>> tom: worries in europe get even worse. this time, german bonds have trouble finding investors. u.s. stocks slump on the news. why american investors should care when germany has trouble selling its i.o.u.s. it's "nightly business report" for wednesday, november 23. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt good evening and thanks for joining us. susie gharib is off tonight. stocks sold off for the sixth straight session. today's culprit? a disastrous bond auction in germany. normally, we wouldn't pay much attention to a european government selling i.o.u.s, but it is new evidence that europe still is very much in charge of u.s. financial markets and how people feel about the economy and investing. the dow tumbled 236 points, the nasdaq fell 61 and the s&p 500 off 26 points. big board volume was light at 874 million shares, while nasdaq volume slipped to 1.7 billion shares.

suzanne pratt begins our reporting tonight, taking a closer look at that disappointing auction in germany and its impact on u.s. markets. we can add german bonds to the heat. germany is supposed to be europe's save haven, in a region plagued by financial crisis. today investors decided it was time to question germany's fortitude, opting to pass on an auction of german debt. the central bank of germany tried to sell $8 billion worth of 10-year bonds. but they were only enough buyers for 60%, making it one of the worst auctions in a decade. bond market expert michael possible says if rock solid germany can't sell out debt, it didn't bode well for the rest europe. >> the concern here for the markets is really about whether there's enough demand for, for european sovereign

issuers to be able to fund their deficit. so as they run up a tab they need to for row money. >> reporter: investors also worry the failed auction suggest a crisis is spreading throughout the euro zone, the so qualityed contagion we've all been fearing. but but officials see not to overinterpret the auction, adding the poor result was due to nervous investors, not falling demand. for u.s. bond vefs, europe's spiraling crisis should mean treasuries will retain their position as the world's safe haven. >> that's why we don't expect a big selloff in the near term because we do expect the demand that's been around keeping treasuries around 2% of the 10-year, will continue to keep it there. >> reporter: u.s. financial markets are closed tomorrow, giving investors a much needed break. clearly it may be wise to keep one eye on the turkey, and the other on the european bonds. suzanne pratt, "nightly business report", new york.

>> tom: as while it was disappointing news out of europe, we got some mixed news about the american economy, coming at the start of the critical holiday shopping season. the number of people seeking jobless benefits rose last week after two months of steady declines according to the labor department. initial claims jumped by 2,000 to 393,000. meantime, americans earned more last month. pay rose by the most in seven months. but we spent very little; a mere 0.1% increase from the previous month. and businesses pulled back on investments in long-lasting manufactured goods. orders for durable goods fell 0.7%, with much of the weakness coming from a big drop in demand for commercial aircraft. while investors remain mostly focused on europe, there's sequestration here in the u.s. it sounds like a word only a government bureaucrat could love. sequestration is another name for more than $1.2 trillion in automatic cuts coming to the federal government budget in 2013. darren gersh explains why

markets are watching sequestration and why you might want to as well. >> reporter: if you own stock in or work for a company that makes something for the defense department, the sequester is your biggest enemy. >> the defense contractors are going to go to war against each other to try to hold on to their contracts, but overall, it is bad for the sector and if the sequester is not changed, profitability and employment is going down in the defense industry. >> reporter: in 2013, defense takes a $55 billion cut under the sequester. that's 10% of the defense budget. medicare is trimmed by $11 billion. farm support payments and many other smaller programs will be reduced by a total of $5 billion. the rest of government takes a $39 billion hit, with the biggest reductions coming in on grants to schools serving low- income students and in cuts for cancer and medical research. after defense, health care companies have the most to lose.

>> it's actually quite bad for hospitals. hospitals have a very small profit margin-- 3%-- and the government is planning on cutting pay to hospitals by 2%. >> reporter: the investment impact will depend not just on how much is cut, but how the cuts are made. >> there has been a wild lobbying over the past three months, everybody saying that "whatever i'm doing is absolutely essential, and my benefits are necessary, so don't cut them, cut somebody else." >> reporter: already, there are calls to change or amend the sequester, though president obama has vowed to veto any effort to undo it. even so, history shows automatic cuts have a funny way of not happening. >> sometimes they waived them completely, and other times they have waived them partially, and in other instances they've passed different laws that made

