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tv   First Business  KICU  November 4, 2013 4:00am-4:31am PST

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feeling the heat.... why this winter could take a toll on your wallet. in today's cover story... food stamp cuts are setting in for 47 million americans. plus.. be like of the world's most successful investors spills his secrets... and...what's old is new again in the music industry.... first business starts now! you're watching first business: financial news, analysis, and today's investment ideas good morning! it's monday, november 4th. i'm angela miles. in today's first look: the pressure is on the nasdaq today... the nasdaq trading exchange was stopped-- friday by a flood of orders. officials
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report "a significant increase" in options orders flooded the system. trading was halted for the fed bank stress tests are coming. the fed wants to make sure banks are secure in the event of higher unemploment, a housing market crash or a severe slow down in china. and in a spinoff effort from the hit pbs show downton abbey a wine has been created for fans. the wine will sell for around $14 per bottle. liane feldstein of fc stone joins us now. good morning to you. > > good morning. > > so we have a jobs number coming out at the end of the week. how you think the market will perform a head of that? > > well the market might kind of slow down a little bit. we don't have a lot of economic data coming out this week as opposed to last week when we were still making up from reports from when the government shutdown, but this economic report is a week late and so this throws a lot of
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things out of balance and we can also see the number be a little bit off because of the government shut down-- were these workers counted in but did any of them actually apply for unemployment so i think the market will be unsure of what to expect and how to react and might take it pretty easy. > > as far as economic data what else do you think people should be watching-- especially average investors? > > well it's very interesting right now. last week's data pointed to a slowing down of the economy and this week since we don't have a lot of data one of the most important things of course will be the jobs number but on monday were going to have factory orders and this actually shows how the economy could be performing into the future so people might want to take a look at that, and if people are ordering more durable goods say refrigerators and stoves for their houses that means people are spending more money which increases our economic growth. so it's very hard to determine what people should be watching without a lot of reports coming out this week. but i would say really watch for those factory orders because it gives us a picture into the
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future. > > what about going long this market? what sectors or industries which to invest in right now or consider? > > it's so strange because with the economic data last week, the s&p made new highs and everyone was kind of sitting there saying i wonder why this would be were waiting for the fed to come out talk about tapering still. we're waiting to see if they're going to change the rates which everyone was pretty much with the consensus that they would not. so i think you have to pick your areas from a broad base. look into financials, look into tech, look even look into the pharmaceutical industry and take your portfolio and spread it across different areas a little bit evenly because in case of one day financials could be up the next day they could be down. the same with pharmaceuticals. we just don't know what's really happening with this market right now because everything is kind of a topsy-turvy according to data. > > good to have you on the show and thank you. > > thank you have a great day. food stamp allocations rolled back to pre-2009 economic stimulus levels ---much as the payroll tax holiday expired at the beginning of this year. as our cover story explains, it's not only direct recipients who are affected. the greater chicago food depository is bracing for more demand for its pallets of food shuttled on forklifts daily. this giant warehouse already supplies 650 low-income food pantrys, soup kitchens and shelters throughout chicago. and the need for meals has not eased up since end of the recession. "over the last five years, we've seen a
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70% increase in food pantry visits in cook county, alone." the food stamp rollback is the end of a temporary boost to food stamp allocations as part of the 2009 economic stimulus. it affects 47-million americans. the rollback, effective immediately cuts $36 a month for a family of four. the usda estimates the result will be 21- fewer meals per month for that family. but advocates for low income families say while some segments of the population are recovering economically, that hasn't happened for a lot of americans. "we haven't seen an economic recovery for low- income. the census bureau says we still have about 15% poverty level and that hasn't budged in three years." the ripple effect can be seen at super mercado rivera. forty-percent of raul rivera's customers use food stamps--in illinois, the assistance is distributed electronically through link cards. "people are going to come and buy less. we'll have to cut
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the hours of our workers." nationwide, the rollback amount to five billion dollars less in assistance for food. in illinois, for example, the supplimental nutritional assistance program, known as "snap" gives a 240-million dollar boost to food retailers. "for those retailers that depend on snap, we worry if they will all survive." so far, raul rivera is not talking about laying off any of his ten employees but he and others are concerned that food stamp recipients may be threatened again, if congress cuts the food stamp program deeper as part of the farm bill, now in conference committee. the clock is ticking---if the farm bill
