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tv   First Business  KICU  May 8, 2014 4:00am-4:31am PDT

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from e-commerce giant to biggest ipo in history... everything you need to know about alibaba. in today's cover story....why historical landmarks are the newest hot housing investment plus... why joining the real world could be a smooth transition for the class of 2014. and... could a new movie help a comedy star make the leap to superstar status. first business starts now! good morning! i'm angela miles. it's thursday, may 8th. in today's first look: tesla rolls in with a $50 million dollars loss for the quarter. shares fell 7% on the news after the close. ford intends to buy bakc $1.8 million in stock. fast food workers prepare to
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protest around the world about low wages. president obama removes special trade benefits for russia. he says the country no longer needs them. fed chair janet yellen and russian president putin move the market. putin wants to postpone the east ukraine vote on autonomy. and yellen signals the fed will remain pat with its stimulus strategy. the dow raced up 118 points the nasdaq was hit with another sell off in big tech and the s&p gained 10 points. gold fell $19 dollars and oil rallied $1.21. trader todd horwitz is here to start our trading day for us. good morning, todd. > > good morning and what's up, angie? > > well apparently it's not interest rates because janet yellen is telling congress rates will remain low, so what we do with our money, todd? > > well unfortunately you are forced and compelled to put your money into the equity market which is artificially driving this market higher. again. i'm not going to fight it but i just think that we are in very
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bubblish territory and as we know, the fed's track record for picking tops in market and picking bubbles is 0 out of 1 million-- they've never been right at picking the market, so why would i expect this time to be different? i don't.i think this is going to turn out to be a very ugly scenario when it's all said and done. > > never a kind word for the fed, todd. let's move on to the decline of the dollar. how much is that tied to what's going on with ukraine? > > i think the dollar is just weak because we want it to be weak. the fed is trying to devalue the dollar consistently-- as are all the other world currencies. so really what it is is it's a battle down to the bottom because we're trying to artificially inflate our own gdp which is another scenario which will probably not work out very well. > > if you hadn't heard yet, alibaba has filed for an ipo. are you seeing any effect in the market already?
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> > well i think you saw an effect in yhhoo. yahoo was down about 7 percent yesterday which is pretty ugly because they hold a 25% stake in alibaba and it wasn't really good news for them. > > good to have you on. thanks! > > thank you. federal reserve chair janet yellen was crystal clear in her comments to congress that tapering is on track for the fed's bond buying stimulus program. we anticipate continuing to reduce the pace of our asset purchases in measured steps. so the answer is yes. yellen was mostly upbeat about the economy-- indicating the recent rebound in spending and production will translate into solid growth for this quarter. while yellen is cautious on the housing sector, she predicts a pick. she did however mention even with the recent declines in the unemployment rate-- the fed is keeping tabs on americans who have been unemployed for 6 months or longer. especially unemployed young peple living with their parents and struggling with student loan debt. chuck coppola has the scoup on the best cities for grads on the hunt for a job...
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the economy is presenting college graduates with better opportunities. a study by wallet hubs ranks the best places to launch a career. washington d.c. landed in the number one spot, followed by denver colorado, irving texas, seattle washington, and minneapolis minnesota. quality of life and employment opportunities were factors in the study. the ceo of wallet hub tells us overall, job prospects are looking up for the class of 2014. "i think the grads of 2008-2009 have had it hardest and i think after that point it has been slowly improving. and we believe 2014 overall, is a good year for new grads." many new grads may end up staying put for a while, though. u.s. census data reports 20 somethings are 40% less likely to move than they were 30 years ago. as for student loans... students borrowing money for the 2014-2015 school year will need to brace for higher rates. bloomberg news reports-- the interest rate on the undergrad stafford loan will climb to
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4.66% from 3.86. most federal student loans are pegged to the yield on the 10 year treasury note. the rate increase means students will pay about $46 more per year for each $10,000 borrowed and paid back over 10 years. bank of america is staying quiet about its recent "math problem" at this week's shareholder meeting, ceo brian moynihan called the bank's recent miscalculation of capital "disappointing." he revealed few clues about the bank's next move for shareholders hoping for a dividend. late last month the bank hit the breaks on a 4 billion dollar stock buyback plan due to the oversight. executives promised more details when they become available. the cost of bankruptcy is adding up for the city of detroit... the motor city's bankruptcy case has already cost taxpayers $36 million in fees and expenses for lawyers and
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consultants. the city examiner who is reporting on the cost- calls it in line with the quality of service provided. oddly enough, cnn money reports-- kevyn orr the emergency manager appointed by michigan's governor to take charge of detroit, is a former partner with the jones day law firm which has made $16 million working on the bankruptcy case. a new labor battle is brewing in the temp industry. business groups in california are fighting a bill that aims to hold businesses accountable for overworking or underpaying workers instead of temp agencies. employees say they are being exploited. the american staffing association contends staffing firms follow state and federal laws, and encourage workers to file individual lawsuits. the temp industry is booming nationwide, growing 41% from 2008 to 2012. encouraging numbers are out regarding how many american's have signed and "paid for" health care insurance companies tell congress.. between 80 to 90% have paid their first month's premium.