up for them. >> reporter: but if congress revokes the sequester, the rating agencies could downgrade the u.s. credit rating again. >> there would be no further savings in the budget, and the electorate, i think, would believe that it had been hoodwinked and gypped by people who said "we're going to do something." >> reporter: one thing is sure, you'll be hearing the very strange word sequester an awful lot in the coming year. darren gersh, "nightly business report," washington. >> tom: another word you'll hear a lot over the next couple of days? sale! it's now make-or-break time for retailers. the day after thanksgiving traditionally kicks off the holiday shopping season, when stores hope sales pour in, pumping up profits. erika miller tagged along with analyst john long of kurt salmon associates on a trip new york city's flagship j.c. penney store to get an early read on the season. >> reporter: what are your initial impressions as we enter the store?

>> initial impressions are traffic is light, but we are expecting traffic to be lighter this year because consumers are using the internet to do research before they come in to buy, and obviously also using the internet to purchase. so that should reduce the net number of times they are coming in the store this year. >> reporter: but don't be fooled. even if foot traffic is down friday, long thinks holiday sales will still be strong overall. >> reporter: so how are department stores expected to do relative to other retailers this holiday season? >> they are expected to do particularly well, and that's because this year they've got exclusive brands to offer their customers. they've got better customer experiences that they spent time enhancing. and they've got lots of locations. and they've got one-stop shop. >> reporter: what's going to be different about this black friday relative to black fridays in the years past? >> well, as we've all seen, this black friday is really starting on thursday, and it's all about getting people out early to sample what the retailer has to offer.

so, having a good friday makes retailers feel confident going into the season, so that's why we are going to be looking at their results. >> happy holiday! >> reporter: jc-penney handed out coupons while we visited, and there were also plenty of promotional signs across the sales floor. as you walk along the store and you see signs for 25% to 40% off, $8.99, how does the level of promotional activity strike you this year? >> this year it strikes us as about what we would have expected. we don't see retailers yet pulling any unexpected punches with regard to promotions. it's going to be a very well- planned-out year, but we do expect to see earlier on the 40% offs and the 50% offs. >> reporter: those deep discounts are a key reason long thinks holiday sales could come in better than many are expecting. his firm is forecasting a solid 3.6% gain for retailers overall, in spite of the soft economy. >> consumers are shrugging off the economy to some extent and are looking to splurge, looking for values out there. >> reporter: the good news for department stores is that apparel is likely to be one of the top-selling categories,

especially sweaters. >> fortunately, we got some cold weather in the northeast. that has really improved outerwear and cold weather sales, which were lagging going into october, certainly. >> reporter: when you look at the merchandising, what do you see? >> a lot of full racks. so this business in particular is set up to do business, and hopefully they'll get the traffic to do it. but i was surprised, actually, by the amount of merchandise on the selling floor today. >> reporter: like many retailers, j.c. penney is hoping much of its merchandise will sell on black friday and that the day will mark the start of a slow and steady climb in holiday spending. erika miller, "nightly business report," new york. >> tom: j.c. penney isn't alone hoping friday kick-starts a big selling season. even before the season officially began, video game retailer game-stop cut its sales outlook thanks to what it calls the uncertain consumer. we spoke with paul raines, c.e.o. of gamestop, about what's contributing to the softness and where it might see growth.

>> you look at the fourth quarter, we see the consumer in a position where there's economic uncertainty, there's a lot of titles out there. tights like battlefield three, blockbuster titles, and people struggle how do i pay for all of this. so that's put a little caution into the holidays. >> tom: so it the supply of new video games that's damp epping your outlook? >> we think there's an uncertain consumer because of the macro environment. we track employment, we see a consumer that i under a lot of pressure. that's why you see you truce try to put currency into consumers hand. >> tom: you've lunched your i device business, looking for trade-ins, an old iphone 3 g. how big of a business could this be in 2012? >> we're in 260 stores today and on our website. we receive trades of iphones and i devices in any store and

we're selling in 260 stores. next year we expect to ramp that up, pretty significantly. a couple data points that are interesting. the recommerce business in the united states, that's the business that takes old electronics and refurbishes them and resells, them, that's an $800 million business in the united states, it's very fragmented. there's about $7 billion worth of i-devices in people's homes, and if of think 'your own behavior, everybody has an ipod, iphone, ipad, we believe there's a huge market in promoting the consumer that they can come trade those in and we'll buy them back. >> tom: we've seen video game sales slow down the growth trajectory has slowed down. how does this affect the business of selling and reselling tights? >> our market model shows that the cat information is flat for software sales on the physical software side. however, there's a lot of growth in digital content sales for console, we call

