New york city today to send a tough message back to washington get your act together. He urged lawmakers and the white house to reach a quick deal to avoid the fiscal cliff, saying it might mean next year could be a very good one for the economy. Ben bernanke didnt endorse any specific tax or spending policies to solve the fiscal cliff, but he urged lawmakers to think creatively. He said an agreement on ways to reduce longterm federal budget deficits could remove road blocks to growth. On the other hand, going over the cliff might mean a recession. On top of that, worries about a deal were already causing trouble. Uncertainty about how the fiscal cliff, the raising of the debt limit, and the longerterm budget situation will be addressed appears already to be affecting private spending and investment decisions, and may be contributing to an increased sense of caution in financial markets. Susie wall street and Business Leaders were pleased that bernanke was talking tough. And they said the feds role in the fiscal cliff negotiations is to communicate. Tell the world and the individuals in the political establishment that they have to help get their act together or we have a problem, and that notion of preaching from the pulpit that he has is very fundamental. Susie is there another role or more of a role for the fed . I think to be a cheerleader and to be on the sidelines telling the government they have to do what is right for the public. Susie as for what the fed can do if the u. S. Heads into recession because of the fiscal cliff, bernanke says, not much. In the worse case scenario, where the economy goes off the broad fiscal cliff, the largest fiscal cliff, which, according the c. B. O. And our analysis, would send the u. S. Economy into recession, i dont think the fed has the tools to offset that. Susie members of the audience agreed. He was very frank in saying, you know, we can try, he essentially said, we will try, but we dont have anything in our arsenal that comes close. Susie bernanke is already using the weapons in his arsenal to fix the job market, which he said today is still unhealthy. He also repeated the feds plan to keep Interest Rates super low at least into 2015. We will want to be sure that the recovery is established before we begin to normalize policy. We hope that such assurances will reduce uncertainty and increase confidence among households and businesses. Susie but bernanke gave no hints on when americans can expect to see higher rates. The further we go down the road, the question is going to turn to how is the fed going to reverse policy, and what the chairman said today is that decision is a long way off. Susie on wall street, stocks slipped on that fiscal cliff warning from bernanke and then recovered. The dow lost seven points, but the nasdaq and the s p both gained about a point. Rebecca patterson joins us now to talk more about the markets and bernanke. Shes the chief Investment Officer of bessemer trust. Hi, rebecca, nice to have you with us. Hi. Thank you. Susie so when i was at this event where ben bernanke was speaking, a number of the Money Managers i talked to said that the markets really havent factored in the prospect of falling off of the cliff. How hard do you think the markets could fall if that were to happen . What are your thoughts on this . If we dont have a deal by year end and we do go off the cliff, even if it is just for a few weeks, i think the market implications are pretty severe. If you look at the implied volatility of the stock market right now, the vics index, it is suggesting everything is going to be fine, there is no nearterm risk factored in, and that makes me very nervous. We are being very defensive, given that risk is still out there. I wouldnt be shocked to see 5 , 10 , if we went off the cliff on the s p. That wouldnt be a big surprise to me. Put it into perspective, last august when we had the debt ceiling and a downgrade, we saw a much bigger fall in the stock market then. Susie you say youre uncomfortable with this kind of uncertainty. How are you positioning the portfolios for your investors . You said youre defensive. Tell us more. So into the u. S. Election, especially given that the polls were leaning towards obama, we had taken a defensive stance already. We had gone slightly underweight equities, and added more things like highyield mortgage debt, emerging market debt, and mortgagebacked securities, that will yield as much as capital appreciation, and investments that have lower volatility than the stock market. So we have an overweight there. Those investments i just spoke about, thats about 24 of our portfolio right now, and thats definitely helped us get through the last few weeks without giving up much of our gains. Susie tell us a little bit about well, you are on the buying side with equities, what are you buying . Are you in u. S. Stocks . International stocks . What is the mix . Sure. One of the interesting things i think over the last few months, and maybe this isnt putting it very elegantly, but i like to think about it as revenge of the global investor. For all of 2011, and the start of 2012, we saw the s p as one of the worlds leading stock markets. And a lot of investors said, why dont i just own u. S. Stocks and why bother with this global investing stuff. But what weve seen since july, nonu. S. Equities have been outperforming u. S. Equities by quite a bit, especially recently. Susie when you say