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tv   First Business  KICU  May 7, 2014 4:00am-4:31am PDT

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gearing up for the market's biggest public offering ever! in today's cover story.... the white house warns of climate change, as business owners hunt for opportunities. to get in on the tesla hype without owning the stock. and.. a .marriage foul. behind the money drama of a team owner bounced from the nba... you're watching first business: financial news, analysis, and today's investment ideas. good mo miles. it's wednesday, may 7th. in today's first look: alibaba-- the chinese commerce internet sensation -finally files for an ipo in the us. federal reserve chair janet yellen heads to capital hill to give congress her view of the economy. more store closings
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are in the works for sears according to ceo eddie lampert who is attempting to turnaround business. disney easily tops wall street earnings estimates' stocks slide as investors rotate out of tech and more. on light volume-- the dow fell 130 points on selling in banks. the nasdaq slipped 57 points as twitter and yelp dropped dramatically. and the s&p closed down 17 points. gold and oil were just about flat on the day. larry shover of sfg alternatives joins us on this wednesday morning. what do you think? will janet yellen, the fed chair be a market mover today? >>i don't think she'll be a mover today. she's got two days to speak today. thursdayi do believe she understands that the market is just depending on her to stabilize the marketand i think that's what she'll do. i don't think she'll reiterate anything other than we're data
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dependent, we continue to watch the inflation and jobs reports. >>disney had earnings report last night that topped expectations. will that move the dow? >>i think it will. that was really nice to see them beat on both ends. the market was really looking forward to that. talk about a company with it's finger on the pulse of the consumer and something so hard to quantify or qualify. a lot of good thingsi think the only downside with disney is the volatility and ratings with abc. but definitely could move the dow today. >>we had a rough go of it on tuesday with the stock market. what are some of the biggest losers of this market? >>right now it seems to be social media stocks being sold at wholesale. underneath that we're seeing financials sold off a little bit. it does seem like some of the bigger monies is taking money off the table with the higher valuation stocks which would be social media and perhaps putting it into cash or treasuries. that's what we're seeing. >>thank you for your thoughts today larry. >>you're welcome. the blockbuster alibaba ipo has officially filed for trading.
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documents were filed with the sec after the market close last night. alibaba is the chinese version of amazon. but much larger. as traders await the opening day of trade later this year-- the company filed for a $1 billion dollar ipo. but some estimates value the company above $100 billion-- making it the biggest in history. yahoo has a 24% stake in alibaba and stands to reap up to $10 billion dollars from the ipo. options players are already lining up to potentially make money on move in yahoo. the trend is obviously to the bullish side on tuesday's trading session, calls out traded puts. by almost 3 to one so some massive, massive bullish sentimentin yahoo. yahoo shares closed -- last down last at $36 dollars. but rallied in the after hours session.chuck coppola joins me now. he has his eyes on apple. hoping its new retail chief will do for apple what she did for an aging british fashion label the company gives a very
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warm welcome to angela ahrendts. her hiring comes with about 68 million dollars' worth of stock options. ahrendts is the former ceo of british clothier burberry. sales at the company more than doubled with her at the helm. she becomes apple's only female exec. the tech giant is known for paying its top people generously. apple shares were down yesterday, closing at $594.43 a free fall in twitter. shares of the social media company sold off nearly 18% yesterday in very heavy trading-- as the lockup period for early investors ended. twitter is down 30% from its much-hyped ipo last november. analysts say now may be a good time for investors to stay on the sidelines. "we think that there is still a sell off in twitter that continues, a sell off in momentum stocks in general or social media stocks. we could easily see that stock price drift into the mid 20s..we get into the mid and low 20s we start to get pretty interested in the name but here at this point we would still suggest people stay on the sidelines." that was rick summer of
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morningstar. he says while twitter's user growth is on the rise, the pace of the growth is cause for concern. a mysterious microsoft event is scheduled for later this month. the company sent out "save the dates" for a media event on may 20th. its expected the company has been working on a smaller version of its surface tablet to rival apple's ipad mini. recently, microsoft revealed sales of the surface are up but higher production costs are resulting in losses. walmart is number one as retailer and now its on its way to number one as an e-tailer. for the first time in a decade-- walmart's web sales grew faster than online retail giant amazon. according to the wall street journal. walmarts world wide sales rose 30% while amazon's growth registered 20%. amazon still beats walmart though in online sales of electronics. in today's cover story, who wins when the climate warms? the national climate assessment report is out. and its findings may boost business that's built on addressing climate change.