that d. l. c.. and if of look at what's happening in the u.s. today, we have created a d. l. c. sell technology with microsoft and sony in a title like modern wear far 3, for example, many customers bought the physical game, but many customers also bow bought a $49 elite digital pack, which gives you downloads for additional content. so all of the growth we think in 12 will be on the digital side, with gratish growth on the softer -- flatish growth on the softer side. >> tom: how is zynga impacted gamestop's business? >> we certainly have watched the growth of facebook games, casual and social sites. in fact, last year we acquired a company called congregate.com which is a leading portal and a lot of our growth on the digital side has come through there so, we see that consumer. on the face back side, people

don't rolize this, we are the largest distributor of digital currency for zinca facebook games. >> tom: the holiday always sees fierce competitiveness. how will you respond? >> we always face discounting at the holidays. one of this things that has made us very effective is our unwillingness to chase discounts for the summer. what we prefer to do is add more value and use buy-sell trades. last year we gained share through the holiday season of we expect to do the statement this year. >> tom: paul, thanks so much, paw raines. the c.e.o. of gamestop. >> thanks very much. >> tom: thanks to that sour auction of german government bonds, stocks slumped into the thanksgiving holiday. let's get to tonight's "market focus."

trading before a holiday can be volatile thanks to light volume, throw in the disappointing news from germany and we had the makings of a sell-off before the opening bell. with today's more-than-2% drop, a good chunk of the october rally has now disappeared. here is the past 90 sessions of the s&p 500. the index is at its lowest point tonight since the first week of october. stock sectors most closely tied to the economy saw the biggest losses, but all 10 major stock sectors lost at least 1%. energy, financials and materials led the losers, falling at least 2.8% each. helping push energy stocks down was a $2 drop in oil prices. just last week, crude rallied back to over $100 per barrel. this is the past 90 sessions. leading the sell-off in the energy stock sector was land- based driller nabors industries. shares slid 7%. coal miner alpha natural resources fell more than 6.5%.

as worries persist with europe and with yesterday's federal reserve announcement to conduct another round of stress tests on america's biggest banks, financial stocks continue to see selling pressure. this exchange-traded fund is made up of banking stocks. it fell 3% and is now only about $1 above its early october low. among the big banks, bank of america saw a stiff sell-off, down more than 4%. b. of a. has been caught between the european concerns and now new stress tests. today's selling takes b. of a. to a new 2.5-year low. more on bank of america coming up in tonight's "street critique." with agriculture and construction equipment, john deere certainly is tied to the economy. the manufacturer blew away earnings estimates in the third quarter, showing double-digit percentage increase from a year ago. deere lived up to its corporate color, putting up green on the screen today, gaining almost 4%.

battling against that weak tape today. despite the concerns about europe, deere predicts "substantial" growth in 2012. the firm credits increased demand for global agriculture commodities. we saw those ag commodities fall in price today. corn dropped below $6 a bushel-- that's a seven-week low. soybeans fell to their lowest price in more than a year. some traders are waiting to hear about china's economic outlook, since china is the biggest importer of soybeans and a big buyer of american corn. and that's tonight's "market focus."

the lines haven't formed for black friday just yet, but already tonight's "street critique" guest is thinking about cyber monday. it's usually one of the busiest online shopping days of the year. she's hilary kramer, author of "the little book of big profits from small stocks." you're looking at the online internet retailer amazon.com, hillary, happy thanksgiving. it was just a few months ago amazon was close to 2.50 a share, tonight well below 100 of what's your outlook? >> amazon is going to be the winner this holiday shopping season. we have black friday coming just less than 24 hours away. however, the problem with black friday is we just had the market down, six days in a row. the consumer is still cash strapped and you have amazon as a cyber play.

