tv First Business KICU December 16, 2013 4:00am-4:31am PST
all eyes are on the fed this week! as traders hope for answers.. will it or won't it make a move on tapering. in today's cover story....as americans flock to new forms of entertainment, the changing dynamic of the circus. plus...a father's passing and the future of his dream is put into his young daughter's hands... and... is the price of gold hurting a christmas tradition? first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's monday december 16th. i'm bill moller in for angela miles. in today's 1st look the question for the week, what, if anything will the fed do about quantative easing when it meets tomorrow? it's been in the bond buying
biz for months now. with the economy in clear recovery, how will it pull back without causing long term interest rates to spike. the president's pick for the new fed head, janet yellen is moving forward. she went before the senate banking committee last week. the full senate could vote this week on her confirmation. with all this on the mind of traders, the markets were tepid late last week.they open this morning with the dow and nasdaq both up a fraction but down for the week. the s&p down a tad and off 1.5% last week. oil dropped below 97 dollars a barrel while gold closed higher friday - up a half a percent for the week.as for the long term on gold, analysts at jp morgan have lowered their forecast on gold by 10 percent. they project 1263 an ounce for 2014 and slightly higher the year after. ok, let's talk with a trader to get some sense about the day and the week ahead. phillip streible is with rjo futures. phil, everyone is talking about tomorrow and wednesday's meeting with the fed and whether or not there's going to be some
concrete tapering news. what do you think? >>yeah, i think that's exactly what traders are looking for and i think that we're going to get that. obviously they're not gonna do any tapering right away but what they should do is structure some kind of guideline which will give us an indication that i think by about march we will start to see the taper come into effect. >>some months ago when ben bernanke talked about it it rattled the markets. do you think some of the fear has been built in already? >>i think that's why we saw the s&p pullback about 1 ½% last week. i think caused that momentum for traders to take some of the money and pull some things off and start looking toward next year. >>tell me about some of the sectors out there that you might see impacted by any announcement that comes this week. >>we should see the gold market selloff hard. i think that will press that 1200 level. that's been a key level of support so we're probably gonna see another leg down on that. we'll also see the oil markets sell off. most likely 2 -3 dollars on that type of news. >>both of those commodities have already been dropping. >>absolutely. >>how about equities in general? >>we're probably gonna see the
s&p 500 continue to melt down. 1750 is a key level of support and i think that a lot of liquidation is gonna occur as a result. >>you think people should be ready for the turnaround right? >>back to the downside, yeah that's completely possible that we selloff but here's the thing---a lot of these short sellers are wanting to push it down and a lot of the buyers are waiting to buy any kind of dip about 5% down so i think the down side is limited. >>what i actually meant was prepare for the turnaround back up again. >>i'm not too sure about that. i don't think that's gonna happen. i think that we may have seen some tops on the year already. >>alright phillip, thanks so much. >>thank you. it's full steam ahead in washington. the senate is back on the hill today after two all night sessions last week on confirmation hearings without as serious of a filibuster threat. on the agenda-- the senate's versiuon of a budget bill. it is expected to pass with bipartisian support as it did in the house. the long term budget solution would cut the nation's deficit by 85 billion
dollars. that's expected to come up for a vote tomorrow. also this week: confirmation votes on not just the yellen nomination but also president obama's pick to be the next commissioner of the internal revenue service. he is john koskinen and that vote could actually take place today. u.s. companies are laying off workers in china. slow growth has big names like hewlett packard, and johnson and johnson downsizing. a survey of the u.s. china business council says half of american companies plan to increase investment in china in 2014. it sounds like a lot, but its actually down dramatically from last year. fewer companies are opening factories and facilities, which indicates a deceleration in long term plans for growth. big names like gm, and walmart however, have not ditched efforts to expand in the east. maybe a new name will make people forget. that's one of the changes s-a-c capital advisors is considering as it downsizes and restructures following a landmark insider trading settlement with the
government. the once mighty hedge fund is still a titan even after paying nearly 2 billion dollars in civil and criminal penalties and returning billions more to clients. it will now focus on managing the billions of its founder steven a. cohen. qualcomm is making the switch to a new chief executive. steve mollenkopf, former chief operating officer, will take the reins in march, replacing paul jacobs, who is stepping down.the announcement came shortly after reports said microsoft was considering mollenkopf as ceo.he takes over as the chipmaker faces an antitrust investigation in china, its largest market. boeing isn't saying what it's plans are, but it just took out a lease, for 1 dollar, for 468 acres of state land near its plant in south carolina. this after one of the company's main unions again rejected boeing's offer for a new contract to make planes in the company's home region around seattle. as talks have founded hearly 2 dozen states have been making
