>> susie: lower growth and more people without jobs-- the fed chief offers a bleak assessment of the economy, but ben bernanke says the central bank remains ready to act. >> we're prepared to do more and we have the tools to do more. >> tom: from washington to the heartland, we talk jobs with iowa governor terry branstad. >> its a very competitive world out there and we need to be able to compete effectively, and i'm proud to say we're doing that. >> tom: this is "nightly business report" with susie gharib and tom hudson. "nightly busine" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. the federal reserve cut its growth outlook for the u.s. economy, but it announced no new plans to stimulate growth. as the fed wrapped up a two-day policy meeting in washington, it also said it's keeping its key interest rate unchanged at near 0%. overall, tom, the message from the fed today was pretty grim. >> tom: susie, policymakers did say the economy "strengthened" in the past three months, but the forecast for the next three years is bleak. the central bank expects

economic growth in 2012 will be 2.7%, down from its earlier prediction of 3.5%. the fed predicts unemployment will stay above 8.5%, but inflation will be stable at 1.75%. the markets rallied, pulled back then rallied again as traders tried to figure out the next move. by the close, the dow rose almost 180 points the nasdaq jumped 33 and the s&p added about 20. >> susie: bernanke answered questions from the media after the meeting. our washington bureau chief darren gersh was there. >> reporter: the federal reserve's policy-making team acted to keep the economy from stalling out last summer, but chairman ben bernanke was still on the defensive today. he declared himself dissatisfied with high unemployment and economic growth-- "frustratingly slow," he called it. still, bernanke stressed the very aggressive action he and his colleagues have already taken. >> our best estimates are that absent the support of monetary policy, that the economy would be in a much deeper ditch and

unemployment would be much higher than it is. >> reporter: now that commodity prices have receded, the fed is forecasting inflation will remain under control for years to come, leaving unemployment the clear target. while bernanke did not promise further action today, he did say one viable way to boost the economy would be buying more mortgage bonds. >> we are prepared to take further action. we've already taken quite a bit of action, but we're prepared to do more and we have the tools to do more. >> reporter: after listening to the chairman, analysts concluded more monetary stimulus was likely from the fed, though that may not change the central bank's gloomy forecast. >> the funny thing about these forecasts are they assume that monetary policy will do the right thing already. so these forecasts already assume that the fed will ease if it needs to. so, the fed would rather not live with these forecasts, but it's their best determination of what will happen, even if they conduct policy correctly. >> reporter: the fed chairman said he and his colleagues are

also considering how to better communicate their goals to investors and average americans. >> i think the fed feels its misunderstood, and it wants to let the public know that it's trying to work in their best interest. people might not feel the fed is doing what's best for them, especially if they have savings accounts that are earning zero. some people believe the fed is just out to protect bankers. >> reporter: one thing bernanke is not ready to do is reshape policy to target a specific rate of economic growth. the chairman said the fed could steer the economy just as well by focusing on inflation and unemployment. darren gersh, "nightly business report," washington. >> susie: joining us now with more analysis on the fed and the markets? charles reinhard, deputy chief investment officer at morgan stanley smith barney. hi, charlie, how are you doing? >> great, susie. >> susie: let's begin with all this stuff ta we heard from the fed today. what stood out the most for you? >> well, the fed is clearly willing to stand by the economy. they show that they're

committed, and they're not satisfied with the unemployment rate, and how slow the economy has been growing. and they have a very accommodateive stance already, and also what stad out to me today was that i think they've become realistic by lowering their growth estimates for next year. we think it's going to be a challenge to reach the new lower growth estimates that they put forth today. >> susie: that's exactly the point. fed chairman bernanke also said today that monetary policy is less effective now than it has been in the past. so they are limited by how much they can do. looking at that forecast, unemployment is still in relatively higher over the next few years. so what can the fed do to create more jobs or to create an economic environment that businesses will hire more? >> well, i think you mentioned the key point, it's about creating an environment where uncertainty goes down, so people feel that they can go forward with decisions,

