tv First Business KICU May 9, 2013 4:00am-4:31am PDT
the next round of market movers as stocks set new records. in today's cover story, the surprising dwindling deficit. how the government is chipping away at its debt. it was the scandal that rocked wall street. how enron's former leader could soon walk free. plus, why one film studio could be setting up for a rocky summer. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's thursday, may 9th. i'm angela miles. in today's first look: is the sky the limit? once again, the dow and s&p 500 soared to record highs. this is the 5th consecutive record close for the s&p. nasdaq put
on another 16 points, while gold ran up $24 and oil rallied 94 cents. in earnings after hours, groupon topped targets, while tesla turned its first profit. shares zoomed 25% higher after the close. and brewing up a deal: starbucks and green mountain tell cnbc the competitors are making it possible for customers to use some starbucks single- serve packs in green mountain's keuring brewers. will it be another record day for the market? todd horwitz of average joe options joins us. good morning to you, todd, and what do you think will be the next big market movers? - i think what you are watching now is the market trying to make a decision where it wants to go. what we are looking at here is a market that continues to go higher in the face of any news, it doesn't really matter. so, what we want to really
watch here is, first thing, we want to see what happens with the jobless claims this morning. then we want to see what is going on with the volume and volatility. if volume and volatility continue to stay low, then it looks like the market could go higher here, and i see no reason that anything will get in its way. eventually it is going to correct, but when is just the question. - nouriel roubini, better known as dr. doom, says the market is setting up for a crash in a couple of years. do you agree? - you know, anything is possible. i have learned one of thing in my 35 years of trading, that you cannot predict tops and bottoms. nothing would surprise me. the market is supposed to correct now. it hasn't. this is the first time in 17 years that we have gone this long a period of time without at least a 5% correction. so, is it possible? absolutely. but, i leave the predictions to those guys, because trading is about reacting and protecting your inventory, or in other words your cash. - are the recent gains in gold showing traders any kind of momentum happening out there? - gold is really in a trading range right now. you can look at gold from about $1,430 to about $1,500. the longer-term trend is definitely lower, and i would certainly look to be a
seller somewhere around that $1,500 level. i don't think it has any real value. it is not what it's called, a safe haven. it is strictly just another commodity that is downtrending, and we want to look for a spot to try to sell that. - what's driving oil, todd? - i think oil, there is a little bit of unrest in the mideast right now. the bottom line is, we are getting a little bit of fear, a little bit of short-covering. i think the overall oil market here is probably pretty near its top, and i would look for a spot to sell it here. really, we are still a net exporter of oil, and there's still plenty of those, although yesterday supplies were a little bit light. - thank you todd, and have a great trading day. - thank you so much. the former president of enron may receive a "get out of jail early card." reports say jeffrey skilling and the justice department have reached a deal to lower skilling's prison sentence from 24 years to just 14. skilling has already served 6 years for conspiracy and fraud following the collapse of enron. as part of the deal, $40 million of skilling's forfeited assets would be distributed among enron's former
investors. changes to the sentence must be approved by a federal judge. united airlines is moving up the take off date for its boeing dreamliners. the chicago tribune reports flights are scheduled to resume may 20th instead of the 31st. the jets have been grounded for more than 100 days by the faa after batteries overheated on two 787s earlier this year. boeing is making a modification. the first flight to take off since the grounding will be from houston to chicago. another sign that the economic recovery may be a little more solid than before, the congressional budget office says this year's budget deficit is down 32%. our cover story explores the significance of this fiscal snapshot. the deficit - how much more the government spends in a year than it takes in - is shrinking. why? mostly because more of us are working - and paying more in taxes than we did last year. "i think it's a sign of the economic recovery taking hold." for the first seven months of
the government's fiscal year, october through april, tax collections rose by $220 billion, up 16% from a year ago - a lot of it payroll taxes that, combined with individual taxes, accounted for $184 billion of that amount, although the fiscal cliff deal also raised taxes on top earners. "and as people get jobs, they'll need less in housing assistance." with more people working, the biggest drop came in the payment of unemployment benefits - down 25%. also, defense spending fell 5.3% and other non-defense spending was down 8.6%, such as payments to mortgage finance agencies such as fannie mae - itself about to turn a financial corner. "what fannie mae is about to do is to reverse the tax credits that it wiped out and remit that to the treasury. so we'll get some help with that $53
billion." though it's a long way from a surplus, this year's deficit is about a third less than it was last year at this time. it also pushes back the deadline for raising the debt ceiling into october. president obama will be in texas today where he will talk about new ways to grow the economy through advances in technology. the president will visit with students at manor new technology high school, then later deliver a speech at applied materials in austin. austin managed to avoid a major hit during the recession. the president's trip today marks the first of a series of stops highlighting new economic models. an incubator for start-ups in chicago called 1871, for the year the city began rebuilding itself after the great fire, is celebrating a year of success. the digital co-op has provided