nonu. S. , what are you talking about, emerging markets . Europe . Were talking about a mix of both of those. We do have some european equities. Normally there were focusing on Global Companies that have to be dodomiciled in europe. And the u. K. And switzerland as well. Companies that dont depend on the greek consumer for the demand, but are truly multinational. We do own some european stocks and they have done very well recently and emerging markets. Susie thats a very interesting twist because most people dont think of europe for their poormts, portfolios, at least not now. Thank you so much, rebecca. Rebecca reporter im Suzanne Pratt. Still ahead, im working really hard today doing research for one of my favorites stories, black friday shopping. Tom hewlettpackard has been struggling to keep up with the quickly changing computer business. The market is shifting from desktop and laptop computers, where hp reigns, to smart phones and tablets, where the firm barely has a presence. So its no surprise business is weak. But what was a big surprise when hp reported its Quarterly Results was a lot of red ink, blamed on what the company said was accounting fraud at a firm it bought a year ago. The allegations of deception are just the latest bad news for the technology giant. It wrote down 8. 8 billion related to its buyout of Business Software company autonomy. Hp paid 11 billion for the firm last year. Hp c. E. O. Meg whitman said their own probe found serious accounting improprieties and outright misrepresentations. For instance, hewlettpackage claims autonomy recorded revenue from deals even when a customer didnt buy anything. The buyout of autonomy happened before whitman took over hp. The deal was part of a strategy to increase hps software and services business, which usually come with higher Profit Margins than hps traditional computer and printer business. The former c. E. O. At autonomy, mike lynch, tells the wall street journal claims of accounting fraud are completely and utterly wrong. Grady burkett is the director of Technology Research at morningstar. Joins us from chicago. Well talk about the business at h. P. , bu at hand, what do the accounting claims say about h. P. s own Due Diligence in the buy outa year ago. Ith i i think it is important to separate out the goodwill impairment. It is a noncast charge. I think most investors were aware that h. P. Overpaid for autonomy. So it doesnt affect our forecast for h. P. What it does highlight, though, is that there are potentially further Corporate Governance issues, and management control issues. But, more importantly, this is going to be this litigation will be an ongoing stracts for senior management, at a time when many of their existing businesses are facing competition. Tom it overpaid, having trouble integrating it, and the fiscal Fourth Quarter results, this is what they looked like. H. P. Earned 1. 16 a share, minus all of the charges, two cents better than expected. What kind of shape is h. P. s business in . I think everybody recognizes and everybody rec nice to meet you, recognizes that there are secular pressures. H. P. Can continue to drive profitability in those businesses, and we see those as steady cash generators going forward. The bigger concerns with us for h. P. Is in its enterprise hardware, enterprise services, and enterprise software. Hardware did not perform very well, and services is an issue, and will be for at least 12 months. Thats where h. P. Needs to compete and be aggressive. Tom grady, not a great outlook. You went through a laundry list of ills at h. P. You know the share price today down 12 almost, down at better than a decade low. Is it worth buying here below 12 . So the stock looks fundamentally undervalued to us on a modeling basis. However, we see a lot of uncertainty in this name, both nearterm and longterm, so we really wouldnt get excited about h. P. As a stock. Tom okay. Do you own any . I do not. Tom not excited and you dont own it. There you go. Well leave it there. Grady burkett with us, Technology Analyst a morningstar. Susie its being called the biggest Insider Trading arrest a former Hedge Fund Manager from s. A. C. Capital was arrested today for using confidential information to trade ahead of public news on two pharmaceutical stocks. Allegedly, Mathew Martoma got his information from the doctor running an alzheimers drug trial. His firm made profits of 276 million. Prosecutors say the fraud is the most lucrative Insider Trading scheme ever. Martoma was charged in u. S. District court in manhattan and could face as much as 40 years in prison. Susie after eating all that food on thanksgiving, getting some exercise at the mall might be a good idea. And according to a new survey, 60 of consumers plan to shop over the thanksgiving weekend, many more than last year. But it turns out not everyone is headed to the mall. Tonight, Suzanne Pratt continues our special weeklong look at holiday retailing. Reporter this is a typical scene on any black friday in previous years, and its likely to occur again this week. Increasingly, however, black friday shopping is also happening here. And with two venues, shoppers may wonder where theyll find this years best deals. After all, isnt that what black friday is all about . Surprisingly, theres no clear cut answer, although one online store is dominating. The 100pound gorilla out there is amazon toys, right . Books. I mean, check in with amazon, because they