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a representatvie from wellpoint says there is strong membership growth and the newly enrolled are paying by the due date. more than 8 million americans have signed up for health coverage under obamacare. although insurance companies have discovered some duplicate enrollers because of problems with the website. stocks are getting slammed on wall street. whole foods fell 18% as the upscale grocery chain cuts its forecast. it will lower prices, as competitors give it a run for its money. candy crush maker "king digital" reported its first set of earnings. revenue and user numbers increased -- but the stock dropped like a rock as critical "in-app" purchases fell. aol shares stumble as it misses estimates and spends more on advertising. and groupon sells off as investors hear of heavy losses. electronic arts was a bright spot in the bunch, soaring 21% on better than expected earnings. the transportation secretary is making a call about-- gm's 2.6 million recalled cars. the decision is.... it is not
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necessary at this time for gm to order owners to stop driving. an attorney has been pushing for the automaker to demand drivers put the cars in park because of fautly ignition switches that can suddenly cause the car to shut down. gm dealers are said to be replacing the switches free of charge. in today's cover story, a rising investment trend--restoring and renting historic or architectural gems. homes that may have seen better days are being fixed up to share with the public looking for a luxury getaway. in chicago's northernmost neighborhood, rogers park, the home architect frank lloyd wright designed for emil and anna bach in 1915, opened in may for public tours after a two-year restoration that's still going on. and that's not all--it's also available for overnight lodging and events such as receptions. "we're doing it to preserve the buildings. this is the only wright home you can stay in that's in an urban setting." jennifer pritzker, heir to a family fortune and ceo of tawani enterprises, a private wealth management company,
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purchased the home four years ago for 1.7 million dollars. in 2003, it had been listed as high as two and a half million but didn't sell on the open market. "to restore it to this level takes a lot of financial backing." the restoration reversed changes, such as a bar in the living room that some of the homes 10-previous owners had made. now, it's as if the day wright handed the keys to emil bach, who owned one of chicago's oldest brick companies--a popular choice for builders after the city's great fire. there's also some modern furniture for comfort. "if somebody's staying here or having an event here, we want them to feel as though they can use the place." tawani enterprises won't say how much the restoration cost but but even at 750 a night for two bedrooms that doubles to 15-hundred starting in june, they don't expect to make it all
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back anytime soon. "it's an investment you have to love. it has to be in your heart because you're not going to make a killing." and in another "cover story"... jet is ending it's run as a print magazine. jet has been a popular staple amoung african american readers for 63 years. similar to other print magazines jet is going digital. the app will be available in june. still to come: big dream or big waste-- is tesla's ceo on the right road with his electric car? plus... are fans turning on a popular superhero franchise? that's in movies and money and... as alibaba gets ready to rock the market, bill mollers discovers why there is so much hype... that's next.
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the news this week of alibaba's plans to trade its stock in the u.s. is still rocking the investment world. you know, in revenue, number of users, its valuation at 6 times that of facebook - any data point you look at associated with this chinese e-commerce company is off the charts impressive! but are the numbers good in terms of you - as an investor? do you want to invest in this company? karan girotra, he wrote the book, the risk driven business model. he is a professor at the international business school insead. the amazon of china &
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so much more. you really are impressed with how this company was developed, designed & managed. > > bill, you have to think of alibaba as a company which has got amazon, ebay, paypal, and the better business bureau all together, all in one company. so the best thing they have pulled off is even though all these different business markets or business segments they've designed individual business models which address the specific needs of each of these different markets. that's different from the amazon model which has one plan and it works across a broad spectrum. exactly right, so amazon is a one size fits all model. where as alibaba is much more a horses for horses market. so when they have this platform called taobao which is really about smaller merchants which is really about mom-and-pop stores. for taobao they have a very different model than for tmall which is the platform which apple uses to sell to chinese customers. for instance at taobao they really don't charge any transaction fees and so think of them like ebay but with no transaction
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fees. > > what about the growth potential if i am investor-- they are pretty well saturated in china, is there a lot of upside there? how about globally? > > so i think there is some opportunity to grow in china and on top of that i think of alibaba's main skill is really being able to configure the right business model for the right market. that is the skill, you can take that to many operation markets. india is a market which is in the early stages of ecommerce and perhaps a lot of people argue that the proceeds from the ipo will go to helping them make the u.s. market perhaps. so this skill set of adapting the right business model to the customer needs is universal. it can go a long way. > > so karan, my sense is that you do think it is, at least in the short term, good for investors. > > i think so. it depends on exactly where the ipo price comes in, but i think it has a lot of long-term potential. this is going to be one of those facebook like stories-- it's going to do well. it's going to be the facebook, google-- one of those stories and it is going to end up one of the big players. > > karan girotra, thank you so? much. ??> > thank you. ??
