Susie optimism was the word of the day here on wall street. Investors were feeling encouraged that fiscal cliff negotiations in washington are making progress. That led to a powerful rally today, continuing the momentum from friday after that white house meetingetweenredent obama, and congressional leaders. Stocks rallied right from the opening bell the dow surged 207 points, the nasdaq jumped nearly 63, and the s p 500 rose 27. Tom those hopes about a fiscal cliff deal may be good enough for Stock Traders today, but is the economy in a position to deal with whatever solution politicians may hammer out . Its expected that the fiscal fix will involve tax hikes of some sort, and spending cuts as well. We spoke with economist dean baker from the center for economic and policy research, and economist Douglas Holtz eakin of the American Action forum. N. B. R. s Washington Bureau chief darren gersh began the discussion by asking baker what tighter federal policy will mean for the economy in the coming year. Insofar as we get austerity, we get tax increases, spending cuts, thats going to slow the economy. I anticipate a deal so we are dont see the full, you know, 500 billion tax increases 100 billion spending cuts but whatever we do see in tax increases, spending cuts will be a drag on growth which is really not what we would see. If i had my choice we would have more stimulus, more tax cuts, more spending, boost the economy. Are we headed for europeanstyle like austerity,. We shouldnt have to be. What we should be doing is fix the longterm debt problem. And that should happen in the spring. Between now and the spring we have to get through the end of the year threat which would cause a recession in my view. And so lets not do more tax increases. Lets not dot big spending cuts. Lets continue current policy, get to the spring intact and solve the debt problem. That doesnt mean you cut national security, basic infrastructure, education, research. Those are Core Functions of government. You fix the big entitlement programs which the source of the exploding debt and you do a tax reform to grow as quickly as possible. Im hearing some people say that maybe we get a deal where we phase out the payroll tax cut going away or we, that the president might want some kind of jobs program. Do you think thats possible and how big could it be for next year. I think its possible that we would see a bit of both. We would see something by way of either an extension of at least part of the payroll tax cut or some equivalent tax cut to boost the economy. Because i think there is a lot of support by the republicans tos would the economy some measure. Jobs program might be harder so with the republicans. But perhaps extending unemployment which is an important thing. Could republicans take a jobs program or stimulus, whatever you want to call continuation a program to help the economy and would that make sense . If we got a good deal on the fiscal cliff and we didnt dot irrational thing and go over it, that in and of itself could help the business confidence. Second is that the more you try to cram not lame duck the more dangerous it gets. But if we dont do something, you dont think if we do a minideal that gets us to a larger deal next year, you dont think that will rep ardize the economy . I think if we can do as little as possible, they will already raise some tax. The payroll tax holiday may very well go away. So no more. I think the economy can get through that be, its not good news but its not the end of the world and then you need a deal in the spring. Dow agree with that . Well, i think that we will see slowing, yachlt i mean that will be a drag on the economy but the story of the recession going over the fiscal cliff is one where those tax increases and spending cuts stay in place through the year. Just very quick prediction. Do you think theyll come up with a package and how big will it be, 2 trillion, three and a half, 3 trillion. I dont think i think theyll separate the issues. I think well have something done on getting over this fiscal cliff and then theyll talk about a package. I think they will not go over the fiscal cliff, probability. 7, not one. And they will sketch out a framework for dealing with spring. It is too much work. I thought we would solve this all before thanksgiving, but i can see maybe why they will need more time. I want to thank our economists doug holtzeakin and dean baker. Have a good holiday. You too. Susie our next guest tells investors not to make rash moves in their portfolios, based on guesses about how the fiscal cliff negotiations play out. Hes william mcnabb, c. E. O. Of vanguard, the nations Largest Mutual Fund company. So bill, i heard that conversation. I know youve been worried about the fiscal cliff situation. Did you feel a little more hopeful today . Well, i did. And im very much in the camp of the two economists who were just on that what need its to happen is a short term deal to get us past year end. And i would likeo see it tied to a time frame to strike a longerterm deal that deals with the nations fiscal situation on a longterm basis. And i think thats what the markets are actually anticipating. Suzanne meanwhile. Susie meanwhile investors think the clock is tick and they dont want to wait to see what happens. They are worried about the tax implication of whatever deal does come out of washington. What are you telling investors to do . I think the ageold and very important philosophy, if you will, is to stay highly diversified. Its very difficult to anticipate, you know, where tax rates are going to end up or, you know, which sector is going to get favored over another. And i think the best defense against that is to have a highly diverse fight portfolio of stocks and bonds and stick with that allocation. Susie a lot of people are just trying to find a safe place to put their money so unies have become popular, a lot of people into treasuries, cash, of course. What do you tell people when you hear them talk about these investments . Well, again, you know, for