>> tom: china's red hot economy gets a case of the housing blues and that could slow the recovery here in the u.s. >> growth is moving on at a modest pace or moderate pace but it doesn't look like its going to be accelerating into a stronger range. >> tom: but the economy is going well for two of the nation's biggest banks-- j.p. morgan chase and wells fargo report better than expected earnings thanks to stronger mortgage businesses. it's "nightly business report" for friday, april 13. 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.. a volatile week for u.s. investors ended with u.s. stocks down today. worries about the global economy have come back into focus this week as china's economic growth has slowed and spanish borrowing costs have soared. that helped wall street cap the week in the red. the dow fell 137 points, the nasdaq lost 44 and the s&p 500 was off 23. we have two reports tonight on the shape of the world's two biggest economies, starting with number two: china. its economy expanded at a rate of just over 8% in the first quarter. here's the worry: that's significantly down from the nine percent growth at the end of

last year. and what's critical here is that china has been the engine of global growth. darren gersh begins our reporting by looking at whether the chinese economy engine may be slowing or shifting into a new gear. >> reporter: as the factory to the world, china's biggest customer is europe. so with the euro crisis crimping wallets, it's not surprising chinese companies are exporting less. but there is another problem for the chinese economy that should be very familiar to americans. >> well, the share of resources that's being devoted to housing in china is substantially in excess, about 50% greater than it ever was in the u.s. at the peak, and it's on a par with spain and we know what happened there, so there is a potential for a big drag on economic growth. >> reporter: of course if housing really tanks, the chinese government has shown it knows how to flood the economy with cheap lending. but that could be more of a challenge now. china is trying to shift away from a traditional model of

heavy investment in big factories. >> there is a sense that in an economy that is very labor rich, where there are lots of people who are still looking for employment, to pour so much money into physical capital investment, and to have more returns go to capital than to labor doesn't seem like the right growth model. >> reporter: not the right model because investing in more and more factories worsens china's already bad environmental problems. and it doesn't solve other problems. >> factories are very efficient but the problem is if you have huge factories with a lot of machinery and equipment, then you may not hire as many people, and the larger the factory, the more machinery intensive it tends to be, so larger factories employ fewer people proportionally than much smaller enterprises. >> reporter: instead of only looking to exports to fuel its economic growth, china has been making progress in boosting demand among its own people-- wages are rising at double digit rates and retail sales surged 15% in march.

but there's no guarantee of a soft-landing for china's economy. >> this is the slowest growth oi are are are are ed witheg og oja og ojaoja ojaoja carl caller china's had since it began to recover from the global crisis in the first quarter of 2009, and we don't know how much longer it's going to last, so i think it's premature to say this is a soft landing and i also think its premature to say that they're going to have a hard landing. >> reporter: in a statement, chinese officials vowed to continue reining in property prices while boosting overall economic growth. darren gersh, "nightly business report," washington. >> tom: the slowdown in the chinese economy has been one factor weighing on the u.s. recovery, along with higher gasoline prices and weak job growth. the latest reading on how consumers are feeling about the u.s. economy consumer sentiment data, down 75.7 this month as consumers continued to worry about higher gasoline prices and jobs. erika miller takes a look at just how well the u.s. economy is doing. >> it should come as no surprise that the u.s. economy is still on shaky ground. yes, things seem to be improving, but not fast enough.

>> reporter: for every three steps forward, there seems to be one step back. it's rare to have a consensus about the economic outlook. but surprisingly, most major wall street firms seem to agree that the u.s. economy is growing in fits and starts. >> you'd like to see a little bit more momentum in activity but it's an economy that's showed remarkable resiliency. breakout growth still remains very out of reach. >> growth is moving on at a modest pace or moderate pace but it doesn't look like its going to be accelerating into a stronger range. >> reporter: 2012 began on a generally positive note. consumers were more comfortable spending and businesses had finally started hiring, but a few weeks ago, the issues that weighed on the economy last year resurfaced: recession in europe, slowing growth in china, higher energy prices and continued weakness in housing. >> the housing market there are still a lot of over hang. house prices fell last year. fiscal policy is weighing on growth. so it's hard for the economy to take off when there are so many

factors acting to constrain the consumer and american firms. >> reporter: as a result, some economists think the federal reserve may have to do more to help the recovery, like another round of quantitative easing. that's the massive bond buying program, designed to lower interest rates and help the economy. >> the fed is likely to pursue another round of quantitative easing because quite simply they're not hitting their dual mandate of price stability and full employment. >> reporter: the u.s. is expected to grow at a roughly 2% rate this year. that's not much to brag about, but is better than the outlook for other major economies, most of which are expected to post slower growth than last year. erika miller, "nightly business report," new york. >> one trillion dollars in student loan debt. some call it the next big credit crisis. i'm sylvia hall. still ahead, we look at a controversial proposal for dealing with that heavy debt load. >> tom: an update tonight on one of the biggest investments ever made by you the taxpayer.

