tv FOX Business After the Bell FOX Business July 19, 2013 4:00pm-5:01pm EDT
backlog of orders helping them with new highs today. david: everybody sounds happy today. we have kind of a mixed decision as the market settles, again we may get, probably not, but make it into the positive territory. inching in a positive direction. the s&p is up flatlined today. the stocks weighing in on that. the russell 2000 managed to pull out a gain, but ever so slightly. a day that could have been a lot worse, was a lot worse at different parts of the day. "after the bell" starts right now. ♪ david: we do have breaking news,
the sec charging s ac capitals for failing to supervise to see employees and preventing them from insider trading under his watch. with us now, former federal prosecutor to talk more about this. i had to admit i am puzzled. failing to prevent, it is hard enough to get insider trading case, but failing to prevent somebody else, it is kind of like charging the secret service for failing to prevent the assassination of kennedy. >> yes, good point. putting it in simple language. it is like conscience i want you to take this suitcase across the pond to england and i will give you $40,000 a couple first-class ticket. deliberately closing your eyes to b the high probability something is wrong. now this liability.
you are a supervisor, particular employee who did something wrong. there was evidence of substantial irregularity that you are aware of and you did not supervise or prevent. it is a little different than your secret service formulation but by the same token and the lawyer will tell you if you can charge somebody with direct wrongdoing you would do so. this is sort of a substitute theory. cheryl: the back story, some have called this a witch hunt. one of the most successful wall street traders ever, this is the last to make the charges filed, charlie gasparino saying he things there could be potentially charges coming criminal. >> the other criminal prosecution, the sec has to go to the state's attorney's office.
the civil enforcement action where the file lawsuit, and then you have an administrative proceeding which is what this is. whoever wins or loses for the sec itself, they can affirm it, reverse it or more. it is a little bit like a witch hunt, administrative, using the secret service water down, and i think the prognosticators who say look, this event the strongest i have ever seen. cheryl: this is exactly it. david: any charge has sort of this academic textbook sound to it. let's take a look at martha stuart, she was not charged with insider trading. a lot of people thought she would be.
it is extraordinarily hard to get that level of proof. we know they wanted to charge a lot of people with insider trading, were not able to. so how much more difficult is it to get this case past? >> this case is very hard because you have a critical cooperator in the center of everything. no criminal case, but what about the civil charge. >> will ultimately prevail on that. cheryl: this is hard to prove. coming out in front of the building, let's all be clear, she lied to us. she did not do securities fraud.
here basically your argument is bad things were going on, you knew about it and you did not supervise it. >> we want to be able to look like they got this notch on their belt, but they can't. i don't have a crystal ball, but i like to think the contradictions are fairly accurate. cheryl: what is the consumer buying and rocketing growth continue. the ceo will be here. david: the motor city stalls after detroit filing for the largest municipal bankruptcy in history by far. what does it say about the nation's debt crisis and could
david: and new bidder has emerged the company that owns saks fifth avenue. setting the stock higher. let's go back to nicole petallides on the floor of the new york stock exchange. nicole: david, what news. take a look at where the shares closed. a gain of eight and a quarter percent. unbelievable news as the new york titan is now getting into the game. as this news broke late in the day, looking at the entry chart, the stock jumped into negative territor territory.
not certain what he is offering but may have offered between 17-$18 per share. hudson bay owns morgentaler, and another from the middle east may also be in the running for saks fifth avenue. for those who do not live here, right next to send patrick's cathedral, it is prime real estate. clearly pushing the stock into the positive. david: have a good weekend, thank you very much. cheryl: we are getting breaking news from our partners at the "wall street journal." the "wall street journal" reporting according to their sources the faa will ask anybody flying a 787 to immediately disable the emergency transmitters. this is the honeywell made transmitter in the back of the plane responsible for the
ethiopian airlines jet that caught on fire. no injuries that happened in london at the heathrow airport. david: there are not that many planes flying in u.s. carriers. only about 50, 6787 right now in flight. posting gains the week after the dow hit an all-time high yesterday. what is ahead for next week? tim, wants to start with you. i want to start with bond yield spread something interesting happened with bond yields.
they started shooting up before the market open and ended the day down. great relief to the federal reserve. what is happening, why can't they get a direction? >> what you had was initial shock and probably overdue from one way low this year. what you are seeing right now is a short covering and repositioning in bonds on the realization there is no timetable for the fed and it'll be quite difficult for the fed to reverse course and we will have to wait for further data to see what happens. cheryl: jonathan, one thing we have seen is the dollar strengthening. they sent back on what we have seen from the fed, if we begin tapering in september as some analysts believe we will see, what does that mean?