95% of americans still shop in real brick and mortar stores. but amazon is running specials all day friday online to keep people home, they've really expanded their network of retailers, very competitive in terms of pricing. have you the kindle fire, all cylinders are go for amazon. >> tom: what's your price target? it had been at 250 earlyier in fall. do you think it will return in the next year? >> i'm hoping in the next 12 months we'll see that 246 to 250 level again, but it more of an expensive stock. but a growth story. >> tom: latest of questions in our inbox surrounding p. m. i. group, this is a mortgage insurer. it filed for chapter 11 bankruptcy protection today. the stock has been halted since october when it was seize bid regulators in arizona. you mentioned this back in the fall of 2010, and the share price is almost worthless. a complete lost here, hillary? >> most likely pmi would be an

absolute loss because you have the bond holders ahead of the equity holders. with p. m. i. in arizona the insurance regulator seized the company, they fought it since october 21st. right now you're talking about a company that even the judge himself in arizona said the last three years pmi has been off 35% in their projections each year. side by the projections that the company presented to us as investors, the housing market didn't recover as expected and the short fall was that $500 million there. it's just taking time for housing to come back and it a rough market whether it's horizon, a pmi group. we saw another shipper, front line, have a really tough week and fall to 90%. so i would say some of these stocks have been a loser. >> tom: a quick question from john regarding another troubled financial company, look-time holders of bank of america were pleased with your positive outlook.

since your last appearance what strategies would you suggest for adding to existing holdings, timing and when to sell a bank of america? what do you think? >> bank of america, as i've said, too big to fail, a lot going for it. it a long-term play. a lot of people ask me questions. boy say you'd want to slowly continue to buy into a position of bank of america, and we should see a recovery. but again two to five years out. >> tom: do you bone everything we mentioned tonight including pmi? >> amazon i don't open, but i may be playing the options there, some announcements coming about their black friday. >> tom: option to buy from hilary kramer. e-mail us at nbr.com. here's what we're watching for tomorrow: the markets are closed for thanksgiving and we will bring you a special

program: "women in leadership: pamela newman." you may not know her name, but in the insurance business, she is one of the most influential women in america. her client list includes donald trump, warner music group and the "new york times." just as the holiday season begin, nokia siemens is cutting 17,000 jobs worldwide. that's nearly a quarter of its workforce. the unprofitable joint venture of nokia and siemens expects the reduction to be completed within two years. the company says the move will save more than $1 billion a year. nokia siemens will focus on mobile broadband and services, and plans to cut units not considered essential. a federal bankruptcy judge rejected the city of harrisburg, pennsylvania's bankruptcy petition. its divided city council voted the judge who dismissed the case did so because the bankruptcy petition filing violated state law. the capital city's debt problem began 10 yeas ago when it

decided to upgrade a trash incinerator. they thought it would generate enough revenue to cover its financing cost, but it's left them with $310 million in debt. nearly 43 million people are expected to drive, fly or ride trains to their thanksgiving destinations this week.

that's the most since the start of the recession. those hitting the road will be spending more money. the average round-trip airfare is up about 20% from last year, and gasoline is about 50 cents per gallon more. but despite the higher prices, or maybe because of them, travel is a hotbed of startup companies online. >> our company is a site and a mobile app that takes the agony out of searching for travel. the way we do it is by showing you the most relevant options in a visual interface on a single screen. >> tom: hipmunk.com's business sounds similar to more established industry heavyweights travelocity and kayak, but c.e.o. adam goldstein thinks it can compete by concentrating on the mobile market. >> well, the future for us is very much geared around mobile. we think that lots more people are going to be buying flights and hotels-- at least searching for flights and hotels on their phones and their tablets. so, we released an iphone, ipad and android app over the last year all for flights, and we're going to be releasing all those apps for hotels as well.

g-trot.com is another relatively new competitor in the crowded online travel market. it provides personalized advice for any travel destination. two years ago, zach smith and brittany laughlin started gtrot as a class project while studying at harvard. it now has nearly 15,000 subscribers by focusing on the social media explosion. >> we know what works in social and what doesn't, and so the instant personalization thing is something we're really excited about that we haven't seen anyone else doing. >> reporter: it's no wonder these entrepreneurs are betting on travel online. even in a struggling economy, online travel is expected to grow 10% this year to more than $100 billion. >> tom: the entire travel business has rebounded this year back to 2006 spending levels. almost four cents of every 40 cents travel dollar is spent online. that's "nightly business report" for this wednesday, november 23. i'm tom hudson. on behalf of everyone here at n.b.r., good night and have a happy thanksgiving.

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