>> i saw today that one of the house republicans referred to what they're doing as "high stakes poker." he's right about the stakes, but this is not poker. this is not a game. this shouldn't be politics as usual. >> tom: a lump of coal for millions of working americans-- extending the payroll tax falls victim to partisan politics. >> suzanne: still, stocks surge with the blue chips turning in a triple-digit gain on encouraging economic news both here and abroad. it's "nightly business report" for tuesday, december 20. this is "nightly business report" with susie gharib and tom hudson.

"nightly business report" is made possible by: captioning sponsored by wpbt >> tom: good evening and thanks for joining us. my colleague susie gharib is off this week. i'm joined by suzanne pratt. suzanne, investors got an early holiday gift today-- a hefty rally in stocks. >> suzanne: tom, it was enough to pull the dow industrials into positive territory for the month. strength in the housing market was a big support for equities. construction of new homes rose 9.3% in november, the best showing since april of last year. >> tom: on top of that, investors were cheered by good european news.

first, german business and consumer confidence rose unexpectedly, and then spain pulled off a successful bond auction. the dow tacked on 337 points to close back above 12,000. the nasdaq surged 80 points and the s&p 500 was up nearly 36 points. despite the positive news out of europe, credit ratings agency fitch became the latest to warn european banks about possible downgrades. wolfgang koester is c.e.o. of fireapps, a currency management firm. joining me tonight from the nasdaq. wolfgang koester, it has been a week and a half since the latest european debt deal. have we put the worryries behin us? >> that would be nice. but you need some good news with a lot of bad news, unfortunately sxi, think europe is doing a very good job of managing the euro towards the ultimate break up. so some good news there, but

not good enough to stop the european euro problem. >> tom: managing the euro to the ultimate breakup. does the euro currency survive 2012 with that outlook? >> i don't believe so. i don't believe so. and i think it's not just myself. we're hearing a lot of boards asking ceos and coming to us ñi and saying help us understand the exposures, because we need to be prepared. you saw the cls, the clearing bank for foreign exchange, 62 banks prepare for the euro breakup. you're seeing the fed today coming out wanting to increase further capital requirements for the banks. again, i think that has to do with what they're afraid of happening in europe. you saw the united kingdom coming out and asking the banks to come together to prepare for a euro break up. >> wolfgang, you mentioned the federal reserve action. we'll have a report on that in a moment. this is significant. you don't think the euro is going to be around as an

international currency a year from now. how are companies preparing for that to protect themselves and shareholders? >> they're doing three things. number one and most importantly, they're understanding their exposure. they're preparing to understand it. two levels. one, euro versus all the other currencys. in the pharma industry, it's not all about the euro and the dollar. it's the euro versus swiss >> frank: and yen. second level is within the euro zone of 17 countries where are all the revenues coming from and where are the expenses going to be, and what they can do to offset those. >> tom: if understanding exposure to number one, what's two and three? >> liquidity. what does liquidity do. it's pretty cheap right now, so managing that is number two. and number three is ceos and cfos need to be able to articulate to their investors how they're understanding the problem and how they're going to manage the problem. >> tom: 30 seconds.

vito ask. any good examples of company that is are in the early stages of the planning? >> those in the early stage of planning doing a good job. sure. googles. accenture, monsanto. some of those companies have done a good job. and other companies c the ceos are not articulating their exposures well, and not getting the confidence. >> tom: quite the forecast. no euro a year from now. the guest is wolfgang koester with currency management firm, fire app. >> nice to see you. >> suzanne: 11 more days till the payroll tax cut expires. doctors, the unemployed, and anyone drawing a paycheck is likely to have less cash to spend come january now that congress has gridlocked over the central issue of an extension of the tax cut. republicans in the house of representatives today voted down a bipartisan two-month extension of the payroll tax cut. the bill also included extending unemployment benefits and medicare payments. darren gersh takes a look at what may come next. >> reporter: defiant house

republicans today almost taunted democrats and republicans in the senate, urging them to get back to work. >> america is not on vacation, nor should the senate be. we have two weeks to find a solution. >> reporter: but having passed a temporary two-month extension of current economic policy, there seems to be little chance senators will return to washington. house speaker john boehner argued waiting won't make the deal-making any easier. >> who doesn't believe that if we don't do this now, we will be right here doing the same thing we are doing now? >> reporter: unless someone blinks, it now appears three legislative hits will take place on january 1. the payroll tax cut will go back up to regular rate of 6.2%; emergency unemployment benefits will expire; and the so-called "doc fix" will lapse, causing medicare to slash payments to doctors by 27%. all that could add up to sizeable economic punch.

