>> this is n.b.r. >> tom: good evening. i'm tom hudson. susie gharib is off this week. no hints of additional economic help coming from the federal reserve right away. will new rules make banks safer? the former chair of the financial crisis inquiry commission will join us. and, "made in america", how one lettuce farm is harvesting the green. that and more tonight on "n.b.r." the federal reserve chairman did not give markets the kind of clear signal they wanted. but he did lay out his thinking on the risks and the key questions facing policy makers as they ponder their next moves. under close questioning from members of congress, bernanke defended fed policies to bolster the economy and he argued fed policy would not lead to higher inflation down the road. darren gersh reports.
>> reporter: moderate. that's how ben bernanke describes economic growth these days. it's not the kind of forecast that raises alarm bells, but with unemployment still high, it may also not be enough to put more people back to work. here's what's worrying bernanke. if, in the worst of the recession, fearful employers fired too many people, they may have hired most of those workers back by now. so, with hiring slowing, the economy will need an extra jolt to really get more people back to work again. >> so that is the essential decision, the central question we have to look at-- will there be enough growth going forward to make material progress in the unemployment rate? >> reporter: but with interest rates already so low, fed skeptics think the central bank is out of options. bernanke disagrees. he says the fed is confident it can ease interest rates even further, though he didn't say exactly how that might be done. one thing the fed chairman almost pleaded for is help.
help from congress in taking on some of the economic burden, or help in not messing things up more. >> a do-no-harm policy is what i am looking for here, at least avoids derailing the recovery in the short term, but combines that with a strong and credible plan that reduces the deficit over the medium term. >> reporter: as for the fed, bernanke said again and again no decisions have been made on next steps, but he added every option will be on the table when policy makers meet again on june 19 and 20. darren gersh, "n.b.r.," washington. >> reporter: i'm erika miller, still ahead, wall street's take on the fed chairman's testimony. "nightly business report" is brought to you by:
captioning sponsored by wpbt >> tom: on wall street, investors didn't hear what they wanted from federal reserve chairman ben bernanke. and that put the damper on a strong stock market rally early in the day. the dow closed up 46 points, after surging as much as 140 points during the session. the nasdaq ended down 14 and the s&p mostly unchanged. as erika miller explains, investors aren't giving up on hope for more economic stimulus. >> reporter: sure, stock investors were disappointed fed chairman ben bernanke did not hint at immediate action to prop up the economy. but they are still hoping the central bank will extend operation twist. a $400 billion program to lower long term interest rates, which is set to expire this month. >> we are kind of at a tipping point. if the market believes there's going to be some concerted central bank action, then i think we could really see stocks rally.
if instead, the fed is a bit more cautious and does not go ahead with these policies, i think we may see some increased downside here. >> reporter: stock investors did not particularly like what the fed chief had to say today, but they still found other reasons to buy stocks, namely china's surprising decision to lower interest rates. the quarter of a percentage point reduction, is china's first rate cut in nearly four years. the country also loosened controls on lending and deposit rates at chinese banks. the moves are the strongest sign yet, that china is doing whatever it can to avoid a sharp economic slowdown. >> what the china central bank is showing is, we recognize that we need to somehow stimulate some growth and this is a first signal that we are doing that. >> reporter: the stock market has been desperately looking for any good news. in addition to watching the fed, investors are waiting for the results of the greek parliamentary elections on june 17.
erika miller, "n.b.r.," new york. >> phil angelides from the university of oregon, we've got china providing more stimulus, u.s. federal reserve not, is there something wrong with that picture. >> i certainly think so i think the federal reserve needs to step up to the plate more aggressively here. we've seen some weak numbers recently in the u.s. that should be i think sending some warning signals to federal reserve officials a little more broadly than we see. and we're seeing that play out in markets, falling bond yield, falling inflation expectationsment so yes, i think the fed is in danger here of falling behind the curve. >> last three sessions or so for the stock market has been behaving as if the federal reserve is likely to provide more stimulusment do you think that the market will bully the fed into it, maybe? >> well, not sure the market is going to bully the fed into it. you notice the credit markets i don't think have
shown as much enthusiasm as the stock markets have. so for reading into the ups and downs of the stock market itself is always difficult. i think really what is going to make a difference is if the fed going to be bullied into it, it is going to be because the global financial situation looks to deteriorate rapidly in the next couple of weeks. and that could really be the factor that pushes them into action. >> one of the tools the federal reserve is consistent to point out that it has is communicationment but in recent days, boy, we've heard much different takes on the economy and 9 outlook from inside the federal reserve, the decision makers, the federal reserve vice chairman said this earlier this week. i consider the balance of risk to be tilted toward a weaker economy. but that in-- the james bull does ard said the outlook for 2012 has not changed significantly. so far. so what is the message of the federal reserve? >> we've seen this in the past.
