tv First Business KICU January 9, 2013 4:00am-4:30am PST
a wake-up call for boeing as its dreamliner problems continue. in today's cover story, plugging into the consumer electronics show. what new technologies are turning heads this year. is the housing market setting up for a breakout year? revealing the truth behind anti-virus software. why the protection may still leave you at risk. and, earnings season kicks off. what traders are watching. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's wednesday, january the 9th. i'm angela miles. in today's first look: alcoa turns a profit. the first dow component to report in the fresh earnings season posted a
profit of $242 million despite weak prices for aluminum. the sell-off in the market continues. the major indicies all fell yesterday. telecom stocks were among the biggest losers. gold rallied, while oil flatlined. president obama is expected to soon name his next treasury secretary. white house chief of staff jack lew is said to be high on the list. the irs will accept 2012 tax returns starting january 30th, 8 days later than planned due to tax law changes in the fiscal cliff bill. now for an early look at how alcoa's earnings could affect today's trading. larry shover of sfg alternatives joins us. and what do you think here larry? > > yesterday's number was good. most people weren't expecting them to beat on revenue. but they beat by quite a bit. people were maybe thinking earnings per share, that could be better. but that is a good thing for the market, a good thing for the materials sector. i think it is going to give a lot of confidence going forward.
> the stock market pulled back yesterday. should investors be concerned about that, or is it just one of those things that has to happen here? > > let's look at what happened. we had a gigantic rally january 2nd. right now we are just digesting and consolidating those gains. we are seeing correlations break down, which means certain groups are doing better than others. people are just kind of consolidating what they have and looking forward to what the next catalyst might be in the stock market. > > unemployment is stuck at record levels in europe. should the average american investor be concerned about that? > you know, we should be concerned if it persists, and it seems like it will persist for a little bit. when you look at credit spreads in europe, that is a bellwether on whether we should be worried. and right know they are not trading as wide as they have, so it is going to be a peak thing. most economists believe the worst is over for europe, especially in terms of unemployment. > larry shover of sfg alternatives. thanks lar. > > thank you.
two mishaps in two days aboard boeing 787 dreamliners pushed investment firm bb&t capital markets to downgrade boeing's stock rating from "buy" to "hold." the first incident, monday, involved an electrical fire aboard a japan airlines 787 that had just been emptied of passengers at boston's logan airport. the next day in boston, 40 gallons of jet fuel leaked out of a different jal 787 just before take-off. boeing issued a statement saying that the smoke detected was traced to the battery used to start the auxiliary power unit, and that they are cooperating with the ntsb in the investigation of the incident. despite bb&t's downgrade, other analysts say the problems have not discouraged investment in the aircraft manufacturer. "i think they've done a good job of handing it. we have them at 73. they've been as high as 77 as low as in the 60's. that's more within the context of where the profitability of the 787 is." dihora says this year, boeing still intends to double monthly
production of the 787 to 10 a month. american airlines' board meets today, and it's reported the topic of a possible merger with u.s. airways is on the agenda. interestly enough, shares of u.s. airways have been climbing higher since last thursday. that's when reuters reports the ceo of amr told employees a decision would be made "in a matter of weeks." american has until march to complete its bankruptcy re-organization plan. aig is considering suing the u.s. government for coming to the rescue. the aig board meets today and will consider joining a $25-billion shareholder lawsuit against the government. oddly enough, the insurance giant was teetering on the brink of collapse back in 2008, and took the single largest bailout at $182 million. the suit is led by former aig ceo hank greenberg, who believes the company was coereced into taking the loan.
"i think they'll back off of it. there's no basis for it, and aig wouldn't survive the storm that would come from the pr disaster that would bring aig." that was hugh totten, an attorney with valorem group. aig's bailout ended with taxpayers earning $22 billion in profits. there is no comment from the white house. the future of sears rests in the hands of brazen billionaire eddie lampert. lampert runs a hedge fund, is the chairman of sears, and will now become the 5th ceo of sears in the past 7 years. analysts are wondering if lampert can provide the fix needed to put the retailer back on track. "i think the important next step is that the economy has got to improve and the merchandise has to get that much better. if that happens, then the digital stuff is great, but it needs a lot more time before it moves the needle along in terms of cash flow for the company."
that was paul swinand of morningstar. lampert was the man behind the 2005 merger of sears and kmart. sears stock has fallen dramaticaly in the past 3 months from $70 to $40. morningstar considers shares fairly valued at current levels. there's more to the consumer electronics show in las vegas than gadgets, geeks and electronic game boards that can double as your coffee table. in our cover story, some of the newest in electronics include water-friendly smart-phones. sony's come up with a smart- phone that can survive a 30- minute dunk underwater and still work. "how many times have you or someone you know dropped it in the toilet, whether they admit it or not." it wasn't hard to find a market for it. "i think that's awesome. i had an ipod that i dropped in the pool. bye-bye ipod. that's awesome."