especially decisions that have longer term ramifications. then of course as time passes, and housing, the housing industry becomes a bit better, one of the key dynamics that's contributing to a high unemployment rate is a key dynamic has been leading to sub par growth is the fact that housing has not really been participating in this recovery. >> susie: was there anything the fed chairman said today that makes you change your investment stage? you were on our program a few weeks ago. and at that time you said you had changed your asset allocation for a modest risk portfolio, to look upon the screen here these are the numbers you gave us. 30% stocks, 37% bonds, 7% cash. and 26% alternative. what about now? are you standing by that or are you changing things now that you've heard from bernanke? >> susie, we are standing by that. for a couple of years, for more than two years we have been more constructive and we had been operating with a

higher equity portion and a slower cash and slower fixed income for bond portion. but we think that's the best part of the bull market of the last couple years is behind us and we felt it was a good time to take some profits, we don't need to be heros, and then to have a still very diversified portfolio. but one that is designed such that if we hit the bumps in the road they will not be very much. >> susie: let's say the fed does take some action over the next couple months. what's your call on the dow and the s&p 500 over the next six months? >> we think it's going to be a very challenging environment. that's the reason why we made some of the changes that we did, between now and the last time that the fed actually met. we think also that their policy challenges on the other side of the atlantic ocean. so we want to remain this way until we see a light at the end of the tunnel, when we see that, for example, some of the leading indicators that we

look at that have dimmed recently, we want to see them turn up. and of course if policy is more stimulative, eventually that could happen, but we think some of the benefits of, might have to wait until the next business psych tomorrow manifest the results. >> susie: one thing, we have a few second left, one thing that's been hanging over the markets is europe. bernanke said that there's not much the fed can do about that, that's up to the european regulators. if europe doesn't get its act together, can the u.s. grow, can the markets do well with europe in a recession? >> well, it will be difficult. the world economy is poised to gr, but most of that growth is happening in emerging market countries. a tiny portion of world growth coming from europe. and some growth coming from the u.s.. but then again, not enough. the word is more connected than it ever been, a few years from now it will be more connected than it is today.

so this is another challenge. and also i would say on the policy, when it comes to policy it's not just what you do and how much you do of it but how quickly you act. so, for example, if policy action had been taken a few months ago, in certain measures, it might have had a better impact or 2011 and 2012 than if we're only getting around to it next. >> susie: a lot of issues for investors. thank you so much, charlie, for coming on the program and giving us your views, we appreciate it. >> thank you, susie. >> susie: we've been speaking with charles reinhard. >> tom: still ahead, the european debt crisis claims its first u.s. victim, m.f. global. could there be more? >> susie: will it stay or will it go? that's what germany and france want to know about greece and its membership in the european union. the leaders of those countries are holding emergency talks with greece's prime minister.

they want clarity on whether greece will leave the e.u. the pressure comes after greece sparked panic in global markets by saying it will hold a referendum on the bailout package designed by the e.u. and the international monetary fund. the next installment of bailout money, which was due this month, is now on hold until after the greek vote. now scheduled for december 4 or modest job growth for the private sector-- that's the upshot of today's report from a.d.p. the payroll processing firm says 110,000 jobs were added at private firms last month, slightly more than expected. a.d.p. also revised its september numbers higher, to 116,000 positions added. on friday, the labor department releases its report on how many jobs were created in october. >> tom: harvest season is over, and the crops may be out of the fields, but the booming business of agriculture underpins an iowan economy growing faster and with a lower unemployment rate than the nation's. during our visit to iowa this week, we had a chance to talk

with governor terry branstad. in tonight's "how to fix the economy", the governor tells us how his state's economy has outpaced much of the rest of the nation. >> we are benefited by the fact that agriculture is an important part of our economy. i was governor in the 80s when agriculture was the weakes part of the economy, the farm crisis. now we're selling, you know, we have record prices for corn and soybeans, also cattle and hogs are doing well, we're the number one egg producing state. all those things are good. but also we're investing in research and biotechnology, looking for the opportunity toed avalue to what we produce through bio sciences. and also we're strong in the insurance and financial services. >> reporter: in the domestic economy whirlpool announced it's closing a plant in arkansas. whirlpool purchased maytag with the big manufacturing center here in central iowa, which will be getting some of those jobs. >> right, they're going to add