>> what we look for in the market is currently the market seems to be approaching fair value, giving investors pause to say where can we allocate going forward? overseas markets have not done quite as well, so we're looking at the market advising our clients to look overseas at some of the market that has not performed quite as well. david: one of those is japan. a lot of people don't realize there is an election over the weekend. it is a regional campaign that could affect what he does, right? >> right. getting control, that means the third arrow they talked about, reform, the regulation, that will invigorate the bulls in japan. cheryl: what is your strategy?
at the same time, we are past the first half of the year. a strong first half of the year. there might be some headwind, anything you are concerned about for the next six months? >> we are looking for opportunities, pockets of opportunities. looking at financials that look attractive, materials and industrials. david: i just heard the beginning of the closing bells on the cme. we are about 45 seconds away. how does this seem to be shaping up for monday? >> we wrapped up 4 weeks of straight games except the nasdaq broke its streak, but the fact of the matter remains a lot in the system, they are not talking about tightening. the market is still driven by liquidity, i think we are
looking the same as it has been. near the highs and holding. cheryl: one of the concerns of the equity side continues to be the fact that even though you can argue the fed chief has been successful, he has not been successful with deployment. --dash employment. that does not seem to be quite to 3% gdp as the forecast. >> as we open this conversation you have to look at valuation. one of the things w i think is built into the market is the market moving towards fair value. let's look around the world and allocate resources given the fact there is pretty high growth baked in currently. david: jonathan, first to you, the dollar is getting stronger. some people view that as good or bad depending on where they sit on expert issues but how will that affect stocks specifically because t appears to be a long-term trend. >> we're looking at the market.
approximately 40% of the s&p 500. it will have a negative impact on a lot of earnings. looking at the trend from a macro perspective and make the allocation decisions. cheryl: big productions next week besides volatility which may not be a bad thing. >> next week looks like it will be quiet, the last week of the month. cheryl: thank you. we will see how the s&p futures close. david: motown running out of gas. the biggest noticeable bankruptcy in u.s. history by far spurring a domino effect all over the country? we will be asking somebody who has strong opinions.
will help the tech giant boost the massive products. the average wage rose in the fourth quarter up 4.7%. leading the climate average wage climbing 25%. coca-cola may face a class-action lawsuit over misleading consumers on the health benefits of vitamin water. a judge ruled consumers cannot sue for my damage but could try to change how coca-cola labels its products. pope francis changed and new commission in the finances. eight members will recommend reforms to avoid wasting money and improve transparency, and that is today's speed read. cheryl: overstock.com reported strong second-quarter earnings yesterday easily beating out lament. is it emerging as a favorite in the e-commerce race and what is the company doing to leap ahead?
david: joining us for exclusive interview, the man behind the success of the great company of overstock.com ceo and chairman. i know you warranty or employees not to pay attention to the ups and downs and with the stock is doing, but you have to take notice when the stock goes up 20% in one day, don't you? >> as i told you before, i am not a stock price guide, i am an economics guy. i'll be lying if i didn't hear some utterings about it around the office. cheryl: most consumers who have the smart phones now are using apps to shop. is there growth with technology or do you think it is still trying to catch up a little bit? >> we're quite surprised at how our mobile is growing, 19% for sales.
now that has been adopted as become conversant can part of the business. david: one hit and i am there. a lot of people are still getting to know you. google is an important part of that process. google occasionally changes their search rankings claiming because it is because of these algorithms and nothing is intentional. do you buy that? >> i think it is intentional. they're always trying trying to fine-tune their algorithms to make search results, easier for people to find what they want. they are driven by consumer behavior or population behavior. they have been shifting their algorithm, boosting local listings and discounting the online people.