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is not passed by the end of the year and the current one isn't extended, dairy supports would also expire, which could result in higher milk prices. walmart is one of the retailers that benefits the most from the food stamp program. the wall street journal reports.. 18% of food stamps spending is done at walmart. that equates to around $14 billion dollars. however, the ceo of walmart told shareholders last month.. as american's struggle with less money from food stamps, they are likely to turn to walmart. walmart has worked in the past wtih first lady michelle obama to encourage americans to eat healthy on a food-stamp budget. shares of the container store nearly doubled on the first day of trading. shares priced above range at $18 late thursday and jumped to $36 at the open of friday's trade. the retailer raised $225 million in its ipo. the container store sells
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shelving, filing cabinets, storage bins, and other products to organize homes and businesses. it has no direct competitors other than discount chains such as walmart. shares of the container store closed at $36.22 more questions are being asked by federal regulators about trading and hiring practices at jp morgan chase. the u.s. department of justice along with other agencies are investigating the banks hiring in hong kong. the firm is also admits-- it's facing a probe into currency trading, possible manipulation of foreign exchange rates and it's connection to the bernie maddoff ponzi scheme. the investigations are in the early stages. jp morgan officials are cooperating with authorities. auto sales revved up in october. sales rose across the board for the biggest automakers. all reported in higher sales, but the results were a little shy of what wall street wanted. gm -- however nearly doubled wall street's expectations. sales picked up after the nearly three week government shutdown came to a close mid october. ford is recalling an electric car due to a potential power loss to the wheels. ford is recalling more than 2 thousand focus cars. the model years are 2012 to 2014. the issue is caused by software that causes brakes and steering to
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malfunction. despite the issue the car should continue to operate normally. no injuries are reported. climate change is putting global economies at risk. risk analysis firm "maplecroft"-- ranked cities facing the biggest threat of floods, storms and landslides attributed to climate change. dhaka, bangladesh topped the list... followed by mumbai, manila, kolkata and bangkok. a total of 67 cities are considered high risk, making up nearly a third of the global economy. however, maggie fox of the climate reality project, says its nearly impossile to "calculate" the cost. "as we travel around the world, begin to calculate that cost but in most parts of the world we don't even know how much some of these events have cost because they dont begin and end with dealing with a natural disaster. after the disaster is quote "over" peoples lives are changed forever. not everyone agrees -- some scientists argue that the enviornmental changes are natural and are not spurred by human activity.
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heating your home this winter-- could give you a chill.. kevin craney of rjo futures joins us with the update good morning! > > good morning, how are you? > > im well! so what are you seeing as far as the futures what are they telling you about home heating oil? > > heating oil is down substantially here for the start of the month of november but we did see a rise in october and i think that's on account of what could come later in the winter. we're forecasting a very cold winter as we progress through this winter season. > > how is that likely to affect heating bills? > > i think you'll see a small rise in home heating bills and i think it really depends on fuel use. there's a lot of heating oil in the supply pipeline right now. the forecast is for a mild winter to start, a harsh winter to end, so that'll give time to build supplies a little bit but if you're using natural gas, things could be a little different. 50% of homes are heated by natural gas and if
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we see a rough winter, you could really see the bills tick up if that's the fuel of choice. > > thank you for the update kevin! > > thank you the federal trade commission is cracking down on work from home scams. the agency is asking consumers to report information regarding work from home pitches they receive by email. the scams have been on the rise, by promising high pay and zero commute. however -- what the sites are really getting at is information such as social security numbers. the ftc says to watch out for get-rich- quick proposals, and file a complaint if you are suspicious. drivers may be in a for a price break at the gas pump.a glut of oil in the market is causing the price of west texas crude futures to decline dramatically. if the oil continues to pile up in abundunace --it could drive down prices to around $3 dollar. the current average is $3.27 per gallon of unleaded. it's saving deja vu for 401k accounts... the government is maintaining 401k and ira
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contribution limits at the same level as last year. that means for 2014.... employees may contribute a maximum of $17,500 dollars. and, ira contributions are still capped at $55-hundred dollars. the catch-up limit for contributors over 50 also stays at 55 hundred dollars for both iras and 401ks. it's happening because the consumer price index, hasn't risen enough to warrant the government bumping up the limit. hedge funds and brokerage firms are heading to the hamptons... the wall street journal reports .. people who normally work on wall street are popping up on a regular basis in the resort beach towns of long island. the paper reports-- there are 33 investments advisors and broker-dealers registered with the sec near towns in the hamptons. a billion dollar deal is being approved in the "office" space. the ftc is giving clearance to office depot and office max to merge in feburary. the agency says combining the office supply companies is not likely to harm competition. the news gave a rise to both stocks. office depot gained 3% office max shot up almost 4% the retailers expect to close the deal tuesday. office depot and office max-- report earnings today.
