Captioning sponsored by wpbt this is n. B. R. Susie good evening everyone. Im susie gharib. Worries about political gridlock, in italy and in washington, cause investors to dump stocks. Its the worst day for wall street since the november elections. Tom im tom hudson. With 85 billion in federal spending cuts just days away, we talk with congresswoman Cathy Mcmorris rodgers. Susie and the man who founded barnes and noble wants to buy his bookstores back, but he has no interest in the companys electronic book reader b ns nook business. Tom that and more tonight on n. B. R. susie a sharp sell off on wall street today, as stocks suffered their biggest drop since november. Italian and american politics put investors in a sour mood. Behind the selling a strong showing in italys elections by groups opposed to economic reform, on top of that, u. S. Equities face a looming friday deadline for massive government budget cuts, known as sequestration. The dow tumbled 216 points, the nasdaq fell nearly 46, and the s p 500 lost 28 points. While theres been much talk of a correction in the stock market, sequestration may not be the catalyst. Suzanne pratt reports. Reporter it is widely accepted on wall street that sequestration is coming. And, with it a new reason for the fragile u. S. Economy to sputter. But, what will the first phase of billions of dollars in federal spending cuts actually do to the u. S. Stock market . After all, major market averages are hovering close to alltime highs, and dont forget investors are finally warming up to equities again. Floor broker art cashin says todays selling was mostly a reaction to italys election, and that the stock market is not yet focused on sequestration. I dont think that even we slip into sequestration it will have the same dramatic effect that the fiscal cliff and the debt ceiling had. It is seen as somewhat temporary. Reporter others say stocks can weather another political deadline dominating u. S. Headlines, as long as lawmakers reach an agreement soon. They are expecting that dip into sequestration to be fairly shortlived and there to be a compromise worked out sometime before the ongoing resolution on march 27. So, there is room for disappointment if we dont get that silver bullet. Reporter still, stocks are vulnerable to myriad other headwinds too, the most notable is the end of a surprisingly good earnings season, and a muddled outlook for corporate profits in 2013. Weve seen First QuarterEarnings Growth expectations shrink to just a little over 0 from expectations of 3 or 4 . So, its almost as if for every percentage point companies were beating Fourth Quarter numbers analysts were cutting the First Quarter numbers by a similar amount. Reporter so even if sequestration doesnt kill the stock market rally. It could certainly amplify a correction that may have already gotten started. Suzanne pratt, n. B. R. , new york. Tom as suzanne mentioned, were just days away from 85 billion in federal spending cuts hitting the u. S. Economy. Today, the war of words over the sequester continued. President obama called on the nations governors today to pressure lawmakers over the sequester, saying citizens of their states will be out of work. The American People are out there ef row day meeting their responsibilities, giving it their all to provide thor their families and their communities. A lot of are you doing the same things in your respective states. We need that same kind of attitude here in washington. At the very least the American People have a right to expect that from the representatives. Weve got more on this from darren gersh. He spoke with one of the Republican Leaders in the u. S. House today. Cathy Mcmorris Rogers. We began by asking whether the sequester will actually happen. I hope not. Well see. March 1st is right around the corner. And what we need is for the president and the Democratic Senate to sit down and come up with a proposal to replace the sequester with a smarter approach to cutting the federal government. Its 2. 4 over the next ten years. What is going to happen under the sequester and all the 50 states. And in your state, there will be a heavy impact on defense employees. 29,000 in your state. What are youoing to tell those people when theyre furloughed. Im very concerned about the way sequestration disproportionately impacts the military, our National Defense which is the priority within the federal government to protect the citizens. So there is a better way. And the republicans in the house have twice now passed legislation. We passed legislation six weeks ago. We passed a bill six months ago to replace the president s sequester cuts with smarter cuts in reforms that will accomplish the goal. So the president says we need spending cuts but we also need tax increases. It should be balanced. Are there any tax increases that republicans would accept to get over this problem that you say you want to get over . The agreement a year and a half ago was to reduce some spending in the federal government. And it just, to some its like its never the right time to actually cut the spending. The president often says well we need to raise taxes. That seems toe his solution every time. And we need the democrats to recognize that we have a spending problem. But if we cut 700,000 jobs, thats what some estimates are of the sequester, how does that create certainty, doesnt that hurt the economy . Well, theres a smarter way than the president s sequester. It doesnt have to be the approach that hes outlined. And thats where we really need the president , we need the senate, to sit down and Start Talking about, start figuring out the better way forward where we replace the president s sequester, but still find the savings within the federal government. And theyre there. 2. 2 billion dollars for a free cell phone program, just in 2013. We spent 2. 