This program is made possible by contributions to your pbs station from viewers like you. Thank you. Captioning sponsored by wpbt tom good evening, everybody, and thanks for watching. The number of americans making new claims for Unemployment Benefits fell for the first time in a month, down by 31,000. But susie, the overall number of claims is still way too high to describe the report as good news. Susie tom, that comes on top of some dismal reports on the state of the housing market, and a day ahead of whats expected to be a major speech by fed chairman ben bernanke in wyoming tomorrow. Everyones looking to the fed chief for answers on the economy, the stalling recovery, and the labor market. Tom we have two reports tonight looking at jobs, and what bernanke can actually do about the economy. We begin with scott gurvey in new york, who spoke with the head of one of the countrys biggest staffing firms. This one is different. It has components of the late 90s and 2001 recoveries. Its just exacerbated, and what that is is that companies are not going to hire in any type of forward way. Theyre not going to hire in anticipation of demand. Reporter jeff joerres should know. The c. E. O. Of manpower says his clients are not hiring unless they have orders they cannot fill with their current workforce. Thats because they are unsure of the outlook for future demand. Tomorrow, the government is expected to cut its estimate of secondquarter growth to less than 1. 5 . Economist Julia Coronado says that may mean the private sector will post job losses for august. If you think about the economys Sustainable Growth rate as being about 2. 5 , if were growing more slowly than that, its not enough to even keep up with population growth, and therefore, youre going to see some deterioration in the labor market. Reporter there is also a great imbalance in the economy. Some sectors, like technology, are showing significant growth. Other sectors, like those related to housing, were so overextended, some jobs may never come back. Economist Dan Greenhaus notes that eight and a half Million People lost their jobs in the recession. Even using the most optimistic forecasts, its going to be several years before those people who have lost their jobs can return to fulltime work. And that ignores new entrants into the labor force immigrants, people turning 18. When you include all of these people, as they work. Become of age or come to the united states, were talking it could be the middle of the decade, if not a touch later, before we start seeing unemployments rates that americans have become accustom to in normal times. Reporter still, manpowers joerres says, for workers willing to learn new skills, there are industries with jobs to be found. Those that have manufacturing businesses that are contributing to Capital Expenditures as companies try to improve their productivity and efficiency. Those that have value brands, whether they be on the retail or service side. Theyre booming, actually; theyre moving along nicely. Its just that theres this bifurcation. This isnt a tide that lifts all boats. This is a very selective recovery that were seeing. Reporter many of the economists i talked to today said a 7 Unemployment Rate is a reasonable goal, while 5 is likely a distant memory. Scott gurvey, nightly Business Report, new york. Reporter this is darren gersh in washington. If you think those the weak jobs numbers are an unwelcome surprise, youre not alone. Bank of americas ethan harris says most economists, including those at the Federal Reserve, did not expect the economy to lose so much steam. And thats causing them to rethink policy, and to really think about something they were hoping they wouldnt have to do, which is to restart this extraordinary unconventional monetary policy. Reporter in the first round of unconventional policy, the Federal Reserve pumped up its Balance Sheet to 2. 3 trillion, buying up mortgages and other bonds to boost the economy. Economists call buying up bonds in big bunches quantitative easing. To boost the economy further, another round of quantitative easing could mean buying another trillion dollars in bonds. That would bring down borrowing costs for business and might pull Mortgage Rates below 4 . But its a big decision. Roberto perli spent eight years at the fed, advising on monetary policy. He expects his former colleagues will want to see more evidence the economy is slowing before committing to a trilliondollar bond buying program. This would be a very large increase in the Balance Sheet, which is what leads us to maybe believe another option would be to proceed in installments. Reporter some fed officials worry a big boost to the economy could set the stage for a huge jump in inflation, but economist josh bivens disagrees. He thinks prices are falling from lack of demand. What the fed needs to do now, he argues, is commit to driving inflation higher. So, basically, by increasing inflationary expectations, you are driving down the real inflationadjusted Interest Rate people face, so they are going to be more likely to take out loans to do some spending. Reporter with the economy sputtering, the pressure is on fed chairman ben bernanke to make news when he speaks at a policy conference tomorrow. At the very least, harris thinks, bernanke will have to acknowledge the Economic Outlook has changed. To be credible, he needs to admit that the economy is weakening, but i think its important that that message also come with a message that we will do something about it. Reporter that message may be all the more important, because the fed may be the only game in town. Most analysts see very little political appetite in congress for another expensive effort to boost the economy. Darren gersh, nightly Business Report, washington. Tom here are the stories in tonights nbr newswheel. As we mentioned, the blue chips fell below 10,000 as worries about the slowing economy pick up. The dow fell 74 points, the nasdaq was off 22, and the s p 500 lost eight points. Trading volume pulled back ahead of tomorrows bernanke speech. Just over a billion shares trading hands on the big board, and 1. 