captioningponsored by wpbt >> paul: no sign of inflatn but consumers still ve the ues. from the jobs cture to housg, we look at what's weighing on the american consumer. >> jeff: more nightmes for eing's dreamliner as an italian supplieror the 787 jumbo jet hits snag with the plane's fusela. comingp: what the latest production delay mns for investors. >> paul: tonight market monitor est says despite today's market losses is is still a re bull market. he'sames stack, president of stack financial management and vestech research. >> i more in tune with how much money i he to spend. >> jeff: he's ma the switch om credit cards to debit cards, and he's t alone. it's arend that's gaining steam as the recession rls on. >> paul: i paul kangas. >> jeff: and i'm jeff stine. susie gharib ioff tonight. this is "nhtly business report" for friday, aust 14.

"nightly business report" is made possibley: th program was made possible byontributions to your pbs station from viewers like u. thank you. >> jeff: gooevening, everyone. call it a casef the summer aahs. the consumer blues or too much d ink on household balance sheets. the result: a surpsing drop in early gust consumer sentiment. ascott gurvey reports, americans are still too rried out jobs to hit the mall. >> rorter: it's been said many

times, hap consumers spend and unhappy consumers keep tir money in theirockets. or even woe, in a bank. the markets greeted with dippointment the news that consumer stiment fell in the first part of augu. cary leahey of decision economs notes the decline in sentiment defied expections. >>t would make sense that since the number of people applying for umployment insunce benefits have dropped 100,000 workers in a coue of monthsthat would be reflected in consumer nfidence and sentiment and those nuers woulstart getting better. buyou did not and i think it's just rlective of the fact that even though firings ha gone down nobody thinks hings are going to go up. >> reporr: president obama tookome heat following today's report. criticsay he was overly cautious in acting to recent reports on gwth and emplment, and that discouraged consumers. at lst there are few signs of inflation anywhere. the consumer pri index for the ar ending in july declined re than any other 12-month period in 60 years. stable prices might expected to drive consumers to the stores, but dad wyss of s&p says jobs trump prices a time.

>> it really doesn really mean too mu for the recovery. it's me of a symptom, the lack of recovery. the weak econo means corpations do not have any ility to raise prices. and the weakabor markets means labor costs aren't gng up so they don't have toaise labor prices. >> reporter: the are signs some compani have ramped up production to replenish inventories. but unless csumer demand creases, those production increas will be short-lived. >> until consumers feel more confident about the econom which probably means two tngs, they've got toaise their savings rates anthey've got to redu their debt loads, they're not gog to be hitting the malls very hard. reporter: leahey says the decline in sentiment means retailers face tough back to school shoppg season and even the winter holidays may disappoint. ott gurvey, "nightly busines report," new yor >> jeff: oil pces tumbled to a three we low on that weak consumer confidence ading. in new york trading, lig sweet crude foseptember delivery settled at $67.51 a barrel, wn $3.01 or 4%.

investors e worried a weak ecomic recovery will make for ntinued weakness in global o demand. >> paul: profit takers took corol of wall street in the early going today, as seers linked no ange in july consumer prices a very slgish economy. derscoring that was the surpriseip in early august consumer confidence. after o hours, the dow was off 163 points and the nasdaq do 39 points. a beer than expected 5/10 percenrise in july industrial production helped stocks stabize and cut the losses by the final bell. the dow closed off 76.79 a 9321.40. this week rose twice and fell three times for a t loss of 48.67 points. the nasdaq lost 233 to 1985.52 today. also rose twice and fell three times is week for a net ss of 14.73 points. the s&p 0 fell 8.64 to 1004.09

today and for the we overall lost 6.39 points. in the bond rket, the 10 year te climbed 10/32 to 100-15/3 putting thyield at 3.57%. >> paul: tough enomic times have more coumers saying no to cred cards. a new study shs debit cards have becomthe preferred form of plastic in the u.s. surpassingredit card transactionsor the first time ever. but as stephanie dhue reports, for consums, the trend has its pluses and minuses. >>eporter: josh clark is among the increasing number americans who are choosingebit er credit. he made the swit three months ago, after ming out his credit card while srting a designer jean busines