we're talking about the rescue programs during the financial crisis. in a report today, the treasury department says the programs should break even, and may even make money. the tarp bailout, originally pegged to lose $341 billion, now may lose just $60 billion. the government may also come out ahead on all of its financial rescue efforts. add up all of the bond buying the federal reserve has done, along with the tarp program and the costs of bailing out fannie mae and freddie mac, and the treasury says the government could see a slight profit. giving out more loans, especially, more home loans helped first quarter earnings at two major banks. both j.p. morgan and wells fargo reported better than expected earnings thanks in part to writing more mortgages. that business was helped by home owners taking advantage of lower rates by refinancing, but also business from federal government assistance programs like the home affordable refinance program or harp. that program allows home owners to refinance regardless of how

much the value of their homes has fallen. both j.p. morgan and wells fargo also set aside less money to protect themselves from loans going bad in the future. but j.p. morgan did earmark two and a half billion dollars for future legal expenses, most to the threat of having to repay investors in mortgage backed securities gone bad. j.p. morgan earned a $1.28 per share, a dime better than estimates. in addition to its mortgage business, investment banking rebounded. well fargo results were two cents ahead of wall street expectations, earning 75 cents per share. had eric oja follows the big banks for s. & p capital. are these good-quality loans unlike the kinds of loans we saw five, six years ago? >> sure, we think that they're better quality loans than what were made at the height of the housing boom in 2006.

and the mortgage business is strong for both banks, and should continue to be strong this year. >> tom: with that in mind, are these banking results from these two big banks in line with what you would expect in a growing economy, here in the u.s. at least? >> well, the results were good. they beat analyst expectations. and profits were better than expected. however, it wasn't perfect, and there were some negative implications for both banks, wells fargo, and j.p. morgan. loan growth was actually negative in the first quarter which followed three quarteres of strong loan growth. >> tom: this is interesting, bawlings the mortgage loan business was strong. it was the overall loan business that seems to be stagnant at this point. does this get to the critics' point that banks aren't doing fluff to get the money out in the economy? >> yeah, there's some correctness to that.

banks probably could be lending more. but if you lift the hood and look at the loan portfolios, most of the shrinkage came from the construction lending business. and the consumer lending and business lending appeared to be fairly strong. >> tom: one measure of a bank's health is how much capital does it hold back to protect itself? this is a tier 1 capital. it's a measurement here for these two banks. it's getting up there in double-digit banks. j.p. morgue an over 10%, and it it it over 10 for are for wells fargo. is this healthy for the broad economy? >> well, the more capital a bank holds, the less they can lend. so in that sense-- >> not healthy in the near term, but in the longer term, should another financial crisis hit, it pays to be well capitalized. and in addition, about a year from now, there will be new sets of capital requirements being

phased in. and both banks are building towards those capital levels. j.p. morgan is just about at the level they may need to be a year from now. and wells fargo is. >> tom: let me ask you, finally, we're looking ahead at a bitsy week next, we bank of america, citigroup, goldman sachs, among the banks. have we set the tone with j.p. morgan and wells fargo what we'll hear next week? >> it's norwood extrapolate to the other banks because wells fargo and j.p. morgan are among the best capitalized and best managed bank in addition u.s. next week brings a whole motley assortment of u.s. banks of ones that are experience legacy assets and troubles. however, we would think that the trading results from the largest banks should be fairly strong. >> tom: okay. certainly in the fixed income in the bond business. we saw that with j.p. morgan,

for instance, today. eric, we appreciate the inside in the banking business. cding on along with us tonight from s & p. >> thanks, stop. thanks to higher prices for food and gas consumer prices crept higher last month, but cut if you didn't eat or drive, prices were steadier. the labor department says the consumer price index rose three- tenths of 1% in march, excluding food and gas, so-called core prices increased just two-tenths of 1%. meantime, after nearing $4 a gallon nationwide. you may have noticed gasoline prices have gotten ever so slightly cheaper over the past week, down three cents from a week ago. triple a says the national average for a gallon of unleaded

has dropped to $3.90. while that's about a dime above last year's price at this time and about 20-cents below the all time high. a.a.a. thinks barring any shocks to the system, summer gas prices may not head much higher from here. an update tonight to a big story we told you about earlier this week, apple and several publishers being sued for price fixing on e-books. today, the tech giant responded. saying the accusations are quote, "simply not true." instead apple says its ibookstore has helped digital publishing. in a statement, apple says quote, "the launch of the ibookstore in 2010 fostered innovation and competition, breaking amazon's monopolistic