nice toward boeing, hoping to be picked as the new home to build the next generation 777. toyota is in talks to settle lawsuits related to sudden acceleration. the automaker will enter an "intensive settlement process" and begin conferences on a case-by-case basis in february. it has settled several lawsuits but still faces more than 300 of them. toyota has blamed driver- error for crashes since 2009 that have caused serious injuries and in some cases, death. but it recently lost its first trial in a sudden- acceleration case when an oklahoma jury found that defective electronics on a camry caused an accident that killed one woman and seriously injured another. ford is on a tear. it announced it's about to embark on, quote, "the faastest most aggressive manufacturing expansion in 50 years." 5- thousand new employees will be hired next year. new factories will open in brazil and chine. 23 new models will be introduced around the world. ford's november sales were up 7-percent from 2012 - all thanks to cheap gas
and looser credit. signs of stability in europe. while job growth has not yet accelerated, employment levels are unchanged from the previous two quarters. after years of crippling cuts in the job market, analysts say economic growth is starting to kick in. however, it could be years before hiring picks up. and... one country has officially emerged from the crisis. ireland says its made a "clean exit" from its european bailout. another warning about bitcoin. the european union says if you buy something in europe with the digital currency, you have no protection from any government. what can happen? hackers could attackyour account, it could lose value and any misuse could prompt law enforcement to shut the bitcoin system down & you could be blocked from getting to your investment. a lot of people aren't heeding the warnings. last month the value of the virtual coin rose beyond 11- hundred dollars and a total worldwide value of 11 billion dollars. it has since dropped a little. meanwhile, a poll by bloomberg says half of the
public want tighter regulation for the virtual currency. back in the u.s, amazon is planning to be the place consumers turn to for giant tubs of peanut butter and other packaged goods. pantry, a new business to be introduced next year, will compete with warehouse club stores such as sam's club and costco. plans are still private, but pantry intends to launch with about two thousand products ranging from cleaning supplies to pet food. people like their binging. so much so, it could spawn a binging binge. i'm talking about television viewing - watching a bunch of episodes back to back. netflix has popularized the practice with its release of multiple epsodes of new shows at once. a survey finds that those who stream tv shows prefer to do it by binging. it just makes the shows more enjoyable, they say. and how do they define binge viewing? watching no more than 6 episodes in 1 sitting. an alternative to watching a series of episodes in one sitting is to actually get up from the couch and take everyone out to see something performed in person.the circus has historically been one draw.
but as our cover story looks at one of them preparing for new season, controversies remain that have a familiar ring to them. ringling brothers and barnum and bailey's parent company, feld entertainment highlights acrobats and an opportunity this season for ticket holders to learn juggling and balancing skills on the arena floor. "we offer affordable entertainment for the whole family who comes to our shows." but the signature performer remains the asian elephant. for a city such as los angeles, the circus brings in nearly a million dollars and employs 12- hundred local workers each year. "at feld entertainment, this past year has been one of the best for our company. not just ringling brothers but all our brands, disney on ice, disney live." but what the circus calls "a critical tool that it needs to present elephants" is being banned as cruel. animal rights group, peta shows its use in this video on its sponsored website. "a bullhook is this. it's a rod with a hook and pointy end and
it's used to beat animals anywhere they are most sensitive." los angeles city council members, swayed by this undercover video shot by peta in 2009, banned the use of bullhooks, effective three years from now, to give workers time to find replacement jobs. on it's website, feld entertainment called it "a rash decision" "unsupported by fact or science" that "will deprive families of the the right to take their children to see live animals at the circus." "our animals are treated well and we are committed to their care." "ringling brothers has been responsible for 30-elephant deaths since its inception." in 2009, animal rights groups lost a decade long lawsuit against ringling brothers over its treatment of elephants. a decsion upheld two years later. but in a separate case, the circus paid more than a quarter of a million dollars to settle charges that it violated federal animal welfare laws. and - it happens every year. someone anoymously drops a gold coin in the kettle. and the first one we've heard reported this year was the other day in a salvation army kettle in kokomo
indiana. there it was a gold krugerrand. value? 1- thousand 220 dollars. that's 400- dollars less than last year. so much for the waning price of gold - though it did gain last week. still to come: due date. why one trader says a test is in store for the market. suddenly and unexpectedly she had to take over the family dairy business in order to fulfill her fathers dream. and....after a rocky year.... could this week's fed announcement mean good news is on the horizon for bond traders? that's next after this in the know message.
