tv On the Money CNBC May 25, 2014 7:30pm-8:01pm EDT
hi, everyone, welcome to "on the money", i'm becky quick. memorial day, the unofficial kickoff of the summer. ebay warns that you should change your password and target still feeling the pain after the credit card breach. what you can do to stay cyber safe. is it high times for legal marijuana sellers or are profits going up in smoke. the big business of weed from a cannibus convention. what are the best cities for starting out? "on the money" begins right now.
>> here's a look at what's making news as we head into a new week. two important pieces in the housing story were pieced together and both were pretty good. new home sales were stronger than expected with 433,000 units sold in april. sales of existing homes rose 1.3% to an annual rate of 4.65 million, that is the first monthly increase of the year. both numbers suggest a rebound. stocks rows modestly on thursday riding a two-day rally. the s&p 500 closed near the all time high and markets continued to rise on friday. the federal reserve's open market committee released minutes and talked about a rate increase but no signs of doing anything soon and the fed also discussed the housing sector and china and ukraine. big retailers -- and lowe's and
staples and sears and the big part of the problem is the severe winter weather that slowed spending. many say things have picked up since then. while many of us count on coffee for our morning jolt, coffee prices may soon be getting a jolt of their own. a fungus called coffee rust caused damage to crops and u.s. companies are working with growers to eliminate the contamination and some are searching for other suppliers in hopes of keeping a caffeinated american public from having to pay more. stock prices creeping up and long holiday weekend for the markets. what will the rest of the year bring? joining us now, don hodges. >> i'm delighted to be here. >> we're delighted to have you. it has been a tricky year to figure out the market. we're not seeing what we saw last year with the massive gains but it's still nothing to sneeze at. where do you think we go from here? >> i think we're in a good
market, positive market, but the nature of the market has changed with high frequency trading and dark pools and i think traders driving the market today more than investors. >> is that a good thing or bad thing? >> well, on the surface it's a bad thing. as stock pickers, it presents a lot of opportunities, though if you're willing to pull the switch. >> if you see a sell-off in something you look closely and think -- >> frequently we'll see something decline, 7 or 8 points and at that point we think it's a good buy. >> it does create opportunities. >> yes and it makes the market hazardous at the same time. >> is it harder to be somebody who's a longer term investor at this point? is it more nerve-wracking? >> not so much. i think because we are long-term investors and we look for value, we're more comfortable than the
person who's trying to trade and capture the small moves. >> and when you take a look at the different markets, there are a lot of mixed signals. i've been shocked at interest rates, 10-year at 2.5%. does that surprise you? >> yes, it does. but i'm a little bit of the opinion they are going to keep the interest rates low until the economy really shows some evidence of improving and i personally don't think we'll ever go back to the kind of full employment like we used to have because technology has eliminated the need for as many employees. a company that used to hire maybe 40 or 50 employees can get by on 25 or 30 now because of improved technology. >> what does that mean for stocks? if you expect interest rates to stay low for some time to come, does that create a goldilocks scenario? >> where we look at individual companies, that's our passion, is just investigating companies.
we see value all the time somewhere. stocks that are out of favor that you've for some reason or other think they are going to regain favor, those exist in the market at all times. >> what do you like lately? >> we're still picking up some of the oil and oil related stocks. still buying airlines, i think there's still some opportunity there. some of the industrial stocks. and i think maybe we're on the cusp of seeing some of the retail stocks return the favor. >> do you expect growth to pick up significantly over the rest of the year? because gdp was very low in the first quarter too? >> in some cases significantly probably on average, moderate pickup if you look at the whole marketplace. >> don, what's something what has surprised you the most? watching this market for decades
and kind of seeing where we are right now after 2008. what surprised you the most? >> the thing that surprises me most is the volatility in the market and the effect of traders and program trading. the program traders, they could care less what the stock is going to be in three months. they are looking for a nickel or 25 cents a share, in and out, in and out. and i guess i thought for a while that maybe program trading was somebody setting at a desk flipping a switch telling the computer what to do. but the computers are preprogrammed and they identify certain characteristics and go on without any urging from somebody. they just participate in the market and that changes the way the market trade is and makes you a little bit more cautious about what you do. there's still plenty of opportunity. there always will be. >> that's good advice. thank you very much for coming
in. it's a pleasure talking to you. >> it's a pleasure to be with you. >> up next, we're "on the money" from corporate espionage to credit card fraud. hackers are taking over much more than computers. how your livelihood and reputation could be at risk and the government is not equipped to stop it. then later, looking to live the good life, the best cities across the united states for all of the recent college graduates entering the workforce. as we head to a break, take a look at how the stock market ended the week.
