it did anything close to an adequate job of what it was supposed to do. so i think its a hard case to make that enforcement will be as effective as it needs to be in the future if you leave it where it has been. >> paul: that's why the treasury secretary says we need a new single regulator for things like mortgages and credit cards. but he's running into a host of opposition. >> suzanne: getting the engines of economic growth cranking again. coming up, we take a look at what the recovery will look like when it finally takes shape. >> paul: tonight's "market monitor" guest says investors beware, we're definitely in a bear market rally. he's frank cochrane, president of investment timing consultants. >> suzanne: then, the recession is wilting flower sales as americans pull back on everything from major purchases to incidentals. and that's pruning growth for the floral industry, here and abroad. >> paul: i'm paul kangas. >> suzanne: and i'm suzanne pratt. susie gharib is off tonight. this is "nightly business report" for friday, july 24.

"nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> suzanne: good evening, everyone. protecting americans from another sub-prime mortgage mess or credit card abuses are major goals of the obama administration's plans for financial regulatory reform. and the white house wants to give that job to a new agency, one with strong enforcement and rule-making powers. today, it sent treasury secretary timothy geithner to

capitol hill to sell lawmakers on a new consumer financial protection agency. but geithner ran into opposition from many of the people he works with every day. darren gersh explains. >> reporter: today's hearing was as much about power politics as regulatory reform, a fact noted with some amusement by the man who called the hearing, house financial services committee chairman barney frank. frank opened by marveling at the complaints he is hearing from the nation's assorted financial regulators. >> they can argue that taking the powers away from them may not make sense, because the powers that will be taken away from them are in very good shape because they have rarely been used. >> reporter: which is why barney frank and the obama administration want to put the power to protect consumers into a new regulator, the consumer financial protection agency. the goal is to make sure products like abusive sub-prime mortgages never again threaten the system or consumers with disaster. the obama administration wants to go further, requiring

financial institutions to offer simpler, so-called "plain vanilla" mortgages and other financial products as an option to consumers. that requirement has raised concern among many lawmakers, including texas republican randy neugebauer. in other words, "this is kind of the optimum credit card, this is the optimum mortgage, this is the optimum car loan," and to me, i don't see that as the role of the federal government. >> reporter: neither does he, insisted treasury secretary timothy geithner. >> innovation in products-- that's very important to us. this is one of the great strengths in our system. we just let it get a little too far away from any basic sense of gravity. we need to bring that balance back a little bit. >> reporter: but every regulator in town is shooting at some aspect of the new agency, calling it's powers too broad or its structure too insular. testifying later, federal reserve chairman ben bernanke, f.d.i.c. chief sheila bair and others were all asked whether they would take back some of the powers the administration wants

to take from them and give to the new agency. as frank predicted, they all agreed. >> yes. >> reporter: that united opposition is one reason treasury secretary geithner wants to move by the end of the year on regulatory reform. bankers, brokers and even regulators all have reasons to resist change. the administration fears reform will only get harder if it slips into next year. darren gersh, "nightly business report," washington, d.c. >> suzanne: stronger than expected corporate earnings have helped underpin stocks this week and push the dow over 9,000. while some economists believe a stabilized profit picture suggests the recession is coming to an end, others are not yet convinced. in fact, there is growing concern about a double-dip recession, also known as "w- shaped" recovery. as we continue our "reviving the economy" coverage, scott gurvey takes a look at how some experts actually "spell" recovery. >> reporter: tonight's story is brought to you by the letter "v", or maybe "l".

perhaps a "w". how about "u"? we're not sure because when you ask an economist to forecast the shape of the recovery, you could get any one of those letters as an answer. we already know that the front part of the shape is like a "v," and it is not pretty. the question is, where do we go from here? joe mcalinden is bullish. he says the bottom is now and a sharp upturn is about to begin. >> i'm in the "v" camp. i think that we definitely are making in global g.d.p. a sharp bottom, a v-shaped bottom in the second quarter. and the reason for that is a massive easing of monetary policy, the heavy stimulus in japan, and the natural course of the business cycle. >> reporter: but the fact that consumers have cut back on spending leads david wyss of standard and poor's to forecast sluggish growth near-term, with a pick-up in the second half of next year. that puts him in the u-shape category, but he worries about being an "l". >> an l-shaped recovery bothers us. that's sort of what happened in

japan in the 1990s. they went down in that recession and they never really saw a recovery. that's something that could happen this time. i don't think it will, because i think we've got enough strength in the u.s. economy to do better than that. but in many ways, we look a lot like japan looked in the early '90s. >> reporter: new york university's noriel roubini worries government debt and higher energy prices will stifle a recovery, producing the dreaded double-dip recession. that makes him a "w". mark zandi of moody'seconomy.com is also a "u," but he doesn't see us entering the upward leg until 2011. if you find all this confusing, you are not alone. mcalinden says part of the problem is how you phrase the question. >> i think some of the debate that's out there about what letter is appropriate may circle around what we're talking about. i think industrial production is going to have a v-type bottom. i think corporate profits are going to turn around sharply and g.d.p. will pick up.