me it always comes down to what is their time frame. So if somebody has an immediate need or a short term need where they know theyre going to need capital then you want to be in a safe vehicle like, you know, a shortterm Municipal Bond fund or treasury fund, that is short term in duration. But if you are talking about planning for longterm, retirement or a childs education 10 or 15 years down the road. Then you have to have a much more robust allocation and take some risk and put money into equities and you know, again over the long run that is how are you going to get rewarded. Susie a lot of people are nervous about putting their money into the stock market. Not just now but its been like this for a while. What do you think it will take to get individual investors to feel comfortable about investing in stocks again . Yeah, i think its a real crisis of confidence, if you will, more than anything else. And what you are seeing is, you know, with all the uncertainty and some of the volatility that that uncertainty creates, its made people nervous. You know, when you look at the numbers, if you look at stocks over the last ten years, the returns actually pretty good. And you know, people who have been invested for the last ten years have actually earned a reasonable return, between 6 and 7 per year. And so what you are seeing in terms of people staying out of the markets is really a reflection of the uncertainty that we see around the economy and the volatility that that cause the markets. Causes in the markets. Well, that uncertainty has become the watchword for everybody these days. Thank you so much bill for coming on the program. Bill mcnabb, c. E. O. Of vanguard. Reporter im erika miller in new york. After the thanksgiving meal, many people will be heading to the malls. Well look at whether Opening Stores on the holiday, makes Good Business sense to open on thanksgiving. Tom we saw more evidence today of an improving National Housing market. Of course, real estate is local, but measured as a nation, sales and prices are picking up. Existing home sales rose 10. 9 in october compared to a year earlier. That was stronger than expected. Its the 16th straight month of yearoveryear gains. Median prices were also up, climbing to 178,600. All this as home sales ticking up, number of homes on the market going down, dropped to just over 2. 1 million homes last month, the fewest number of existing homes on the market for sale in almost a dekachlted Megan Mcgrath knows this data well. With us tonight at the naz. Megan, first of all, does the relatively few number of homes threaten any pickup in housing . Well, its an interesting dynamic were seeing now. Were hearing from realtors is that they think that sales are actually depressed a little bit because of this lack of inventory. That buyers are getting frustrated that they are not finding enough homes in the mart so we actually think it could be depressing sales a little bit testimony should be helping prices. And hopefully that will bring more inventory on to the market over time. But were in a little friction in the market. Were not seeing folks bring their homes into the market because were at the bottom. Would you describe this as a buyers market for Residential Real Estate or sellers . It depends a little bit on the region but overall it is definitely turning into a sellers market at this point. Tom more pricing power. What about for new homes. We saw today also that builders sentiment continues to increase. Those Home Builders are an optimistic bunch to begin with you, you have to when you are putting shovels in the ground. Up 7 months in a row, this chart going back better than six years, were at a six year high. What about this Builder Sentiment and are we at any risk of overbuilding . No, were not at a risk of overbuilding yet. The sentiment number was 46. So we still have more builders telling us that things are weak versus strong. That would be that point is 50. So were still relatively weak. But were up a lot versus last year. I think last year the number was 19. So weve seen a significant increase in Builder Sentiment. And october seems to have been better than expected. So things are humming along. But inventory in the newhome sales market is also low, also below six months of supply. Right. So weve got builders being rational still at this point. Our last half minute and i do want to talk about the Home Building stock sector as witness this Exchange Traded fund, has had a nice rally but sold off with the rest of the market. Real quick what is your outlook . Yeah, were relatively neutral on Home Builders right now. Theyve had a good rally over the past year. Were a little bit concerned about things like input costs and certainly about what is going on in washington like your previous said. So were a little neutral right now. We would wait and see, we think the stocks had will be flat over the next 3 to 6 months. Do you have a position in that Home Builders etf . We do not. Tom Megan Mcgrath, analyst with mkm partners. Susie as the Holiday Shopping season officially gets underway, all this week on n. B. R. Were looking at holiday retailing. Tonight, the earlierthanever store openings on thanksgiving day. For years now, retailers have been chipping away at the taboo of opening on thanksgiving. But is that extra shopping day a Smart Business strategy or simply a gimmick . Erika miller reports. Reporter for the first time, sears will join a slew of other retail chains in Opening Stores on thanksgiving day. So you may wonder if the holiday will soon be nicknamed black thursday. Like other stores, sears will be offering its best deals of the year. We have a 32 tv for 97. Ive never ever heard of a 32 tv going for 97. Reporter sears, walmart and toys r us will open their doors at 8 pm. Target opens an hour later. Macys, kohls and best will wait until midnight. Kmarts opening is the earliest 6 am. The stores say theyre simply meeting the needs of their customers. Think about thanksgiving. And right after you have thanksgiving dinner, you are