grip on the publishing industry." this was the week investors were reminded that europe's debt problems aren't over and earnings season gets underway. we saw the dow industrials suffer its worst week of the year, falling in three of the past five session, shedding 1.6% since last week. the nasdaq saw more volatility, falling 2.3% since last thursday's close. remember the stock markets were closed last friday for good friday. and the s&p 500 fell 2% over the course of this week. after two days of sharp rallies, the major indices fell back again today, especially late in the session. the s&p 500 was down for the entire day and it was the final 40 minutes when the selling picked up with the index finishing at its lowest level of the day. weighing on the market was the financial sector, falling 2.5%. the technology and energy sectors also were weak, down 1.6% each. as we reported on earlier in the program, earnings from j.p. morgan and wells fargo were better than expected, but that

didn't help their share prices. both stocks fell about 3.5% more big banks report earnings next week. with the stock market moving lower this week, we saw more bond buying to end the week, pushing down interest rates. the ten year u.s. government bond interest rate is back just below 2% as we head into the weekend, close to its lowest level in a month. interest rates fall as bond prices rise. even strong earnings from google couldn't shelter that stock from today's weak market tone. despite last night's better than expected earnings and first ever stock split. google shares were among those weighing on the technology sector. the stock fell 4%. volume quadrupled with share slipping to a one month low. next week, google is due to appear in a san francisco courtroom. a trial is scheduled to begin over a lawsuit from oracle. oracle contends google's android mobile phone software uses patents oracle owns. if oracle wins, it could ask for $1 billion. google says total potential

damages could be less than a tenth of that. solar energy stock has been suffering some dark days. the latest disappointment was a canceled initial public stock offering. bright-source energy was scheduled to sell stock to the public this week but it canceled the offering, blaming poor market conditions. first solar is among the biggest solar panel makes with a market value of just under $2 billion. today shares sank another 5%, pushing the stock down to less than $1 away from a new 52 week low. investor sentiment toward solar stocks has cooled, as prices for solar panels have dropped thanks to plenty of supply. and who said grocery stocks can be boring? check out safeway. shares have been staging a stiff rally all week, moving up 2.5% today. volume also has been picking up. volume more than doubled today. optimism toward its earnings have been building after a strong report from competitor super-valu. and that's tonight's market focus.

student debt has surpassed credit card debt in the u.s. and it's getting attention from lawmakers. illinois senator dick durbin recently introduced a bill that would allow student debtors to dissolve their private loans in bankruptcy. that hasn't been possible since 2005. but there could be consequences to changing the law. sylvia hall reports on what it would mean for struggling borrowers and the student lending market. >> reporter: for a growing number of college graduates, student loans that financed their educations, are clouding their futures with an inescapable and mounting debt. >> bankruptcy protection is a right that millions of other americans have. you can discharge your gambling debt in bankruptcy. you can discharge your flooded

mortgage, your bad mortgage. but i can't discharge my bad student loans? >> reporter: raeann roca finished college in 2008 with $70,000 in student loans. interest has piled on since then, raising her total debt to $106,000. and it's still growing. that's why she's pushing for consumer protections for student borrowers, including allowing debtors to walk away from student loans in bankruptcy. >> i know lots of people that would benefit from that. people who have master's degrees, people who have hundreds of thousands of dollars in student loan debt, that is the result of capitalized interest. >> reporter: student loans are different from car loans and mortgages. if you don't pay back the student loan, the bank can't repossess your education like they could your car or home. that means student loans come with different risks for lenders. and changing the laws could affect the student loan business. >> the downside is it's going to raise the cost of student loans and make them less available, but the upside is were going to have fewer students with the amounted debt that's going to

take decades if not their entire life to repay. >> reporter: the nation's top private lender, sallie mae, openly supports reform that would help borrowers dissolve their student loan debt, but only after they've tried to repay the loans for five to seven years. that caveat would keep grads from filing for bankruptcy right after college. something advocates like robert applebaum say is unlikely anyway. >> you can't just declare bankruptcy. and suddenly your debts are erased, you have to prove insolvency. you have to prove an inability to pay. >> reporter: applebaum doesn't think the bankruptcy change will make it into law this year. but, as student debt plows past $1 trillion. he hopes lawmakers will consider this and other reforms. sylvia hall, "nightly business report," washington. >> tom: next week on n.b.r., we mark the two year anniversary of b.p.'s gulf oil spill. we'll see how the region's comeback is progressing. and we look at who fared better during the recession, women or men, when it comes to jobs and

