tv First Business KICU October 18, 2013 4:00am-4:31am PDT
the s&p makes history as traders wrap up a wild week. in today's cover story....president obama calls for action on the farm bill-- but there's a deep divide in congress. plus....in traders unplugged. what traders think about retailers opening "on" thanksgiving. and... could bubble wrap become the next economic indicator? first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's friday- octber 18th. i'm angela miles. in today's first look: the market has gone from from rocky to record this week. the dow lost a couple of points yesterday, the nasdaq gained 23 while the s&p-- ran up to a new all time high
of 17-73 on the deal out of congress. gold gained $39 dollars and oil dropped to $100 dollars per barrel. some analysts say oil was the safe haven play during the debt default crisis. in earnings after hours-- google shares rallied to $950 after earnings blew past expectations.more layoffs are planned at wells fargo. the firm intends to let go nearly 1,000 employees in its home loan unit as demand falls for re-fis. and, the labor department makes it official. the jobs numbers from september will be out on tuesday after being shutout during the shutdown. the market expects 183,000 jobs were added to payrolls and the unemployment rate will remain steady at 7.3% and now that the government is rolling again. so is panda cam! lincoln ellis of green square capitol joins us now. lincoln it has been a wild week and now today it's options expiration day---it's also a full moon. but what do you think about
trading today? > >it might as well be friday the 13th right? and the new all time highs we are seeing on the s &p as of the close last night should put---i wouldn't be surprised if get a little bit of a selloff here. we've had a very significant run, a big sigh of relief. i wouldn't be surprised if end today down just to cool things off a little bit. > >what about the earnings? any market movers there? > >yeah, some pretty big market movers. as you know on thursday google, chipotle, ibm, and goldman sachs all reported. goldman and ibm really weighting the dow down most of the day. and later in the day google and chipotle both reporting some very significant beats both on revenue and on forward guidance. > >what's next? what's the next hot spot in the market. some are saying silver could see record numbers.
> >silver sure could. particularly as it pertains to the price of gold. we've seen significant uptick in gold volatility, that's both on the backside of the crisis and the expectation that janet yellen will keep federal reserve policy very loose for a very long period of time. i think people should begin to look at more cash flowing assets. mlp's---master limited partnerships and the energy revolution that's happening here in america. it's been happening for some time and could continue. > >thank you very much lincoln. > >thanks angie. the crisis over the debt ceiling has been averted.. but. a chinese credit rating agency is going through with a downgrade on america. china's dagong credit rating agency cut the u.s. status to a-minus from a,. the agency says our congress failed to solve the nation's debt and growth problems.the agency is not a widely-watched but the downgrade reflects china's frustration with lawmakers and china is the largest single holder of u.s. treasuries - with 1.28 trillion as of july. "this might be a way to reach out to try to put some pressure
on politicians, on lawmakers in washington to think that another country is serious enough about this to downgrade the u.s. credit rating." paul christopher, chief international strategist with wells fargo says it's not likely there will be other downgrades. the shutdown if over, but fighting is still on the agenda in congress. next up-- the long-delayed farm bill. it sets agriculture policy at roughly five year intervals but as our cover story explains--much of it funds federal nutrition programs known as food stamps. it was one of the first things president obama listed as priorities. "passing a buget, immigration reform, farm bill. those are three specific things that would make a huge difference in our economy right now." the farm bill comes up roughly every five years and revises u- s agriculture policy. this year's version reflects concern about climate change. many farmers want to expand federally-subsidized crop insurance by ten percent because of recent searing summer droughts.