160 jobs. alcoa will be producing more aluminum for the auto industry, they'll be adding a couple hundred jobs, real good manufacturing jobs in deafen part. so we're having some success. but we're not satisfied. we want to do a lot more. >> tom: governor, do you find yourself competing more and more with other states for jobs? >> we're competing in a world economy. so the competition is not just our neighboring states, it's all throughout the world. and we need to make sure that we're reducing the regulatory and tax burdens that are an impediment in our state but also our nation because of the high corporate income tax, because of the penalty to bring profits back from overseas to reinsist here is at a competitive disadvantage. >> tom: the companies you mentioned that are looking to iowa to expand, whirlpool, alcoa, have they been asking for incentives to create jobs in iowa? >> yes, we've provided some incentive, but that's a small part of it. we want to make sure we have a competitive tax and regulatory climate, and that we have the

work force to meet those jobs. but we have provided some incentives in addition to that. it a very competitive world out there, and we need to be able to compete effectively. i'm proud to say that we're doing that. >> tom: what do you think the success of the iowa economy can teach other states? >> control your cost. we have set the goal we want to be the healthiest state in the nation, we want to get people to take ownership of their own health care costs and we want to do what we can to reduce the tax and regulatory burdens, property tax, corporate income tax and also looking, i require now a job impact state on all new proposed state regulations, and we're going to be looking at all the existing regulations to see if they impede economic development or facilitate it. if they're impeding job growth, then we want to look at how we can eliminate them or change them so that we can be competitive for the jobs of the future. >> tom: governor, thanks so

much, terry branstad of iowa. >> thank you. >> tom: after two days of stiff selling, and despite no action by the federal reserve, the major stock indices rallied. >> tom: after two days of stiff selling, and despite no action by the federal reserve, the

major stock indices rallied. the s&p 500 started the session in positive territory even with the continued worries about the fate of the greek bailout. the index hit its low of the session just as the federal reserve announced no policy change. it was broad-based buying today with all 10 of the major stock sectors in the green. the strongest were energy, financial and material stocks. each of those sectors re-bounced by more than 2%. leading energy was independent oil and natural gas firm pioneer energy. quarterly earnings more than tripled, leading to a 12% price jump in its shares. financial stocks have been under pressure thanks to growing worries out of europe. with the fed's reassuring words, banking stocks recovered some of their recent losses. bank of america led the dow industrial gains-- up 5%. while it was among the most actively traded stocks as it usually is, volume was slower than average.

payment processor mastercard saw its third-quarter profits pop from last year as customers used their credit and debit cards more. both earnings and revenues were better than forecasts. shares rallied 7%, with the stock hitting a new 52-week high during the session. the company reports not experiencing any softness in europe despite the debt worries, and it has been increasing incentives to secure stores using its payment-processing network ahead of new regulations next spring. for-profit education firm career education got several failing grades. its third quarter earnings came in way below forecast. it also acknowledged some programs failed to meet minimum standards of graduating students getting jobs. shares plummeted, losing almost half their value. volume exploded-- more than 20 times normal-- pushing the stock down to more than a decade low. the company also lost its c.e.o., saying it was time for fresh leadership.

as the fed remains on hold and on guard to provide more fuel for the economy, metal prices rose. silver, copper and gold all moved higher. here's gold. jumping $18 an ounce, closing at $1,730 an ounce. that puts it at the top of the range it has been trading in since the september drop from $1,900 an ounce. a couple of stocks that were moving after hours tonight? mobile phone semiconductor maker qualcomm. after rising 4% during the regular session, the stock was up another 9% after hours. it reported record quarterly shipments, revenues and earnings. meantime, grocery store operator whole foods gained 1% during the day, but after the close, the stock fell 5.5%. the late share price drop came despite better-than-expected earnings and a dividend increase. finally, diamond foods' efforts

to diversify its snack foods portfolio are on hold. the company best known for nuts is looking into accounting of payments made to walnut growers, and that has delayed its purchase of the pringles brand from procter & gamble. shares sank more than 17%. the pringles deal would make diamond the second-largest snack food maker behind pepsi's frito- lay. p&g says it's committed to the deal, but analysts say if diamond foods share price falls below certain levels, the company would have to assume certain debts that otherwise would have been forgiven. and that's tonight's "market focus." >> susie: one company investors are still focused on? m.f. global. there are new questions today on how the brokerage firm handled client funds. a key regulator says m.f. global made "substantial" transfers of

customer money after an audit last week, and before the firm filed for bankruptcy. today's developments come as investors try to understand how a respected firm like m.f. global went wrong and what its collapse means for the american financial sector. suzanne pratt reports. >> susie: on wall street, sometimes perception is just as dangerous as reality. recently that's been true for the financial sector, where perception has grown that europe's debt woes will cause problems for u.s. that perception is partly why financial stocks have not had a good year. this financial e.t.f. is down nearly 20% since january, and it looks like investors were right to worry. m.f. global is the first u.s. victim of the europe's debt mess. the question is, will it be the last? banking analyst fred cannon says probably not. >> there certainly are other financials out there that have made large bets. you know, hopefully they're hedge funds and the size of m.f.