>> if everybody thinks it will be settled soon, then the impact will be much, much smaller. where we get into trouble is if it looks like maybe that gridlock is never going to be sorted out, maybe these things are going to disappear permanently. then, the impact is really going to build. >> reporter: there is a slight chance the house or senate could blink, rushing a fix through in the few days left before the end of the year. but the most likely outcome now seems to be that a solution will not be found until late january. and many democrats seemed happy today to keep fighting a battle that pits republicans in the house against many republicans in the senate. >> what we are witnessing today is the triumph of tea party extremism over the good of the country. >> reporter: congress now seems virtually certain to end the year the way it began it-- lurching from one increasingly short-term fix or temporary patch to another. darren gersh, "nightly business report," washington. >> tom: the federal reserve today proposing tough new rules on capital and liquidity for the

nation's biggest banks. they're designed to prevent another "too big to fail" scenario, and they'll be rolled out in two phases. phase one focuses on the stress tests and capital ratios already issued by the fed. they require american banks with more than $50 billion in assets to show they can meet a risk- based capital ratio of 5%. phase two is based on the fed's adaptation of the "basel three" international banking standards. those rules are expected in 2019. they boost capital ratios to 7%, and add additional surcharges for the biggest banks. the fed is taking public comment on the proposals until march 31. >> i came to realize that they really wanted jobs, good jobs. >> suzanne: still ahead-- how one coffee company helps small farmers in africa by rethinking the way they do business. our series "conscious capital" continues. >> tom: it was supposed to be the biggest deal of the year. now, it's the biggest dud of a deal in a decade.

in deciding to end its effort to buy t-mobile, at&t claimed not completing the merger doesn't change the reality of the wireless industry facing a capacity crunch. erika miller takes a closer look at the options left for at&t and t-mobile. >> reporter: it's no secret that we americans love our smart phones and tablet computers, maybe a little too much. there are more than 323 million wireless subscriptions in the u.s., and 307 million people living here. in other words, more wireless subscriptions than residents. cell phone companies like at&t are clamoring for more spectrum, or airwaves, to meet that growing demand. but analysts say at&t's options are limited. >> they can invest in the network that they have, and roll out 4g services with the road map that they laid forward with t-mobile, and they can try to gather additional spectrum through alternative means. >> reporter: so at&t is asking regulators to quickly approve

its pending purchase of unused spectrum from qualcomm. but that small deal won't solve congestion problems for at&t and other providers long-term. they want congress to release additional spectrum. >> the carriers really want additional spectrum to be made available, so they can provide additional capacity to their customers without the necessity maybe of investing maybe as heavily in network equipment. >> reporter: but what about t-mobile? it has only about a third of the subscribers of at&t and verizon wireless. >> given its standing as the fourth largest wireless carrier, t-mobile is expected to remain up for sale by parent deutsche telecom. in the meantime, expect t-mobile to ink more strategic partnerships. >> we think they are going to continue to try to work with other providers. so they have a roaming agreement with at&t that is part of this deal. we think they are going to try to find and sign other agreements with other carriers so they can allocate some of

their resources in a smart way. >> reporter: last week, dish network said it may be interested in doing a deal with t-mobile, if its merger with at&t fell apart. but others think dish would be better off partnering with at&t. >> there's a lot of speculation out there that dish looks really attractive to at&t as a second strategy, a fallback strategy, now that t-mobile has been killed. >> reporter: but don't expect another big merger proposal from at&t in the next few months. analysts say the company needs to repair its relationship with regulators and focus on improving its network. erika miller, "nightly business report," new york. >> suzanne: a partial victory for apple in a patent dispute with taiwanese handset maker htc. a federal agency sided with apple on a single claim related to key features in its iphones. the decision means current owners of htc phones will no longer be able to do things like tap on a phone number in an email and automatically make a phone call. this is the first major ruling supporting apple's claim that devices running google's android system copy the iphone. htc plans to change its phones

to comply with the ruling. for its part, google is expected to work on finding a different way to offer the same data features covered by apple patent. >> tom: just enough to fuel the big stock rally today. updated with the details in tonight's market focus. strong new housing data in the u.s. and some better than expected news our of europe was enough to fuel that big stock rally today. the market saw buying right from the opening bell, and the s&p 500 was able to build on the early gains throughout the session, ending with a 3% gain. let's look at today's sharp rally in context with the past 180 sessions. we have seen the index trade in a tighter and tighter range, with higher lows and lower highs. the chart shows how the index is forming a wedge. analysts will now look for it to break out or break down. after the closing bell, the