hiring. and monday, mattel, the maker of barbie dolls and matchbox cars reports earnings. we'll see how the results play with investors. the risk for investors is not being a stock investor. that's what tonight's market monitor thinks. he's chuck carlson, c.e.o. of horizon investment services. chuck joins us from the c.m.e. group in chicago. chuck you think it's greater risk if you're on the sidelines than in fyou're actually putting money at risk in stocks. why? >> well, i do. you're going to have days like this, tom. these are part and parcel of all bull marketes, these types of pullbacks and we think it is a bull market pat the end of the day when you look at factors that drive stock prices higher view, favorable interest ratees, inflation, and i think corporate profits are going to continue to be favorable. second, you have to put your money somewhere, and when you look at alternatives to stocks, they're not very attractive, in my book. bonds, commodities, et cetera. i think stockes, specifically

u.s. stocks, are still reasonably priced for nice gains. and finally, i continue to be amailsed at the tremendous amount of skepticism that continues in this market, especially on any down days like we've seen this week. it's like everybody rushes for the exits. and that is not the type of sentiment that usually accompanies significant market tops. i think there's still plenty of upside. >> tom: i know you're a long-term investor. europe a very patient investor as well. how do you deal with the volatility? we did have volatility to the upside during the first quarter, there was no doubt about it, but here we are again seeing triple-digit moves for the dow. >> i think you deal with the volatility with having a longer term perspective, quite honestly. yes, today, and this week we had these triple-digit moves in the dow, but when you look at the net result for the week, yes, the dow was down, but it wasn't down tremendous, and i think that's how investors have to kind of play it, especially individual investors. >> tom: all right, let's get to some picks here. you look technology in this

environment. an area which disappoints?ly provide a big dividend cushion although some do way. you like qualcom, i wireless chip manufacturer. it has a small dividend in a small yielding wield but a heck of a share rally. you see popular to come. >> i do. it wields 1.5% but you will get double-ding earnings growth. you'll get double-digit revenue growth. qualcom has its tentacles in virtually every rapidly growing market in the tech and smart phone sector. they have an annuity-type business where a large chunk of their revenue comes from the licensing of their various technology. pristine balance she want. it's not the cheapestest block on the stock. >> tom: what about cinco, csco, kind of a sleeping giant that's been out there? it has been woken up, music from the low teens up to the midteens here, but not necessarily one that's in the headlines every day because of its size.

it's simply so large. it takes a lot to move this stock. >> well, that is more of the value play of it, too, certainly. you can buy cisco now at less than 11 times 2012 earnings. they have beaten estimates over the last four quarteres and it's a company that has knotten religion, quite honestly terms of prudent use of shareholder capical. the yield and dividend will grow at a double-digit rate. they'll have double-digit earnings growth this year. as you mentioned, it's a stock coming out of a bout of disfavor on wall street and i think that's going to change and i think there's further upside for that stock as well. >> tom: updates on your previous picks. in september you liked exxonmobil, big energy play, obviously, back then up almost 14%. might 17.5% higher. do you still like these two? >> we do like it those two very much. especially microsoft. >> tom: do you have positions for you and your clientses in

these four? >> all four of them we do, yes, tom. >> tom: there it is on the friday 13th edition of the market monitor. chuck carlson tonight with verizon investment services. and finally tonight, pay attention to the little things and you might just find the next big thing. author and educator lou heckler explains in tonight's "lou's been thinking." >> i've been thinking about sanibel shells. i lived in southwest florida for almost 20 years and one of my favorite things to do was to go to sanibel island and look for shells. people come from all over the world and you can find some fabulous shells if your timing is right. the best time? low tide and especially after a storm has stirred up the waves. early one morning i got up before the sun, determined to beat all the other shell-seekers to the best ones. i raced onto the beach only to find two women already there. i sprinted past them and got to a strand of beach where no one had yet searched that morning. sure enough, i found two or

three beauties to add to my collection. as i was leaving, i noticed the two ladies each had gallon plastic bags filled with shells- - good ones, too. wow, i said with envy, you all must have been out here all week to get that many great shells. no, the one woman replied, we've found every one of these this morning. most of them you ran past! i realize i tend to do that with good ideas as well. norman lear, the long-time television producer used to love to walk on pacific ocean beaches in the early morning and always made a point to look closely when he stubbed his toe. his philosophy? everywhere you trip is where the treasure lies. i'm lou heckler. >> tom: that's "nightly business report" for friday, april 13. have a great weekend. i'm tom hudson. we'll see you online and back here next week. "nightly business report" is made possible by:

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