8 billion moved on the nasdaq. So much for uncle sams foreclosure prevention plans one in ten americans with a mortgage is facing foreclosure. The Mortgage BankersAssociation Says if you add in homes already in the foreclosure process, one in seven is in trouble. And another new low for Mortgage Rates, the ninth in the last ten weeks. Freddie mac reports the average rate on a 30year fixedrate loan is 4. 36 . Still ahead, should your portfolio say nihao to china . Mike holland joins us as we continue our series of interviews on the bric economies. Tom Hewlett Packard and dell are taking the fight for Cloud Computing firm 3par to new heights. Today began with dell announcing it increased its bid from 18 to 24. 30 per share, and that 3par had accepted it. But after the closing bell tonight, hewlettpackard came back with a richer price, upping its original 24 per share offer to 27. 3par had no comment to the higher hp price. But news of the higher bid sent 3par stock above hps offer of 27, signaling investors expect an even higher price to emerge. Meanwhile, the recently ousted head of hp is selling some of his holdings in the tech giant. Mark hurd filed with the s. E. C. Earlier this week, saying he planned to unload 775,000 shares of restricted hp stock worth an estimated 30 million. He has 90 days to sell all or part of that amount. Hurd resigned from hp three weeks ago after a board investigation found he filed bogus expense reports to cover up a personal relationship with a contractor. Susie another major recall for toyota. This one involves more than a million corolla, matrix, and pontiac vibe vehicles made for general motors. Toyota says the recall will fix potential engine problems causing the cars to stall. Now back in march, the auto maker said problems with the engines were not a safety issue. Toyotas change of heart comes just days after federal regulators stepped up their investigation into the vehicles. Toyota has now recalled about 11 million vehicles over the past 12 months. Susie as stocks pull back, more investors are pulling their money out of equity funds. Stock funds saw outflows of almost 3 billion in the last week. So where did the money go . The Investment Company institute says americans poured almost 4 billion into money market funds, and added almost 8 billion to bond funds. Tom, it looks like investors are looking for safety as the blue chips fall back below 10,000. Theyre not interested in anything thats risky. Tom they would like ious from uncle sam and that has deliver than Interest Rate on the tenure yield down to post recession lows, since the beginning of 200. Lets get updated on tonights market focus. The major indices failed to put together two consecutive days of buying. The selling pushed the dow industrials to close below the 10,000 mark for the First Time Since early july. The s p 500 also has erased most of its july gains. Heres how the day looked for the s p index. It started out in positive territory. A weak report from the kansas city Federal Reserve bank on manufacturing took away from a small improvement in the weekly jobless claims, sending the index lower. Since the most recent market highs earlier this month, the selling has been concentrated in financial stocks, the industrial sector, and energy all very sensitive to the overall direction of the economy. Each of these three s p sectors are down by at least 9 in the past three weeks. Today, it was Technology Leading the way lower. High profile mergers such as intel and mcafee, and the fight for 3par between hewlettpackard and dell didnt help the sector. Disk drive maker sandisk fell more than 5 on heavier than usual volume. There was no Corporate News today, but sandisk shares have dropped to their lowest price since april. Cisco systems was the biggest percentage loser among dow components, falling more than 2 . Ciscos latest selloff began three weeks ago when its quarterly revenue came in a fraction below analyst estimates. This is a new 52week low for csco. Intel also weighed on the dow, and also falling to a new 52week low. The company is in the process of buying Software Security company mcafee, and reports tonight indicate it is close to a deal to buy the wireless business of german Semiconductor Maker infineon. And speaking of computer security, look at this rally in arcsight. It rocketed higher by 30 on almost 20 times its usual volume. Earlier this week on our word on the street segment, james rogers from thestreet. Com, highlighted arc as a Company Analysts see as a buyout target. The wall street journal quoted sources as saying the company has been shopping itself around to possible buyers. After the close tonight, retailer jcrew reported a return to selling fullpriced