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tv   Nightly Business Report  PBS  July 7, 2009 6:30pm-7:00pm EDT

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>> susie: rampant speculatn >> susierampant speculation driving prices in the ener markets? a key futures regulator is taking aloser look at the role of speculative tding, and could crk down on action in the pits. >> jeff: from alumum to steel, the sic materials sector has en a high flyer. but some say the mets are looking a bit taished. >> susiepresident obama heads to his fir g-8 meeting tomoow. economic alyst c. fred bergsten jns us for a preview of what's attake for the u.s. and the global economy. >> jeff: worries aut a prolonged economic recery derailed rl road stocks-- a look at thsector in tonight's stocks in the ws. >> susie: i'm susie ghib. jeff: and i'm jeff yastine. paulangas is off tonight. this is "nightly biness report" fotuesday, july 7. "nhtly business report" is made possible by:
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is program was made possible by contributio to your pbs ation from viewers like you. thanyou. captning sponsored by wpbt >> susie: good ening, everyone. another sharp drop in oiprices today-- th are now at $62 a barrel. the past week alone, they'v mbled 13% on growing concern an economic recovery is far away. the latile ups and downs in the new york oil markets are tting attention in washington. regulators are trying to fige out whher wild swings in
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prices are a result of bets de by speculators as darren rsh reports, the commodity futures tradin commissionays it's time for some answers. >> reporr: if you buy crude by the tanker or fuel by the truckload, regulators say yo have physical demand for oil, a real need to ptect your business by ading in futures rkets. the commity futures trading commsion is considering stcter trading limits on everyone who h a financial need for oil, meaning instors and speculors. c.f.t.c. commissioner ba chilton says t idea is to limit the ability of anyne trader to pu around energy pres. >> this is an effort to sure that peoe are paying a fair price for commodities. it's not ourob to pick a high ice or a low price, but to makeure that it's a fair price that itraded and there is no manipution or abuse in these markets. >> reporter: theutures industry association support sensible limits on tradi posions-- the question is how they are defined. asciation president john damgard saysts important to
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have investors a, yes, speculators tradg with airlines and trucks who are worried about rising fuel sts. >> i thinkt is important for people to not demonize speculation. speculators are an important component of our marke and if theyent away, a lot of people who artrying to manage risk wouldn be able to do it. >> reporter: b critics say last year's wild swingin oil-- up to $145 barrel and then back down-- show the dconnect between the financial needor oil and the re need for oil. the oildrum.m's nate hagens sa those demands have to come into bettealignment. >> the c.f.t. and the administtion is trying to get their arms around is long-term disconnecthat there aren't enough natural resources f eryone to have a 30-to-1 billion-dollar levaged hedge fund gred up to invest in them. >> reporr: members of congress
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ke bart stupak have been pushing hard for more regutory oversight. stupak says 'll be watching the c.f.t.c. close to make sure it cracks down speculators, which he says have forced oil pricefrom $33 a barreln december to almost $63 toda >>hat incident, what occurrence would allow a doubling? nothing other than excesve prit-taking. so all we are ying is give the american consumer,ive the economy, give the wod economy ich is in recession a break. >> reporter: it may soon be r easier to figure out wheer speculators are, in fact, hang an undue influence on ergy prices. regulators promise to lease more infmation about the trading activity of hedgfunds and other vestors in futures markets. darren gersh"nightly business report," washington. >> jeff: alcoa marks the unofficial start oearnings season tomorrow wh it reports second-quarter rests after the bell the company's thfirst dow coonent to show its cards on the cond quarter, expected to post aoss for the third time in a row. because alcoa is seen an