a lot of fed doings this week. let's talk with brian battle, a director at performance trust capital partners. the main event is the fed meeting tomorrow and wednesday. the big question is quantitative easing. will tapering once threatened actually start taking place? >>yeah, the 2 day meeting is very important. the market's watching very closely. the federal reserve has been engaged in experimentaly monetary policy for the last couple of years where they are buying bonds in the secondary market. 85 billion dollars a month worth. so what we're going to find out at this 2 day meeting is if the fed is going to stop that a little. maybe not buy so many bonds. that would be a massive change because the federal reserve is a big buyer of bonds in the market so them giving that indication is going to require 2 things---1 are they gonna stop buying? when? and how long is it going to take them to stop all together? so the magnitude and the duration of their buying might be revealed
this wednesday. >>some of this was rattling the markets months ago. last spring when it was directly stated by bernanke himself that it would happen. it's just that it didn't happen. >>the chairman mentioned it may 22nd and the market subsequently sold off 100 basis points. so retail mortgage rates went from 3 ½ to 4 1/2 %. just all summer the bond market got crushed. that rate has not gone down again. so the market has anticipated the fed's gonna end tapering sometime. so the taper decision might be a big deal or might not, it depends on 2 things---how much and how long is it going to last? >>let me ask you about janet yellen who is the new choice from the white house to be ben bernanke's replacement as chairperson of the fed. she was before the banking committee in the senate last thursday. she possibly could be set up for a full senate vote this week. >>janet yellen is the vice chairman. she is going to get that job. it's not a problem. she takes the position february 1st so she doesn't get the job instantaneously. but it seems like a forgone conclusion. she's a renowned economist. she's been on the fed a long time and she's going to have no problem being acknowledged as the next chairman.
>>probably because her philosophy is pretty much like ben bernanke's himself. the expectation is it's going to be ben bernanke again. so no change in policy for the fed. >>how about her replacement as vice chair? it's kind of all in the family. they all have a single mind on a lot of things. >>yeah, a very interesting choice for vice chairman is stanley fisher who is a renowned economist. he is a guy who worked at the world bank, the imf, ran the central bank of israel, and is coming back to the states to be vice chairman here. he has a lot of credentials, a lot of credibility. he's been around very long time and curiously enough he was a professor of ben bernanke when he was in college. >>he probably gave him an 'a' and now it's payback time. >>i would think so. >>let's talk about the impact that the fed's policies have had on the bond markets. you're a bond trader. it's been a terrible year, 2013. >>this summer was a disaster. like i said, we had 100 basis points sell off in the market. that's a big deal because the 10 year went from a 160 to almost 3% so that sounds like 100 basis points but the yield
almost doubled. that's a massive percentage change. so the market has experienced a selloff and individual investors fear higher rates. when the think rates might be rising and all this fed chatter and ewspaper stories and changes at the fed is leading people to say i'm gonna sell my mutual fund now because i think i don't want to lose any more money than i already have. >>as a bond trader you kind of welcome tapering. maybe 2014 will be a better year. >>it will. we hope so. it will be great to see the experiment in monetary policy be over and the market find a natural level of interest rates. >>brian battle from performance trust capital partners, thanks so much. >>you're welcome. coming up...currency check... where in the world one trader is investing his money. but first, daughter knows best. she took over her father's small local kefir business and turned into a 100-million dollar international company. the story is next. ♪ ♪
popular in his home country. the business grows. he suddenly dies and it falls to his daughter and son to run the company. the company is lifeway foods. he was mike smolyansky and she is julie smolyansky. you're the ceo. he passed 10 years ago and you've made the company into a national brand - lifeway is sold at all whole foods and target stores. you are now opening operations in europe. i bet you weren't prepared to take over this company. >>i was probably a little bit underprepared at the age of 27 but perserverance and the feeling that failure was not an option, i really wanted to see my father's dreams come together. >>i did an interview with him and then after he passed i wnet back and did another television story on you and i have to say i do see some similarities between you two. why don't you articulate what he taught you that you are carrying forth? >>i think we're both stubborn in some ways in that failure was never an option for either