items, higher sales and margins, but there was some worrisome news. Earnings per share beat the street by four cents, thanks to tighter inventory control leading to fewer discounts. The stock saw heavier than usual volume ahead of the results. But thanks to a weaker than anticipated outlook, the stock dove 7 in afterhours action. If that kind of pressure holds through tomorrows opening bell, it would push shares down to a new yearly low. Berkshire hathaway is getting a little bigger. Warren buffetts wants to add Wesco Financial to its portfolio of companies. Buffett already knows wesco well. The company is similar to berkshire, owning many Different Companies such as insurance, rental furniture, and metal cutting. Wesco is run by berkshires number two, charlie munger, and berkshire already owns almost 80 of it. Both classes of berkshire stock were lower while wesco rallied. Several small and midcap earnings hit the tape, from manufacturing to jewelry to wind turbines. Gerber scientific is a sign making equipment manufacturer. Solid earnings and a confident outlook sent shares up almost 15 . Signet owns kay jewelers and jared. Results were better than expected and the stock jumped almost 5 . Dental equipment maker patterson is almost at a new low after revenues were less than expected despite higher margins. And chinese alternative Energy Company apower energy could have used a jump start. The stock fell to a new low on disappointing revenues. And that is tonights market focus. Susie with china now the worlds second biggest economy, more people are looking east to invest. All week, weve been profiling the big emerging economies knows as the brics, or brazil, russia, india, and china. Tonight, we turn to china. Its economy expanded by 10. 3 in the Second Quarter, lower than earlier this year, but still robust compared to the rest of the world. So, does it make sense to invest in china . Joining us now, mike holland. Besides running his investment firm, holland and company, hes been a director of the china fund since its start nearly 20 years ago, and hes also a director of the taiwan fund, both trade here at the new york stock exchange. Hi, mike. Hi, susie. Susie despite this impressive clothe, growth, theres already talk about chinas economy slowing down. I know you go back and forth to china regularly and talk to businesses there. Are you seeing any signs of a slowdown . Yes, and its much to be desired, susie. The countrys Stimulus Program worked really, really well. They institutesed theirs at the same time the u. S. Instituted its Stimulus Program. Theirs caused a growth in the economy that up until this most recent quarter was going about 12 a year. As you said, for a country that is now the second largest gdp in the world, this is no longer a tiny emerging country, economically. So the answer is yes, they wanted to slow down. They have had some speculation in real estate. Theyve been tamping that down. So the people who have been worried about a bubble popping actually at this point looks as if the authorities there have been able to slow it down without popping any bubble. Susie so its still growing but its just not going to grow in kind of a hot bubblelike way. Yeah, that 10 you just mentioned compares to what we may hear tomorrow, the u. S. Growing is 1 to . Its just. Susie big contrast. Huge contrast and they have a labor shortage, not unemployment of 9. 5 . So what they did was they focused on the economy, infrastructure, job creation and it worked. Susie do it if things are going to well with the chinaee chinese economy where is the stock market so sharply high the shanghai index is down Something Like 20 this year . Well, because they are stocks and if you liss the viewers who are listening to tom and yourself earlier in the program, anything that is a stock worldwide right now is anathema. People are very negative on stocks generally because of the financial crisis and the big decline in the stock markets around the world when the crisis hit. Now that happened there, their stocks went down as well because it is a Global Market now but the economy continued to grow which makes the valuation, the price that people are paying now for that growth and those current earnings very, very attractive relative to other countries. Susie now your china fund where you are a director there, has been one of the best performers in the market. Its chn on the new york stock exchange, up Something Like 30 in the past year. Tell us why it is doing so well . Well, the manager, i dont manage the fund. I am just a director and we just oversea the Management Company and they have done a spectacular job, identifying the indigenous growth. I mentioned a second ago, the country decided to do its Stimulus Program different than ours by forcing people to spend money that was given to them to buy appliances. Our manager bought a large Appliance Company called huyen appliance. Susie we have a list of some of your top holdings. We have huyin but we also have china health care. China medical. Susie a healthcare company. Yeah. Susie a consumer goods company, and an insurance company. What is it about these stocks and these sectors that are so attractive . The largest growth of the middle class in the history of the world. I think you also may have wupart their retailer that sounds like walmart no surprise. Those four Companies Make up nearly 20 of the fund. And these are all of a single thought