>> tom: could the economy be slipping again this spring? there's new disappointing data on the job market and fresh weakness in housing. >> we'll tell you whether the spring housing market is heating up or cooling off. >> tom: but dow chemical is hiring. it's building a billion-dollar plant in texas, thanks in part to the historic drop in natural gas prices. it's "nightly business report" for thursday, april 19. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie is off tonight. familiar worries were back today-- worries about jobs and housing. first, jobs. the number of people filing for unemployment insurance for the first time fell by 2,000 to 386,000. that sounds like good news. but more people than originally thought filed for unemployment insurance last week. that number was revised higher. the data, plus some mixed earnings reports, caused investors to sell shares for the second straight day. the dow fell 68 points, the nasdaq lost almost 24, the s&p down eight. and then there was housing. we saw new signs the recovery in housing remains questionable. sales of existing homes dropped 2.6% in march to an annual rate

just shy of 4.5 million homes. sales for february, however, were revised higher. momentum from the winter months may have stalled, slightly. but as suzanne pratt reports, there are still signs of life in the market. >> reporter: the drop in home sales is a depressing reminder america's housing market is still in the cellar. after all, home sales are well below the six million annual rate that experts say comes with a healthy market. the good news is that activity in the past three months made for the best winter stretch in five years. >> by and large, i would say that the marginal improvement in housing is alive and moving forward. it's going to depend on how strong this recovery turns out to be. >> reporter: much of the reason sales slipped in march was a lack of supply. that's, in part, because foreclosures are starting to decline in some areas of the u.s., and that's a hopeful development. while much of the nation's

housing market is struggling, new york city is rebounding strongly. still, realtors here say this spring would be even stronger if there were simply more inventory for would-be buyers. halstead broker brian lewis says new york's short supply of housing is due to a lack of new construction. >> there's a dirth of inventory, and there's a hunger out there. >> reporter: and don't forget the law of supply and demand even applies to a weak housing market. so, with supply low, prices may start to inch up, and that's exactly what happened last month. the median sales price rose to $164,000 last month. that's a 2.5% increase from a year ago, another encouraging sign.

>> keep in mind that, if prices start to increase a little bit, that generally will give confidence to other prospective homebuyers, because no one wants to buy a house if they think prices in the next six months or a year are going to decline. >> reporter: still, some experts advise sellers not to get greedy, even if the market in your city or town is finally showing signs of life. >> price it where it's supposed to be, not where you hope it will be. >> reporter: suzanne pratt, "nightly business report," new york. >> tom: still ahead-- small business owners, listen up: washington is counting on you to lead the recovery and hoping for your votes this fall. once again, markets and economists are looking at europe to figure out what might happen to the u.s. economy.

this time, spain is the issue. a key bond auction today resulted in slightly higher interest rates. that's a sign investors are concerned about spain's economy, and so are international policy makers, as darren gersh explains. >> reporter: if you're looking for a finance minister or other leader of the global economy, there's a good chance you'll find them here at the spring meeting of the international monetary fund. the i.m.f. is basically the world's financial fire brigade, and the clear focus here now is on preventing another flare-up of the euro crisis. to that end, i.m.f. managing director christine lagarde is beefing up the fund's resources. she has $320 billion in commitments for new funds in hand, and aims to hit $400 billion soon. >> as part of the outcome of this meeting, we expect our firepower to be significantly increased. >> reporter: but that's the back-up plan. lagarde urged europe to keep up with its own crisis reforms. it could start by bolstering its new european stability fund so the i.m.'t dsnoe need to step

in. lagarde said that new fund should also lend directly to banks that get in trouble. >> and we would see that as a move towards stronger and better integration, stronger and better europe. >> reporter: that would also help spain. there are new fears the spanish economy is faltering. the pile of bad debts hit a 17- year high at spanish banks. on top of that, madrid is trying to slash government spending by 5% of its economy. the i.m.f. is signaling that's taking austerity too far, and that could help spain argue back to germany, which is asking for quick cuts. >> we might want to do this a bit more gradually to make this a little bit more sustainable and easy for people to swallow. >> reporter: but don't look to the i.m.f. to sort all this out over the next few days. >> what i expect this weekend to happen is the i.m.f. to say, "europe get your act together, this is really getting serious." but not much more than that. >> reporter: this weekend, there will be some action and lots of worrying over a global recovery