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economicellwether, its performance will be rutinized. suzanne pratt reports, instors are watching for signs life, both in the aluminum instry and the basic materials sector. >> reporter: a hotummer and lots of thirsty people cou be aloca's best hope foa pickup in demand,s soda can makers wod need to stock up on aluminum. but experts y alcoa is unlikely to see acceletion in dema from other buyers of the tal, like carmakers or aircraft builds. that because the economy has yeto show significant signs of recovery. as a result, the's little expectation thaluminum giant's earnings will bu the stock market vertheless, s&p uity strategist alec young ys, when alcoa speaks, invests should listen >> when they give us fward guidance, people areoing to read intthat. there's a lot of intert in what ts recoverys going to look like,nd so there's going to be a lot ofuriosity. >> reporr: others say alcoa alsoears watching because it
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uld give clues about activit in the bas materials sector, which includ metals, chemicals and forest products. basic materials is a clical sector, meaning it often outperforms the oader market during the early part of an economic rebound. with the.s. widely expected to come out of recessn later this ar, now might seem like a good te to buy basic materials stocks. but wh commodities prices spiked this spring, those ocks rallied 30%. somexperts think the sector got ahead of itself. >> we think the stoc are really driven by whathe commodities do, and a lot the industrial andase metal commodities, we think, hav alrey run-up enough to justify e economic recovery that we' going to have. we don't seehose commodities shooting up a he of a lot more from here. >> reporter: oer analysts also worry that china, whichas been a big pa of the recent demand picture for basic mmodities, could go missi as a buyer. for exple, morningstar analyst elizabeth collins ys china was stockingp on copper this year, mostlyo increase stockpiles,
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not because it was doing aot of building. >> we're little bit cautious on t outlook for basic materials, due tthe china factor we think that a lot ofhe chine buying of raw materials inhe first part of the year can be explained bfactors besides a large increase in demand for the e products. >> reporter: those who forect earningsor basic materials companies expect to see a bi improvement later this yr. that's partly e to easy comparison and partly to the expected economirecovery in the s. suzanne prat "nightly business report," new york. >> susie: a big viory for hank greenberg todaas he won a rounin court against a.i.g., the giant insurae firm he once heed. a federal jury imanhattan says a company controlledy greenbg can keep more than $4 billion in stockaken from an a.i. fund meant for his retirement. a.i.g. claim greenberg improply took the stock, then sold it because he wasngry at
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being booted frothe firm. there are stilother issues to be decided in this case, a a judge won't issue a finaruling until the end ofugust. >> jeff: decliningrices for oil and metals in e commodity rkets put wall street in a selling mood. the dow stair-stepped lor from the openinbell. the biggeslosers were the materials and heavy-equipmen companies, like 3m and caterpillar. g.e. shares fell 4%, and t punishment in blue-chip d tech shares contied straight into e closing bell. the dow ended off 161.27 at 8,163.60. the nasdaq fell 41.23 pots to 1,746.17. the s&p 500 finished dow17.69 points at 881.03. the bond market saw so flight- to-safetbuying from the equity sell-off. e ten-year note climbed 15/3 to 97 9/32, puttg the yield at 3.45%.