with the whole family. You could just come with the whole family and shop. Sears is a family store. Reporter but not everyone is happy about the early openings. At change. Org, there are petitions fighting the trend some with hundreds of thousands of signatures. They argue oping on thursday is not necessary, because it simply steals business from other days. Retail expert brian sozzi disagrees. I think its very important now. When you have people looking for the best deals on their mobile phones, their ipads, online; you need to give the customer a reason to get in the store as soon as possible. You cant blame retailers for trying to get a jumpstart on sales, given the stiff competition for shopper dollars. Stores also have to compete with online retailers, many of which are always open. Plus, early store openings extend the crucial Holiday Season by a day its going to be the way of the future going forward. Retailers are, for the most, part publicly traded companies. And they owe it to their shareholders to drive as many profits and sales when they can as humanly possible. Its their biggest season. Reporter and thats why stores like sears will now be open thanksgiving, hoping holiday traditions will now include a trip to the mall. Erika miller, nightly Business Report, new york. Susie intel c. E. O. Paul ottelini is retiring in may of next year, a few years earlier than expected. Intel said today it will consider candidates from inside and outside of the company. And, as Suzanne Pratt reports the Management Change comes as the chipmaker grapples with weak mand for personal computers. Reporter Paul Otellini has spent four decades at intel, eight of those years in the corner office. And it has been during his tenure at the top that the industry has shifted toward mobile computing and away from pcs. The problem for intel is that its chips are mostly used in computers, not in the increasingly more popular smartphones and tablets. Ottelini was seen i think as a little bit late to the party in getting into mobile and into smartphones. And, its possible that his successor will move a lot faster and be more aggressive. Reporter the next c. E. O. Will need to figure out how intel can catch up. He or she will also need to boost the companys struggling stock price. So far this year, the shares have lost 15 . This is a Healthy Company financially. Theyve got 10. 5 billion in cash, 53 billion in yearly revenues. Many companies would kill for these revenues. But, its all about the future with technology, its all about their growth. Reporter ottelinis big miss on mobile computing has made investors question intels future. Suzanne pratt, n. B. R. , new york. Tom u. S. Stocks staged their best single session rally in weeks. The s p 500 was strong from the opening bell, finishing at its highest price of the session. Up 2 . Trading volume was 707 million shares on the big board. Just under 1. 8 billion on the nasdaq. Fueling todays rally the materials sector jumped 2. 9 , technology bounced back 2. 8 , and telecommunications was up 2. 3 . A big help today was the biggest publicly traded company in the u. S. ; apple. Due to its size and influence in the s p 500 and nasdaq, when apple moves, so do those indices. And today that was higher. Apple jumped 7. 2 , rallying more than 38 dollars per share. This was apples second best single day gain this year. Apple had been sinking since hitting an all time high in september. With todays gain, its down just over 19 from that record. We reported on the song existing home sales report earlier. That helped improve the market sentiment. And Home Improvement retailer lowes underscored that. The retailer earned . 40 per share, a nickel better than estimates. Lowes has been working to improve its inventory and reduce costs in its competition against home depot. This Third Quarter report was helped by sales of generators and other supplies thanks to Superstorm Sandy in the northeast. Shares jumped to a new 52 week high. Volume more than doubled with the stock up 6. 2 . One tax set to go up in january is the tax on stock dividends. Walmart today had an early gift for itshareholder it moved up the payment of its Fourth Quarter dividend. Walmart will pay out 39. 75 per share on december 27. It had been scheduled to go out january second. Under current law the tax on common dividends could go from 15 to as high as 43 for some shareholders. Shares were up 1. 5 on heavier than usual volume. J. P. Morgan gained 2. 8 before announcing a new chief Financial Officer late today. Marianne lake currently is the chief Financial Officer at the banks conser busins. The management shakeup comes after the banks 6 billion Derivatives Trading loss this spring. Just ahead of thanksgiving, the countrys biggest meat producer tyson foods saw the impact of this summers midwestern drought. Dry conditions led to higher animal feed costs, leading to less meat supply, helping tyson raise prices. Bottom line for the quarter . 55 per share in earnings, . 11 better than estimates. Thats despite tysons revenues coming up short of forecast. Shares jumped 10. 9 on heavy volume. Despite the sales shortfall in the past quarter, its revenue outlook for the year was more than anticipated thanks to higher product prices. All of the five most actively traded Exchange Traded products were stronger. The biggest gains came in the nasdaq 100 tracking fund, up 2. 