always have the same item cheaper. Reporter and guess what. Amazon. Com blacks friday store is already open for business. So are many web sites for other popular brick and mortar stores. But lets say youre a diehard target shopper. Is the better deal offline or online . Advertising executive Andrew Bennett says savvy retailers recognize there can be no distinction. What youre already seeing is this blurring between offline and online, and almost a coming together of black friday and cyber monday. Reporter and guess what. It turns out bombarding consumers with ads for black friday deals does result in big spending, both online and in stores. It works to drive traffic. We know that black friday tends to be number one or number two in terms of volume days through the year, so it does work. Reporter still, all that retail activity on black friday and thanksgiving weekend may actually stop consumers from shopping in the first half of december. That pause in spending might also happen because it turns out deals are even better closer to christmas. That means i might be waiting and doing a lot of my shopping right here at the office. Suzanne pratt, nbr, new york. Tom stocks marked time after yesterdays big rally as Trading Volume slowed ahead of the thanksgiving holiday. The s p 500 began with some early profittaking, but rebounded midmorning on a better than expected report on new home construction. A midday selloff came when Federal Reserve chairman bernanke warned about the economic consequences if congress and the white house dont hammer out a deal to avoid the fiscal cliff. The index finished with a small gain. Trading volume was lighter 641 million shares on the big board; under 1. 6 billion on the nasdaq. The healthcare and financial sectors saw the best gains, up a half percent each. Technology was the hardest hit, down six tenths of a percent. And thats because of the big drop in hewlettpackard. The stock was hit by its massive writedown, which we reported on earlier, and a disappointing outlook. Shares fell 12 . Volume was huge, more than six times normal. At 11. 71 per share, this is hps lowest stock price since the mid1990s. It has lost more than half its value we have a deeper dive into hewlettpackards stock chart. It is on our web site, nbr. Com. Click on the blogs tab and look for michael kahn. Hps outlook also hung over other companies that are big in the traditional computer market. Semiconductor maker intel dropped 3. 7 to a new 52week low. Intel has been criticized for being late to get more involved in the mobile computing market. Disk drive maker Western Digital fell 2. 6 . Advanced micro devices, another Semiconductor Company hit by weak personal computer demand, fell 2. 1 . Home builders keep breaking ground on new houses with more evidence of confidence in the housing market. Housing starts rose 3. 6 in october to their best annual rate in more than four years. The data was much stronger than anticipated. Homebuilder stocks found buyers. The biggest builder by market value, lennar, rallied 3. 5 . It recently traded at a six week low. Consumer Electronics Super store best buy isnt riding any wave of optimism with housing. It describes its latest Quarterly Financial performance as clearly unsatisfactory. Heres what it was referring to. After onetime charges, the Company Earned just three cents per share, a fourth of what was expected and a huge drop from a year ago. Best buy shares fell to a new decade low, dropping 13 . The store does not expect the rate of decline will continue this quarter. That was no solace for investors today. Four of the five most actively traded Exchange Traded products were higher. The lone loser was the emerging markets fund, slipping two tenths of a percent. And thats tonights market focus. Susie after the thanksgiving break, lawmakers will get back to work hammering out a deal to avert the fiscal cliff. Grover norquist heads up americans for tax reform. Hes is known in washington as a powerful force in the Republican Party and a strong voice against tax increases. Darren gersh sat down with him today and began by asking whether republicans will accept higher tax rates to avoid the fiscal cliff. Well, one thing to look at is what happened two years ago, when you had the exact same situation. Two years ago, you had a Republican Congress coming in, the Democratic Senate and the democratic president. Thats exactly what you have today. Two years ago, obama looked at the economy and said the economy is so bad, we should extend all of the tax rates and have not a tax increase. The economy is not any better than two years ago. One of the resting places might be to extend it out six months, a year, two years, four years, and focus on other things because there is not an agreement here. But republicans and speakers have already put tax revenue on the table. Does that make the pledge not to raise taxes now meaningless . What he said was that he supports the idea of revenue have Economic Growth and tax reform as part of getting revenue for the government. We need to do that. Revenue today is at an alltime low because the economy is so bad. We have 10 million fewer people working than if we have a reaganstyle recovery. Obamas recovery has 10 million unemployed people. More jobs, more people working, more revenue. That is what boehner said a year ago, that he wanted to do in some sort of grand bargain, and thats what he said again. But when the speaker came out of the