lagarde calls "timid and fragile." darren gersh, "nightly business report," washington. >> tom: ever since the credit crisis, the handful of firms passing judgment on the credit of governments and companies have been under pressure. the bigger companies like standard and poor's and moody's were called to testify before congress for their high ratings on complex financial deals that eventually collapsed. egan-jones is one of the lesser known credit ratings agencies approved by the government. according to the firm, the securities and exchange commission voted today to take action against it, accusing egan-jones of making misstatements in its application four years ago to be one of the few approved credit rating agencies. founding principal of the firm sean egan joins us from philadelphia. sean, its sec accuses your firm of overstating how many securities you raids, how long you have been raising those securities, howe dow respond? >> our response is that this is not about the quality or

integrity of our rating. that we are not paid by the issuers. we don't have the typical conflict of interest. we are paid by institutional investors to get it right and we have done just that. the sec is accusing us of filing an application back in 2008 which they approved. and two years after that approval, they are questioning its information we provided on the form. our view is that we would have been happy to give them more information as of 2008 but now five years later, it's very difficult to support from that information. and further, the agency-- . >> tom: the agency isn't call fooing your question your ratings, instead it is talking about your application itself. what about the information on that application. >> that is the issue. and according to the sec we think the paperwork issue that we-- i was responsible for filling out that foferment i filled it out in accordance with our lawyers

guidance. said fill it out as honestly and accurately as possible. and i did. if i had to fill it out again today, i would do exactly the same thing. bear in mind that this is an application from about five years ago or so. the number-- . >> tom: now let me ask you, you brought up the idea of the business model here. most of the big credit rating agencies get paid by the companies whose bonds they are rating. your business model gets paid by the investors on those bonds, why dow want to make this about the business mod snell. >> because that's at the heart of it. according to the commission and the angelides commission, inflated ratings by firms that are paid by issuers, those are conflicted ratings are at the heart of the credit crisis. the u.s. lost over $2 trillion. we had the biggest financial crisis since the great depression.

in fact, there are estimates globally there are about $5 trillion lost and not a darn thing has been done about it. at the heart of it is what we think is an unmanageable conflict of interest. and so forth nationally this issue, our problem puts a light on that. in addition, we have issued some negative reports on sovereign credit, this is well publicized. >> including the united states government. >> absolutely. we think that there is significant problems in europe. we downgraded three and all the other, the righting firms as we did in the u.s. and-- . >> tom: let me ask you dourx think are you being singled out because of your negative stance on u.s. government debt? >> we are different than others. all the other rating firms. and we think that our ratings are timely and accurate and it will be proven over time. in fact there san independent study that proves that. as far as what is motivating

the actions, a number of people have said it's because of our business mold, because of our outspokenness. i don't care. we're going to continue to issue our ratings. >> tom: we should say that you do have the lowest rating on u.s. government debt among the rating agencies. we have to leave it there. >> we probably should add-- . >> tom: sean egan with ega egan-jones rating company. >> tom: a couple of big banks >> tom: a couple of big banks turned in stronger than expected first quarters. morgan stanley saw big gains in its bond and investment banking business, helping it report much better than expected earnings.

but these results exclude a $2 billion charge due to the lower value of its debt. bank of america's first quarter was twice as good as wall street analysts were anticipating, earning 24 cents per share. similar to morgan stanley, b-of-a took an accounting charge related to its debt. while bank of america's bond and commodity trading business picked up, its core consumer banking business saw a double- digit drop in revenue and bad mortgages increased. a centerpiece of the government's response to all the bad mortgages and other debts owned by banks has been to come up with a way to wind down a troubled bank without bringing down the whole economy. stephen lubben is a law professor at seton hall university. joining us, professor, you looked at how the new regulations would handle a situation if a big bank like bank of america were to fail. are regulators any better prepared to deal with the big bank going bust today? >> they're slightly better prepared. but just slightly. >> tom: and how are they better prepared. >> they have that facility.