"production has become much more iffy. we went from the dust bowl until just recently with pretty benign weather. that's not been in the case in the last ten years." but 80-percent of the farm bill's funds go to the nation's anti-hunger program--food stamps.,and while the senate passed one version that cut eligibility. house members want ten times the cuts. the bill that passed the senate has stalled in the house since june. "there are a lot of republicans who see the foodstamp program as costing too much. if they cut back, we could save billions." forty-seven-point-eight million low-income americans, mostly children, the elderly or on
disability recieve food stamps. benefits average 133-dollars a month. changes proposed in the house would cut 39-billion from the program over ten years and remove four million people from eligibility. nutrition and farm subsidy programs have been connected for decades. there is a proposal in the house to split the two: foodstamps considered every three years, and agriculture programs, every five years. now that lawmakers have reached a deal and averted a default crisis. mortgage rates have the potential to fall next week. currently-- the average rate on a 30 year home loan is 4.28%, the 15 year is 3.31%. mortgage rates normally follow yields on the 10-year treasury note. yields are lower with the consensus in congress over raising the debt limit. the government shutdown has not taken a toll on home prices-- just yet. home prices did rise around 1% on average while the nation was on edge. accordingto real estate site trulia that was not enough proof the shutdown was a major factor in home prices. jed kolko of trulia says the real impact was felt by homeowners who were in
the beginning stages of the buying process. " lots of mortgage applications were delayed or stopped. and we still have to wait to find out what those backlogs look like. and how people who were in the mortgage application process how long they will have to wait before they can actually move ahead with their loans." kolko says an upside of the shutdown is that the federal reserve may be less likely to taper its bond buying program soon, which could keep mortgage rates from rising. in fallout from the housing crisis-- hsbc will pay a record $2.5 billion dollar fine for misleading investors. the investors won the largest amount ever awarded in a securities-fraud class action trial. a unit of hsbc was accused of hiding the fact that its growth was coming from predatory lending practices. including: misrepresenting interest rates and charging illegal fees to borrowers. british prosecutors are planning to name names next week in a massive fraud investigation. in a court hearing monday, the u.k's serious fraud office will accuse
former traders and brokers from major banks including ubs, citigroup, and hsbc of rigging the london interbank-offered rate, or libor. in a separate suit, evidence shows barclays employees knew of the alleged rigging since 2007. sac capital has a tentative deal for a $1 billion settlement for insider trading charges. the deal still needs a judge's approval. federal prosecutors wanted a $1.8 billion penalty and a guilty plea. but sac's lawyers argue the government should deduct $616 million - for money sac already paid to the sec. the port of baltimore remains shutdown as thousands of workers strike. arbitration begins today between the steamship trade association of baltimore and representatives from four labor unions, including the longshoremen. two- thousand workers walked off the job this week over contract disputes. its expected the closure could hurt east coast auto sales. baltimore is a port of entry for cargo from mazda and bmw.
in detroit-- number crunching shows the city has some cash on hand. in july, detroit issued the largest bankruptcy filing in u.s. history. as of last quarter-- the city had a cash balance of $128 million dollars. but that-- mostly happened because the city reportedly is no longer paying unsecured bond debt and avoided making a $44 million dollar payment to 2 pension funds. next week-- a michigan judge will hold a mini-trial prior to deciding if detroit is eligible for bankruptcy relief. motorola solutions is offering buyouts to employees as a way to counter-act slow sales. the electronics maker is offering the voluntary packages to 20 percent of its workforce, or 22-thousand employees. reports say the company is also going to "evaluate the workforce" and "make organizational adjustments". motorola reports earnings next week. but has already cut revenue forecasts twice this year. another recall is happening at
toyota. 803,000 sedans are being "called in" for servicing on "air conditioning condensers" causing potential water leaks into power steering and airbags. toyota admits the airbags could deploy at the wrong time. the recall covers 2012-2013 camry, camry, avalon and venza sedans. 2 minor injuries have been reported. blackberry may soon have a buyer. the wall street journal is reporting that chinese pc maker lenovo may place a bid for blackberry. both companies declined to comment on the speculation, but reports say lenovo has signed an agreement to sift through blackberry's books. in addition to pcs, lenovo makes smartphones that are only sold in china. blackberry could give the brand more global access. blackberry shares- gained 7 cents yesterday to close at $8.20. apple is expected to take the wraps off 2 new ipads next week. this week-- apple officials alerted the media about a major event planned for october 22nd. according to tech bloggers-- the new ipad and ipad
mini be revealed then and go on sale on halloween. traditionally-- apple rallies into large events and that's what is happening this week. apple closed last night at $504 dollars. facebook shares are also on a roll. the stock hit an all time high yesterday of 52 dollars. the social network could have instagram to thank for the momentum. facebook bought the photo sharing app -- last year. analysts say instagram's new video service...could help bring in major ad revenue by next year. in earnings watch goldman sachs is the latest bank to report in disappointing earnings in the third quarter. it beat on profits but missed on revenue causing the stock to lose more than 2% yesterday. verizon on the other hand was a big winner on wall street this week. shares popped after reporting strong earnings and revenue. the company says it continues to gain marketshare. and talk about a turnaround...american airlines saw revenue rise 6% last quarter. its adding 60 new jets to its fleet. sports betting is going to a whole new level. starting this week...you can actually invest in pro athletes...just like team owners--sort of. fantex holdings is launching a
marketplace, which lets investors put money in stocks tied to athlete's financial performances from endorsement deals and contracts. the project was reportedly backed by powerful executives from sillicon valley and wall street. still to come: the stakes are high for retailers --the stocks traders are betting will win big this holiday season. plus, its all about timing ...find out trader plays on investing in big banks. and next....view from the top. what one ceo has to say about signs of growth in emerging markets.. we'll be right back.
