Microsoft . We have all of that and more tonight on nightly Business Report for friday, september 27th. Good evening, everyone. Its cleanup in aisle 6. Thats because it has been a mess of a week for the retailer, jcpenney. Worst week ever for its shares, down 30 . The Department Store has prospered for more than a century, through the great depression, to world wars, the Online Shopping revolution, but now penneys is in a fight to survive. Samestore sales down eight quarters in a row. A savior brought in and then kicked out. His turnaround plan an unmitigated flop. Then a new boss, the old boss, and yesterday a plan to save cash so they can get through the holidays and into next year. Still, the company is resolute, launching new boutique shops within its stores today. Court reagan has more. Reporter its been a long week for jcpenney shareholders. The beleaguered Department Stores stock price fluctuating in both directions. Ultimately, the stock posts its worst week ever. Late thursday, jcpenney announced an 84 million Share Offering to raise nearly 1 billion. The Department Store says it will use the proceeds for general purposes. But today jcpenney is focusing on the core of its business, selling merchandise. 565 giggle baby and disney shops are opening in jcpenney locations throughout the country, a year after the design partnerships were announced under thenceo, ron johnson. A question in recent months has been the confidence of jcpenn jcpenneys vendor community. In order for the business to survive, jcpenney must maintain the relationships between its suppliers and its design partners. While giggle baby merchandise is just now available for shoppers, founder ali wing says despite jcpenneys broader issues, the only, quote, crazy part of the past year has been the development of 200 new products for her jcpenney shop. We see some early numbers online, and i think some of their online are very quickly bound and having online perform is really encouraging to me what they can do as a brand. And absolutely, theyre talking to us about this all the time. Theyve been great partners. We talk to our partners every day. We have amazing relationships with our vendor and supplier community. Everyones having the staple q3, the same year, in a lot of ways, and everyones looking for more traffic. Reporter though jcpenney needs shopper traffic more now than it ever has before. This Holiday Season is going to be the most scrutinized in its history, getting back shoppers is critical for its longtime survival. For nightly Business Report, im Courtney Reagan in new york city. Washington worries created jitters on wall street today. Investors were discouraged by the lack of progress in budget negotiations and the real possibility of a government shutdown. Stocks ended a dismal week in the minus column. The dow and the s p recorded their first weekly decline since august. Not even a sixmonth high in consumer income and Greater Consumer spending last month inspired investors. By the close, the dow was down 70 points, the nasdaq lost 5, and the s p was off by 9 points. But despite a losing week, and with one trading day left in the month, the major averages are on track for the best september in three years. Up between 3 to 5 . And the dow and the s p are on track end to higher for the Third Quarter, making it three up quarters in a row. Tyler . Our first guest tonight, susie, says barring a positive surprise, stocks are more likely to move down than up. Hes brad mcmillen, chief Investment Officer with commonwealth financial. Mr. Mcmillen, welcome. Good to have you with us. Why do you say that . And how far down do you expect they might go . Well, if you look at the way the news is evolving, weve seen a lot of positive surprises, but the most recent one, the positive surprise of no taper actually resulted in a pop, but then weve given all of that back and then some. So the question is, with earnings, in my opinion, rolling over, what is going to carry the market higher . I dont see a lot of potential good news out there, but i do see a lot of potential bad news, starting with washington, d. C. Well, a lot of investors are looking forward to those earnings numbers for the Third Quarter. They should be coming out in the next two weeks or so. What are you expecting . When you look at what happened in the second quarter, most, if not all of the earnings gains, came from the financials. Now, with the mortgage refinancing boom having largely plaid out, with financials really starting to come under pressure from a regulatory perspective, jpmorgan is a good example of that, our financial is going to come to the rescue again. I have my doubts. And when you look at the expectations of earnings growth, we were less or about double what we actually saw in the second quarter. Im not sure thats what were going to see. And i think disappointment is quite possible. So, brad, if i buy your thesis here, and ive had a pretty good year so far, im up about 20 in the s p, and lets say i have a balanced portfolio, 60 stocks 40 bonds, what i should be doing now. How can i protect my profits and still leave room for more, if theres more to come . The answer really is strategy diversification. Not only in the equities, but also in the fixed income. You can go with the long short approach or a low volatility approach in equities. At commonwealth, weve been recommending caution in equities for a while. Weve wanted clients to diversify their portfolios among equity strategies, to preserve the upside exposure, but do it in a way thats going to limit any downside exposure. In fixed income, munis right now are probably the most attractively priced option. The detroit situation has resulted in some opportunities being created there. All right. Brad, i saw in your note that you see, youre a little optimistic about whats going on in europe and