particularly with i think some of the regional presidents that seem to be behind the curve of thinking in washington d.c. and so i think that that does lead, in fact to a muddled message where the regional presidents aren't exactly sure what's going on at the board of governors. you know, we've tended to see this resolve in the favor of the board of governors so you give more weight on the yellin sames than the bull does ard statements. >> which means future estimate lutz coming, how soon do you think, by the end of this month? >> so i tend to think that the needle is pointing in that direction. i'm not yet fully convinced that we're going see that this month. just because of some of the-- i don't get a sense from the chairman ben bernanke or his testimony today that he is really pushing for something, particularly aggressive for this month. but i do think that given the current path of data,
given the current path of financial news we're seeing in particularly stemming out of europe that more easing is coming. whether we get it in june and of what kind is a different issue. >> and remains to be seen, tim duy of university of oregon. >> tom: in the years to come many u.s. banks may have to hold more money back from lending and other business in order to protect themselves against tough economic times. these new rules are a result of efforts by international regulators, including the federal reserve, to force banks to have a bigger financial cushion. instead of having a minimum cushion of 2% of assets, today's
proposal would lift that to 4.5% by 2019, and for the biggest banks, they have to add 2.5% on top of that. phil angelides is the former chairman of the-- with us. great to see you. will this make banking less threatening for the u.s. economy? >> well, here's my view which is, this is a step forward, i don't think it's enough. and i don't think it's fast enough. let's take 9 context we're in, a very fragile global economy and in 2008 we had such thin capital cushons that all it took was a 2 to 3% dem anything in asset value to begin to tome the major financial institutionsment so i actually think these capital standards are not tough enough. if you want to look at a balance sheet look at b shire hathaway that has 28% tangible common equity, to assets and i think is a misno tore say this
constrains lending. this is really just saying how much equity -- equity the banks have to have. so if losses come it is not the taxpayers of the united states bearing that loss. >> tom: in fairness berkshire is not a regulated bank like the banks we are talking about here. to your point of lending, the banks say not only could it lead to less lending but also mean shareholder kos get punished because they will have to issue stock or hold back on dividends. >> well, i think they should be holding back on dividends. because again with thin capital cushons, what it really means is when one of these banks takes a big hit, who pick up the bill, the taxpayers of the united statesnd and enormous losses to its entire economy, here we are with 23 million people out of work -- million lost their home, $9 trillion of wealth has been wipe add i watch. so it is really who is going to bear the risk here. and it really should be born by the shareholders. now i think a good place to start would be senator brown's bill that requires 10% of assets to be held as
capital. i think that's a reasonable ratio. look, if you look at all u.s. companies, they have about 30% debt. it's the financial sector that is almost wholly dependent on debt, which means in a crunch we pay the bill. >> tom: haven't we constructed this, though, phil am haven't we constructed this because of the moral hazard crossed in 2008. in other words, deposits money is to the at risk here. we're talking about shareholder equity money at risk. didn't we cross its rub rick back four years ago? -- rubric four years ago? >> well, the fact is that we crossed it in the taxpayers weighted in. >> because capital was so thin. and again, given the context of this very fragile economy, we could be back in that same situation. and remember, they're talking about risk weight add sets which means, for example, risk weight put on sovereign debt in your was zero. the risk weight put on mortgage securities was zero. so it really means if you are talking 7% risk weight
it is probably 3% of total assets. its way too thin. some have argued this will driver up the cost of lending but a study shows that moving disease standards might increase lending spreads by about 1/8 of 1%. you compare that to the societal and economic cost of another meltdown there is no comparison. >> tom: it is always great to hear your insides after sharing that financial crisis inquiry commission. phil angelides with us this evening from sacramento. >> thank you so much. >> tom: initially hopes of more federal reserve stimulus helped