most importantly, the -- for the financial institutions that it had before but it still doesn't have control overt entire -- >>. >> tom: why is it porn to have control over an entire financial institution especially big banks if they get in trouble. >> they were designed from inception as a coherent hold but the problem is when they fail they get pull add part into their legal parts and makes it very difficult to actually save any value. >> tom: what threat-- you take the good stuff that a bank still owns, has value and put that and take the bad stuff into a bad bank is that still a strategy in your mind that still works, if you have done your analysis. >> i think it will work partially. it will work under the liquidation authority for the domestic piece, the problem is there is still no way to resolve the international piece and as

we well know there is a huge international kpon ents of the big banks especially in light-- . >> tom: let me ask you, as you went through your hypothetical looking at a big bank failure, under the dodd frank new financial wall street regulation reforms, are banks just still too big to fail? >> they are to big to fail easily, it wob be a very painful process if one of the giant american banks failed. this is a financial institution that is at least three times the size of lehman brothers. we kind of know how that went. >> tom: certainly. but of course the argument there is you don't have an f.d.i.c. perhaps involved in depositsers money. in this case depositor a he money is one thing but you have all the mortgages and other saturdays. >> you have depositor money in bank of america, you have broker assets, client assets to deal with. you have also got a giant derivative portfolio, about $70 trillion derivative portfolio. >> tom: one of the other

challenges with the big bank failings and you addressed this in your name is the vacuum that that creates in the world of credit. because a bank like bank of america is a big provider of credit. and should that get in trouble, that credit is no longer in the system. how does the regulation deal with that? >> well, the regulation doesn't really deal with that i mean the only way it deals with that is that it does provide government funding for the failed bank. recognizing that the availability of private funding is going to be pretty much gone if a bank has signs of failing. >> tom: what would you suggest regulators act on now to get prepared? >> well, there is-- probably more things than we have time to discuss. but i would start with a living wills there are these living wills in dodd frank which basically requires the financial institutions to plan for their failure. and one of the things they need to plan about is how do they pull themselve as part with all these pieces including the international piece. and still leave some

semblance of liability. >> tom: we have difficulty facing our own mortality let alone corporate mortalityity we have to leave it there, stephen lubben of seton hall university. >> tom: the low price of natural gas and growing demand for the ingredients to make plastic will lead to thousands of new jobs along the gulf coast in texas. dow chemical announced a $1.7 billion new chemical plant in freeport, texas, as part of dow's expansion of its u.s. manufacturing capacity. new drilling techniques have led to a boom in natural gas production, and that boom has pushed down prices. natural gas is as cheap as its been in more than a decade, and there's plenty of it, thanks to drilling in shale rock.

natural gas is important for dow chemical. it uses by-products of the energy source to make chemicals used in all kinds of plastics, from grocery bags to smart phones. but dow c.e.o. andrew liveris says its new plant will be successful even when natural gas prices rise. >> the current price of natural gas below $2 for the first time in over a decade is not sustainable for dry gas manufacture. we believe the price point will probably rise over the next several years to something between $3.50 and $4.50, and that's fine in industries like ours. >> tom: the new plant announced today will require 4,800 cosn 4,000 direct jobs, and is expected to be completed by late 2016. but dow chemical thinks the local impact will be larger. >> the job multiplier, companies like ours with their supply chains and all the things that go around us. it's about a three- to five- job multiplier, depending on the facility. this is a pretty big job multiplier because of the nature. it's a building block, and most

of chemistry and the materials used in everyday life need these building blocks. >> tom: dow isn't alone in making new investments in chemical plants. energy firms shell, chevron and conoco-phillips have plans for building new chemical facilities, taking advantage of cheap natural gas. it wasn't energy but earnings that were in the market's focus today as stock prices sank. the s&p 500 made three tries to stay positive during the session, but the weaker march housing data and earnings concerns pushed the index lower this afternoon. the technology sector led the losers, along with industrial stocks and consumer discretionary stocks, each falling about 1%. after the close, microsoft reported it made 60 cents per share in the last quarter, better than what wall street was expecting. revenue was up across its businesses, except for its entertainment business, which includes its x-box video game console. while the stock was down a fraction today, shares were up

almost 3% in after-hours action. apple shares continued to see a volatile trade, losing 3.5% today. the stock has been seeing some big daily price swings this week. next tuesday night, it will report its latest quarterly earnings. we also saw some follow-through selling of qualcomm, the maker of cellular phone semiconductors. the stock was down in after- hours action last night after its earnings report, and it fell about 6% during the regular session today. but ebay was a picture of strength among technology stocks on the heels of last night's strong earnings report. shares jumped 13%. volume increased six-fold, with the shares trading over $40 for the first time since 2006. among consumer stocks that were weighing on the market today was mcdonald's. it will be in focus tomorrow as it reports first-quarter results before the opening bell. shares were down more than 2%, making them the worst percentage loser among the dow industrial stocks. fellow dow component travelers insurance had a strong start to the year with earnings coming in almost 50 cents per share better