or smaller who can fail. >> reporter: experts say it's difficult to know which other firms could face the same fate as m.f. global, but most agree it wouldn't be a large u.s. bank because they've got plenty of capital. still, investors are likely to keep worrying about the solvency of all financial firms, even though some experts predict those concerns will soon disappear. >> i really think that this is going to be looked at hopefully by investors the same way a tainted food issue would be in the food sector. it necessarily doesn't mean all the food companies have an issue, it means that one food company may have an issue. that would be a healthy situation for the financial sector than where's we've been historically. >> reporter: to be sure, issues beyond europe will continue to weigh on bank stocks. new regulations out of washington top the worry list, as does the health of the u.s. economy. and, then there are market pros who avoid financial stocks, not because of m.f. global, but because they see better

opportunity elsewhere. portfolio manager jack caffrey is underweight u.s. financials. >> the financials wind up being much more generally single- market exposures, much more single-economy exposures, and where i want to look toward where there's still good global growth. >> reporter: so far, the problems at m.f. global do not appear to be spreading to other financial firms. that's the good news. the bad news is investors are still thinking about finding more trouble elsewhere. suzanne pratt, "nightly business report," new york. >> reporter: here's what we're watching for tomorrow: quarterly earnings from chesapeake energy, c.v.s. caremark, kellogg, linked-in, starbucks and sunoco. also tomorrow? michael farr, author of "the arrogance cycle," is back as our "street critique" guest. you still have time to email your questions to streetcritique@nbr.com.

>> susie: discounted prices and educated consumers weren't enough to keep retailers syms and filene's basement out of bankruptcy court. the stores had a rough time in the sour economy, even after syms bought filene's two years ago. syms filed for bankruptcy protection today and said it would shut down all 46 of its stores by the end of january. >> tom: angie's list, the consumer review website, puts itself up for the ultimate review. it plans to raise as much as $114 million in its initial public stock offering. the company will sell almost nine million shares for between $11 and $13, according to a filing today with the securities and exchange commission. the company expects to price the offering on november 16. the stock will trade on nasdaq under the symbol a-n-g-i.

>> susie: with that solid gain on the dow today, it looks like november could be picking up where october left off when it comes to market rallies. here's karen gibbs of the "gibbs perspective" with tonight's "money file." >> the month of october gets a bad rap from investors, but it may be time to give it some love. this october saw the major stock market indices put one of the

best performances ever. the double-digit percentage monthly gains vaulted the dow, nasdaq and the s&p 500 back into the plus column for the year and set the stage for what is known as the sweet spot for the market-- the period between november and april, where data shows most of the market's gains occur. the month of november historically has been kind to stock averages, where monthly gains rank second for the s&p 500 and third for the dow and the nasdaq. however, roadblocks remain. the housing and labor markets remain weak, congress remains deadlocked, global central bankers are searching for ways to stimulate economic growth and sovereign debt issues continue to dog members of the european monetary union. however, the euphoria of october may well spill in to november, as a better-than-expected economic backdrop could set the stage for the much-anticipated end-of-year rally. technology stocks may benefit from sales of electronics, while

gold and high-end stores could see some holiday interest, with many stores holding midnight specials on black friday. nothing is guaranteed, but history is on your side. for the "money file," i'm karen gibbs. >> susie: you can keep up with n.b.r. any time. we're online at n.b.r. on pbs.org. there, you'll find all the market data from the program and you can follow us on twitter, @bizrpt, or my personal feed @sgharibnbr. we're also on facebook at bizrpt. >> tom: that's "nightly business report" for wednesday, november 2. i'm tom hudson. good night everyone, and good night to you too, susie. >> susie: good night tom. i'm susie gharib. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

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