"i jumped in the pool with mine. yeah, make 'em more durable." "well, it would cut out the cost of a new phone." from seagate, we saw a wireless hard drive that could be paired with a tablet to extend battery life to ten hours and storage for hundreds of movies. "i would love to come to class with something lighter than a laptop. this would be very good for students in classes." but the biggest buzz is about the latest tvs - called ultra high-def, with four times the resolution of high-def tvs, which makes the picture appear that much sharper. "we're seeing a lot of innovation. whether or not people are going to buy it may take time because these items are usually premium priced at first and then over time, that's when it trickles into the mainstream." ultra high-def is still ultra- expensive, as in $12,000-$20,000 for the largest screens. but this show is less about affordability and more about possiblity.
there's even a gadget to help you gobble. hapifork has come up with a fork that pulsates in your hand if you're eating too fast. the computerized mechanics of electric cars are a bit too hush-hush according to the government. the national highway traffic safety administration is proposing that electric vehicles and hybrids should be required to have a minimum sound level to warn pedestrians. the new rules would start with the 2016 models and would cost the auto industry $23 million the first year to install sound. a railroad owned by berkshire hathaway is preparing to boost its shipments of oil. burlington northern sante fe, which is owned by warren buffett's company, is investing hundreds of millions of dollars to increase petroleum shipments. it plans to move 40% more oil by the end of 2013. the oil is being produced by bakken shale formation, which is reportedly set to be the largest oil
producer in the world by 2020. the railroad is attempting to recover from a tumble in coal shipments, which dropped 6.2% last year. once seen as a likely future ceo for jp morgan chase, james staley moves on. staley, the former chief of jp morgan's invesment bank, is leaving to become managing director of blue mountain capital management, which is a hedge fund. staley has long been seen as a top candidate to replace jamie dimon as chief executive. staley's jump is the latest departure from the once-tight top managment team at jp morgan chase. since 2011, several other confidants of jamie dimon have left the firm. from downmarket to high end. pawn brokers are turning into the new banks for the upscale. according to marketwatch.com, because of stricter bank loan rules, even the wealthy can't always access quick cash. the pawnbroker industry is responding and seeing growth among customers looking to tap into loans that can go as high as a million dollars and be made within minutes. the pawn
industry made more than $15 billion in 2012. although they appeared to be a casualty of the housing crisis, jumbo loans are actually flourishing. as the housing market improves, banks are increasingly handing out jumbo loans to home buyers in excess of $625,000. reports say overall, lenders gave out $148 billion in private jumbos in the first 9 months of 2012, a 23% jump from the year before. getting the loans requires a credit score in the 800 range. target's special holiday promotion will become year- round. target says it will match prices on identical products if consumers find them priced lower at select rival stores, like amazon, best buy and wal-mart. price-matching became a popular tactic for retailers this holiday season. target is the first brand to continue it past christmas. ahead of the oscar season, film
executives question whether facebook is the best way to promote their movies. orginally, facebook was viewed as a way to reach moviegovers through social media versus traditional ads, by having fans "like" their films on facebook. now that studios pay to be on facebook, the la times reports, some, but not all, are becoming skeptical. last year, gm dropped $10 million on a facebook campaign. mcdonald's has lost a valued member of its company's history. mcdonald's' former ceo fred turner died early this week at the age of 80. turner held the ceo position from 1977 to 1987, before retiring in 2004. he had been with the company since 1956, as one of the chain's first employees. still to come, why now could be the time to put your home on the market - that's later. but first, is safety software doing more harm than good? we'll take a look - next, with
spent more than $7 billion last year on antivirus software. the problem is, according to experts, these programs rarely, if ever, can keep ahead of the torrent of new viruses that are being designed. jerry irvine is cio of prescient solutions, an it outsourcing company, and he's a member of the national cyber security task force. this sounds very scary. what are these bad guys doing? > > it is very scary. the problem is, just as in medicine, you can't fix a virus unless you know what it is, and you can't fix a computer virus unless you know what it is- > so it's reactive instead of proactive. > > it is always reactive. > so how big is the problem? are the bad guys realizing that this is a window of opportunity, and they are front-loading viruses as quickly as they can before the nortons and mcafees can get ahead of it? > > that is exactly what happens. they will look to see what problems exist in an operating system or in an application, then they'll write a virus for it attacking that specific weakness. and it will take three, five days, or even a month for an antivirus
solution, or for microsoft or another vendor to put a fix out to- > and by then the bad guys have gotten away with the information that they want. so, tell me, is this mischief makers, or is this malicious, with criminal intent behind it? > > virus applications used to be just for an annoyance factor. that is not the case anymore. they are out for money. they are out to grab your personally identifiable information, to steal your identity, to get your credit card information, and to make money. > so what is the plan? keep your anti-virus programs up to date? > > absolutely. two things: first off, you have to run an anti-virus. even though it is reactive, you have to have it up and running. you have to make sure that your anti-virus definitions are up-to-date. make sure that that gets updated every day. do your microsoft security patches, do your application security patches. as soon as they come out, get them up and running and installed. > are these the things that businesses are doing, because they have a lot more at stake
perhaps than just a consumer. > > of course. that is their number one task for an i.t. department, is to keep the systems all updated, to keep security solutions updated, to look for new solutions like application fire walls or different things to make sure that they can protect as much of their data as possible. > jerry irvine. thank you so much. > > thank you. thank you bill. still ahead, this could be the year that housing makes its official comeback. we'll hear more on that after this.