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bill-- priceline is a success story in the u.s. in the e- commerce space. the name your price site reports earnings after the close. shares traded last at $1,131 dollars. trader joe kinanhan of td ameritrade is using options as a less expensive way to trade on earnings. he also views priceline as an economic play. if you are someone who belives we are coming back as an economy people should be using pricesline more so it kind of plays into the recovery strategy..if you believ the economy is in recovery. priceline has sold off since the last earnings report. kinanhan believes options traders are comfortable buying the stock around $1,100. coming up... a trader who will make tesla investors feel better about a slide in the stock! plus... why billion is the new million in hollywood. that's next in movies and money!
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disney is on a hot streak. the blockbuster hit frozen lead the company to a mind numbing 27% jump in profits. our movie guy is here-- to talk about disney's success-- can it continue? > > well it certainly looks that way, i mean, 1 billion seems to be the new hundred million for hollywood and with their stake in marvel, they have captain america: the winter soldier the sequel this year that is clearly the number one film in the world right now and we're going to see if it continues that way which i think will for a while. ú> > and you still like the stock? > > i do like the stock. how could you not like the disney stock. they look at what happened at the box office last weekend. we talked about this film: the amazing spider-man 2. you're not so big on it-- about $91 million. > > its the kind of opening that sony looks at and says "ok... we'll take that." but they're going to get that anyway. the thing is that this is a film that with the amount of budget and advertising, they're already going in looking to clear atleast $600 million just to break-even. imagine the hubris it takes to have a movie open and knowing that $600
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million's going to be no problem to hit, and they're probably going to hit it, but you're going to see this thing start dropping over the next couple weeks and sony's not going to be too pleased with the future prospects of this franchise. > > does it have franchise fatigue, eric? > > it's not just franchise fatigue. it's just the fact that they made a really terrible movie-- even the hard- core fans of this one are really starting to turn on it, and you're going to see it drop to no.2 this weekend which i think it's going to do, and it has godzilla and the x-men movie over the next couple of weeks. you're going to see this thing really drop off. it's going to make a profit for sony, but for part three, i think they're really in trouble. > > also at the box office last weekend coming in at number 2: the other woman, heaven is for real, captain america, and rio 2. coming up this weekend: mother's day in mind, coming out is mom's night out. > > yeah, it's only opening in limited release around the country-- only about a thousand screens. you're not going to see that make too big of a bump. > > what do you think about legends of oz: dorothy's return? > > i think if you've seen the trailer, you've seen all you
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need to see. the animation looks pretty amateurish and i don't expect to see a lot of people showing up to that this weekend. > > there's nothing like the real thing. finally neighbors. > > yeah, this is the film that is going to cause a big stir this weekend because i think it's going to be seth rogen's biggest opening in the live- action realm. i think this thing is going to do somewhere around $40 million, and with the drop-off spider-man is going to have-- you could see that drop #2-- neighbors is going to be number one this weekend. i firmly believe that. it's a very funny movie, it's getting very good reviews, people like it a lot more than spider-man, and i think you're going to see this be one of those surprise hits of the summer. watch spider-man drop, and sony's not going to be too pleased with that. > > a quick mention: the chicago film festival taking place this weekend in chicago starts friday. > > yeah, chicago critics film festival that i help coproduce is happening this weekend. we're very excited about this event at the music box theater. please come out and join us-- it's a week celebration of films. films that we don't always get to talk about on the show. > > and you can meet eric.
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thanks for coming on the show! > > thank you. still to come -- is it time to steer clear of tesla or go along for a bumpy ride? chart talk is next
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shares of tesla stalled out after the close last night on earnings. joining us now, matt cavanaugh of cmz trading. matt, the stock is trading under $190, was that sell off warranted? > > well i think what you're
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seeing is a little bit of profit-taking, people not really loving the fact that they're really spending more on research and design, but i know the stock has sold off, but i don't think it's the end of the world. i think it was a decent quarter and you have to expect things like this from elon musk. he's a dreamer and this is what he does. > > and to keep things in perspective it wasn't that long ago, maybe two or three years ago, the stock was trading below $22. it was a very inexpensive buy. that's right and even within the last 52 weeks, this was a $55 stock, so i think it depends whether you bought it? at 55 or 255, but you know this is a stock that tends to move after earnings. a 10 percent move? is no big deal, ad i think hearing tesla that as long as it holds 180, we should be ok. > > if you were already long the stock, would you sell some
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here or just hang on? > > i think that's really a question that people have to ask themselves individually because it's really do you believe in elon musk and what he's? trying to do? this is kind of a new company, but he has done phenomenally well, he's trying to solve big problems and now it looks like things are gaining traction. so we've seen this stock really rally up but for the long-term you have to say do i trust in what he's doing or do i think he's gone a little bit too far? > > thanks for coming on the show today. > > thank you. it's time for us to get out of here for today... coming up tomorrow in traders unplugged..the guys debate whether alibaba is buy on ipo day or is it better to wait till the excitment dies down. from all of us first business, have good thursday...
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