stocks, but as immediate help didn't seem to be in the offing from the fed's chairman, stocks came off their highs and gold fell. gold dropped about 3%, down $46 an ounce to settled back below $1,600. as for stocks, the s&p 500 hit its best level of the day in the first hour of trading before settling into smaller gains. then just after 3p.m. eastern time, the fed released plans to require big banks to hold more money in case of a financial emergency. the earlier gains vanished, with the index finishing essentially unchanged. volume on the big board totaled 847 million. 1.6 billion shares on the nasdaq. the utility sector led the gainers, up 0.7%. the industrial sector was up, partly thanks to the interest rate cut in china. industrials up 0.6%. conglomerate, united technology was a stand-out among industrial stocks. today's 2.4% gain was the biggest percentage winner among dow stocks. the buying came on almost twice
usual volume, with the stock bouncing off a six month low yesterday. the biggest industrial loser was filtration company pall. shares sank more than 4%. volume more than quadrupled as shares sit at their lowest price since november. it reported a drop in core quarterly earnings, flat revenue and higher expenses. utility excelon thinks natural gas and electricity prices are bottoming. that was enough optimism to help shares plug in to some buying. the stock jumped 4% as volume doubled. natural gas prices fell, so too had excelon's share price this year. the company expects natural gas prices to rise and older power plants to be retired, helping revenues. truck-maker navistar international hit the brakes on its financial forecast today. the company has been under pressure thanks to warranty expenses for a new engine. that new engine is supposed to meet e.p.a. smog guidelines but at a lower price. the e.p.a. has not yet given the engines an okay. shares certainly hit the brakes,
falling 14.4%, hitting a new 52 week low. demand for commercial trucks has softened; additionally, the firm announced an upper management shake-up, but c.e.o. dan ustian remains in place. rival engine maker cummins bounced up more than 1.5%. shares had been at a five month low earlier this week. a couple of very different clothing retailers had their shares headed in the same direction. yoga athletic wear firm lulu- lemon fell almost 9% after warning big sales growth is slowing this quarter. first quarter same store sales were up 25%. it expects this quarter sales to slow to low double digits growth. men's wearhouse fell almost 19% after a weak profit outlook. the company blames a drop in sales of uniforms in the united kingdom for the disappointment. a mixed finish in our exchange traded fund market flash, the s&p 500 and emerging market funds were the two gainers among the five most actively traded e.t.f.s. and that's tonight's "market foc
>> tom: the presidential election is still months away, but the republicans claimed a small victory today in fundraising. republican contender mitt romney raised more than $76 million in may. president obama brought in $60 million. romney raised all his money on pushing a platform of small government and lower taxes. sylvia hall breaks down romney's plan as we continue our coverage of the 2012 election, jobs and the economy. >> reporter: speaking behind a podium labeled "putting jobs first," mitt romney sends his message to crowds across america.
>> instead of having a government take your money, and throwing it at their bad ideas, i want to lower the tax rates and simplify the tax code, and get the american economy running again at full strength. >> reporter: to do it, romney wants to drastically change the tax code, cut taxes across the board by roughly 20%, cut the corporate tax rate to 25%, and eliminate some tax breaks. also in his economic plan, capping federal spending at 20% of the national g.d.p. he also wants to repeal big regulations, like health care reform and the dodd-frank financial reforms, promote domestic energy production, build solid trade relationships, and crack down on china for its currency practices. >> he's got a history of being a problem solver. and so what governor romney's going to do is he's going to make a list of all the fiscal policy problems and our economic policy problems, and he's just going to go after them one by one and knock them down. >> reporter: also in the plan, retraining workers. but one thing you don't see in a romney plan is a federal jobs program.
instead, he's focused on business-friendly reforms that aim to entice investment here. >> its' a big job creator to do that, but its' not something that you need to call a targeted jobs plan, because really, the whole philosophy is to have a smart government that creates a level, fair playing field-- an attractive playing field, and then to let the economy grow again. >> reporter: but as all campaign platforms do, the plan draws plenty of criticism. economist josh bivens says it misdiagnoses what's ailing the economy. >> the reason why unemployment is high today is because there isn't demand for goods and services. and he does nothing to address that, in fact he would make it worse by slashing government spending, and i think it's hard to recover from that. >> reporter: right now, romney and president obama are neck- and-neck in the polls, competing for support from undecided voters, and that pool could be growing, a new report shows nearly 40% of americans are independent voters; a 25 year high. sylvia hall, "n.b.r.," washington.