2 billion. Theres smarter ways to go in there and find the savings within the federal government. And thats where we need to get. Thats where we need to start having that discussion. Are there any tax changes, tax loophole changes anything like that that the president has suggested that republicans might support . Well, were going to talk, we believe in tax reform. And we need to talk about a simpler, flatter, fairer tax code t would also help our economy if we could simplify the tax code both for individuals and corporations. And the republicans have long been talking about the importance of tax reform as a part of getting our economy growing. And that is going to be a separate discussion though than sequestration. Sequestration, acrosstheboard cuts, that is part of raising the debt ceiling a year and a half ago. And we agreed that we were going to find some spending reductions in the federal government, its slowing the ate of growth within the federal government by 2. 4 . This is possible, everybody in america has had to tighten their belt a little bit and its time for the federal government to do likewise. Weve seen record increases in spending under this administration. So you talked about these cuttings about 2. 4 of spending, so are you saying basically that the white house is kind of blowing this out of proportion when they say this is going to be such a terrible impact on the economy and people. It depends on how the white house, how president obama actually implements hits sequester and how he finds these saving, for him to say within the defense part, the first place we are going, we are to the going to send the second carrier into the persian gulf, i really question that decision. There is other areas within the Defense Department where we request find the savings. That needs to be the goal, the smarter spending reductions that will actually help get our budget where it needs to be and ultimately help get our economy growing again. Which is the goal. Kathee Mcmorris Rogers the chair of the House Republican conference, thank you very much for your time. Thank you. Susie still ahead, will rising home prices keep shares of Home Improvement retailers like lowes and home depot popping this spring . Tom an update tonight on two big trials, first, the civil trial against b. P. , and its contractors, stemming from the 2010 rig explosion and subsequent oil spill in the gulf of mexico. The government began the trial saying the primary fault of the disaster quote lies with b. P. The other big trial, saw some high profile testimony today as macys c. E. O. Terry lundgren testified in his companys fight with j. C. Penney over who has the rights to carry Martha Stewart home goods. Susie despite the big stock selloff today, shares of barnes and noble surged more than 11 . Investors bought up the stock on news the booksellers founder and chairman wants to buy the retail business. In a securities and exchange filing, Leonard Riggio said he plans to make an offer for Barnes Nobles bookstore chain, but not its nook ereader business. Erika miller takes a closer look at whether splitting the Company Makes strategic sense. Reporter whats interesting about Leonard Riggios bid is that he wants to buy the weakest part of Barnes Nobles business the bricks and mortar bookstores. During the all important holiday season, sales at b ns bookstores and website fell more than 10 . Still, some think those bookstores may be a hidden gem there are Many Americans who still like walking into a store to buy books to browse through the books and get a better sense of what they might want to read. Often times, if the price is about the same, and youre already there, you can have it. You can walk out with that book. Reporter the bookstore business has deteriorated dramatically in recent years, as more People Choose to buy their print books online from places like amazon. Com. In addition, more and more people are reading their books electronically, on devices like tablets and ereaders. Borders, dalton, and other boochains have ne out of business. But that means less competition for barnes and noble analysts think riggio may have a viable turnaround plan ready hes looking at everyone who has gone out of business and hes saying to himself, if i can add three or four more categories in these big box stores, that are consistent with the book business, ive already got all the overhead. I can close a few stores. Suddenly, ive doubled my profitability. I think hes got Something Like that inind. Rorter riggio joins a growing list of executives hoping to buy the struggling companiethey founded, including michael dell of dell computer, and best buys richard schultze. Erika miller, n. B. R. , new york. Susie lowes nails it today with better than expected quarterly results. Not only did the Home Improvement retailer post Solid Earnings and revenues, its upbeat about its outlook for this year. But as Ruben Ramirez reports while lowes and its competitor, home depot expect a bump in sales on the back of new Home Construction, their success is still dependent on everyday consumers opening their pocketbooks. Reporter Home Improvement retailers continue seeing the trickle down effect of a recovering Housing Market and a boost in renovations on the back of a better economy. About a quarter of sales at lowes and home depot come from Home Construction and renovation. During the housing downturn, lowes tightened its toolbelt, closing stores, cutting costs and investing in its online business. Its a plan that is starting to pay off. It really will take a couple of years yet before the combination of improved merchandising, better supply chain execution and really overhauling a lot of the Stores Operations before we see some meaningful operating margin expansion. Reporter wahlstrom says lowes 4 growth target for 2013 is aggressive but achievable. The company