market focus fell on earnings from oracle. the business software giant's results came in like a skunk at a picnic. the company's fiscal second quarter earnings were one penny shy of expectations. revenues were also shy of estimates. hardware sales fell by 14% and software sales were up a meager 2%. shares saw some buying ahead of the results during the regular session, closing up 2%. but after the top and bottom lines came in lighter than expected, shares fell 8% in after-hours action. that puts the stock below $27 per share for the first time since september. before the shadow oracle cast, perhaps it was the better u.s. housing data or some relief out of europe, but today's gains were broad-based and led by energy stocks. the energy sector jumped 4% on the backs of some economic optimism, as well as a $3 per barrel jump in crude oil prices. the materials and financial sectors weren't far behind, up almost 4% each.

driving the gains in energy were service companies. land-based driller nabors popped more than 8.5%. cameron international provides gear to get oil and natural gas out of the ground. it's shares jumped almost 8%, and halliburton popped about the same. helping the financial sector was brokerage jefferies group. the stock soared by more than 22%. the stock had been trending lower through the summer and fall over worries about exposure to the debt crisis in europe. while quarterly earnings fell, the company also said it has reduced its leverage from 13-to- one down to ten-to-one. part of today's rally was sparked by much better than expected data on new home and apartment building construction. this exchange-traded fund follows homebuilders, and it gained more than 5%. while last month's data was pushed up by new apartment construction, analysts are hopeful it could benefit single family home construction, too. leading the gains, pulte group, kb home, and toll brothers, up between 6% and 10% each. kb home could set the tone

tomorrow for the sector. it reports earnings before the opening bell. a couple of food makers saw their shares move in opposite directions as they both wrestle with rising commodity costs. general mills shares were down a fraction after earnings fell, due in part to its buyout of yoplait yogurt. still, profits were a little lighter than anticipated. meantime, conagra stock was up 4%, rising above $26 per share for the first time since july. earnings were better than expected. both conagra and general mills expect the next six months to be stronger as recent price hikes take hold. and that's tonight's "market focus."

>> suzanne: for many americans, coffee is more than a cup of joe that wakes them up in the morning; it's almost a fine wine. a small coffee importer is cashing in on the premium coffee craze in a unique way. as we continue our series "conscious capital," diane eastabrook shows us how crop to cup is making money by empowering coffee farmers. >> reporter: there are coffee hounds, and then there are coffee connoisseurs. they flock to ipsento on chicago's northwest side, where coffee is roasted onsite, then served up with steamed milk or without. >> wow, it's big. it's unique. this is an espresso. >> reporter: coffee is 30-year- old jacob elster's life. he co-founded crop to cup four years ago after working on social projects with coffee farmers in africa. the company buys coffee directly

from growers in uganda and burundi who practice sustainable farming. it then sells the product directly to coffee houses like ipsento, and to consumers over its web site. videos let customers see who's behind their coffee, and that personal relationship helps the farmers command higher prices for their crops. the concept is called "traceable" or "relationship" coffee, and elster says it's a win-win for everyone. >> not only does that allow us to get coffee profiles that are more in tune with what the market wants, but the process is very engaging, and it highlights some of the differences of what we provide versus the commodity coffee importer. >> reporter: the untied states imports over 130,000 tons of coffee a month. it comes from roughly 60 nations, and most of it is traded like any other commodity. by the time a cup of coffee like this gets to a consumer like me, it's hard to say where it came from. >> with this coffee, we're getting just tons of chocolate.

>> reporter: neil balkcom is sort of a coffee sommelier. he sniffs and slurps the coffee crop to cup buys, looking for unsavory beans. if he finds any, he'll trace them back to the growers and help them identify potential problems. in one case, the beans weren't to blame, but a washing station was. >> there was a piece of machinery that needed to be calibrated and it wasn't being calibrated. therefore, it was letting through certain defects. >> reporter: elster says that kind of information is critical to farmers. to him, crop to cup is as much about empowering rural africa as it about selling coffee. >> working with and living with the communities i worked with in uganda, i came to realize that they really wanted jobs, and good jobs, as a first starter. with that came a lot of pride and a lot of dignity to take care of themselves. >> reporter: recently, crop to cup brought that philosophy home to chicago. it's paying developmentally disabled adults at the misericordia home to package coffee.