david: there was a time for example when you went down in the google rankings and is affected your sales, did it not? >> it did. sales affected 528%. when google tinkers with their algorithm as far as a business industries concerned, it is like somebody tinkering with gravity. it has a dramatic effect on business. it seems to be coming back. cheryl: somebody who likes to go to your site, the perfect person to ask, the consumer right now. consumer discretionary. what are they looking for, and are the spending patterns picking up? >> deep down it is all being pumped i the fed. by what they are actually saying, we grew 22% less quarters of people are clearly
coming back, lot of our stuff is furniture and home goods. david: i am with you on the fed, don't believe in the phony printing of money as a solution to all problems but on the other hand i believe strongly of the power of the u.s. economy an itd been down for so long and eventually it does come back. put aside the phony money printing stimulus. putting that aside, isn't the economy ready for a comeback? >> it is definitely ready for a comeback. we have to make deep structural reforms to make it happen. we have to fix education wall street before our country can thrive on it. cheryl: if you look toward the future, so many things changing and how we interact with the internet, the tablets, smart phones, where do you see the growth will be? will it be somewhere else, where
do you see this all going on the technology side of business? >> we see something quite interesting. mobile traffic when they spend is less than the average that people spend on our site, tablet traffic, they spend a lot more than average. phones have gone essentially for free but the tablet is expensive. that means the public is more affluent and if you have a good tablet experience for them, you can track and affluent shopper. it will follow the phones, metat will diminish a bit. david: we have to ask, patrick, do you buy your shirts on overstock? >> some of them. but this was made for me by a girlfriend of mine.
david: times are good. cheryl: thank you so much. david: great to see you, patrick. detroit filing for bank of the become and the largest minutes history. to seek chapter 9 protection. how does the motor city go bust and are other cities headed down the same road? steve forbes weighing in next. cheryl: could strong results push for morals?
cheryl: time for a look at the market drivers. earnings for microsoft and google weigh in on stocks. the dow ended the fourth straight week of gains. energy from industrials and health care the biggest top-performing sectors. gold and that the highest levels in a month post the second best day in a row. treasury prices biggest two-week
gain after federal chairman ben bernanke ease concerns a federal begin tapering soon. 10-year yields slipped basis points after declining 15 basis points last week. david: the motor city is not very hav happy, it has gone bus. detroit filed for chapter 9 bankruptcy, the largest such filing in history for a municipality. cheryl: the city is facing $18 billion in debt in unfunded liability, so what is next for the biggest cities in this country? jeff flock is in detroit with the very latest. jeff. jeff: i spent the day with the experts of emergency management director, the governor, i just wanted to show you what the city really looks like. buildings like this, the filing had addresses, this was supposed to be demolished but they don't have the money to do it. this is the fire hydrant. you wonder why people two things
burn, not a lot coming out of that one. can you tell in parts of the city there is a sidewalk there? row after row of homes being swallowed up essentially by nature. this is what a lot of detroit looks like. the emergency manager kevin orr told me today one of the things he is shocked about is how long this has gone on and for how many years this has been tolerated. >> what shocked me was the tolerance for this behavior for decades. to say the least it is at best unorthodox and terms of how these things are going. i am surprise, know a lot of people are outraged. i wish there had been more outrage over the past 10, 20 years. >> i tried to get him to say who he most blames for this and he said i don't want to get into the blame for this plenty to go
around. i'll lis was to be torn around, arson a huge problem in detroit right now. i don't know the bankruptcy filing will change anything of what we are seeing on the ground, this will be a long process. david: kevin orr sounds so much like governor chris christie. he says blame the politicians who promised far beyond their means for the past 30 years i have been doing this. i was in things they cannot deliver. cheryl: your interview with kevin orr was excellent today. a strong handle of how to reform the city when a lot of people don't seem to have a strong idea. >> he is a really bright guy. why he did this on, i don't know. it is like a divorce almost. however it comes out everybody
will feel screwed over. david: jeff, thank you very much. have a good weekend. cheryl: big banks are running on all cylinders and the profit machine is humming but are there any dark clouds on the horizon for these as well as their investors and shareholders? we have the playbook. david: the biggest municipal bankruptcy in history could mean for others and the muni market as well. steve forbes giving us his opinion in just two minutes. she's still the one for you -
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david: time for your fox business brief. as oil prices continue to climb, drivers are having to shell out more at the pump. the national average for a gallon of regular gasoline is now $3.67 if you can get it. still off of the record high of $4.14 back on july 17, 2008. funding fell during the second quarter as venture capitalists spent less money on deals. the total investment spelled 9% from the same time last year. the national hockey league scoring olympic sized when securing the purpos dissipatione players at the winter games in russia. the league will break from the regular 2013-2014 season returning february 26. that is the latest from the
david: detroit just the tip of the iceberg or is it an isolated case? that questions haunting muni bond holders today. fearing a spillover. detroit just maybe, a wakeup wap call that gets other cities and states to put their financial houses in order. steve forbes media chairman and editor in chief. how widespread is this? will' it cascade to other cities and states? >> there will be others. counties will get in trouble, there will be more of them. a wake-up call after they see the huge orders.