>> iealized if i put something on my credit card, i'm goingo be ping interest on it until i can fully pay it. >> reporr: tight credit is also encouraging more debit rd use. and consums are using it to manage their money. clark says it helps him contl spending. >> i check my bank accnt more frequently than check my creditard account, so i'm more in tune with howuch money i ve to spend. >> reporter: as debicard use surpasses creditards that presents newhallenges for both consumerand regulators. bit cards come with fewer ilt-in protections. consumer advocate ed mierzwiki warns in thease of a lost or stolen card numberthe debit card holder n be on the hook for much more than if credit card were us. >> the maximum amount you ca lose with a edit card is only $50. with a debit cd, you could lose all the money in yo account you don't comply with l of the complicated rules. the credit caris protected very wel debit card is not.

>> reporter: consumers can ao get in over their heads wi charges fooverdrawing their accounts. the bankg industry takes in $38 billion a year in overaft fees. nks also profit from fees charged to merchantso process debicard transactions. >> the banks allowour debit card to rk at a merchant, even when you don't have monein your accnt and they do that to encourage overdraffee income, so youuy a $4 latte and it really cosyou $4 plus a $35 fee, $39.0 >> reporter: theederal reserve and lawmakers are coidering cracking down on overdraft fs. the financial services industry's sco talbott says the consumerlays a role in avoid fees. >> customerseed to be careful to make sure they know wt the balance isn their accounts and banks make it ry easy to know theibalance, on the telephone, the a.t.m., evenn email alert sento your phone, checking on your bckberry, it's very easy to understd your balance. >> reporter: josh clk says he learned hilesson the hard way

d now checks his balance oft to avoid overdraft fees. stephanie dh, "nightly busiss report," washington. >> jeff: colial bancgroup failed tonht as published ports say the f.d.i.c. has arranged deal to take control of the troubled bank andell its assets. the montgome, alabama-based colonial has 355 branches five states with aut $25 llion in assets. it wld be the sixth largest bank failu in u.s. history and by far the larst bank failure is year. earlier this wk, colonial said might not be able to contin as a going conce.

>> jeff: microsoftnd yahoo's joint venture y be able to give search giant ogle a run for s money. intern research firm com-score says in june, nearly two-this of all online searches in th u.s. were do using google. together micro-hoo had8%. but, comscore ys the newly combined entity could beme more competitiveecause 75% of all users conduct least one search a mth on each service. that rais the question: whether people a using google out of hab, or because they favor the brand. paul, if is just a habit, that leaves room for micro-hoo target those google searers. >> pau jeff, google, microsoft and yahoo shares were alamong the nasdaq's most acve. we'll see them awe take a look at our stocks in t news tonight.

>> jef until the recent global slowdown, southeast asia was me to some of the world's fastest growing ecomies. but investment in the region infrtructure hasn't kept up. and that could cree a big roadblock to future economic growth. as riamaelzer reports, cambod is one of the countries with a lot of pothol to fill. >> reporte this simple two- lane road is what qualifieas a national higay in cambodia. it also qualifies as maj progress built wi american aid money, it h slashed travel times between the capital anthe country's only por cambodia's infstructure was in a pitiful stateven before 25 years of war d its damage. >> it s just over a decade ago now that the ker rouge guerrillas finallyurrendered and the current pre minister hun sen cemented his hold power. it was only then tt the task of rebuilding-- in most cases building froscratch cambodia's infrastructure-- cou begin in

earnest. >> reporr: multilateral agenciesnd foreign governments have pumd in billions of dollars to pave roads, bui bridges, bring ped water and power, a provide irrigation. thisapanese-funded irrigation oject outside phnom penh has boosd rice production in the area from just one hvest a ar to three. commerceinister cham prasidh points out tt his country alrey produces a large surplus of rice with only around a third of agrictural land irrigated. >> if we can go to 8 or 90% or 10, cambodia is going to be one of the superpower for ce exports and agricultural products. and this meets our dam to make cambodia the graary of soutast asia. >> reporter:ewly paved roads now allow farmers to getheir produce to markequicker, tting costs for them, d for consumers.

