>> this is n.b.r. >> susie: good evening, everyone. i'm susie gharib. tom will be along later in the program. gm and chrysler post their best monthly sales gains in years, and even japanese automakers are revved up. states are facing a big decision on health care spending. they face tempting but difficult choices. we'll explain what's at stake. and we look at restaurant costs, how price and palate impact what's on the menu, as we continue our series on the foodie craze. that and more tonight on "nightly business report." some early fireworks in detroit today, as american automakers celebrate strong monthly auto sales. looks like americans shook off worries about the economy, and went shopping for new cars and trucks in june. general motors sales surged almost 16%; nearly half came from fleet sales. ford posted a gain of 7%.

and chrysler was the u.s. star, sales jumped 20%, on strong sales of its jeep and fiat brands. toyota, honda, and nissan also firing on all cylinders, the trio posting double-digit sales gains. only a year ago, they had few cars to sell, as inventories were hobbled by japan's earthquake and tsunami. analysts say the average american car is now close to 11 years old, and people are in the market for replacements. >> pent-up demand that's out there is still seeping through, even though we have some economic conditions that are holding back pent-up demand and keeping us from getting to pre-crisis levels here in the united states. >> susie: morningstar expect sales of about 14 million cars and trucks this year. that's getting closer to the record set in 2000. shares of the big automakers rose slightly in today's shortened trading session: gm up over 5%, and ford adding 2%. we have technical analysis of ford stock on our web site,

nbr.com. you can find it under the "blogs" tab with michael kahn. "nightly business report" is brought to you by: captioning sponsored by wpbt >> susie: the u.s. economic recovery remains "tepid." so says christine lagarde, head of the international monetary fund. the i.m.f. issued its annual report on the u.s. economy today, and offered this advice-- focus on boosting growth now and cutting deficits later. lagarde also said she is most concerned about the so-called

"fiscal cliff" facing the u.s. next year, as several tax cuts expire. she says that threatens to reduce the u.s. economy's growth to just 1%. >> too strong a contraction of the u.s. economy as a result of, say, the realization of the fiscal cliff would have significant spillover effects outside the united states. so not only the fiscal cliff realization would contract the u.s. economy and reduce it to marginally positive, if at all, it would also have effects outside the united states. >> susie: our guest tonight says one word describes stock market performance for the rest of this year: "volatile."

he's stephen wood, chief market strategist at russell investments. >> hi, steven. why the call for volatility? >> i think there's a lot -- i agree they're very consistent in the forecast on the u.s. economy, but there's a lot of political volatility. essentially, in a fragile economy, we've got european politicians, american politicians doing their best to kind of mess things up for investors, and one of those is the inability to decide where we're going to be in taxs and fiscal policy leading into the electric. that's creating volatility for investors, consumers, and business owners. depending on the election weather romney or obama wins, we'll have implementations of obama care. so there's policy issues on top of the economic and the corporate issues that are going to create the volatility. it's not necessarily a reason to exit the market, but just understanding that there is volatility. >> susie: and when you talk about economic and corporate issues, are you talking more

on the u.s. side or europe or both? >> well, i think there's three engines. europe, the united states, and china. europe right now is obviously not in a very good spot, and also, economically, they're in a rescission. the united states from our perspective is we avoid a recession in the u.s., and china, the third leg of that analysis is going to have a landing right now. so you're seeing global softness. commodities have sold off, emerging markets have sold off. and the united states has held up well, if you look at the russell 1,000, and the 2,000, you do need long term disciplinea sxnding. and there's going to be softness and volatility. >> susie: you know this is a headline driven market, and the headline is everyone is waiteding for is a report. what are you expecting? what kind of market reaction

is going to come as a result of this? >> the consensus right now is a hundred thousand. that makes sense in that we've got a soft labor market. we're looking for a glacial improvement in the jobs markets. i emphasize glacial. it's going to get better, but not soon. >> susie: so if the number comes in below 100,000, is that a sell-off in the market? >> i don't think so. the market is expecting in the 85 to 90. that's the consensus i look at. the market is pricing in a very soft number. also, i think the market is pricing in revisions to previous numbers. that's really why most of the softness has come in revisions of previous numbers. i think the market sent expecting anything terribly strong right now. if it does surprise, it would be to the upside. >> susie: you know, the other headlieb everyone is looking for is monday after the