david: even politicians recognize something has to be done have trouble tackling it. the mayor is trying, but he can't, too much of a captive interest. >> until something actually happens. it is all conceptual. other cities will say do we want to become a detroit? we have to avoid that, here are some steps to take. david: on the way to do it is to take it out of the hands of the politicians. knocking heads together whether you like it or not, almost imperial power to get something done. speaker this is a free enterprise zone with low tax rates, real estate rates, residential rates, so you track people who want to start new
businesses and show if you have a low tax regime, while wrigley for a regime you can attract people very quickly and to what new orleans did at schools, break the union, put it in the hands of parents and you can see them return very quickly. david: even big cities like new york since 2002 cut the police force. 5000 fewer police and yet has had a 100% increase in the cost of the police force because of pension. always coming down to pension, doesn't it? >> one of the crazy things about new york city is the mayor does not control pensions. you know what happens with that. they just want to please people who can help them in election time.
david: even when you have somebody like christie, have problems. it will not take somebody appointed by the court. >> even though they have a long ways to go, he got concessions on terms of contributions to health care plans, concessions on contributions to pensions. a real roundabout with them. things can be done. it takes strong leadership willing to say i don't care about the next election. he is taking charge. david: bondholders, will they take charge? >> if you go to bankruptcy, you will not get as much sympathy as city workers and pension and the like.
you better make a deal before hand. david: finally, the federal government, jay carney was asked at one of his pressers if the federal government would get involved bailing out detroit or other cities like it, let's play the sound. >> we will of course as we would with any city in this country work with that city and have policy discussions with leaders in the city and make suggestions and offer assistance where we can. david: offer assistance, what does he mean by that? >> that is a polite way like lit with visiting new york city when they went broke, dropdead, remember that headline, that is what in effect they are saying. congress will not do it. even in the white house the recognize this as a bottomless pit.
david: steve forbes, who we will see tomorrow at 11:00 a.m. eastern time on the fox news channel. good to see you, thank you very much. cheryl: i will be watching. bringing in the dough. the country's largest banks reported profit for the second quarter. finally reaching a healthy turning point or is the party about to come to an abrupt end? it can reach speeds 160 miles per hour. it is not a lamborghini. details coming up. if you've got it, you know how hard it can be to breathe and man, you know how that feels. copd includes emphysema and chronic bronchitis. spiriva is a once-daily inhaled copd maintenance treatment that helps open my obstructed airways for a full 24 hours.
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cheryl: financed somali best-performing sectors with big banks meeting on earnings for a second quarter, so are the good times rolling again? david: or could the bank's success spark more scrutiny from regulators? joining us now with his thoughts on the financial earnings and the outlook for the big banks. >> thank you for having me. david: lets talk but a couple of those companies in particular. 66% in the last quarter.
i have been focusing on their niche, the buyout of smith barney. blackrock had huge earnings. they have cornered the market n the etf market, very good exchange traded funds going almost exclusively to black rock to get an etf. is it a consolidation of banks focusing on what they do best? back in 2009, they buy smith barney, try to put it together. this quarter it looks like it is all coming together. the chairman was doing victory laps in terms of the performance. what would a merrill lynch be?