oxy moron at this point? the news from 145 million ebay users getting hacked in the united states, charging chinese army officials for hacking into systems for trade secrets. companies and individuals can do everything right and still have a security breach. joining us to talk about cyber crime, coo, kevin mandia. >> hey, how are you? >> we know about target and ebay, that is just the tip of the iceberg. i know you know about a lot more. i guess my question is, how bad is it out there? >> right now i think we're getting sucker punched in cyber space. the whole industry is going through a transformation from legacy security practices that have proven ineffective to more capable security safeguards that work a little bit better. during the transition and we're getting better every day at cyber security at the retailers and a lot of companies, during that transition, we can't pitch
a perfect game every day. >> i'm sitting at home reading about this and i am a target shopper and shopped during that time frame that i know things were being stolen and happen to have an ebay account. how worried should i be? >> i'm not that worried and i do both as well. the reason why, in general cyber security incidents and there's safeguards that try to prevent those and these retailers and companies are working hard to prevent the security incidents of t it doesn't necessarily open up the companies for fraud. sometimes it does but there's fraud based safeguards that you can use as the second line of defense after these intrusions occur. so right now it normally pans out that the consumers really don't have that of risk in regards to the bottom line and to losing their credit cards to fraudulent use. >> is there anything you would be telling me? should i use different pass words and check my bank account regularly? >> i think that things you can do and it's a hard thing to
practice, is have a different user account and pass phrase when you can for different online things you do. if you use amazon and gmail and facebook, try to make sure you have different pass phrases, therefore, if you do have your account compromised at any of the online providers of great services, it doesn't allow the attackers to log into multiple accounts in your name across different companies. >> earlier this week we heard from the attorney general, eric holder and he charged actual chinese officials with cyber hacking. and i know this is something that we first found out from you. you warned us that the chinese were doing this. did it stop when you came out with that warning? what happened and why is the united states now taking this? >> we told the world in the mandia report, february of 2013 there's a military unit in china that was compromising the private sector and conducting
economic espionage, they did stop attacks for 40 days after they were the front page of the "new york times." but today hundreds and days of later they are back to their usual level of activities. >> what happened when eric holder made these charges? did it stop things or is this really just stepping up the potential threat? >> i haven't observe the data to tell you whether it stopped or not. but it seems like a logical step in the incrementalism we've done. we' a year ago mandia released a report that said the chinese military is beyond the cyber espionage for economic gain in the united states. the chinese government can look at the private sector report and maybe say it's not accurate or that there's some flaws in it. but when a sovereign nation's department of justice says we know you're doing it, it does elevate the game another notch.
we'll just continue to elevate it looking for nontechnical solutions to the challenge. >> how is the government keeping up with new ways hackers can get our information? >> they see it. when you're watching attacks and responding to the attacks, the government is isn't immune, they are getting attacked every single day. they have a standing army of cyber security professionals responding to these attacks. i'm pretty sure they are well abreflt of the latest techniques being used against the government to break in and those same techniques are used against the private sector. >> i know you told people, don't worry about it, the fraud, the retail retailer, somebody else will pick up potential exposure. i think of worst case scenarios like a bank gets hacked and it's compromised or if your brokerage or 401(k), do you printout and still get paper printouts of your bank account information and 401(k) information just in case? >> i don't -- >> i do.
>> i know, i say don't worry because we still want to see e commerce take place. >> it hasn't stopped me from shopping online for sure. >> thank you. it's a pleasure talking to you. >> up next we're on the money from cap and gown to cubicle and 401(k), we're looking at the top towns for recent graduates to put down roots. later, it's growing like weeds, colorado's pot business. problems abounds for budding entrepreneurs. what are dealers dealing with? we're going to find out. whon a certified pre-ownedan unlimitedmercedes-benz?nty what does it mean to drive as far as you want... for up to three years and be covered? it means your odometer... is there to record the memories. during the mercedes-benz certified pre-owned sales event now through june 2nd, you'll get complimentary pre-paid maintenance and may qualify for a two-month payment credit.