markets close. alcoa will be the first big cumb to report its second quarter earnings result. alcoa is a big international company, and a bellwether for the economy. what do you think it's going to tell us about the shape of the u.s. economy and what to expect from corporate earnings this season? >> i think you're right. a little going to give us a global and commodities based pictured of the market. i think what it will show us is that the united states is doing okay. >> earnings are going to secelebrate, and we've had a strong front on the earnings, and that's close tol maturation. we're going to see a slowdown, nothing cramatic. that said, we should expect soffness around emerging markets. >> and they think thal be

reflected in the numbers. >> susie: we have to leave it there. thank you so much. have a great holiday. steven woods, chief market strategist at russell i nvestments. >> susie: the fallout continues at barclay's, as two more top executives stepped down today amid a scandal over rigging interbank lending rates. c.e.o. bob diamond resigned in london this morning. new details show that diamond may have played a role in manipulating interest rates to the bank's advantage. also, barclay's chief operating officer resigned. yesterday, the bank's chairman stepped down. all this comes after barclay's

paid a fine of $453 million last week to settle the rate manipulation case. but the investigation is growing, with regulators in the u.s. and britain looking into other top banks. could the barclays' scandal spill over to any american bank? joining us now to answer that: erik oja, banking analyst at standard & poor's. >> susie: eric, what is your answer to that question? could any american barng or bank be pulled into this scandal? >> sure. they already have. the top banks in the country. citigroup, bank of america, j.p. morgan chase, as well as the largest bank in canada. royal bank of canada are already enmeshed in it, and they are the subject of an antitrust suit that's going on right now as well as regulatory investigations. >> susie: so how serious is this whole situation? how much are the banks at risk when the news and the investigations, you know, come out with some findings?

>> l i think they're very much at risk. as far as the dollar amount, we don't really know. these stocks have all had very good share price appreciation in the last week. so clearly, the market isn't really worried yet about them. but it could pose to be a very big problem down the road. for barclays it was almost a half billion dollar fine. >> susie: could there be management shake-up as a result of this at american bank, any big american bank? >> it's much too early to even think about management shake-ups yet. we don't be which way the antitrust trial will go, or which way the investigations will go. i can't even think about that. >> susie: let's turn to another issue today. nine big banks gave their living wills to regulators today. this is the plan for how they would, you know, handle their demise in the event of a

bankruptcy. looking at the list here, 9 banks. jp morgan, citigroup, goldman sachs, and on the european side, barclays, deutsche credelt suisse, and others. >> i know you've had a chance to look over the banks and the regulators wha. does this tell you about the shape the banks are in? >> the banks on the f.d.i.c. website released plans for what they would do if they were to be liquidated. there weren't any big surprises. they gave basicalty their march 31 reported numbers, and they show that their capital levels are very strong, and then they also spelled out clearly what they would do if they would need to be liquidated. the holding company would go to chapter 11, the bank would be taken over by the fdic, sxlt broker dealer would be

taken over by the securitys investor security. >> and it made for good reading f. there's another financial crisis, tell be more orderly than it was in 2008. >> susie: quickly, everybody sell worry body too big to fail. does this remove those worries in a word or two? what do you think? >> i think that it should. in a little bit, remove those worries. however, some of these banks still are enormous, and liquidating them would take all the resources of the fdic to do that. >> we'll leave it there. thank you so much, and thank th

>> susie: a milestone today for the fight against aids. the food and drug administration today approved the first-ever over-the-counter in-home h.i.v. test. the oral swab, made by ora-sure technologies, gives results in as little as 20 minutes. the news came after the close of trading. shares of the company were up 5%, or 60 cents, ahead of that approval, to just above $12 a share. well, diseases like h.i.v. and aids have had a devastating impact on state health care budgets, costing billions of dollars. and now, because of the supreme court's historic ruling on health care reform, many states face another challenging budget choice: should they accept federal money to expand coverage to 17 million low-income americans, or should they protect their strapped