than anticipated. almost 50 cents per share better we reported on dow chemical's new plant in texas just a moment ago. fellow chemical maker dupont reported a strong first quarter with a double-digit increase in revenue. still, shares fell more than 1%. sales were particularly strong in the u.s. and latin america. while sales volumes decreased, it was able to make up for that by charging higher prices. while earnings were the focus today, there was a possible buyout hitting the headlines. this one is in the biotech field. human genome is the target of this unsolicited buyout offer from glaxo-smithkline. it is a $2.6 billion offer, giving human genome shareholders $13 per share. but the market thinks h-g-s-i is worth more. the stock closed over $14 today after the company said glaxo-

smithkline's offer doesn't reflect the value of the company. the two firms already know each other well. they sell a drug for lupus together. two other drug companies, gilead and bristol myers squibb, reported optimistic results from a new experimental hepatitis-c drug combination. gilead shot up 12; bristol-myers was up 1%. and that's tonight's "market focus." what do oprah winfrey, donald trump, and kim kardashian have in common? today, house democrats named all three as some of the business owners who would benefit from a small business tax break proposed by republicans. but supporters say its a much- needed boost for small business.

the bill passed the u.s. house today by an overwhelming majority, 235 to 173. this is just the latest battle in the congressional war over taxes. sylvia hall has more from washington. >> reporter: the small business tax plan is simple-- cut federal taxes for one year on all businesses with less than 500 employees. house republicans say it would help the nation's business owners create more jobs. >> in small business, it really is about how do you grow? how do you have the positive cash flow? mr. speaker, to grow your business, to invest in new technology, new equipment, to take your ideas and spin them forward and grow jobs. >> reporter: but house democrats point out not every business with fewer than 500 employees needs a tax break. they referenced celebrities like oprah winfrey and donald trump as business owners who could benefit from the bill. >> this bill provides a windfall tax break to hedge fund owners,

to big washington law firms, to the very wealthy, even if they don't hire a single person. >> reporter: but the plan will likely never make it into law. the democrat-controlled senate won't bring it to the floor, and the white house has already threatened to veto it. instead, it can be filed next to the buffett rule, a democrat- supported tax on millionaires that failed in the senate earlier this week. both proposals highlight the gridlock gripping congress in this election year. >> if ever there were a starker contrast between the republican party and democratic party's vision on how to get the economy going, it's what's happening today in washington, d.c. >> reporter: the senate is expected to take up an alternative business tax plan soon. no word yet on whether it has a shot of making it into law. sylvia hall, "nightly business report," washington. >> tom: with entrepreneurs and small businesses so important to the economy, tonight's commentator reminds them of their biggest investment, themselves. here's alfred edmond, jr., senior vice-president and editor-at-large at "black enterprise." >> america is experiencing record numbers of business

start-ups, especially among women and minorities. if you are among them, you've probably heard established entrepreneurs stress the importance of reinvesting revenues back into your business. what exactly does that mean? most people think of the obvious-- buying new equipment, spending on better technology, increasing your marketing and sales efforts. all great ideas. but it also means investing in you. that means spending money and time on your own development as an entrepreneur. invest in continuing education by attending events for business owners the seminars, workshops, and networking opportunities offered by such events will be invaluable to your development as a new business owner. second is distance learning, which you can do from your own home or office via resources online. there are a number of great, low-cost webinars and online video courses available. take the time, and if necessary, spend the money. there are no better ways to reinvest in your new business. i'm alfred edmond, jr.

>> tom: if you have a teenager at home, are you ready for prom? on average, families spend over $1,000 on high school proms this year. how much you spend depends on where you live. tomorrow, find out which parts of the country are shelling out the most cash for the rite of passage. we asked our facebook friends what they spent on prom back in the day. sergio says, "dinner and corsage (no limo)-- maybe $200 tops in '81." duru spent around $100 and borrowed his dad's car, and he says, "that sure seemed like a lot of money back then." also tomorrow, we talk with louisiana senator mary landrieu about the b.p. oil spill two years on. that's it for us tonight. "nightly business report" for thursday, april 19. i'm tom hudson. we'll see you online and back here tomorrow night. "nightly business report" is made possible by:

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