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>> susie: the worst cial and politicaeffects of the economic crisis e still to come. that's what the head of e world trade organizaon said today. pascalamy is worried about a surge in trade protectionism so he's urging-8 leaders meeting italy tomorrow to resist making restctive trade moves as they mbat the global cession. lamy also repeated a cl for approval of the doha negotiations, asures proposed back in 2001 to open up wod trad joininus now with a preview of what to expect fm that g-8 summit, c. fd bergsten, director of the peters institute for internional economics. thanks for beingn the program toght. >> good to bhere. >> susie: eryone always talks abouthe risk of prectionism. but is te are the risks real? >> the risks are real. the actions taken by
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gornment so far have not en severe. thou there has bn increased resort trade barriersn latest of countries. the ar is that with the continuation of threcession, unemployment continuing to ricen a lot of countries for anher year or so, that we could get somethin much more serious. that mns the g does need tostiffen its resolve against any new barriers, b more importanneeds to take some rward nitiative. history shows th you can only stop back lieding on ading if you're movg forward,f you're liberalizing marts. so i thk the g-8 countries mit come out with some seous declarations to get the doha rous started ain, stt once again therocess of reducin barers, that's the best defense against prottionist back lieding. >> susie: present obama has talked for a while that he's going to give a major speech aboutrade. he hasn't done it. do you think he'll use the g-8 summit as a platform to ke a
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stanon trade? >> i think he'll continue to do what he has so far, which is to resist protectio, sig onto plentys not to put on new barriers, and to contribute his full part to the resistance against trade back sliding. at the president has not yet done, hover, is the second part of the equatn, to move forward, to put out a positive agenda, to start aggreively pursuing the trade agen that will resolve the protectiost problein the united states. i n't think he'll do at this meeting suspect he will make his speech on trade before the g-20 summitin september that's the occasion where i think he wl lay out a design for anobama trade policy. i think itill be in the right direction. but we'll have t wait for that to get a clear picture of his strategy. >> susie: what doou think the direction will be? >> i think he will underake me serious new initiatives to resume u.s. leadershipof global trade localization. i think the doha roundin the
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world tradorganization is importanto the united stes. i think he'll want to change some of the details on it. but i think he'll support it strongly. i think he'll alsoant to pursue new international negotiatns on clima chge. e climatehange issue has a big trade dimension, beuse countries cant agree to avoid ptectionism in the climate change context, congress re, oer nional legislatures, may put controls onto scriminate against imports om countrys that are not as aggressiven trying to mit climb change. that means that the - i suspect that will be partf it. >> susie: , let me jump ahead to the ecomic crisis. today a report from the european union warned that econic growth maybe "permanently damaged" by the financial crisis. is there anything more that these world leaders o central banks can do to fix the problem? >> i don't think t g-8 per
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se will do aot to move forward onesisting the economic cris now. but they will have to debate the crucial issue of continuing thetimulus progms like our own budget stulus here, andthe expansionary monetary policy by centr bank. the europeans, particularly rmans, are begning to cal fo reigning back the stimulu program. they are genuinely concerned and rigly so about big buet deficits that relt. but the europes are premately talki about exit strategies from the stimulus approach. >> susie: how is that debates going to play t at this mit? more smulus or exit strategy? >> i don't think ere will be either. but the europeans ar starting to talkbout exit rategy. the u.s. wants t continue the stimulus effort at least for another x months or s i think the united states is right. it would be ver risky to cut off the smulus now, it would be paicularly risky totart
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tighteni budgets, ireasing interest rates, and taking restctive action. at would be like japan d inhe 1990s, itrolonged their lost decade by several years. so that debateay be center piece at the g-8 summit. >> susie: all right, interesting analysis. appreciate your time tonight. thank you so much. >> good to be here. >> susie: my guest tonight, fred bergsten, fro the petersonnstitutes for international onomics. >> jeff: as the g-8 leaders get t to meet in >> jeff: as those g-leaders get set to meet in ita, there's a different voice calling for ecomic change-- po benedict xvi. he says the globalconomy should be run in a wayhat protects the environment, ensures worlpeace, and helps the poor. the pope said e world's finaial systems need ethics to function properly, ethics at are centered othe needs of peop. over recent mont, the german- born pontiff has talked out how e financial meltdown has hurt the world's poo his commentsoday included a call for a new w of unrstanding business, one that respects the dignity of rkers, and looks out for the mmon good.
