captioning sponsored by wpbt >> this is n.b.r. >> tom: good evening. i'm tom hudson. hiring slows in august. just 96,000 jobs are added to payrolls. and that puts more pressure on the federal reserve to act when it meets next week. >> susie: i'm susie gharib. intel warns about chip sales and analysts blame it on the shift to tablet computing. >> tom: he's "n.b.r.'s" longest running market monitor guest and he's been in the bull camp for three years. tonight investech's james stack tells us why he's pulling in his horns. >> susie: that and more tonight on "n.b.r."! >> tom: hiring stalled in august. expectations were for robust job growth last month. but, susie, when the numbers were added up, they fell way short. >> susie: tom, today's disappointing jobs report is fueling speculation the federal reserve will have to step in to further stimulate the economy. here's a closer look at the job numbers:

businesses added only 96,000 new jobs to payrolls last month: economists were expecting 125,00 meanwhile, the unemployment rate slipped to 8.1%: down from 8.3% in july. >> susie: but, that decline is not what it seems. we have two reports looking at the labor market and the political reaction to today's job numbers. we begin with erika miller in new york. >> reporter: a drop in the unemployment rate is often a good thing. but not this month. an incg asreernuinjo ombbf seekers quit looking for work. so they weren't counted as unemployed. the number of people who decided the job market is so bad, there's no point even looking was nearly four times higher than the number of people who got jobs. >> we are creating jobs, but we are basically creating enough jobs to keep up with the pace of population growth. we are not creating enough jobs to bring back the people that left the labor force.

>> reporter: unless that trend reverses, economists fear the recovery could lose momentum. >> if people stay out of the workforce, they're not looking for a job, their skills erode and that also is a weight on demand in the economy. all of those things over time, if they're not changed, will do damage to growth. >> reporter: that was far from the only troubling sign in the report. manufacturing, which helped lead the nation out of recession, cut the most jobs in two years. and temporary hiring-- often a gauge of future trends-- fell for the first time since march. all strengthen expectations the federal reserve will announce another economic stimulus plan when it meets next week. >> now we feel they will act on two fronts. they will buy more bonds, including treasuries as well as mortgages. and i think they will also change their guidance in terms of when they think the time that rates will stay on hold-- are going to extend until the middle part of 2015.

>> reporter: the fed has held interest rates close to zero for nearly four years and pumped about $2.3 trillion into the economy through two bond buying programs. >> but so far this year, job growth has averaged 139,000 a month, less than last year's average. many economists believe hiring will start to pick up after the presidential election. >> it's very hard for companies to make plans about what the economy is going to look like. what the regulatory backdrops going to look like, what tax liabilities are going to look like. and until we get some resolution, it's actually prudent for them to be in a wait and see mode. >> reporter: that's not what the nation's 12 million job seekers want to hear. five million of them or 40% have been out of work for six months or more. erika miller, "n.b.r.," new york. >> reporter: this is darren gersh. the president cast the august

jobs report as another positive step on the long road towards recovery. >> today, we learned that after losing 800,000 jobs a month when i took office, business once again added jobs for the 30th month in a row, a total of more than 4.6 million jobs. >> reporter: the turnaround was dramatic, but measured against the number of jobs lost in the great recession, the president's policies have only gotten the nation part of the way back to normal. >> a recovery package that was only ever intended to generate around three million jobs when you are fighting something that is going to make you lose eight million jobs, that's just not enough. >> reporter: the administration argues the president would have done more, but he got no help from republicans in congress. >> the president has been focused on taking steps to strengthen the economy, to strengthen job growth, he's worked with congress to do this, he has asked congress for more assistance to help the economy, there are steps congress could

take right now that would strengthen the economy. but he took a very difficult situation and we are now on a better path. >> reporter: pointing to lower take-home pay and employment, the romney campaign sees it differently. >> there are today 23 million americans that out of work, or stopped looking for work, or underemployed. it's a national tragedy. >> reporter: but the key economic question still remains. will job growth come from more investment or more efforts to boost demand? >> there was very little done since the february 2009 stimulus package, even though the economy was just begging for it. we needed more boost. we needed the government to step in and fill some of that economic demand and activity that was erased by the bursting of the housing bubble. >> reporter: governor romney is pushing for more incentives to invest and save and his campaign says efforts to spend our way to prosperity have not worked. >> i think we've really tried the president's path... the path of stimulating demand really