and that is that the growth of the middle class there, the country is trying to promote has been successfully promoting, are increasing their buying power dramatically. And they are raising their Living Standard so all of these have been beneficiaries of that. They also, one other thing, they also did a very smart thing by buying taiwan shares when they were much cheaper before a great deal of good political stuff was happening between the Mainland China and taiwan economy. Susie i want to switch gears from china back to the u. S. Because you are one of our Federal Reserve experts. As we reported on the program benzodiazepine ang is going to give a critical speech tomorrow. I was just wondering what are you expecting from that. Do you think hes going to inspire confidence that he can fix the economy . I expect that the expectations susie are too high. As tom said at the beginning of the program this is a very highly anticipated speech by the markets. I think that Benn Bernanke has enormous pressure to do something he probably cant do and that is provide a magic bullet tomorrow in his speech. I think if anything hes probably being given an unfair test here because if he says something that the markets dont like they could do down a lot but if he doesnt Say Something with the magic bullet, they could still go down a lot. Susie very good insights, thank so much for your thoughts about china and also about the fed. Thank you. Susie and by the way, mike, any disclosures to make on the china fund . I own it. I own shares and have for a long time. Susie okay, great, thank you. Weve been speaking with mike holland of holland co. Tom tomorrow, we finish our weeklong look at emerging markets with our market monitor. Jeff everett from everkey Global Partners says developing markets are growing much faster, and their companies are more profitable than familiar u. S. Firms. Also tomorrow, well get an update on Second Quarter g. D. P. As we mentioned earlier, its expected to show the American Economy grew at a much slower pace than first reported. Susie American Airlines has been slapped with the largest fine in history for alleged maintenance violations. The federal Aviation Administration wants the carrier to pay 24 million for not keeping the wiring on its md80 aircraft up to code. The safety lapse happened two years ago, and the f. A. A. Says it could have led to fires and fueltank explosions. American grounded its entire fleet of md80s back then, a move that led to the cancellation of thousands of flights. Tom research in motion is researching new ways to balance the security needs of blackberry devices in india with customers privacy. The Company Faces a possible ban on its Blackberry Service in india next week unless it resolves the countrys concerns. Indias government is worried the smartphones could be used for terrorist attacks or other illegal activities. R. I. M. Faces similar concerns in saudi arabia and the united arab emirates. Susie making peace with the millennials. Tonights commentator explains why we should collaborate, not compete, with Generation Next in the workplace. Heres alfred edmond, jr. , editor in chief at blackenterprise. Com. Okay, everybody, you can relax. For nearly a decade, weve been warned of the rise of Generation Next also know as generation y or the millennials and how they were going to terrorize the baby boomers and generation xers who preceded them, and change everything we hold sacred about how work and business should be done. Well, Generation Next generally, those born from the late 70s to the early 2000s has been part of our business reality for a while now. And what do you know . Theyre not the disruptive, mindbending threat we thought theyd be. Sure, theyre different. For example, they are more comfortable with media, communication and Digital Technology than any group of workers before them. But instead of fulfilling dire prophesies of shaking up the workforce, theyve demonstrated an ability to energize organizations with their tech savvy, new ideas, and constant hunger for fresh challenges, the perfect set of attributes for a rapidly changing economy full of both peril and promise. At black enterprise, weve harnessed this valuable Human Capital through our be next initiative, with huge benefits for our entire organization. The millennials are not an invading force set to change all we hold dear. They are the fresh troops we need to restore our confidence in our ability to spark new innovations and conquer new markets. If youre smart, no matter your age, you will engage and collaborate, not compete, with Generation Next. Im alfred edmond, jr. Were going to need some of that invasion to turn around the economy. With the generation nearing the workforce unlike any generation in 70 years, at least. Susie thats nightly Business Report for thursday, august 26. Im susie gharib. Good night, everyone, and good night to you, too, tom. Tom good night, susie. Im tom hudson good night, everybody. We hope to see all of you again tomorrow night. Nightly Business Report is made possible by this program was made possible by contributions to your pbs station from viewers like you. Thank you. Captioning sponsored by wpbt captioned by Media Access Group at wgbh access. Wgbh. Org more information about investing is available in nightly Business Reports video how wall street works. To order this dvd, call 1800 playpbs or visit online at shoppbs. Org. Test test