinue to se shorts getting squzed out. >> reporter: t market has surged more than0% since the march 9 lows, so neay everyone agrees tre could be a pullback of roughly 5% to 10% percent coming. but manytrategists, including milton ezrati, thi the long- term tnd is higher. >> think the bias is going to be up. and the reason i sayhat is because wet lord abbett believe th the economy is turning to at ast a modest recory. anas that becomes apparent, the market will ve an upward bias >>eporter: for economic optimism, looko further than today's existing homsales report, which show a record 7% jump last month. thhope is the housing crisis which sparked threcession may finally be eing. growing investor optism is being reflected in the "vi--

the market's volility index. it's down sharply from las octobe the height of the financial crisis. but manyros warn wild swings could soon bback. ptember anoctober have notorious reputations as the worst mohs for wall street. last september, lehman bthers filed for bankrucy. and thmarket crashes of 1929 and 1987oth came in october. that's why oppenheimer'sichael schwartz recommends inveors consider options strategs to protect theiportfolios. >> in th environment, where there could be a potenal correction or volatile new coming o, it would be wise to buy index putsn the s&p 500 to protect ur portfolio. >> reporter:f he's right and there is trouble aheadit's sa to assume shorts will be back in fashion on wl street. ika miller, "nightly busines report," new yor >> pl: stocks on wall street rallied for the urth straight da the session started with a early bot on rorts european

economies are covering. by nn, the dow was up 143 points and the nasdaq 28 points. the fed chairman'somments and that solid 7.2% se in july existing home salekept the rally goinstrong through the afternoon, and stockended near the day's best levs. the dow dustrial average cled up 155.91 at 9,505.96. this week, it fell oy once for an ovell gain of 184.56 points. the nasd advanced 31.68 to 2,020.90 today. it alslost only once this we, and gained 35.38 points overall. the s&p 500 rose 18.76 t 1,026.13 todayand for the week, ded 22.04 points. in theond market, the ten-year note losing 6/32 to 100 15/32, puing the yield at 3.57%.

>> susie: the tion's largest dealer group is pulling t of the cash forlunkers program tonight. autonation says it has sold er 10,000 vehics with clunker retes. the $3 billi government prram is set to end monday, but what happens afterash for clunkers is scrapped? stephanie dhue gets some answers. >> reporter: cash for clkers isredited with putting 750,000 new cars on the roadn the last month. rry sanders came to pohanka honda today to see if he cou still cash in. >> we were definitely tryingo take advantage of thcar for clker deal, and once we found out it was near the end, me more pressing to ce in and see

if we uld find something. >> reporte inventories are low as consume have snapped up hicles. hanka automotive group's 14 dealerships ha sold about 800 cars under therogram. geoff ponka says it really helped get sales rolling. >>t's given people permission to come shop for aar again. car sales have bn down about 35% since lastear and the industryas pretty much been on its knees. we were looking for shot in the ar and this has been a very sucssful program. >> reporter: but it sn't been withouits headaches. to date, the government has en slow tprocess the clunker rebates. that's left dealers on theook. pohanka iswed more than $3illion. >> cash flow is imrtant to us, and we were very concern with thgovernment about being promptly paid. we were asred by the government we wod be paid. in ft, it's in the law we must be paid within t days of submitti the claim, and we have claims thatre now a month old and haven't be touched or look at yet. >> reporter: while the casfor clunke program officially ends at 8:00 p.m. omonday, that's

the deadlineor dealers to have all of their paperrk in to get paid as a result, my dealers have already stoppethe program or aronly doing select deals. consumerroups are worried about dealers presring customers to come up with tra cash in case clunker dea are rejected. lena pons of plic citizen says consumers need tknow that's illel. >> if ultimately the tnsaction is rejected th something havi to do with the paperwork bmitted incorrectly, that lo is sposed to be sustained by the dealer. >> reporter:hile the program provided a boost for the industry, some alysts worry it came at the expee of sales down t road. with inventory l and pent up dend depleted, sales are expected to be wk for the rest ofhe year. stephanie dhue, ightly business rort," washington.

>> susie: some encouging news today out the u.s. job siation. 17 states, or roughla third of the nation, show decreases in unemploynt last month. sen states showed no change, but the other 26 shod increasingnemployment. that iludes california, nevada, rhode island, and georgia. they reached their higst level of joblessne since the record- keeping began 33 yrs ago. unemployment in chigan dropped

slightly t15% from 15.2%, but ittill has the highest jobless rate in the country. >> paul:onday, with six unemployed peoe for every availae job nationwide, we look at hoto stand out from the crowd. >> susie: harley davidn is toing sites in four states as it shops for a new home r its main motorcycle plant. it's current located in york, pennsylvania. the coany is looking at spots inennessee, indiana, kentucky and missouri. back in may, harlesaid the york plant had toouch cacity, and that iwanted to either revamp the plan which employs 2,300 worker or locate. >> pl: a former u.b.s. banker will spend more than thr years in prison, despitecting as an inrmant for the u.s. government. bradley birkenfe was key in helping the i.r. get the names of 4,500 american u.b.s. cents o may have cheated on their taxes. but he also admitt helping u.b.s. clients hide assets.