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the national climate assessment report, compiled findings by 300-climate specialists overseen by a 60-member federal advisory committee including representatives from oil companies. the report concludes global warming in the last 50- years is due primarily to human activities such as the burning of fossil fuels. morningstar equity analyst mark barnett says water-intensive energy plants, such as coal and nuclear may become harder and more expensive to compared with wind, solar or geothermal. "a geothermal plant is...a reliable source of power to the grid." in that sector he says three companies worth watching include: ormat technologies a geothermal company,next era energy, a regulated utlity with a large renewable portfolio and n-r-g energy. "ormat is one of the best positioned and fastest growing companies in the industry. and it doesn't have the problems that a lot of its competitors have." alexander bishai is a commercial energy consultant. he's also working on running electricity-intensive businesses on renewable and sustainable
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sources with the help of wind turbines, such as this one by a company called "urban green energy." "we're actually behind as a country when it comes to utilization of green sources of energy. but we're going in the right direction." a u-s appeals court rejected an oil industry challenge to the obama administration's 20-13 biofuels mandate. calling the contention "meritless," the oil industry must increase the amounts of biofuels such as ethanol blended in gasoline and diesel supplies for the next eight years. coffee futures have the jitters partly because of the climate. coffee bean prices have doubled since december as severe drought conditions kill crops in central and south america. now, a disease called coffee rust is threatening the 2015 crop. a coffee futures trader tells us it will eventually trickle down to consumers. "we're seeing it effect exports
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already. and its one of the reasons why we're seeing higher prices being paid in futures markets and eventually over the next few months, these higher prices will spill down to the retail level, the only question is how much." worldwide production of coffee could fall 7.1 million bags below demand. exports rebound and the u-s trade deficit narrows in march. led by gains in aircraft, auto and farm goods sales. the commerce department says the trade gap dipped 3.6% to $40 billion dollars. overall exports rose 2.1%. however, economists say the numbers are not likely to have an effect on g-d-p. "although the trade deficit narrowed in march, it wasn't as much as the government was expecting when they did the advance estimate for first quarter gdp so it looks like instead of a very small increase, it might have been flat or a small decrease, when we get the revised gdp report later this month. " gus faux-shay, a senior economist with pnc financial services group says the weather was a huge factor, and expects
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g-d-p to rebound in the second half of the year. debt is soaring at malaysia airlines. the airline is attempting to restructure $1.3 billion dollars in losses during the last year. the carrier is facingi a decline in bookings since the disappearance of flight 370 march 8th. that's on top of stiff competition and unprofitable routes. reports say the malaysian government is refusing to give the troubled airline a funding infusion. m&a madness in the drug industry continues. aspirin maker bayer outbid rivals for merck and company's consumer care business. bayer bought the unit for 14-billion dollars. it aims to become the largest over- the-counter drug maker in the world. merck shares fell 2% in trading yesterday. office depot will close at least 400 stores -- a quarter of its outlets. the company states after merging with office max last year there was an overlap of retail locations. the office supply chain has also suffers as shoppers buy more supplies on-line and at bulk
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retailers. office depot reported earnings tuesday that exceed estimates and backed its full year forecast sending shares 16% higher. also turning in earnings. a-i-g. shares fell 4% as the insurance giant reported a decline in operating income for the first quarter-- as catastrophe losses rose. and chipamaker nvdia sold more graphics cards for computers and gaming consoles than analysts expected. but its stock fell two-percent. analysts attribute that to due to the lack of a forecast for the current quarter.earning fell 7.1%. full results tomorrow. drivers who own a g-m car recalled for a faulty ignition switch-- will get an employee discount. usa today reports gm is offering employee pricing on new cars to owners of two and a half million recalls. drivers can also add on any other discounts. gm is not advertising the promotion and is not commenting on how much money drivers will save. the stock was unchanged in trading yesterday at $34.75. and those buying used cars are adding some steam to the market. sales were up 3.65% in april when compared to a year ago according to cnw automotive
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research. the used car market is closely linked to new car sales -- motroists often trade- in their older vehicles before they begin shopping for a new one. as the movement for raising the minimum wage to $10.10 an hour gains some momentum, many businesses are working to stop it. cnn money reports that groups such as the national retail federation the national federation of independent business and the restaurant industry are lobbying hard against the increase. the groups warn there will be job cuts. and, because raising wage has popular support, many larger businesses remain mum in public.. many u.s. millionaires support "sharing the wealth." cnbc reports 51 percent of u.s. millionaires surveyed support raising the minimum wage and say they would pay higher taxes. respondents also say they believe the wealth gap is a huge problem in america. they also shared some insights into how they built their own wealth. factors included hard work, smart investing, and savings. wells fargo is making a pitch to the rich. wells is offering 2 new credit cards to its banking clients who either spend big every day or are frequent
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fliers. the bank is tops in mortgage and auto lending.. but has weak credit card business. the new cards are called propel 365 and propel world. still to come: a trader gauges a bullish move for the stock market. plus.... find out about a play on tesla before it hits the mainstream... and.... donald sterling was recently banned from the nba for life.... why this may be the just the start of his financial troubles. . first business continues right after this!