a company that will outperform when the retail investor comes back. so, morgan stanley in terms of the cycle is going to do well, and that probably is a 2014, 2015. when unemployment drops, retail investors begin to melt down grandma's silver and come back and the stock market. cheryl: talking about morgan stanley, one of the things they have been focusing on, focus on high net worth individuals and managing their money. wells fargo blowing it out when it comes to loan origination, mortgages. you do see somebody like wells fargo who wants to compete with wells fargo. >> and origination business, the
rates are rising. remember they have the will call via business, which is number three. number one morgan stanley, number two is merrill lynch, but unfortunately these wealth management businesses are much more diverse organizations. difficult to believe i to incree the revenue is enough to offset what would be a weakening on the mortgage origination. cheryl: you may be the first person this week that has had a little bit cautious. >> they started expense control, there is a reason why they push on expense control because they see this at least a portion. the good part of wells fargo is thethere pushing and the institutional business. you never think of wells fargo as an investment bank but they are taking share, using the big
balance sheet too began to push into gpm's business. the big investment bank. they are moving back and forth amongst themselves. investment banking player, right? david: bank of america, retail, what do you think of that? >> if one were to think of bank of america, one of the challenges you are having is not the wealth management, that is fine. wwe're seeing losing market shae across institutional business, which really says bank of america has said we are retail banking, retail wealth management. david: focusing on what they do best.
does that mean bank of america is a bike, or a wait and see? >> it is a buy. we are past the worst of the credit cycle, it is a great tower. if you're going to distribute money, you are going to go to bank of america. cheryl: great to see you again. thank you. david: very good overview. cheryl: if you are a thrill thrillseeker, this is for you. coming up, we have the details on this over the top ultimate adrenaline rush. david: also we asked you on facebook and twitter, is detroit's bankruptcy just the beginning? is this just the beginning a lot more cities going bankrupt? your answers coming next. i've been doing a few things for a while that i really love-- tdd#: 1-800-345-2550 playing this and trading. tdd#: 1-800-345-2550
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and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've investedovere in the last five years - making bp america's largest energy investor. our commitment has never been stronger. >> let's go off the desk. this is this the world's scariest swing? the new giant canyon swing in colorado sits on the edge of a 13-00 foot cliff and swings at 50 miles per hour. it is so terrifying that the designer and owner has only tried the swing once. the giant canyon swing carrieses up to four riders at a time, and each one signs a release waiver and probably take a huge prayer
before you get on to that thing. >> if the inventer doesn't use it, i'm not. honda u.k. teamed up with "top gear" magazine, another wild thing, and team dynamics to build a high performance ride on a lawn mower that's capable of reaching 130 miles per hour. are you crazy! >> on a lawn moor? >> based on the design of a conventional moor, but this accelerates from 0-60 in four seconds. wonder what your neighbors think of this one? >> you're in the cool if you ride on a lawn mowers, sorry. we asked on facebook and twitter if you think detroit is just the start. more cities on the brink of bankruptcy? some on facebook wrote in to say there's going to be many more to follow. >> far -- margaret says hartford, connecticut is behind detroit in a year or two. >> vito says there's more to follow, take a look at chicago. >> oh, yes, of course.
>> good point. >> we can all look at our hometowns. new york just as bad as the others. time for the top two things to watch next week. number two is going to be the june durable goods orders. economists expect orders to be 1.2% higher. that is a drop from may's reading of 3.6%, durable goods reflect new orders replaced with domestic manufacturers for the stuff that lasts a long time like aircraft. hopefully lasting a long time, refrigerators, and cars. >> you'd hope so. number one thing to watch is apple earnings release coming out tuesday. after the bell, david asman here with liz, and they expect earnings per share of 7.31, revenue of 35 billion, stock down 19% so far year to date, and investors continue to be concern about the product pipeline and the ability to invo nate. yikes. >> what do you think? >> i think there's a tablet saturation problem for the problem. >> full disclosure, i bought
apple at 89, at the bottom in 2009 and at 600. i'm flat lining again. bought it at the low and high point. >> "money" is coming up next. melissa: here's what is "money" tonight, detroit's bankruptcy rocks the country. one of the biggest credders planning to get repaid. he joins us on the impending battle. plus, one of the original schindler's list up for auction. stay tuned to see who it is, even when they say it's not, it's always about "money." ♪
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