assistant executive director lois gates says the jobs have made a big difference in the lives of the workers. >> they like to have a reason to get up in the morning, they like to accomplish, and they like to be proud of what they do. >> reporter: this year, crop to cup will turn a profit for the first time. elster admits that's a big accomplishment for him and the company. but an even bigger goal is becoming a model for other businesses at home and abroad. >> i'll consider crop to cup successful if we can get people to copy us, if we can help grow the market for traceable coffee, if we can really reintroduce a new way of dealing with the people who provide all of our commodities. >> reporter: diane eastabrook, "nightly business report," chicago. >> suzanne: tomorrow, as our series "conscious capital" continues, diane takes us to a chicago company that's turning charitable giving into an art form. >> tom: also on the calendar for tomorrow, we'll see november existing home sales, and the latest data on crude oil and gasoline supplies, as well as earnings from retailers bed, bath, and beyond, carmax, and walgreen.

also tomorrow, dan weiner is our "street critique" guest. he's c.e.o. at adviser investments. you can email your questions on mutual funds and exchange traded funds to streetcritique@nbr.com. >> suzanne: hot competition and poor safety ratings have honda scrambling to revamp its new civic. the 2012 model has been in showrooms just eight months and sales have been poor. now, honda's promising an overhauled civic by the end of next year. it normally spends about three years on a model makeover. "consumer reports" panned the 2012 civic earlier this year, calling it less agile than its predecessor. the magazine also withheld its coveted "recommended buy" rating. >> tom: as the song goes, "know when to hold 'em, know when to fold 'em." brent buckley folded today. he's the co-founder of online poker site absolute poker. in federal court, he admitted his company did wrong by accepting credit cards from internet gamblers. absolute poker billed customers, charging their gambling losses to fictitious companies as phony merchandise, violating a 2006

federal law. buckley's plea deal means he'll face 12 to 18 months in jail when sentenced in april. >> suzanne: when it comes to creating jobs and the next generation of workers, tonight's commentator says it all starts with making college education a national priority. here's jamie merisotis,

president and c.e.o. of the lumina foundation. >> as the year draws to a close, it's a perfect time to look ahead and ask what it will take to make america's economy stronger in 2012. most experts say that the education levels of our workforce will be critical to the nation's long-term economic prosperity. already, the majority of the new jobs being created require some form of post-secondary education. but with college costs so high, and with so few prospects for significant new investment, we need to start taking seriously the redesign of our higher education system. in that new system, we'll need to substantially increase the number of high-quality degrees and credentials, at a lower cost per degree, while improving access and equity for the least well-served populations. and what students learn is going to be much more important than where they get their degree. streamlining costs and reducing tuition will become the watchwords of 2012. incentives for students to stay in school and complete their degrees faster will become commonplace.

so, too, will new academic delivery models like carnegie mellon university's open learning initiative, which offers courses that can be completed nearly twice as fast as traditional courses, with the same or better student performance. america has benefited enormously from the ingenuity, innovation, and opportunity that higher education offers. in 2012, we'll be looking ahead, not back, to what it can offer as we build a stronger, more prosperous nation. i'm jamie merisotis. >> tom: nike put up some numbers after the close tonight, which were better than expected. the shoe giant earned $1 per share, three cents better than forecast. while the company experienced higher costs, it also saw better demand for its products in the u.s., china and emerging markets. in tonight's "beyond the scoreboard," rick horrow thinks nike is just hitting its stride. >> reporter: one of the most powerful brands in sports, nike,

has potential for a banner year in 2012. the sports apparel giant becomes the nfl's official uniform provider next year, its first time with the rights since the mid-1990s. the nfl contract has been worth $500 million a year to reebok, the league's jersey supplier since 2001. but nike's financial windfall in 2012 wont be limited to the united states. the company's also poised to strike it rich in london during the 2012 summer olympics. one of the world's largest nike towns is strategically located next to the olympic village, and an estimated 70% of ticket holders will pass through the store before entering the olympic grounds. the nfl contract and the olympics activation are critical components of nike's long-term plan to grow its direct-to- consumer business. sales in nike stores and on its web site grew 16% last year to $3.2 billion. the company expects to open 100 more stores worldwide over the next three years, which should help total revenues reach $30 billion by 2015.

>> suzanne: and finally tonight, ever wonder how that hot holiday toy got so hot? the answer may be mommy bloggers. those are women who write on the web about all things related to raising children. and they've gone well beyond how to get kids to eat more veggies. they're now penning product reviews for the $22 billion toy market. today, toy companies send out about 70% of their samples to bloggers. tom, as recently as five years ago, almost all of the samples went to traditional media outlets. >> suzanne: that's "nightly business report" for tuesday, december 20. i'm suzanne pratt. good night, everyone, and good night to you, too, tom. >> tom: good night, suzanne. i'm tom hudson. we hope to see all of you again tomorrow night.

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