through a lot of borrowing and spending. i think we have to wonder if that's been an effective path and we would argue it hasn't been and what's needed is a change in course. >> reporter: the romney campaign promises to more than double the pace of job creation-- a tall order for an economy still struggling with the aftermath of a housing bubble and financial crisis. darren gersh, "n.b.r.," washington. >> tom: stocks on wall street barely budged as investors weighed the prospects for additional stimulus from thenc federal reserve next week. the dow rose 14 points. the nasdaq was up about half a point and the s&p 500 rose five points. for the week, the dow was up 1.7%. the nasdaq and s&p 500 higher by more than 2% each. while investors and traders may be hopeful about more help from the fed, republican presidential candidate mitt romney doesn't think it would do much. >> i don't think q.e.-3 as it's being described is going to have the economic impact that i

think, that the nation is looking for. i think what we found is q.e.-2 was less effective than we had hoped it might have been to create jobs and frankly i think what we're looking for is the kind of commitment in washington to fix the structural problems that are making it harder for the economy to recover. and some of those problems have been put in place by the president. >> susie: mohamed el erian our guest tonight agrees that more fed stimulus would have limited economic impact. he's c.e.o. and co-chief investment officer of pimco-- the world's largest bond fund. so mohammed, i guess you're in the camp that believes more stimulus from the fed won't do much to fill the job holes. what will? >> what will is a comprehensive approach out of washington, d.c. so the fed on its own cannot deliver economic outcomes. they can deliver financial outcomes and that's important for investmentors, but not economic outcomes. if you want economic outcomes,

you need to deal with the housing problem. you need to deal with infrastructure. you need to deal with fiscal, global and coordination. we need an approach, and congress to stop bickering if we are to deliver this approach. >> susie: what's happening that this economy is not generating jobs? it doesn't really matter which candidates becomes president, because despite promises to create jobs, in reality, can they create more jobs? >> the problem is we went on great -- not in the sense of good, but we went too far. the great days of leverage and debt and felt sbiemgtsed to buy things on credit, not on income. so we have to undo the damage that was years in the making and that's going to take time. that's the new normal. and you're right, susie, whoever comes in -- whoever is

in the white house is january will find that it's much miles per hour limited than the campaign narrative suggests. >> susie: fed chairman, ben bernanke said in jackson hole a few weeks ago that the fed created 2 million jobs since the financial crisis, and there's a the love expectations when the federal reserve meets next weeky they will do some kind of stimulus plan, almost like it's guaranteed. what are your thoughts on that? >> the expectations are as follows: a high probability of extending the forward guidance which means giving assurances to the market that interest rates will be floated at zero until 2015. a possibility of qe 3 which means the fed buying securities. and we don't expect them to move on the other two areas, which is reducing interest on reserves and changing the target of a financial target

to a gdp target. so they're going to do something, but they're not dpg to go all the way in september. >> susie: the fed is always watching europe as are investors over here. let's talk a little about europe. what's you're take on this new bond buying program? i know you just came back from germany. do you think that this program is a band-aid or a giant leap forward? >> it's a big band-aid. so it is a band-aid. but it's a big one. the ecb very skillful doing what the germans want to hear, and what spain and italy want to hear which is financing. they said basically we will provide unlimited financing provided these countries and these governments deliver on their commitment. so the ecb made is very clear that it's ready to go in and now it put the ball in the court of government. so it's important to have the policies by government. but it's a major step, and one

that the market welcomeed and correctly so, susie. >> susie: well, how will we know if the program is succeeding or fail something what's your quick answer to that? >> two numbers. the yield on the 10 year bond in spain, and the 10 year bond in italy. both of them need to get well below five percent. >> susie: we'll leave it there. thank you so much, mohammed el erian, ceo of pimco. >> tom: still ahead, why "n.b.r.'s" longest running market monitor is taking less risk with stocks. he's jim stack president of investech research.