space in chicago's merchandise mart for 225 start-ups - many of them no bigger than an idea and a laptop computer helping motorists, for example, find cheap parking via gps. so far, 800 people have been employed, and they've raised nearly $30 million in capital. "when a company comes out of here and stands at the stock exchange about to go public, we hope they remember where they came from, who helped them, and give back to the community." the companies that comprise 1871 report that they've contributed $13 million in revenue to the local economy. mcdonald's has a case of chain pain. the restaurant reports global sales fell .6%. the biggest concern was weakness in asia, where a new strain of avian flu is slowing sales. in the u.s., mcdonald's fared better with a .7% increase. also, following thousands of customer requests, the buger chain is reaching out to charles ramsey, who helped free three young women kidnapped in
cleveland. ramsey mentioned eating mcdonald's during the 911 call. meanwhile, in china, economic data paints an improving picture, but there's more to the numbers. in april, china's exports and imports were up from the same time last year. last april was an especially weak month for trade in china. this april, exports were up 14%, and imports were up 16%. however, analysts remain skeptical that some of the numbers have been manipulated. the chinese government says it's investigating whether some of the figures were changed. investors appeared to be impressed with some recent earnings. they loaded up on whole foods stock after the specialty grocer surpised wall street by earning more than anticipated and revealed a two- for-one stock split.shares rallied $9. electronic arts raced up to a new 52-week high on plans to develop a new line of video games this fall. soda
stream fizzled a dollar even though the home soda maker forecast better-than-expected earnings potential. some taxpayers are still waiting for the irs to show them the money. filers who had expected refunds at the end of march or beginning of april are still empty-handed. earlier in the season, the irs warned software glitches would delay about 600,000 refunds. that was on top of another delay due to the fiscal cliff debate. the irs has not said how many checks still have to go out, but did say taxpayers should see their refunds "shortly." subaru is gearing up to hire workers at an indiana plant. the car-maker is adding 900 employees to build its small- sized impreza. according to a report, production will begin in late 2016. sales of subarus in the u.s. are said to have doubled over the past 5 years. what drivers consider cool is shifting. vintage suvs are becoming more in demand, especially at classic car auctions. in the last five years, the number of classic suvs for auction was up by
150%. topping the list, the toyota land cruiser. other popular finds are the land rover series ii and the jeep grand wagoneer. the pga's players championship tees off today, with one golfer taking a swing "at the association." v.j. singh is suing the pga. he was accused of possible doping with deer antler spray. he was cleared last week. singh says in the lawsuit he was exposed to "public humiliation and ridicule for months." the pga's commossioner says singh was cooperative during the investigation. coca-cola is counting calories. as part of a worldwide agenda, coke will make calorie counts more visable, and push more low-cal diet drinks in emerging markets. also, the company says it will stop advertising to children under the age of 12. it's the latest move in the war on obesity. coke contends "there is a place for its beverages in a healthy lifestyle." in case you haven't herd,
officials at chicago's o'hare airport plan to use goats to mow the fields of greenery. the goats arrive at the airfield next month to graze on grass. the eco-friendly idea is costing the city around $19,000. apparently, that's the going rate for goat wages. film studios are set on giving. warner brothers is just one of the movie-makers donating plywood, furniture and other materials from movie sets to habitat for humanity. most recently, left-over pieces from "the hangover 3" set were given to the charity. the l.a. times reports habitat generated $700,000 in revenue last year from merchandise donated then sold at its charity shops. still to come, it's being called the "summer box office champion." find out what it is later in movies and money. electronics are invading an industry driven by paper. how it's shaking things up, next with bill moller.
you probably know the feeling: you get pulled over by an officer who asks for your proof of insurance. you're in a panic already, because, hey, it's a cop, and you can't find it as you peek through the glovebox. actually, that is a ticketable offence if you don't have that proof. well now, maybe all you need to do is show them your smartphone. becky yerak wrote a piece about this for the chicago tribune. this is, i guess, e-proof of insurance these days. - exactly. there are a few insurance companies that already have this technology available: state farm, for example, they have pocket agent; e-surance, they are an online
insurer, they have this; and so do other companies. but what is really changing now is that there are 14 states where you now are allowed to show a police officer your cell phone or other device that you have proof of insurance, and another 20 states are in various stages of changing their vehicle laws. - it sounds like a logical thing. yet, you found that there was actually some opposition, some resistance to it. - when i started doing this story, i thought, who could be against this? surprisingly, i found a few people who raised concerns. one of them was a police agency, who raised the point, are people really going to relinquish their telephone to a police officer who wants to take it back to their car to write up the ticket? or, also, what if the police officer, there are so many cell phones and so many apps, what if the police officer can't figure it out? and then i talked to one consumer who said to me he knows of instances where a cell
phone has been mistaken for a gun. - notwithstanding these complaints, though, i think that it is just part of the continuing wave of electronics taking over so many of the old ways of doing things in society. - it really is. we have online banking now, and it's really surprising to think that a lot of insurance policy is still done by snail mail. - when you think - i guess it is hard to know - but state-by- state they'll be taking votes in their legislatures to approve this thing, and, have any considered not going that way? - again, there are 14 where it currently is approved, and then another 20 are in various stages. so clearly a a majority of states are moving in that direction. - get ready for electronics. becky yerak, thanks so much. - thank you. thank you, bill. still ahead, movies and mega-money. will "iron man 3" break past the billion-dollar mark? that's up next.