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what allegedly started as an affair has ended in a money mess. donald sterling- the owner of the nba clippers has been baned for life from the nba. that's after tmz posted a recording of sterling telling his girlfriend known as v. stiviano not to be seen in public with black men. well, his wife is suing the mistress. joining us on set this morning to talk about love and money-- gemma allen of ladden and allen family law. what grounds does the wife have for the lawsuit and can she win in court? >>she has grounds because allegedly he's spending moneyfor a purpose unrelated to their marriage and it's money that belongs to both of them. so, i think she's already won. however, in that look at the groundswell of anger against the girlfriend. >>is this becoming more common for the wife to come back at the mistress? >>it's becoming very common. there is a site now called for wives to out the girlfriends. i think suits for alienation of affection or suits for return of the property are becoming
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more common but it takes two to cheat so i think the wives have to realize that their husbands are involved as well. >>the girlfriend alleges that she didn't actually have a sexual affair with sterling. does that matter? >>i think it's irrelevent. if someone wants to have sex with you and you give them lots of money in the hope that they do, i don't think the act is really important. it's the money honey. >>what should sterling do in this situation? >>what i think he should do from a business perspective is probably file for divorce. >>why? >>because that would slow down all these proceedings. after all, his wife does have interest in the property. she does have rights in this case. and if he wants to slow everybody downthe nba and all of his enemies right nowdivorce
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court is a good place to slow it down and get another set of eyes and have evelyn start to talk reason. >>oddly enough he's had one of his other girlfriends reportedly sign a contract saying i will not leave my wife and you will not get palimony from me. >>he apparently thinks like a lawyer and i think he'll think like a lawyer all the way through this. what i say is all of life is now a contract. >>good to have you on the show. we'll leave on that note. thank you very much gemma. >>good to be with you. coming up...a trader" charts" the next direction for the stock market. a new factory for tesla is creating new investment opportunities. that's next with bill moller!
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tesla will soon announce where its 5 billion dollar biggest in the world lithium ion factory will be built. the gigafactory will make lithium one of the most sought after chemicals in the world. let's talk about the opportunities & challenges this will present for investors. elizabeth collins is director of equity research for morningstar. she also co-wrote
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the upcoming book, why moats matter. is this considered a niche industry? is this a real opportunity for investors? >>we think it's one of the more attractive opportunities within the basic materials space because the demand outlook for lithium is quite strong thanks to growth opportunities like electric vehicles. >>but it's also fraught with a lot of unknowns. would there tend to be a lot of volatility in this sector too? >>there are a lot of key uncertainties. what will be the adoption rate of electric vehicles? what is the supply outlook for lithium? because it can be very politicalsome of the most important sources of lithium in the world are in bolivia, argentina, china. these are not necessarily predictable areas to build extractive industries in. >>but you look upon it favorably. you think it's an opportunity.
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>>yes. in particular we like companies such as rockwood and sqm which have resources in chile where they have low production costs. at morningstar we like to look for companies with sustainable competitive advantages or those that can keep competitors at bay and generate economic profits for decades at a time. we think that sqm and rockwood have these sustainable competitive advantages because they have low production costs for lithium production. >>in reference to the book titlethey have good moats. they have good market independence. >>yes, we think that sqm and rockwood have narrow economic moats. >>what do these companies do? >>they produce lithium as well as other industrial chemicals. >>so they take the raw material from the earth and create the lithium that is used in batteries? >>lithium comes out of the salt brines in chile. you go through an evaporative process or a mining process. so they are a raw material supplier to the battery makers. they are mining companies but it's not always mining. sometimes it can be pumping lithium brines from these massive salt ponds. >>in a nutshell, it's an opportunity but go in with your eyes open. >.yes because we needed to keep a key eye on what the supply and demand outlook is for lithium.
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right now we are actually forecasting that lithium prices will fall as a lot of new supply for lithium comes online. but as we talked about, both supply and demand are uncertain. >>elizabeth collins from morningstarthanks so much. >>thank you for having me. thank you bill. still ahead when is the best time to buy a slice of apple. and is the stock market ready for a rebound? chart talk is next.
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in chart talk this morning our one and only apple trader, andrew keenepresident of andrew the stock flirted above $600 this week and now it is below that level. what's weighing on
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the stock? >>what's weighing on apple is just the stock market. it got above $604 and looked very strong yesterday then it completely reversed. it sold off $10 from the high. the s&p did roll over as well. apple is going to go with the market. apple is at one of these levels that i wouldn't want to get long in here because there's really not a catalyst to make the stock go that much higher. once the stock does split and you get some of the retail money flushing into that. but i would be looking to buy apple on a pullback around to this $560 level. or if we hear rumors about when this bigger screen phonewhich i think is going to be a game changer for applecome out then i think it will go higher. however, apple being back at $600 considering the fact that they have not come out with basically a new product for the last 2 yearswe've been talking about the apple tvnon- existent. that's pretty good for apple. so apple is actually overperforming the market. i'd
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rather be buying at a pullback to $560. >>what do you think about the market? where are we going here? >>i think that we're going higher for sure. we are in a raging bull market. we've been in a raging bull market for 2 ½ years. there's only 3 ways to play a raging bull marketaggressively long, moderately long, or flat. the market did roll over yesterday but we didn't see that pop in the vix at all. the vix is still trading around 1480 in the front month future. so until the vix gets a huge spike or that 10 year that i talk about all the time gets above 3%--i think the pullbacks are bought. i did lose money yesterday. but it was kind of a routine selling day. i think throughout the course of this week and next week we will continue to move higher. >>thank you andrew. >>thank you. coming up tomorrow: does the amazing spider man have a bad case of franchise fatigue? and will hollywood find a cure for the common film follow up. that's it for now. from all us at first business.. have a great wednesday!
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