jobs will lag-- they usually do in an economic recovery. if you measure by jobs, it will be a long drawn-out process. >> reporter: so, "l", "u", "w" or "v"-- sometimes, forecasting the economy is like playing scrabble. scott gurvey, "nightly business report," new york. how did that "r" get in here? >> paul: profit-takers took command on wall street at the outset in the wake of yesterday's big rally. the tech-laden nasdaq was hardest hit due to disappointing results from microsoft and amazon.com thursday. 30 minutes into trading, the dow posted a 61-point deficit and the nasdaq was off 36 points. while many better-than-expected earnings from blue chips helped that sector turn positive this afternoon, the best the techs could do was trim their losses, so the market closed mixed. the dow industrial average ended with a gain of 23.95 at 9,093.24. this week it fell only once for

a net advance of 349.30 points. the nasdaq fell 7.64 to 1,965.96 today, breaking a 12-session wining streak. it also fell only once this week and gained 79.35 points overall. the s&p 500 rose 2.97 to 979.26 today, and for the week, up 38.88 points. in the bond market, the ten-year note rose 2/32 to 95 21/32, putting the yield at 3.66%. >> paul: california finally has a budget-- the state assembly voting this afternoon on a plan

to close a $26 billion budget shortfall. the state senate approved the measure this morning after an all-night bargaining session. governor schwarzenegger is expected to sign the bill into law by monday. the package contains over $15 billion in cuts to services, and billions in creative accounting measures. the budget crisis forced california to start paying its bills with i.o.u.s earlier this month. >> suzanne: the tour de france may be in full swing, but today, president obama began a different kind of competition. the administration announced its "race to the top" program for u.s. schools, which will have schools vying for nearly $5 billion in stimulus money. the president challenged educators to raise academic standards and improve teacher quality. schools that meet the benchmarks for success will qualify for aid. mr. obama says the program will improve the education system, something he says is essential to rebuilding the economy. >> not every state will win and not every school district will be happy with the results.

but america's children, america's economy, and america itself will be better for it. >> suzanne: the education department will start accepting applications for the stimulus funding this fall. officials expect the first round of aid to go out early next year.

>> suzanne: with consumers cutting back on spending, some of life's little luxuries are going by the wayside, and that's wilting the nation's flower business all along the supply chain. from street vendors to flower importers, jeff yastine has more on an industry still waiting for a recovery to bloom. >> jeff: inside each of these boxes is a bunch of flowers-- roses, carnations, chrysanthemums, from colombia, ecuador, and other latin american countries. roughly 80% of all the fresh-cut flowers sold in the united states pass through the miami warehouses of continental flowers and 70 other importers here. but there don't seem to be any of those "green shoots" coming up in this industry. upstairs, continental's sales team is feverishly working the phones, selling pallets of flowers to a network of

wholesale distributors around the country. founder and president bill fernandez says this past year has been the roughest his firm has ever been through. >> we've been in business since 1974, so we've been through five recessions; this is definitely the hardest one. >> jeff: fernandez says people are still ordering flowers for special occasions and holidays. but industry watchers like christine boldt of the association of floral importers of florida say americans are ordering fewer flowers, or choosing less-expensive varieties. >> we're not a necessity-- you don't eat flowers. therefore, it's a secondary purchase. we offer flowers for every occasion, but it's not something that's first in mind for people to buy. >> jeff: after decades of annual double-digit growth, imports of rose bouquets and other varieties are down more than 20% in the past two years. the lack of sales and bank credit is also pruning the number of wholesalers that importers like fernandez can sell to.

>> so the banking crisis has hurt everybody, directly or indirectly. many wholesale florists, they need lines of credit for their operations and they're having a hard time finding it. we've had a few customers this year close down because of that. they decided to just give up. >> jeff: flower growers in colombia are also giving up-- so many, say importers, that prices could rebound sharply when demand in the united states picks up again. until that happens, continental flowers' fernandez says he's hanging tough, trimming costs but not payroll. he's buying time for his business, until the economy begins to bloom and americans start buying flowers again. jeff yastine, "nightly business report," miami. >> paul: monday, let the talks begin. treasury secretary geithner welcomes the chinese for a new round of economic talks. >> suzanne: prices at the pump are moving higher, despite a build-up in gasoline supplies.

triple-a says the national average stands just shy of $2.50 a gallon. but with supplies rising for the past six weeks, analysts say the average cost should be falling. still, today's price is a steep discount to last summer, when drivers were paying $4 a gallon in many states. >> paul: microsoft is moving to settle european anti-trust charges by offering to let users choose from multiple web browsers when the next version of windows ships this fall. the european commission welcomed the move, saying it could solve the pending anti-trust case. in january, those regulators charged microsoft with crushing the competition by bundling its internet explorer web browser with its windows operating system. euquu@