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there's still plenty more to come... what warren buffett says could lead to the big investment regrets. plus.... the grocery store habits that are slowly draining your bank account. and... find out why a recent comeback is music to collectors' ears... we'll be right back!
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big time investors make it look easy to make money. now-- billioniare investor warren buffett is sharing with usa today 3 investing mistakes to avoid. number one: trying to time the market. buffett says bad idea because its tough to predict short term market moves. number 2 trying to mimic high- frequency traders. he suggests buying stocks and hang on. and number 3.. paying too much in fees and expenses. buffett likes investing in super low cost index funds. cutting up your own vegetables -- may seriously cut down your grocery bill. a study by savings site living on the cheap shows how a few minutes of effort can pay off. the break down? people who chop thier own veggies, fruits and meats spend an average of $380 per year. buying prepared or pre-chopped foods.. costs more than $1,000.
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now onto a blast from the past! sales numbers for vinyl records are at levels not seen in years. ky sisson takes us for a spin in hollywood. even in the digital age, clarke andros buys the obsolete. it's worth my paying more. it's not just a digital file. i have the album art in my hands. you can't touch an mp3. he is part of the resurgence in vinyl records and sales of this 65-year-old technology are making a record comeback. nielsen soundscan projects 5.47 million vinyl records will be sold in 2013, up 338 percent in the last seven years. steve sheldon is the president of rainbo records, a vinyl manufacturer that presses nearly 25,000 records a day. his company has been in the business since 1939, and says the demand for vinyl records is unlike anything they've seen in years. this year has been the busiest for uswere doing double what we were doing two years ago. capacity is at 100 percent.
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and it's about the 13-25 year old range that is making these hot off the press vinyls (throw record) fly off store shelves. it's a tangible item and they were brought up on virtual everything. i think they are enjoying handling the records, handling the jacket; the artwork on the album cover was always an attraction. here it is really awesome to see a 15 year old say "oh i just got a turntable for my first time, what do i buy?" and they are extremely excited about it. adrienne pearson works at amoeba records on sunset blvd in hollywood, california and says that record labels have worked in an extra incentive to buy vinyl. i could honestly say within the past 5 years vinyl record sales have increased dramatically. a bunch of record labels are actually putting out vinyl that also include digital downloads and you know vinyl sales are going up when you see them at best buy. rainbo records, has seen more than seven decades of changes in the
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music industry, from records included in a wheaties box, to cassettes, cd's and 8-tracks. sheldon says the digital age couldn't have been more detrimental to his company, but the comeback in vinyls came at the perfect time. vinyl has been the savior for us. after 74 years, it was looking pretty bleak with cds. our cd sales have dropped about 75% since 2008. i was going to scale down the company to a much smaller operation and then the last few years vinyl has taken off. we hired some employees back. 2010 we were at 90, now were at 140 employees. reporting in los angeles for first business news, i'm ky sisson. ky tells us the cost to make vinyl records has remained about the same for the past 20 years. coming up.... bill moller explores why its becoming tougher for baby boomer parents to stop supporting their grown up children.... thats next. and later in chart talk.... a trader clues us in on a unique trade... in the ten year treasury..