>> tom: from waiting for windows 8 to tablet migration-- a host of challenges have intel cutting its sales outlook for the current quarter. the semiconductor giant now expects revenues to be $13.2 billion. that's more than $1 billion less than it previously forecast. intel today said it is seeing a new trend. computer makers cut back on chip inventories at a time when they'd normally be gearing up for a sales boost. why the expected sales boost? microsoft launches its latest operating system windows 8 late next month and previous windows releases have led to stronger computer sales. but analysts say both companies and consumers planning to stick with traditional p.c.'s have been holding off on upgrades waiting for windows 8. and that expected upgrade cycle would normally have p.c. makers stocking up on chips. so, what's different now? analyst point to the shift from

desktop and laptop computers to smart phones and tablets. >> right now intel has kind of a two-fold challenge in the current term. we're seeing weakness in the consumer, weakness in business spending, but in the longer term really the shift away from desk top devices towards mobile devices is intel's greatest question it needs to answer. >> tom: tonner calls prospects for intel's core product: computer chips. not good. intel shares fell 3.6% on the warning. this is the stock's lowest price of the year.

>> susie: returns on hedge funds are up, but trailing the broader market. hedge funds averaged a gain of 0.7% in august, according to e- vestment-- a firm that tracks the $2 trillion industry. that's well below the s&p 500's gain of more than 2%. year to date, hedge funds are up about 4% on average, while the s&p gained 13.5% during that time. as of today, tom, slim gains in the stock market. a real big contrast to yesterday's strong rally. and it appears that investors and traders are cautious because of the jobs report we've been talking about, and now they're waiting to see what the fed is going to do next week. >> tom: a little bit of caution today on the heels of that jobs report, and digesting the big gains we had yesterday, ande'e,alll wl ct i a susie, we'll call it a mixed and moderate reaction. to today's disappointing august employment report. the s&p 500 traded in a tight six point trading range.

but it managed to close at its high of the day and its highest level since december 2007. volume fell from yesterday's pace. 676 million on the bog board. 1.7 billion on the nasdaq. the materials sector again led the gainers up 2%. the energy sector was up 1.6%. and financial stocks gained 1.1% as a group. kraft foods unveiled its long term goals as it prepares to become two companies. mondelez is the name of what will include the snacks business. it's goal is to grow earnings per share at a double digit rate. kraft's foods will be have meat, cheese and coffee brands. it's forecast to a bigger dividend. but sales growth for the companies are on the low end of their long term targets. the forecast was greeted with weakness in the stock. kraft fell 5.5% after trading at a new high yesterday. this was the biggest percentage decliner among dow industrial stocks. meantime, a company kraft counts on to sell a lot of its

products. grocery store operator kroger turned in quarterly earnings two cents better than expected. revenues were slightly disappointing but its margins were better-- a positive sign in the highly competitive grocery business. kroger also raised its full year forecast, due in part to the impact of stock buybacks. shares fell 1.6% on heavy volume. itunes may not be enough for apple. according to the "wall street journal," apple is considering launching its own interest radio service. the speculation is an apple radio business would mean big competition for pandora. one of the most popular way users access their pandora service is through apple's iphones and ipads, setting up the potential of a significant threat. >> many people buy mp3 and digital, and they say we're going to take over the online radio space, than pandora has

to watch out. if you have an iphone and apcell built into t you're more likely to use that. >> tom: pandora shares fell 16.7%. volume was more than five times normal. the stock went public 15 months ago at $16 per share. it closed at $10.47 tonight. it's not just pandora that was hit by apple talk today. small-cap company audience makes audio and video semiconductors for smartphones. shares fell more than 63% after warning apple won't use its technology in its newest iphone. this stock came public in may at $17. tonight, it's below six. a much bigger company locked in an intense competition with apple is google. even though apple's reported plans for an internet radio service would not include working with google's android software, that didn't scare off investors today. the stock climbed over $700 per share, rising to its highest price since 2007. at an investor conference this week, a top google executive pointed strong growth opportunities in its you-tube and mobile businesses.

four of the five most actively traded exchange traded funds were higher today. the lone hold-out was the nasdaq 100 tracking fund. it dropped 0.1%. and that's tonight's market focus. >> tom: on monday, it will be three and a half years since the stock market hit its recession low and a new bull market began. tonight's market monitor is shifting to a more defensive portfolio. james stack is president of invest-tech research and our longest running market monitor and he was recently named one of the top 100 independent wealth advisors by barrons.