>> tom: new jobs was the focus today for almost a thousand executives today at the second annual clinton global initiative in chicago. former president bill clinton spokes about entrepreneurship and job re-training. the president of coca-cola refreshments says the beverage company has been hiring, but steve cahillane says companies complaining about not finding qualified workers have to be prepared to do the training themselves. >> we look at people with a capacity to learn and be trained. so we don't expect anybody who comes to work for coca-cola to day one be able to dot job. of course not. but what we look for is somebody who has the desire, the passion to learn and develop and be part of our team. and you know, those people are not always easy to find. dz while we're talking about job creation new claims for jobless benefits
fell last week, down 12,000 to 377,000 claims. that drop comes after four straight weeks of increased claims. tomorrow on "n.b.r." our coverage of election 2012 continues, with a look at president obama's scorecard when it comes to jobs and the economy. and hank smith is our friday "market monitor" guest, he's still bullish on the u.s. market, he's chief investment officer at haverford investments. two hot button issues in the upcoming presidential campaign are the economy and immigration. nowhere do they meet more directly than in the fields of california's central valley. in our "made in america" segment tonight, mike hegedus, reports from salinas, california, how one company is using technology to bridge the gap. >> reporter: it is the sound of technology making up for policy. it is where a machine fills the void left by a declining work force. a romaine field outside salinas, california, high pressure water jets cutting heads of lettuce-- an efficient eliminator of stoop labor better for the workers that remain, and better for the
company that has seen its labor pool drained by foggy immigration rules. >> the purpose of the machine is to reduce our dependency on foreign labor, and on numbers in the field in general. all of our fields prior to harvest are micro tested, where they're coming in and there are random samples taken throughout the field, and before we can bring our equipment in to harvest, those samples have been sent to a lab and the field has been deemed clear. >> reporter: this, one of two automated harvesters built and designed by taylor farms. a $1.6 billion a year player in the produce business, contracting with hundreds of farmers throughout california and arizona. taylor farms, a 17 year old company has a 65% share of the food service market, providinglñ lettuce to some very well known names. >> subway, mcdonalds, burger king, taco bell, if you go to a local restaurant, red lobster, olive gardens, outback steakhouse.
>> this is our loading dock. we have 23 dock doors, we start loading trucks around seven in the morning and we pretty much load all night. >> reporter: 13.5 million pounds of finished product, from romaine to iceberg, from carrots to cabbage flow through this the food service processing plant in salinas. taylor farms also has about a 20% share of the retail produce sector. >> we're all about getting it in and getting it out as quickly as possible. so we will turn this entire warehouse in one day. so everything that i see here is one in one day and then its filled again. filled again, yup. >> reporter: while staggering to think about, nothing compares to this, the entire plant, everything except the walls is moved to yuma arizona in november, and then back to salinas in the spring, the whole plant follows the growing season. >> if it's moving, its going to yuma? >> reporter: the 1000 or so plant workers migrate as well,
with about a 95% retention rate, the same not true for field workers thus, the automated harvesters making sure the lettuce is picked, when and how it needs to be. >> we're looking for a nice upright, tight hearted starting to close in head. >> reporter: mike hegedus, "n.b.r.," salinas, california. >> tom: next week on "made in america." sunset media, mike hegedus shows us how the long-time how-to publisher is sowing the seeds of new business in the shifting soil of modern media. >> tom: that's "n.b.r." for thursday, june 7. we want to remind you this is the time of year your public television station seeks your support, support that makes programs like "n.b.r." possible. goodnight everyone, we'll see you online at: www.nbr.com and back here tomorrow evening. "nightly business report" is brought to you by:
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