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you're in your 50's or 60's and you figure, hey! you're done with the parenting thing, right? but - there you are still paying for those kids now in their 20's. their cell phone
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bill, medical charges - heck you're buying furniture for them. what's wrong with this picture? well there's a new book that delves right into this: "parents to the end: how baby boomers can parent for peace of mind, foster responsibility in their adult children, and keep their hard-earned money." it was written by seattle psychotherapist linda herman. so linda, we're talking with her via skype. now i have to say, i'm doing this. my son's married, they're going to have a child in march- i can't help it. i just like to pay his cell phone bill. > > well it sounds like that's a gift and sometimes that works and that's just fine parents have to decide what is working for them and is it working for their child. > > so do parents need to take the initiative and say hey kids there some new rules around here now. > > indeed sometimes parents do-- especially if the parent start to get uneasy himself or herself-- that's the cue. is it working for you? > > is it-- i don't know-- a psychological game? do we need
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to understand why they are the way they are sometimes? > > i think it is to some extent because parenting has changed a lot. those of us baby boomers grew up in homes where parents didn't have the money to do those things for us, and so they didn't. we have more money and so we do more. > > so how do we bring this up? if we find that we're a lot of their expenses how do we change that around? > > you start with a conversation-- keeping it as positive as you can-- to the fact that you know i've been thinking about how you do a here well established now... your situation is a good example. i'm thinking maybe we need to revisit my paying the cell phone bill and then thinking that it's about time that this is something you takeover. something like that. > > well about the push back? wouldn't they say well mom i can't afford this i need you to help me? > > then you say well sit down and look at your finances and maybe figure out how you can do this. lots of parents don't want to do a direct cutting off of their kids financial health so they taper off... ok i will pay for the next three months or i'll pay half and then in two months you takeover. parents ought to expect push back.
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> > you wean them off of the dependency. all right linda herman and thank you so much. > > ok. thanks bill! up next-- why investors are calling their brokers to make a movein the bond market. chart talk is next
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we are rounding out our show today with scott shellady of trean group. good morning to
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you. > > good morning. > > now don't let that cow jacket fool you. this guy is trading the tenure treasury. what do you see out there that you like? > > well you know we had some verbiage last week from various fed people that were used to be on the fed but are not on the fed any more, but it just seems to me that our customers have suddenly woken up to the fact that maybe this taper-- at least the tenure-- will start to fall of bed here, and looking for higher rates or lower bonds. so were pretty active on getting rid of bonds and or buying puts and it seems to be the flavor of the day-- were not the only ones. > > you're not the only ones. so how far who do we go with this? and it sounds like it's a one- sided trade here so what do you think? > > well it's kind of a unique trade because due to what the fed is saying in their state mandate: we're not going to taper, but in some point in time they're going to pushed and forced to do that. i think that this is what investors are looking for: the fed being forced to taper. so were looking for say 3 percent over the-- 3% tenure-- sometime in the next four months. > > what do you think the bond
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market though, overall scot,t is telling us about the economy? > > well nobody can get excited about 2 1/2% tenure and that would tell me right now that the economy is not doing very well. we're going to continue to have some sort of a combination, but the big bet is now: will they start to trim back that accommodation? we can still be pumping into next year who and into 2015 even, but we could be pumping a lot less than we are now. that's what the big bond trade is and we're trying to guess when that starts. > > exactly that was my next question as a trader, do you wait for your trader instinct? or when do you know it's time to go the other route? well a lot of times it's just instinct. but we're seeing now a big battle between the strategic investors of the world versus the fed and they're starting to get more and more angry with this combination or no end in sight for this combination. and at some point in time the fed's going to have to have their hand forced. that's where the bets are being placed on right now. > >scott thank you. have a good monday. that's it for now.. coming up tomorrow-- the oh nos of ipos. how to avoid getting burned on a stock debut. from all of us at first business-- thank you for watching and have a great start
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