>> it's great to talk to you again, tom. >> tom: pull in your horns. short term, what do you expect between now and say, the election. >> well, what's interesting about that three and a half year birthday on monday is that right at the median or average bull market duration of all the bull markets going back 80 years. that department mean the bull market is going to end tuesday, but suggests it's becoming increasingly important top manage risks, particularly if you look out past the election. >> tom: but between noup and then, there's a potential for volatility. what does history tell us? >> it's expected to be volatile in this two month period. we're almost exactly two months out from election day. the historical odds are there's not going to be a dynamic move in the market. in fact, there's only been two instances since 1940 in which the market has moved over 5%

in this two month period. but here's what's interesting. these two months, from the stock market standpoint carry a 90% probability of predicting who will hold on to the white house. what i mean by that is if the stock market is up between now and election day, then odds are 90% president obama will hold on to the white house. whereas historically if the market is down between now and election day, the odds are in favor of romney and the republicans taking over. >> it seems like the campaign is watching the s&p 500 as much as the market. >> and what about the volatility twb now and 2013. fi. there's anything certain about the fiscal klich is nothing will be done between now and election day. but historically, there will be some kind of a compromise that lessens the risk of the fiscal cliff. nonetheless, the next four months are critical, the most

critical of the bull market. technical strength in leadership and bellwethers. it's all solid, and the technical strength is in place, but cracks are in the foundation in leading economics. >> last week, all of the declines coming in expectations. if that level is off between now and year end, fine, the market will stabilize and perhaps continue higher. if this is the start of a decline in consumer confidence and it continues falling later this month and in october, it's going to be very difficult for the federal reserve for any administration to avid recession next year. >> tom: you're hopeful, and brought in the horns a little bit, and brought defensive picks with you. among them the biggest global generic drug maker. ecde. it's trading in a range for 12 months. what do you anticipate?

>> teva is a generic drug manufacturer, and seller. it's going to be immune to health care reform. it has a 7.1 pe ratio, and revenue is continuing to grow at double digit rates, and i think the symbol is taif aeva >> and pemsy. pep, the freeto lay brand, it's a steady grower. do you anticipate that pace to continue? >> this is a solid value company. it's number two in food and beverage in the world, next to coke. yes, revenues are going to slow from 13% annulized over five years down to just under 10% for 2013 and 2014, but pepsco is selling at a 20% dip to the average historical valuation and paying a 3%

dividend yield which is more than you can get on a 30 year t bond. >> paid for by dorito chips. you're moving into energy. why is that? >> investors have a lot of fears and this is one of the best hedges. like a conflict with iran, or the valid fears that the dollar could fall over the next couple of years. that's not out of the question. that would send oil prices higher. conoco phillips is a pure oil production and exploration after spinning off. and it's paying a 4.8% dividend yield. that's something you can take to the bank. >> last time we saw you, you had three etf picks the energy is flat, and the technology is a winner uf 11%. do you still have these.

>> we hold all the stocks, i pensioned, the nasdaq is up 20%, i wouldn't be adding. the energy i would be adding to. >> tom: it's the friday market monitor with james stack. >> susie: coming up next week on "n.b.r.": as we mentioned, federal reserve from where you go on the internet to what lands in your grocery cart, companies and uncle sam know a lot more about us these days. and tonight, that's got lou thinking about privacy. here's author and educator lou heckler. >> do you find yourself having a lot of mixed emotions about what companies can know about us now? i don't feel like i have anything to hide, but by the same token i don't think my whole life needs to be public. i read recently that british airways is now googling its most frequent travelers and sharing that with flight crews. the idea is sound: the more the crew knows about the revered customers, the more they can tailor their service to each individual. i like to be treated like a unique person, but something about this makes me a bit uneasy.

i guess it's inescapable. we are on camera many times every day. our various subscription habits are shared among mailing lists and we willingly post information about ourselves on social networking sites. but, am i the only one who's feeling a bit invaded? i've always believed in traveling gray. not this gray but traveling in plain clothes with dull luggage and no touristy things hanging around my neck. a friend who teaches self- defense says the best defense is this: don't be selected by what you do or say, or by your look. i understand that since 9/11 many things needed to change. i certainly want to feel secure and safe. i guess the real question is: how much knowledge about me is too much? like a lot of things in life, i seem to have more questions than answers on this one. what do you think? i'm lou heckler. >> we'll be looking for more transparency with the federal reserve next week. and have more answers. >> susie: ask we have apple with a big announcement and a new iphone 5 on wednesday next

week. >> tom: that's it for friday, september 7th. thanks for joining us. have a great weekend. >> susie: we'll see all of you online at nbr.com and right back here on monday night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org vo:geico, committed to providing service to

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