state budgets from taking on a big new expense? as darren gersh reports, the decisions states make will have important consequences for hospitals and other health care providers. >> reporter: at first, it sounds like an amazing deal. if a state agrees to expand medicaid to cover far more low- income people, the federal government will pick up the entire cost. but there is a catch. after a phase-in period of a few years, states will have to cover 10% of the cost of the expanded coverage. for some governors who already think the affordable care act is a bad idea, that's not much of a bargain at all. >> so now our governors are going to have a choice. do i expand medicaid up to 133% of the poverty line and, if i do, i pick up 10% of the cost and the feds pick up 90%? or do i say no, in which case it costs me literally nothing, so it's cheaper for me? >> reporter: look closer at state budgets, and the calculation becomes more favorable. states pay most of the cost to provide services like mental health care to low-income people who are uninsured. if they expand medicaid, the

states will effectively be shifting 90% of that cost to the federal government. >> as that becomes clearer, states will see that this is a deal that is too good to refuse. >> reporter: the supreme court decision has also given states the ability to bargain with the federal government. in return for expanding medicaid coverage, states could ask to limit enrollment to those who are at or below the poverty level. states could also try to find ways to shift more low-income people into the new state health exchanges, where they will be eligible for federal subsidies to buy more generous coverage. >> the only bad news for the federal budget is the states have now dumped their medicaid population into the insurance exchanges, and it costs a lot, >> reporter: on the other side of the ledger, hospitals will soon lose federal funding they now get for covering people who have no insurance. the health care law assumes those people will soon be covered by medicaid. >> if a state doesn't expand, that bargain is removed. it's not there anymore. so the hospitals will be left holding the bag. >> reporter: half a dozen republican governors have said they may not expand their medicaid programs.

but hospitals are already lobbying state governments hard to take the federal government's offer and protect their budgets from deep cuts. darren gersh, "nightly business report," washington. >> susie: on wall street, america's birthday resulted in some early partying, despite the shortened holiday session. stocks rose, in part, thanks to a report showing a surprisingly strong gain in factory orders in may. orders jumped .07% following a revised decline in april. economists were expecting orders to only inch higher. the s&p 500 index closed near its best level of the day. and turning to a year-to-date chart, we may be seeing signs a summer rally is warming up. the index has recovered about half the ground it gave up since early april. with the markets closing at 1:00 new york time, trading volume was light. at the big board, less than 500 million shares changed hands. at the nasdaq, volume was significantly lower than a typical day. today's buying was concentrated

in energy, materials, and industrials sectors. energy was particularly strong, rising more than 2%. it was a big gain in crude oil prices on a flare-up of iranian military activity that helped draw investors to energy stocks. crude oil rose nearly four bucks to settle at $87.66 a barrel. it was also the highest close since late may. the developing situation in the middle east prompted investors to move into downbeaten energy stocks. exxon mobil gained about 1% to close at $86 a share. chevron added 1.4% to $107, and conoco philips also rose more than 1%. the gains helped lift the threesome back into plus territory for the year. oil service stocks also gained solid ground. anadarko petroleum rose 5%, haliburton gained nearly that much, and schlumberger added almost 4%. investors also warmed up to coal miners, even though the group has slogged along this year. alpha natural resources and peabody posted gains of at least 5%.

these two companies have been vulnerable to slowing demand out of china and competition from natural gas. turning now to alcoa, which reports quarterly earnings monday. it was among the top-performing dow stocks. the shares gained more than 3%, but are down more than5% from last july. research in motion's chief executive was on the defensive today, insisting the company is not on the verge of extinction. last week, the blackberry maker stunned the market with another delay in its new operating system, the blackberry 10. as blackberry's troubles mount, the shares have lost three- quarters of their value in the last year. but apple shines. the stock returned to $600 a share today, gaining nearly $7. and finally, among the most actively exchange traded funds, we see the i-shares emerging markets e.t.f. gained 2%. and that's tonight's "market focus." >> susie: if you've looked at