saw some strength in sales from superstorm sandy, home depot, which reports results tuesday, likely will also see a sandyrelated sales bump. Most analyst expect home depot to outpace lowes for the fifteenth straight quarter. Renovation activity will be key here as people rebuild and renovate so i think thats going to be a key sector as well in the recovery in housing this year. Reporter both retailers are getting ready for their biggest selling season, spring. Lowes says it will add workers this year. Already, home depot has announced it plans to add 80,000 seasonal workers. Theyre seeing good traffic in the stores and they just want to capitalize on the individual that does come into the store and hopefully help them out with their project and establish a longterm relationship and get them to spend a little bit more money. Getting shoppers to spend a little bit more is something both lowes and home depot are banking on this year. But economists say it cou be a challenge as consumers realize how much the expiration of the payroll tax cut took out of their pockets. Ruben ramirez, n. B. R. , new york. Tom over the past year as the Housing Market bottomed and began to turn up one of the hottest stock sectors was the homebuilding sector. As orders for new homes picked up, earnings improved and the homebuilders Exchange Traded fund gained more than 37 in the past 12 months. It has fallen recently as earnings comparisons are getting tougher. Tonights word on the street is homuilder. Debra borchardt is markets analyst with the street. Com. Deborah is the Home Building stock rally over. No i really dont believe so although what i would say is some of the names are a little bit overbought. And that they have seen this rally and theyve really made some big moves. And so what i really did was try to take a look at some of the home builder names that are fairly new to the market, names that people arent as family with and dont really have a lot of Analyst Coverage so there might still be some room to play. The headline members here lennar, kb ho, pulte group but one of the new ones is tripoint homes, tpa the ticker, became the first home builder with an ipo in almost a decade earlier this year, 17 a share, its above that today. What do you make of tph. When you look at the numbers, it was almost shocking because i thought are you kidding me . A home builder in california. That was ground zero for toxic mortgages. And i was a skeptic going in. But i looked at the numbers and i was really impressed. They built 100 homes in their first year. They had a Community Called they completely sold out of all of those homes. They are really doing very well. Theyve got a very experienced management team. Theyre going in to colorado in the spring of 2013. So i was really impressed at the numbers that they are pulling in. And the amount of homes that people in california are buying. I mean it looks like thins are really starting to turn around in california. Skeptic turns around herself it sounds like for tph. You mentioned building homes. You have to have a lot of supplies do that. Boysy cascade is one of those, bcc, familiar longterm it just became a new public compy early th mont engineered wood products. It sold at 21. Its at 27 her share, its had a nice rally. It sure has. But i really think that this stock has not been discovered by the general public because again the analysts have not started covering these stocks because they are fairly new so when you really take a look at their numbers, this is a really impressive company. And as you mentioned they do engineered wood products, laminated veneer lumber which is lvl, and these are much stronger materials than just a plain wood to put in a home. And with the housing codes gettg rely tgh, they are really the product of choice. They are building a new facility down in florida. And i hope thats not because there are so many hurricanes down there. But they are building a whole new facility, theyre increasing and expanding the facilities that they have. So i really think that this is a name thats been under the radar and thats boise cascade. On the radar now tonight. How but, do you have any positions in these stocks . I dont. Its word on the street. Debra borchardt from thestreet. Com. Warren buffett said today hes buying another newspaper. Hes picking up the tulsa world, bringing Berkshire Hathaways port pot of small and medium size newspapers to 28. And you know tom, its really surprising because buffett has told shareholders in the past that the Newspapers Industries prospects are so bad that he wouldnt buy a paper and heres a quote at any price. But now last year he bought his hometown paper, the omaha world herald, now this deal sounds like maybe a change of heart, right . Maybe. A media mogul in the making. He began as a paperboy in omaha so he certainly knows well of that industry, and the woes it had over the past several years. Speaking of woes, how about the markets today on this monday back to, without. Major indes. The major indices suffered their biggest one day decline of the year with traders pointing to a closer than expected election in italy. There was no clear winner of the italian election, fueling worries about political and economic instability. Here in the u. S. , the s p 500 saw its morning rally fizzle before noon eastern time, with the selling picking up in the final hour of trading. The index finished down 1. 8 , failing to find buyers despite several announced corporate buy outs. Trading volume was on the heavier side. 818 million shares traded on the big board. Just under two billion moved on the nasdaq. All 10 of the major stock sectors were down, with the heaviest selling in the financial, energy and material sectors. Each dropped by more than 2 . Life insurance stocks weighed on the financial sector, as their investment portfolios may