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gonna take a little bit more delays. and from the fact that at customs we import or export products there are delays. the answer is no. not very much. > >you are big into packaging but you are trying to rebrand the company. what's the plan here and why? > >the new is about moving from product pushed to solutions. and market driven solutions. so as a result of that we have 3 divisions. we're the world leader in protective packaging. we protect everything that is being produced industrially and also for ecommerce. we are the world leader in food safety and packaging. we also improve health through our diversity operations in hospitality, healthcare and building service contractors also. > >which means that you are very tied to what's happening with the economy so what kind of signs are you seeing with the economy right now? > >the industrial packaging part has been a little bit soft. the reason is our industrial packaging business is tied to industrial gdp. industrial gdp has been very poor in europe
where we are highly exposed in that part of the business. this has been a little bit sluggish in the u.s. so by definition we have not done very well there so far. in food packaging and in food safety, we've been doing quite well because it's mostly for us about meat consumption. and meat consumption in the emerging world has been very strong. especially out of latin america. quite good because we have strong market shares in the u.s. and good also in the eastern part of europe. > >so that's a good growth area for you. > >that's right. > >thank you for coming on the show today. next time bring the bubble wrap though. > >i will. although it is 2% of our sales but it is the legacy of our company. > >and a stress reliever. > >and it's fun. > >very fun. thanks again. coming up...the holiday shopping craze is just around the corner. but what stocks are on trader's wish lists? and later chart talk, why a
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after a rough and tumble week from washington to wall street-- our traders are ready to let loose. alan knuckman and james ramelli join us from the floor of cme group for traders unplugged. we are good to go with topic 1: retail turkeys - macy's is the latest retailer upping its game by opening some stores earlier than ever on thanksgiving-- is it time to gobble up the retailers? james: retail has been one of the trickiest sectors to trade all year long. i think if i'm looking for any positions in retailers this far out through the end of the year, i want to look at luxury retailers like kors. kors has one of the best looking charts out there right now. it's just a couple bucks of of its high, trading around $75. i'm looking for a long here
in kors. alan: retail is up 250% over the last 5 years. it's outpaced the market in general so it's been tricky if you've been trying to go short. i don't know about on thanksgiving having the stores open. that sets a bad precedent. i like to enjoy my turkey. the stock i like is gap stores. gap stores got hit but people aren't gonna stop buying jeans and stuff at gap. 38 is a pivot level, you can lean on 30. buy the 30 calls for march is the way i'm looking to play it. angie: topic 2: layoff leaders - 10 corporations have announced layoffs by the tune of 75k. can you cut your way to prosperity? alan: obviously they can. they've done it in the past. it's an unfortunate aspect. technology is replacing people. that's what jp morgan is doing---losing 4,000 jobs in banks because you don't need people to get your money anymore. plus mortgage issues so it's a reality.
james: american express is a company that's doing this. investors love this about the stock. the stock gaps higher on their earnings. they beat estimates. i think it's got a lot more to go here looking at american express---a lot of layoffs. it should increase their profitability and be a good long setup for me. angie: fee me--- credit card swipes are costing small businesses...is there money to be made on visa or mastercard? james: i think there's money to be made in visa and mastercard. if i had to pick one i would pick visa. visa is just off of it's 52 week high. we have mastercard right on its 52 week high. good support at 191 which is about $6 lower and with my profit target for the end of the year at 220 i love---- alan:---they've doubled since february 2012. they're very tough at these levels from that standpoint but as we've all learned, you mess with the bull you're gonna get the horns. so it's hard to be bullish here even though they control 80% of that market and they've got a great profit angle. i like the other credit card american express. it's broken above its range between 70-78 looking to go to 86. i think that has a better value than a $700 stock
in chart talk this morning, waiting for a fall. joining us now is trader tim biggam of trading block. tim, you have been waiting for the market to come down and for some individual stocks to come down so you can swoop in and do some buying. let's start with ibm. > >fall to say the least. this stock had a big drop in post earnings. missed certainly on the revenue side although guidance was reaffirmed so i think longer term may be an overdone situation. shorter term---i like scooping up some around here around that 175 level. i think given the fact that you're looking at a yield well above 3% now and the lowest ibm has traded in many a year and the fact that guidance is still in place going forward i think it will trudge along here nice value play. > >what would be your price target for selling the stock? > >we really looking to head back up toward that 195-200 level, i would certainly take some off the table there. that would be a nice move from these levels here and along the way collect a dividend that's well
over 3% now. > >what about some of the banks? > >dislike those for the same reasons. they missed the same way ibm did yet they are trading higher and they fabricated a lot of their earnings as always by pulling forward some loan loss reserves. i think their business model is challenged to say the least in this trading environment. names like citi-group, jp morgan, bank of america---i kind of think they'll have to come down a little to have any kind of interest here. citi maybe looking maybe down around the 45 level. jp also, down around the same area. > >tim, good to have you on the show this morning and have a great weekend. > > you too. thank you angie. that's a wrap for today. coming up next week, a check up on obamacare. what it means for uninsured americans and is it already helping or hurting the economy? from all of us at first business. thank you for watching this week. we will be right here on monday.
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