signs are pointing to a break- out year for home sales. anthony lolli, founder and ceo of rapid realty franchise, joins us this morning via skype. good morning to you, and will 2013 be a breakout year for the housing market? > > absolutely. we are already seeing an uptick at the tail end of 2012. we saw a tremendous amount of closed transactions, which is unusual during the holiday season. people usually tighten their belts and don't make any major investments. but, in december, especially my company, we did phenomenal. > is it true that january is the new spring, and now is the time sellers should put their homes on the market? > > i think it is. i think that the uncertainty of what was going to go on with the presidency, the fiscal cliff, the dust has all settled, so now people are kind of taking out their wallets and really purchasing homes. and mainly it's because there is certainty
in the economy now, so the banks really have extended all the courtesy to kind of educate the consumer, unlike before. > what about banks? are banks still tight with lending? > > it is a little difficult to get a home loan. but, the good news is that the rules and regulations are very clear. so it's either you qualify, or you don't qualify. so, you're not kind of disenchanted with the process, where you get started and then midway or toward the tail-end you don't get approved. it is kind of like an instant no or an instant yes. so really, whereas before a typical home buyer would take about three years from the time they thought about buying and shopped around for three years before they executed a transaction, now it is taking six months to one year. > what are some upcoming concerns for the housing market? what concerns me is the false hope of short sales. there was a big boom in the short sale industry last year. that really
slowed down to a crawl, because there are some people who can't even afford to short-sell, or are not in a position to short- sell. so it was kind of like false hope. so, it was limited inventory - and there's limited inventory now - but, at least the inventory that's on the market is legitimate, verses in 2007 and 2006, the inventory was kind of fake. it was really people that weren't looking to sell, they were looking to refinance or just kind of get a pat on their shoulder about their great investment that they made that appreciated in value, and they kind of had these wacky, out-of-price numbers that, "hey, if someone is willing to give me x, y, z, i will sell it for x, y, z." now there are some really serious sellers that are taking offers. > thank you for your time. that is anthony lolli of rapid realty franchise. > > thank you so much. just ahead, a farming stock with big growth potential. chart talk is next.
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scott bauer of trading advantage joins us now for chart talk. good morning scott. > > good morning. how are you angie? > i am doing well. so is monsanto. it is an ag-related stock. what a great way to start the earnings season. profits tripled. they have that biotech corn seed which is doing very well in latin america. what do you like in the charts? > > just about everything. you talk about blow-out earnings here. the street number was 37¢ a share. there was a whisper number at 39¢. they come in at 62¢, with great guidance. the product that you talked about in latin america, gangbusters. it is going phenomenally. this chart has been just on a steady upward climb, and there is just no reason to think that it is going to pull back whatsoever. going into earnings, there was an expected move of about $2.50 a share, based on that option volatility and where the front- month options were trading. the stock opened up yesterday almost up $4, settled into about that $2.50 range. but i want to
keep something in mind that is really interesting. 75% of the time monsanto has beaten the whisper number, which they did this time. 50% of that time - so we're looking at basically 37-38% of the time - monsanto was up 8-9% in the 30 days following their earnings report. > it sounds like this is a stock that people might want to actually own long-term, because it doesn't seem like there's a lot out there that can stunt the growth of monsanto. > > totally agreed. they're the leader in this industry, and the fact that their outlook is so strong, i don't see how you could be short it or not be in this with some upside calls, which has been huge call buying. it just looks great. > good to have you on the show. that is scott bauer of trading advantage. have a good trading day scott. > > you too angie. we are all out of time for today. coming up tomorrow, it's a controversial movies and money as our critic weighs in on whether hollywood glossed over the truth in "zero dark thirty." from all of us at first business, have a good wednesday!
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