4 . And thats tonights market focus. Tom one bit of economic certainty did come out of this months election, Health Care Insurance reform will continue. That is tonights word on the street mandate. Debra borchardt with us. Now debra, the law will require companies of a certain size to pay if they dont offer their own employees Health Insurance. How real are the threats of job cuts, though, that were hearing . Well, were hearing lots of Companies Company out and say that they are laying off workers, that they will be cutting back workers hours so they wont have to pay them Health Insurance because of the mandate. But its interesting that it is coincidentally, of course, right after the election. And then when you start to look at some of the c. E. O. S of these companies also coincidentally they were romney supporters. So you had to start to drill a little bit deeper to find out what was behind all these changes. Tom weve got two here where we will set aside politics and look at business fundamentals. Beginning with papa johns. Pzza, its owner sbeen a veryocal oonent of Health Insurance reform. The stock has sold off along with the broad market although it rallied some today saying that it could add as much as 20 cents per pizza if it were to go through with the healthcare reform law. Right, thats what the c. E. O. Said. He said that he was can going to cut his employees hours back so they wouldnt be fulltime employees. But when you start to dig through the companys earnings in their most recent quarter, they did have some issues with the company. And specifically on the cost side. They had plenty of money to pay the managers bonuses. They had money for conferences. In fact, the only costs that had actually come down for them had been the cost of cheese. Everything else was up. Their advertising costs were up. So you start to think well you know what, maybe they could have cut back in some other areas. Also theyre getting a lot of flack from the people out in the blogosphere. They say this Company Gives a way 2 million free pizzas, maybe they should cut that out and give their employees some insurance. That is part of a promotion with the nfl. Another restaurant better fon nor olive garde, red lobster threatened to cut back worker hours even though its olive garden is struggling. Analysts point that that is really points to the stock felloff since september. Thats right. Live garden is practically giving that pasta away. In fact, you can go and buy some pasta and get another entree for free and take it home forth next night. And so really, what their problems are, they havent had a lot of growth at olive garden. And as you mentioned their other flagship restaurant red long ster, we all know the price of lobster is cheap, cheap, cheap. There is a glut of lobster so you can go to your Grocery Store for 4. 99 a pound. I went online they are selling their lobster for 33. That is, you know, people know this difference. And that is why they are not going there. Dow own any of these stocks . No i dont. Tom putting politic as side for profit, Debra Borchardt with the street. Com. Susie in this Holiday Season americans are dropping coins into Salvation Army buckets and donating money to a variety of charities. But there are ways investors can contribute to their communities and make money too. Its called social or Community Impact investing. As Diane Eastabrook reports this trend is providing a financial boost to many cashstrapped neighborhoods. Reporter philanthropy is a way of life for university of chicago senior thomas george, guiding his career goals and investment choices. If my money isnt going to be working for something that i dont actually believe in then im not interested. Reporter last summer george bought a 500 Community Investment note from Calvert Foundation. His money is helping finance organizations like growing home. So these are good. Reporter growing homes an urban farm that puts the chronically unemployed to work producing fruits and vegetables in one of chicagos poorest neighborhoods. Community investing is a growing trend both here and in europe. It allows investors to take a financial stake in their communities to improve housing, fight crime, and even add jobs. Reporter Community Investing works a couple of different ways. Social impact bonds raise capital to achieve a social goal like keeping exoffenders out of jail. If the program succeeds investors make money. Community investment notes raise capital for organizations that have a revenue component. If the Organization Makes money, so do investors. Growing home got a 50,000 loan funded by Community Investment notes to build two new hoop houses for growing vegetables. The group makes money selling produce to farmers markets and restaurants. We expect to be able to pay it back fairly quickly were gonna make about next year about 30,000 in income on just what you can see there. Reporter Calvert Foundation says it only loans money to organizations with a solid track record. Were looking at very traditional measurements for credit quality things like liquidity, how strong an organizations operations are and how strong and long their track record has been. Reporter investors can buy notes online from calvert for as little as 20. Investments over 1,000 can be purchased from a broker. The Interest Rate on a oneyear note is 0. 5 . Its 2 on a fiveyear note incapital underwrites calverts Community Investment notes. Chairman Thomas Ricketts says now that Financial Advisors understand these products are as easy to purchase as any other bond, theyre recommending them to more investors. In certain years the Interest Rate would be much lower than what your alternatives were, but right now you get pretty much a market return plus the added benefit of a social return. Reporter Community Investing like any Financial Product carries risk. Organizations might not be able to repay loans. Calvert says its loss rate is only two percent, but it has a cash cushion to assure any investor who takes a stake in his or her Community Gets repaid. Diane eastabrook, n. B. R. Chicago. Susie tomorrow diane takes a closer look at how Community Investment notes are helping provide jobs in one of chicagos poorest neighborhoods. Youll find more on social impact investing, on our website www. Nbr. Com. Just look for the nbru tab. Susie thats nightly Business Report for monday, november 19. And be sure to join us tomorrow, fed chairman bernanke speaks in new york, and tom, well be there covering what he says about the economy, and the fiscal cliff. Tom looking forward to it susie, good night everyone. Well see you online at www. Nbr. Com and back here tomorrow night. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org