meeting at the white house, he said he was open to doing the tough things, putting more tax revenues on the table, closing more tax loopholes. Arent we arguing over semantics . I have not heard a shift from revenues from growth and tax reform. However, that said, the republicans, looking at an agreement, are waiting for president obama to put anything on the table. But if the Republican Leadership does some kind of deal with the president , where they raise tax rates, but in return they get deep entitlement savings, they do Something Like a 2 trilliondollar grand bargain, that cuts the deficit over the next 10 years, are you still going to go aft republicans who vote for that . You have so many hypotheticals there. We have had this conversation for the past two years, and the democrats refused to be any part of reducing. Or spending entitlementments. The president talks about his spending plans. He is planning on raising so much in taxes that he can spend more. So he isnt even on the planet of reducing the cost of government. There is an increasing number of conservatives who are saying that the republican brand is in danger of being seen as only in favor of keeping tax cuts for the wealthy, it is in danger of becoming an elitest party, and it meeds to d needs to do more to the working class and working class group. What do you think of that . You always have people after a difficult election turn left. But they make no sense. Take a look at what is really happening. The president of the United States has said, lets tax the rich people. In his budget he raises taxes on higher incomes and half of all small businesses. Thats a body blow to the maul businesses. Small businesses. They want to tax the higher income people first and then theyre going after everybody else. The good news is when you do apolog polling on this, as yu did last year, obama says were going to rich . And they said, do you think he will also tax the middle class and 75 said yes. The code is tax the rich people first and then you. Grover no norquist, president for tax reform, thank you. Good to be with you. Tom tomorrow on nbr, we Talk Health Care reform with floridas Largest Health insurer. The chairman and c. E. O. Of florida blue, patrick geraghty, joins us. And hows business at 35,000 feet . An update on the nations airlines as the busy Holiday Travel season heats up. Susie we know these are tough times for businesses to get loans. Its even harder for non profits. Last night, we told you how individual investors are helping to finance local organizations with Community Investment notes. Tonight, Diane Eastabrook shows us how this investment is creating jobs in one of chicagos poorest neighborhoods. Reporter this looks like an ordinary store on the outside, but inside, its something else. The nonprofit stewards market is three businesses in one. Theres king lizzy, a boutique specializing in urban tshirts, hats, and custompainted sneakers; a Recording Studio for budding hiphop artists; and a business that washes and refills soap and shampoo bottles for hotels. All three provide jobs for at risk teens and young adults like shevelle walton. I was looking for a job probably for, like, id say about a year straight. Reporter former futures trader Rowan Richards started the stewards market six years ago. Whats the background on that shoe going to be . Reporter even though sales topped 50,000 last year, richards says he recently had trouble getting a loan to expand. We didnt have enough track record a lot of times, you know, and people didnt understand who we were. Okay, nonprofit thats also doing business. We want to see a little bit, come back and talk to us later. Reporter the stewards market eventually got a 50,000 loan thanks to calvert foundations Community Investment notes. The notes work like bonds, and let individual investors finance a variety of Community Programs from Affordable Housing to job training. Stewards market provides opportunity in an area where very little opportunity exists. Unemployment in the humbolt park neighborhood is about 14 , and many families in this neighborhood have been struggling with poverty for generations. Calvin holmes heads the Chicago Community loan fund, which distributes financing from calvert to local organizations. Holmes says the groups dont need to have spotless credit histories, but they do need solid business plans. We have a Compliance Monitoring Team that meets with our customers on a regular basis, and were always trying to help them not only get to the finish line, but to be successful as an organization in the long haul, because the goods that they provide and the services they provide are so important to us. Reporter the stewards market used its loan to buy new computers. It also hopes to buy a machine that will paint sneakers, instead of requiring an artist to do the job by hand. So far, sales this year are more than double last year, putting the stewards market on track to repay its loan and make money for investors. Diane eastabrook, nbr, chicago. Susie thats nightly Business Report for tuesday, november 20. Have a great evening, everyone, and you too, tom. Tom good night, susie. Well see you online at nbr. Com, and back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org join us anytime at nbr. Com. There, youll find full episodes of the program, complete show transcripts and all the market stats. Also follow us on our Facebook Page at bizrpt. And on twitter bizrpt