one of us, a real strong work ethic, a driev to succeed. he taught me to dream. >>that's what he was. he was a dreamer. he was in the ukraine. he told me he was a hippie in the 70s protesting against repression. his dream was to come here. >>he believed in the american dream, he believed in innovation. he believed that there is an unlimited amount of innovation that still has yet to happen and that people can do anything they set their minds to and america's the best place to do it. >>kefir. this is being advertised as a health drink now because of the value and recognition of the good gut priobiotics. >>right. there's over 6,000 published research articles on the benefits of a healthy gut and the bacteria that is found in our gut. our modern lifestyle unfortunately decreases that gut bacteria and we need to consistently replenish it with good bacteria like probiotics and products like lifeway. that impacts our
immune system, our digestive system, everything from depression to how we digest our food. >>you've got the marketing gene and i know that he would have been and probably is very proud of you julie. thanks for coming in. >>thank you. chart talk is next. i'm going to pass chemistry, and i'll take it from there. i'm going to do what makes me happy. i'm going to work hard. be independent. live large. make the most of every opportunity. i knew i wanted to go to college. but figuring out how to pay for it? i didn't have a clue. the u.s. department of education has over $100 billion. and that's a lot of money.
and many actors have played the part of u.s. servicemen in the movies, but for veterans like james crosby their service and their sacrifice are real. and too often when they come home, their struggle continues. for over sixty years, paralyzed veterans of america has been fighting to help our injured veterans get the benefits they need, and have earned. paralyzed veterans of america was there for me when i came home. join me in supporting our paralyzed veterans. visit p-v-a dot org.
let's take a look at some of the charts with indexes as well as currencies. trent wagner he's executive director of the fox group. trent, i know you're expecting not the santa rally but maybe a correction of sorts in the 50 day moving average. >>i do think that we are a little bit overdue for at least a test of the 50 day moving average. the s&p hasn't been there since early october. last week we saw the market selloff a little bit and i think that's in expectation of an announcement to taper sooner rather than later. i don't think
we're gonna see a huge correction in the equity markets. if they do announce a taper later this month, but we would expect about another 10-15 points to the downside before it decides what to do next. >>if it decides anything. they're gonna be meeting tomorrow and wednesday. the possibility exists that nothing could happen. >>you're absolutely right. like i said, even if something does happen with the taper this month i'm not expecting a huge move down. in fact i think i would use that as an opportunity to get long if we get a little move down. if they announce they're gonna put it off until later i think most people would assume that as long as something crazy doesn't happen as far as the economic metrics that they have decided to base the taper on don't fall awry, i think it's gonna be january at the latest that we see them take action. >>let's look at some currencies. where do you see some opportunities right now? >>we really like the yen to the
downside.if you take a look at that chart since mid november, it broke out of a multi-month coiling phase where essentially it just consolidated a big move down earlier in the year. once it broke out in mid-november it has been in a freefall ever since. a lot of people thought we might see some retracement to the upside this week as the equity market sold off. initially we did. we saw some money flowing out of equities into the yen. even as the equities are near the lows of last week we're not seeing holding up to the yen. we certainly like that one moving down going into the new year. >>trent wagner, with fox group, thanks. >>thanks for having me bill. and that's first business for this monday. coming up next time, a surprising holiday trend.....why conveinence stores are becoming a new "hot spot" to shop. i'm bill moller. from all of us at first business, thank you for watching.
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