business people in cies-- like erican tim belcourt who owns coastal resort he-- are also seng the benefits of improved infrtructure. >> yeah,ower outages used to be daily you could expectt for three to four hours a day, so ia weekly basis it would b20-30 hours. w we get t to three hours a month. so it's ch better. >> repter: still, except in the thrivi tourism and garment makingndustries, poor inastructure has historically be a serious impediment to foign investment here, world bank economist stephane imbert sa. >>ome others, agro business or other light manufauring simply never came because of ese constraint so the fact that tse constraints over time are ing removed should help e country diversify its base. >> reporter: tre's still plenty lt to do in cambodia, though, especially in rul areas. rajat nag of t asian

developmenbank says asia as a whole will have toake huge investments innfrastructure if it's to stain high growth over the long term. >> asia ll need about $3 trillion in the next dade-- $300 blion a year. we see posite signs. we don't have to spend tim convinci governments on the importance of infrastructure it's n a question of getting on with . >> repter: much as cambodia has been trying too for the past decade the long, and often bump road toward a more prosrous future. rian maelz, "nightly business report,"ambodia. >>aul: monday, while cash for clunkersolls on, some auto dealers are launching eir own stimulus packa. >> jeff: two wholesa drug buyers are suing mer. accusing the pharmeutical giant blocking production of a generic veion of its allergy drug singulair. thsuits claim merck fraudently obtained a patent anthat's eventing drug distributors fr buying those cheaper

versions merck says itsatent is valid and plans toefends itself against the lawsts. there's a loat stake... singulair les topped $4 billion last year. >> paul: if you receive mecare benefits, plan to y a little more for preription drugs next year. dicare officials say on average, siors will pay $30 a month for stanalone drug plans. th's $2 more than this year. nce premiums vary from plan plan, the ext amount of won't be known until octer, when the plans are finalid.

>> jeff: hers a look at what's happening next week: our friday market motor guest is mark skoun, editor of orecasts and strategies." on the enomic calendar: tuesday, we'll see july' producer price ind along with july housing start wednesday, we'll seehe weekly report on crude oil and soline inventorie thursday, it'seekly jobless claims and the july leadg dicators. friday, existingome sales for ju. also, nexteek, quarterly results from hewlettackard, home depot, lowe's, sears d target. >>aul: my guest market monitor this wk is james stack, president of stack fancial management and publisherf the investech researcharket tter. jim welce back to n.b.r.

stil decisively bullish, yes, i think have more potential gains ahead. we have to keep in md by historical standds this market is way off i highs. bothhe dow and the s&p would have to gain over 50% from today's levels to get back to where is bear market srted. >> paul: somethi that seems to trouble wall street ite a t is ts fading consumer seiment we saw today. what can give that a boost? >> keep in mind,e just had a seack in sentiment. we had a big rally in nsumer sentiment and confiden coming t of the march lows. wee had a slight setback, and it hasn't followed vy much in consum expectations -- that

is, lookinsix months down the road, so i think we're going to see consumer confidencrebound next month. >>aul: how serious a thre is inflation in light of t massive infusion of stimulus dolls? >> we, inflation will be a proble it's not a question of if, it's a question ofwhen. right now don't have ination pressures present in the economy because of the slack fromhe recessi, but looking forward, ihink the greatest risk o the onewarning flag to watcwill be the s. doll. if the dollar drops under th lows of la year, tt will be a warning flag that the fed is gog to have to push rates up faster, that we're going to ha inflatiopressures and nothing kills a bullarket faster. >> paul: what vestment strate are you recommenng to your subscribers at is point? >> well, we are up to a 97% inve to locion. that's our highest allocatio sinc2003, the fir yearof thlastull mart and we're still folwing a safety-first strategy. we're focusing on sectors that