>> susie: if you've looked at your checking and savings account statements lately, it's hard not to be disappointed. after all, most bank accounts and cds are paying almost nothing. those low rates are creating a dilemma for risk-averse investors. erika miller has some other options for people relying on their investments for income. >> my husband passed away about eight years ago, and i was left dealing with money, and i really needed the interest to live on. >> reporter: at first, ivy sommer could support her family on the interest from her bank accounts. but when rates started falling a

few years ago, that income stream dried up. >> i was just afraid that i would run out of money. >> reporter: across america, investors are nervous about the weak u.s. economy and crisis in europe, so they are putting their money in savings accounts and bond funds. unfortunately, that strategy also carries risk. >> at this point, if you are keeping your money in the bank or in cds, there is no way that you can live on it or keep pace with inflation. >> reporter: financial planner cary carbonaro has been helping ivy sommer and others boost the income from their investments. banks are paying next to nothing on cds, money market, and checking accounts, often less than half of 1% a year. and then you have to factor in the bite of taxes and inflation. >> what are you getting? you are actually losing at least 2% to 2.5% to almost 3% a year! >> reporter: so carbonaro recommends avoiding long-term treasuries.

instead, put together a portfolio with a wide variety of other types of bonds. >> shorter-term duration treasuries-- potentially munis-- corporate bonds, potentially some high-yield. you should also look at potentially emerging market debt. >> reporter: and though stocks may be hard for some to stomach, carbonaro says they're often important for diversification. >> we have a dividend-paying stock portfolio that's yielding 4.75%, and they have pretty stable blue chips in that portfolio. but you have to be okay with stocks, too. >> reporter: but for ivy sommer, stocks are just too big a leap. >> they're a little too risky. you put money in, and it could be gone. >> reporter: so there's really no way to eliminate risk. financial planners say the best strategy for most investors is a divers&( portfolio across all asset classes.

erika miller, nbr, huntington, new york. >> susie: we continue now our series on the foodie craze with a look at what's behind the price of the food on the menu. the restaurant business model is pretty simple-- buy ingredients, cook food, and sell it, hopefully at a higher price. but diners tastes change quickly, and competition is fierce. as tom hudson reports, that can make it tough for even top chefs to find the balance between creativity and profit. >> tom: michy's can be considered the home base for superstar chef michelle bernstein.wo e p award for chefs, written a cookbook, and has been a regular on the tv show "top chef." but it's this small restaurant on the north side of miami that she calls home. >> my sister basically designed it with me in mind of a barbie house, when we were kids, of what i used to like. just made it fun and funky and frilly and not so serious, because david and i come from a world of very fine dining. >> tom: david martinez is her husband and business partner. they broke many rules of the restaurant business when they opened michy's in 2006.

it's small-- only 62 seats-- and its location isn't exactly miami glamorous. >> i would have never designed it like this had it been something the market wanted, because this was different. >> tom: but the model has worked by concentrating on the menu, while also paying attention to the bottom line. >> when you're building a business, you're not building a temple to yourself, if you will, because you'll fail immediately. you're building a business that you know will sustain itself, >> am i sick of cooking things like salmon and having tuna tartare on my menu? absolutely. do i want to braise another short rib in my life? absolutely not. but people want it, and i can't take it off, so i cook for them. but i cook the way i want to cook for them. >> tom: the menu is where the balance between food creativity, comfort, and cash flow come together. while bernstein is a world-

renowned chef, she's aware of how her cooking choices can impact the business. >> bone marrow has become somewhat more expensive. and i want to split those bone marrow, which is more expensive, because i don't have one of the machines to split bones. so i asked my butcher to do it. but what i want to serve it with is stir-fried rice, which obviously is not an expensive dish whatsoever. >> i look at it as there's too many high-cost items on this menu and not enough... there needs to be balance, obviously. you look at the heirloom tomato salad. it has burrata cheese, which is extremely expensive. it has heirloom tomatoes, which are a fortune, and baby arugula, which is organic. so, for instance, that dish, where other restaurants would be making money on it, we're not necessarily doing so. >> reporter: the wine list plays a big role in any restaurant's business. it's a lot easier to control costs behind the bar than compared to the kitchen. but focusing exclusively on margins may not be the recipe for long-term success. >> if we were to put on things on menu that make us a bunch of

money, a) who knows if people would continue to come, but more importantly, that's not whywee i >> susie: the markets are closed for fourth of july, so tomorrow night, we're looking at the business of the foodie craze. we'll hear from the publisher of "food and wine" magazine. we'll also talk with the c.e.o. of mccormick about the flavors on your plate, and cover the full spectrum of what's cooking in the food business. that's "nightly business report" for tuesday, july 3. no matter where your travels take you on independence day, travel safe. we'll see you online at nbr.com and back here tomorrow night. "nightly business report" is brought to you by: captioning sponsored by wpbt

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