in china, you see some hope there. Are you looking at that from an investor point of view, of investing in european or chinese equities or in u. S. Companies that have operations there. Whats the best play . I think both of those are opportunities, but when we look to invest at commonwealth, we look at valuations. We would much rather buy cheap than expensive. And you can argue about how expensive u. S. Equities are, but its tough to make an argument that, in fact, theyre really cheap. You look on an historical basis, if you look in europe, relatively speaking, theyre much less expensive than they have been. And on a Going Forward basis, valuations are pretty much one of the major keys to future returns. Buy cheap, sell expensive. U. S. Is expensive, europe is cheap. Thats a pretty good recipe there, brad mcmillen. It usually works pretty well if you do it, chief Investment Officer with commonwealth financial network. Thanks so much for joining us tonight. Have a great weekend. More now on the growing threat of a government shutdown. By a vote of 5444, the senate today approved a bill that will continue to fund the government, but only through november 15th. And it will keep funding the Affordable Care act. Now, that legislation heads back to the republicancontrolled house, where lawmakers there will put together a new version, they hope, could win approve in both chambers. Today, a frustrated president obama spoke at the white house, saying that shutting down the government is like shutting down the economy. My message to congress is this. Do not shut down the government, do not shut down the economy, pass a budget on time, pay our bills on time. Refocus on the everyday concerns of the american people. Well, jcpenney isnt the only big company in big trouble. Blackberry simply isnt selling enough smartphones. And as expected, the company today reported it lost nearly 1 billion in its most recent quarter. And now, published reports say that if the devicemaker is sold to fairfax financial, which offered 4. 7 billion to take it private earlier this week, and ceo Thorsten Heinz loses his job, he could still rake in 54 million. This socalled golden parachute is said to be secured by three blackberry board members, including the chairman of fairfax financial. Lets turn now to microsoft. Who will replace microsofts Steve Ballmer . There are a lot of names rumored to be in the running, but only one is apparently at the top of microsofts wish list. Hes ford ceo, alan mulally. According to the tech website, mulally has vaulted to the forefront of the candidates and the discussions with microsoft are said to be serious. Now, if this is true, is alan mulally the right man to run microsoft. Kara swisher, coexecutive editor joins us now along with jon fortt. We know that alan mulally has a reputation as a turnaround specialist, but hes a car guy and can alan mulally turn around a complex company, tech company, like microsoft . Well, he runs a complex tech company, if you think about it. Talk about a complex company, delivering and creating cars is a similar kind of thing with lots of technological challenges, logistical challenges. So hes certainly got the skills to do it. He ran the commercial Airlines Division of boeing. These are all very difficult and complicated jobs. I think the issue is, hes a nontechie, although hes quite technical, its sort of besides the point. What they need at microsoft is a leader who can try to figure out where microsoft goes next. And the question is, is he too i dont want to say old, but he isnt of the new internet. Does he have enough experience in where the internets going, is more the point. Carol, let me drill down a little bit more on your fine article there. And just to be clear, this is not speculation. The two of them are actually having conversations you characterize as serious conversations about this job. Yeah. How far along are they and when might we expect to hear who microsoft has selected . I think its going to take them time, actually. Whats going on here is there are sort of twin things going on. You have the committee which is searching for candidates. They are still doing that. That is still happening. This isnt going to happen monday, all of a sudden, alan mulally is we didnt say that. A lot of the articles were speculating that, but thats not the case. Hes just become one of the more significant candidates in that list. And there are others, which i mention in the story, such as tony bates, an internal candidate, such as stephen elop, who came from the nokia acquisition, and another exmicrosoft guy, paulmo moritz. So theyre going to drill down on the key candidates and hopefully not take until before the end of the year, but you never know with microsoft. They could take a very long time. Jon, youre right there in the heart of silicon valley, youre hearing what everybody is saying. What are you hearing about alan mulally versus these other candidates that kara brought up . Well, he seems to represent one end of the spectrum as far as what microsoft could choose. One end of the spectrum is your master manager. The other end of the spectrum is your technology visionary. And in a way, Steve Ballmer was more of the manager type. He was a sales guy, bill gates, the original ceo, more of the visionary type. And he has to have more of a bias towards visionaryists. Thats what microsoft needs at this stage. Someone who has a vision for where microsoft can go, can cut through a lot of the nonsense and bickering about whose idea, decide which path to take, and pursue it. And i think the question is, could mulally, though he is a hardware engineer, aeronautics engineer by training, could he do that with a company thats a bit different in the types of decisions has to make Technology Wise . He does, john, have some connections to seattle, because weve mentioned, obviously, that