we feel are gng to pticipate but without taking risks in the financial sector -- in other words, i don't thi we completely through the sh-out in the real estate sector so we're t buying the bas, we are looking attocks in terms of valuation not montum. i wa my stocks sellingat low price-to-earnis and low price cash levels and we'reeeping our eyesopen. i'm not blindly bullish, i'm objectively blish and we're wahing for those warning fgs evenhough we don't see them right now. >> paul: riefly, what a your favorite sectors? >> well the sectors that normally lead a bull market will be consumer discretiary stocks, and we have one recommendation ithat area tonight. also, technogy stocks. the financials, also, bu at the sa time i don't want to play around in thbanking sector to see which ones areoing to still run intoroblems from here on out. >> pl: in mah, you gaveur viewers three stk picks. let's see howthey've done since en. abbott labs wn 4.8%. are you still with it?

>> abbt labs haseally been held back because of the hlth care fea about the legislation and how it mht impact the company, but that coany is selling at the lowest valuation -- the cheapest lel in over0 years, so yes, we are holding that one. >> paul: v.f. corp has done well, up over 12%. are you still wi that? >> yea we're still holding v.f. corp, north base, lee, wrangler, ey manucture those. >> paul: one other recommendation whi is nicely onhe plus de, walgreen up 20%. are you staying wh it? >> yeah, walgreen's is going to benefit as we co out ofthis recession. >> pl: how about some new recommdations, jim? >> on the consumer discretionary side, nike, you don't think of it as such butts a global stk. >> paul: n.k. on the big board. >> a lot of th's coming from asn growth. we also likeharles schwab & compy. it's going tbenefit from the sh-out in the banking seor,

it's notust a discount brokerage firm, 's providi more bankingervices -- in fact, we use schwab institutional as a custodial firm for our trading accounts. >> paul:one more. >> pepso. people think of pepsico as stodgy but it's uble-digit grth companyelling at its lowest price-to-cash flo in 20 year it ps an attractive 3% vidend and it's increased that dividend every yeafor 37 years. >> paul: do you own the stocks mentioned or have any othe disclosures to make? >> absolutelypaul, we own all of them. i wouldn recommend them if we dn't like them and we also use schw institionalas our custodial firm as mentioned. >> paul: they wod benefit nicely from a big bull market a well, would theynot? >> they're all in sectors th should be among theleaders in this bull market. >> paul: very od. unfortunately, our timis up, but jim, as always, thanks for being with us. >> it's my pleasure, paul. >> paul: my est, jim stack of

investech research. >> jef recapping today's market action, stocks tumble on fresh worries abouthe consumer the dow drped 76 points, and the nasd fell 23 points. learn more about the storie in tonight's brocast, to watch our streaming video and toake part in our daily bloggo to "night business report" on pbs.org. you can also emails at nbr@pborg. >> jeff: and finally tight, the x man cometh. the first case since the.r.s. settled with swiss banu.b.s. has netted a guilty pl. prosutors say john mccarthy put a miion dollars into a swiss u.b.s. accou in 2003 to oid paying taxes here. he's going to pld guilty next month. mccarthy fes up to five years in prison anup to $250,000 in nes. in a settlement with t justice department wednesday, u.s. agreed to releasmccarthy's name and the names of 52,0 other americanwith swiss accounts so you can be sure, th won't the last tax evasion claim be made by the i.r.s

>>aul: the difference between legal avoidance an tax evasion. >> don't hire u.b.s. to me th decision. >> pl: apparently not. >> jeff: that's "nightly business report" f friday, aust 14. i'm jeff yasti. goodnight eryone, and have a great weekend, you too paul. >> paul: and yous well jeff. i'm ul kangas. wishing all of you the best good buys. ightly business report" is made possible by this program was madpossible by contributionso your pbs ation from viewers like you. thank you. captioning sponsed by wpbt

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