>> suzanne: here's a look at what's happening next week: our friday "market monitor" guest is robert stovall, managing director and strategist at wood asset management. on the economic calendar: monday, june new home sales; tuesday, the case-shiller home price index for may, and the conference board's july consumer confidence index; wednesday, we'll see june orders for durable goods and the fed's beige book; thursday, weekly jobless claims; and friday, it's the first look at second-quarter gross domestic product, and the second quarter's employment cost index. >> paul: my guest market monitor this week is frank cochrane,

president of investment timing consultants, a financial advisory firm based in bloomfield hills, michigan. frank, welcome back to "nightly business report." >> great to be here, paul, thank you. >> paul: is the stock market's sharp run-off justified by recent signs of economic recovery, the green shutes as they call them? >> short-term, paul, i would say "no" i'm somewhat negative for the outlook for the next few weeks or so the market is discounting much stronger earnings. the earnings that came out were so low, i think a snail could have jumped over them, the bar in that sense. the credit will come back. the consumers will start spending. i really don't see that out there. i think basically the market came out there year around 9,000. that's why we are right now. >> paul: are you telling your clients to ride the rally, nonetheless, or take profits? >> well, i think we have to do -- what we have to do in this environment is you have to trade.

that's something i've said for the last couple of years. we're in an environment now where i think the top end of the market is 14,000 and the bottom end could be 5,000 on the dow and i think over the next several years what we're going to do is basically trade within that -- within that -- those two numbers. >> paul: ok, so in and out and when you have a nice profit, take it. that's it. it's as simple as that? >> exactly. >> paul: all right. in february, you gave -- actually you gave us three possible scenarios for stocks. how are those played -- how have those played out? >> i talked about an l-pattern which didn't -- that didn't work out, in fact, we're 900 points on the dow above there now. >> paul: uh-huh. >> we went down to 6,600 on the dow. i looked for the s&p to go down to 650. that's what we did. we bounsed smartly from there. my outlook right now, certainly the dow could move up to say the 10,000, 10,500 level and s&p up to say 1,100 but in the bigger

picture, this is a trading environment. one must trade this market, trade this market. to buy in hope won't work anymore in my opinion. >> paul: you gave our viewers two buy recommendations last february of a bearish nature. let's see how they've done. we'll put them up here. pro shares, ultra short obviously. haven't fared well. down 34%. and the -- you're not still holding these, i assume? >> we trade in and out of those things. and as you can see from the chart, shortly after i recommended, they were up about 50%. that's what we've got to do with these things. you cannot hold onto them. you must trade them. they are two betaetf's. that's what they're for. >> paul: you're saying buy and hold is dead basically? >> absolutely -- yes, i am. again, we're unwinding 25 years from '82 of -- you know, too much leverage. >> paul: uh-huh. >> too much spending. not enough saving. that'll take several years, many years, um, to take care of and

then so i think you're going to see some very volatile moves, big up moves and big down moves over the course of the next five years or so. >> paul: frank, how about some new recommendations? >> first thing i would do depending on my time horizon is i would have a lot of cash here. i think on a short term, especially if a person is looking for say a one to a couple-year time horizon, i would have at least an 80% cash position. if you must buy a stock, i would buy at&t. good dividends, lots of cash in the bank, so to speak, and that stock, you know, it looks like it's ready to break out so that's a good, safe stock. >> paul: ok. >> and, um, the third thing i would go with is the uso. i think longer term -- . >> paul: etf, right? etf? >> that's correct. i think i would hold onto this one. over the course of the next 18 months or so i think oil will head a lot higher, simply based on supply, not necessarily demand. >> paul: so the price of uso is

directly linked to the price of oil? >> that's correct. which i think over the course of the next 18 months is going a lot higher. >> paul: do you personally own the securities mentioned or have disclosures to make, frank? >> i don't currently own them. i trade them from time to time. >> paul: thank you for being with us once again. >> thank you very much, paul, great the to see you. >> suzanne: the federal minimum wage went up 70 cents today to $7.25 an hour. the increase means a raise for workers in 30 states that have lower minimums, but some economists believe it could prolong the recession. the concern is employers like restaurants and retailers will not be able to shoulder the extra cost and will be forced to cut staff. the wage increase got us thinking-- is there anything you can get in the big apple these days for two quarters and two dimes? we sent our summer interns to find out.

>> what can we get for.70 cents in new york city? do you think we can get something in here? ing i don't think this is going to work. let's go try find something else. post cards! all i have is 70 cents. any way i can get a doughnut? hi-5, thank you. if we put our money together, we can get a spring roll. >> sure, give me 60 cents. >> there you go. one spring roll! hey. got to pay for it. i can call my mom for 25 cents. >> you can use my cell phone. >> we can get two bananas. >> neat. >> the best day ever!

>> suzanne: special thanks to our jeff masino and q youn ha for that fact-finding mission. but seriously, paul-- that 70- cent increase does add up. for minimum wage employees working a 40-hour week, it amounts to an annual boost of almost $1,500. >> paul: clear proof every penny comes. >> suzanne: that's nightly business report for friday, july 24. i'm suzanne pratt. good night, everyone, and have a great weekend. you, too, paul! >> paul: and you as well, suzanne. i'm paul kangas, wishing all of you the best of good buys. "nightly business report" is made possible by: this program was made possible by contributions to your pbs

station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org we are pbs. >> we are pbs. caption test caption test caption test caption test