today, he was sentenceto 40 nths behind bars, almost a year more than procutors commended. >> susie: he's a look at what'sappening next week: our friday "maet monitor" guest is john dorfman, chairn of thunderstorcapital. on the economicalendar:

tuesday, the s case shiller home price index for je is released, consumer confidce for august; wednesday, the julreports on durable goods and new me sales; thursday, it weekly jobless claimsnd a first look at second quarter g.d.p friday, personal income for ly and august consumer sentent. >> paul: my gut market monitor this week is mark skouse editorf the market letter "forecasts and strategs." welcome back to "nigly business rort," mark. welce, glad to be with you, paul. >> pl: you maid some very od called on yourast visit with usn early march. yopredicted the stock market was botting out, and the economy and employment would contin to weaken. all were rightn the money. i compliment you. great call. >> is verynusual to be able to pick thbottom. they say you c never pk the bottom of the market, t i lucked out on th one. >> well, whe do you see the market and the enomy heading now? >> well, my predictn is rather sttling,r at lea it was

several months ago, or back in march. i'm predicting a dow 10,000 by the d of the year. we're at 9400 so it los like we have a possibility that happening. with theeconomy,'m bullis i thinthe economy is revering, but is going to be aery gradua process. thers a lot of prlems inur economy that we're still suering from, from the financial crisis. it's going to take us quite a while to g out of it. so i'm prediing a posite g.d.p. for t first quarter in january of 2010, but i think the stock market is a better place to be. paul: how much betterill it be? >> youay 10,00- >> 10,000 on the dow is a positive number for. the yearso i think that's a go thing to see considering l the trouble that we've go through. >> pl: no inflation this week. theproducer price index owed

actually negave. will inflation ba problemany me soon? >> no, i don't think it ll be a prlem soon. commody prices are rising very arply. i mean, on of my sck picks was freport, and copper prices are backp to almt $3 a pound. so there is some flkz coming back into the syem. t i don't see is happening at the consumer level yet. >>aul: okay, durin your march visit, you recomnd three securities. let's see how ey've done since early march. barnes & noble has done ver well. a little up over 33%. are u still wit it would you buy more here? >> i think is time to sell and move on, but it looks ptty go at this point. maybe a stop order would be a way to go. >> paul: there th freeport copper and gold up 92%. i suppose you've taken some money f the table there? >> yeah, we' selling that wellor using a stop order copper proces are very high.

i don't e a lot of profit potential left in that one. >> paul: and the third pick that you had was the gold shares, the spied orhe big board. and that was a sa heavn, up 1.5%. not bad. >> yeah, it's up, a i would recommend holdinit just as a defensive mease. >> paul: how aut some new remmendation, mark? >> well, i have three new recommendations for yr viers, paul. the fit recommendation-- in fact all of them are income orieed. i'm rommending anna lee capil management, the symbol is n.l.y.. this is a reit, ying 14%. they can pay 14% becau it's a bit of a leveraged position. but they invest in redential, adjustable rate mortgages. but they use onl those guaranteed by e government, like jenie mae. >> paul: weave less than a minute. my other two recommendation are hongong,he hong kong index.

it's an e.t.f.. the symbo is e.w.h. and i think they'll take advantage of the asian boo 4% dividend. and my fin recoendation is an oil, a canadian oil and gas ust, e is the symbol yielding about 9% or 10%. and i think at we'll take advantage of the onomic recory and we'll see higher oil prices. >> paul: very good. do you personally own y of the securies mentioned here or have other disclosu to make, ma? >> i believe iwn the hong kong index, buthat's the only one. >> pl: i'm aafraid we're going to have toeave it there but i want to thank you r being with us once agai >> all rig, we'll seeou next time. >> my guest, mark skousen of the "forecasts and strategies." >> susie: and finally tonigh ve you ever wanted to have your own index? well, now mabe your chance. we're learningonight that dow jones is shopping itstock market indexg business around to potential buyer and that

could lead to a reming of the iconic "dow jones indurial average." news corp ught dow jones in 2007 for $5.7 billion, b it has written downearly $3 billion of thdow unit's value this yeaalone. paul"the wall street journal" saysoldman sachs is brokering a potential sale, ich could also take the form of someort of joint venre. >> susie: that "nightly busine report" for friday, august 21. i'm susie gharib. good night, everyone, and ve a great weeken you, too, paul. >> paul: and you as wellsusie. i'm paul kangas,ishing all of yothe best of good buys. "nightly business reportis made possie by:

is program was made possible by contributio to your pbs station from viewers le you. thank you. caioning sponsored by wpbt captiod by media acss group at wgbh access.wgbh.org we are pbs. >> we are pbs