he was in charge of boeings commercial Airlines Division for a long time. Microsoft and ford have partnerships with respect to the data screens in their cars. But he is a 68yearold guy. Hes got lots of energy. Ive met him, hes an incredibly dynamic photo to see. But i cant imagine that if he were the choice, that hed be there all that long. Well, i dont know. I mean, thats true. Hes not the founder. Larry ellison is right up at about that same age, and people dont often speculate about him retiring, because of age, anyway. He still knows how to win. So i dont think age is the issue so much as, is he the right guy for microsoft at this stage . And i think a lot of people would say, if he is the ceo, hes going to have to have a pretty clear number two or number three with a different skill set of whos very clearly the visionary in technology and can end some of that infighting thats happened between those divisions over the years. Kara, real quick question to you, just to wrap up our conversation. What about bill gates . I understand hes taking a very active role in this search and hes a very handson chairman. Is he a possible candidate . That would be, i think, a lot of people wish that would happen. I would be surprised if it did. You know, you never can rule it out, and thats happened before at yahoo various different places. I dont think thats what hes aiming for and i would be surprised if that happened. Hes very devoted to his charitable organization. So i would probably not rule it out completely, but i would it would be unusual. All right. To be continued. Thank you very much, kara fisher, coexecutive editor of all Things Digital and our very own jon fortt. And still ahead, what automakers are doing to avoid collisions as drivers find themselves more distracted than ever. First, though, how the International Markets performed today. Crash prevention systems can add thousands of dollars to the price of a new car. Until now, consumers had to take the word of automakers that these systems actually work. Now, for the first time ever, the Insurance Institute for Highway Safety conducted crash tests and came out with ratings on the best ones. Phil lebeau has the results. Reporter in a world where drivers seem more distracted, preventing rearend crashes has become a priority for automakers. Nearly all now sell models with Collision Avoidance systems, but how well do they work . These now front crash prevention systems will help drivers avoid crashes and avoid being injured in those crashes. Reporter the Insurance Institute for Highway Safety has developed the first crash test for Collision Avoidance systems. These tests matter two things, how quickly youre warned about hitting a car in front of you, and for those cars with automatic brakes, how quickly do they stop the car . Seven models, including two volvos, two cadillacs, and the Mercedes Cclass were rated s, superior, with the legacy and outbarra outback, earning the best scores. Nearly a third of all accidents in the u. S. , are rearend collisions, causing 31 of the injuries linked to car crashes. A prime reason more automakers are pushing this technology. Safety sells. And it is actually required in a lot of the premium markets that you absolutely have to have the latest safety content Going Forward. Reporter these systems typically cost more than 1,000. Well worth it for those who have the technology in their cars. Phil lebeau, nightly Business Report, charlottesville, virginia. And we begin market focus tonight with a warning from the Worlds Largest air carrier. Continental projecting Third Quarter revenue to come in below expectations. The company says lower fares on some overseas flights are responsible in the drop in price per seat mile. The stock fell 9 to 30. 91. And shares of Lumber Liquidators were briefly halted this morning after the company said that federal agencies had raided its headquarters. A courtordered search was related to certain Wood Flooring products that have been imported. Lumber liquidators sells hardwood, bamboo, cork, and laminated flooring. The company says it is cooperating with authorities. Shares dropped 5 to 107. 30. Finish line reporting a jump in earnings and stronger sales and cost cutting. It also lifted its guidance for fullyear sales. This athletic retailer says things are progressing well with its macys business and trends are improving in its running business after the chains largest product category. The stock rose 9 to 24. 41. And a surge in recreational vehicle sales is helping four industries bottom line. The company says the rise in revenue is thanks to strong growth in motorized rv sales and more modest growth in towable rv sales. Theyve reported strong Quarterly Earnings for more than a year. The stock gained almost 4 . Time for our market monitor segment this week. And he says that stocks are troubled by politics and uncertainty over the fed, but that those very troubles provide buying opportunities. David cotox, with cumberland advisers, great to see you. Since youre seeing troubles the in the market, what are you doing in your portfolios to reposition them . Hi, tyler. Good to see you too. We think youve got a buying opportunity on weakness and were faciphasing into the mark. We have been doing that on a scaling basis. We continue to do it, because we believe that the debt, deficit, sequester, political fight in the end gets revolved. And when it does, markets go higher. And we dont know when its going to be resolved, but i dont believe the United States of america is going to shut down forever. Well, meanwhile, you have a couple of recommendations that are all etfs, theyre all in different kinds of areas, and they all have done rather well so far this year. So lets go down your list. Top of your list is Ticker Symbol, iwo. These are the shares of the russell 2,000 growth