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>> jeff:he white house wants to make the food we easafer. every year, one four americs is sickened by illness carried in food. , after recent recalls of contaminated peanut butter a cook dough, the obama administration h set up a workingroup to tackle the problem. the idea is to tigen requiremen at food processing plants and add stifferenalties r breaking the rules. vice president joe bidenays keeping food safe topshe govement's to-do list. >> we're here today torevent and to ppare. we're here because we know american families have eugh to
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worry about the days, just about putting food othe table, let alone whetr the food they place on the table is going be safe r their kids and their husbands a wives to eat. they should nohave to have thats a concern. >> jeff: to help kp that from becoming a concern, the s. senate is about to take up a bill upping the f.d.a.'s bget bylmost $300 billion. much of that increase uld go to food saty efforts. >> susieit may be july, but for the nation's railers, christmas is just arnd the corner. today, kodak saithe retailers itorks with think this holiday shopping season wi be much better tn last. kodak's c.e.o. anton perez says those samretailers believe the just-wrappedecond arter will be the low point for theconomic downturn. but perez remains cautious aad of the holiday and jeff, he also noted lf of kodas annual consumer sales me after october 15. >> jf: susie, last year, kodak's fourth-qrter sales
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fell balmost a third. now, lets see what was on sa on wall street as we take a ok at our stocks the news tonigh
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>> susie: another big to parts supplier filed forankruptcy toy-- this time, it's lear. its biggescustomers are generamotors and ford. the company hopes r a quick bankruptcy, helped along by support from its bondholdersnd lenders,ncluding billionaire carl icahn.
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lear has been ruggling for months to stay aflt during the storm ffeting the auto dustry. papers filed with the bankruptcy court, it claimed .3 billion of assets, and $4 billion llars of debt. tomorrow, our "strt critique" guest is paul larson, equies strategist at rningstar. >> susie: the receion is hammering high tec research firgartner today said spending on infoation techlogy is on pace to fall 6% this year $3.2 trillion. that's bigr than the firm's iginal forecast for a drop o out 4%. ganer says i.t. budgets are still being cut, and dsn't see e trend changing until businesses a consumers feel confident about the econy. >> jeff: t i.r.s. is giving a break to small businessehit with big tax fines. the agency todayemporarily stoppecollecting penalties against small busisses using questionable tax shelters. e fines came out of a 2004 l
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aimed at big cporations using elters to avoid taxes. lawmakers asked thi.r.s. to stop the collections whi they work to chge the law. the tax nes can run as high as $300,000. >> susie: here's a looat what's happeni tomorrow: the weekly repor on mortgage
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applications, and inntories of crude oil and galine are released and, as we mentioned, do mponent alcoa kicks off earnings sean with second quter results after the bell. tonight's commentor says, when the cession's finally over, there'lle a new set of ecomic rules. he's alfred edmond, jr e inhief at >> we're not out of e woods yet, but sooner orater, our economy will recovernd this latest recession wilbe a thing of theast. but at doesn't mean it's time to relax. e post-recession economy wil be cracterized by new opportunities, new dangers a new rules, but iwill be far fromobust. this is nothe time to fall ba into pre-2008 habits and assutions. that sd, with the following in mind, you can slingshot yo way from mere recovery to neound prosperity. don't lose youfocus. there's thing like fighting for surviv to focus your coentration. the temptation, as the econo imoves, will be to relax and
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take your eyes offhe prize. don't do it. now's the time for businses to take the lsons of the past two years and gorom mere survival to resurgent profitability. convert desperion into momentum both compaes and individuals made desperate mes to stay afloat during the past t years, whether by cuttin persal expenses or shedding workers. it w painful, but now that you are leer, stronger and tougher, me it your goal to dominate the new landsca. it's okay to snd, but continue to seek vae. yes, in ordefor a recovery to be sustaed, we need to spend, but we cant retu to the recklessness that heed cause our economy to crash in e first place. spen yes, but focus on strategic vae and real return on investment-whether a busine or an individual, get all the ba you can for your buck. m alfred edmond, jr. >>eff: recapping today's market action: concerns about t lingering recession lead ta broad-based se-off on wall street.
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the dow dropped 161 points and the nasdaq lost points. and to learn more about e stories in tonight'sroadcast, to watch our streami video and take part in our daily blog, to "nightly business report on you can also email us >> jeff: that's "nigly business repor for tuesday, ju 7. i'm jeff yastine good night, everyone, and go night to you, sue. susie: good night, jeff. i'm susigharib. we he to see all of you again tomorrow evening. ightly business report" is made possible by thisrogram was made possible by contributions to yo pbs station from viers like you. thank u.
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