disney has an iron fist on dollars at the box office. our movie man, erik childress, joins us on set. good morning to you. - good morning. - how soon before "iron man 3" crosses that billion-dollar mark? - a week? 10 days, maybe? - that soon? - yeah. i mean, $175 million is the second-biggest u.s. opening of all time, for any weekend, and $700 million worldwide, globally, right now. it is a monster hit. the summer champion has been crowned. - good for disney. here's what else happened over the weekend: "iron man 3," as we mentioned, at $174 million. then the numbers just drop off here:
"pain and gain" at $7 million, "42" at $6 million, "oblivion," well, in oblivion with $5 million, and "the croods" at $4 million. sad, though, $5 million is still a lot of money. - yes it is. - all right, coming up this weekend, "the great gatsby," highly-anticipated, and tyler perry also has a new film. is "gatsby" the go-to movie, or will it be tyler perry? - if you are looking at what's going to win this weekend between the two of them, "gatsby" is going to do better. but it is a film that warner brothers is obviously looking at very closely, because it's a $100-million budget. some people are trying to project it is going to do $40 million this weekend. i don't think it's going to do that high. maybe in the mid $20s. - and you saw "gatsby." - yeah. it's not good. it's pointless. - you did not love it? - no. - all right, let's move on to what is coming up this summer. we are taking a look at what the scene will look like for paramount this summer, and we have "star trek: into darkness" and "world war z." - yeah. they only have two films on the docket this summer. "star trek: into darkness," which
opens next weekend, very curious. it's gotten some mixed reviews so far from critics, and the studio is doing a very interesting thing, is that they are holding now press screenings from the remaining press until the day it opens in imax screenings next wednesday. - is that a big mistake? - it is a big mistake, because it puts this sort of aura on the film that maybe they are hiding it for some reason. because they have shown it to a few people it's gotten some mixed reviews, so now people are sort of speculating, "what's wrong with this movie?" you know? and "star trek" movies don't do very well overseas. it's not "star wars." so, this film is not going to be a monster hit for paramount. - you mentioned on this show that people at warner bros. are probably going to be sweating it out this summer. what about the folks over at paramount? - they are very nervous about "world war z." this is a film that was supposed to come out last christmas. they delayed it to reshoot the entire third act of the film. some people are speculating the budget has ballooned to like $400 million. that seems a bit high. but even if you cut it down to like $250, $300, this is a film that is going to have to gross over $600 million worldwide. i don't think it is going to do $100 million here in the u.s. so, this is kind of the film that
people are sort of waiting to be the big bomb of 2013. so, warner bros. won't have the title with "giant slayer" anymore. - thanks for taking us behind the scenes on that one, erik. - you're welcome. - have a good weekend. still ahead, will delta's dividend send shares higher? chart talk is coming up.
delta airlines is trying to boost the stock price. joining me now is matt cavanaugh to tell us whether he thinks this is a time to get in on the rally. good to have you on the show this morning, matt, and delta had a standout session yesterday. - they sure did. i tell you, this is a stock that has been on an absolute tear. it has more than doubled off its 52- week low, up over 50% for the year. and delta is really trying to send a strong message to the market of, hey, come on in, we are safe, things are going well, buy our stock. - right. the company is doing that $1-billion buyback. is this a reason to buy the stock?
- well, i think it could be. airlines have typically been an industry that people really shy away from investing in. they are volatile, there are a lot of ups and downs, you have fuel cost, really a lot of variables here, highly competitive. so, this is something that people have typically stayed away from. you don't often see dividends, you don't often see share buybacks. delta doing really well, they've brought their debt down quite a lot, and just like they said in the last quarter, this is the best business environment for them they have seen in a decade. so while it still makes me nervous to invest in a stock that has done so well in such a tough industry, i do think that they are doing the right type of moves to try to attract people who normally wouldn't invest in their stock, like institutional investors. - good to have you on the show this morning. that is matt cavanaugh of cmz trading. that's it for now. coming up, it's traders unplugged. plus, a controversial guest who says outsourcing is good for america.
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