dog: what, what? mattress discounters what, what? mattress discounters memorial day sale ends monday? but mattress discounters has the largest selection of memory foam mattresses under one "roof." comforpedic, icomfort, optimum, and wow, four years interest-free financing on the entire tempur-pedic cloud collection, even a queen size sealy gel memory foam mattress for just $497. better hurry! the memorial day sale ends monday. ♪ mattress discounters
college graduates across the country this spring are joining workforce. if you're among them, how do you find the best cities for new grads to start a career? stacey rapacon is here. thanks for being here. >> thanks for having me. >> what advice would you offer new graduates looking to start professional lives. what questions should they be asking themselves? >> first of all, they'll want to think about the cost of living and kiplinger just ranked the cheapest and most expensive cities to live in. the top priority they should be looking for is a good job market. actually some of those most expensive cities are really favorable for new grads. >> are you thinking new york city? >> new york city is a great place to be. i love it. but it is actually a really
tough market for especially new grads. the unemployment rate is high there, about 8%. the cost of living is a stunning 120% above the national average. so when i say we'd recommend some expensive cities for new grads, san francisco comes to mind. they have a cost of living, 60% above average. washington, d.c. is another expensive good choice where cost of living is about 40% above average. >> 40%. wow. >> boston is also 40% above average. the job markets in all of those three expensive cities are so favorable and it's -- they are really good places for new grads to consider. >> if you are starting out, how do you try to figure this out? crunch the numbers, it's a higher cost of living, how do you make the decisions that might make sense in the long term even if it makes you cash poor in the short term.
>> you need to think of your budget. san francisco, d.c., boston, they do offer higher starting salaries for new grads, so it does help you balance out that cost of living. so you really -- but the point is you really want to find a job after you graduate. and especially if you're looking into certain fields, there are clusters in certain cities where you have to look like, if you're looking for a tech job, you have to look in san francisco even though you'll pay $3,000 a month for an apartment there. >> everything we've been talking about, these are all of the coast, east and west coast. are there areas in the middle of the country that stood out from coastal cities? >> for new grads, boulder, colorado is a nice choice and dallas in texas is a really good choice too. you'll find they are a little more affordable. boulder tends to be about 5 to 10% above average for living
cost and dallas is 5% below average but they offer good hearty starting salaries so you can make your budget work there. >> thank you. >> thank you. >> we're "on the money." we'll look at the news ahead. and the grass isn't always greener on the other side. colorado blazed a new trail by legalizing marijuana. why do business owners still feel they are between a rock and hard place? the highs and lows of gonjapreneurship. [ male announcer ] prilosec otc is the number one doctor recommended frequent heartburn medicine for 8 straight years. one pill each morning. 24 hours. zero heartburn.
for more on our show, go to our website and you can follow us on at which time at onthemoney. earning season continues with results from michael kors and toll brothers and costco. on monday the markets will be closed and tuesday we get durable goods orders for april and we'll see how home prices are faring from the s&p shill erin dex. bank of america will resubmit its plan after discovering a $4 billion miscalculation. on thursday the second estimate for first quarter gross domestic product will be released. marijuana is lighting up colorado's economy bringing in new business and jobs. but for those in the industry going legit hasn't been as easy as you think, with banking and security is the pot rush already going up in smoke?
jane wells is here to explain why pot is still a puzzle for entrepreneurs and regulators. jane? >> becky, it is an industry trying to go legit under the cloud of federal illegality and a lot of rules are being made up as they go along. >> here we have two recreational safes -- >> reporter: brook runs four marijuana stores in denver. >> this tag, another expense to doing business in the state of colorado. >> reporter: she has to follow a bunch of new rules like keeping her recreational pot and cash separate from the medical supply. >> cash management is an entire sector of our business. >> reporter: recreational marijuana is going mainstream in colorado, new packaging, labeling and testing and still no banking. this remains overwhelmingly an all cash business and even taxes are paid in cash. >> well, you have to be creative in the banking situation. unfortunately we did lose our bank of three years.
>> reporter: jennifer murray runs cab lrun s can labs which tests potency. most won't accept money stating the risk remains too high. >> we have other ways of banking. >> reporter: none of that is stopping a green rush of entrepreneurs attending the first cannabis summit, they sell auto mated climate control to pot growers and it's shockingly low tech. >> everyone in the valley does pot. why would you go from one to the other? it's pretty obvious. >> there's one other trend becoming notice ablgable, a lot of women are running business. >> i believe there's a compassionate edge to it. >> my lab director is a woman. the directser of microdepartment is a woman. i have a couple other women lab teches and i was so excited when
i looked through resumes and there was a lot of women. >> reporter: in fact, there's so many women getting into the industry that they are forming a cooperative, a mentoring group there in colorado called women grow to help each other get into the business. becky? >> i think one of the most interesting things is the way colorado has set up the tax system there, where you pay one tax if you're using it for medicinal reasons and higher tax if you're using it for recreational. that has to create problems too. because i would guess most people are still trying to say they use it for medicinal reasons. >> reporter: that's why the bulk of the tax money and sales revenues in colorado are still on the medicinal side. it's a much, much lower tax. you can pay up to 50% tax total on things for the recreational side. the margins are narrower on the recreational side because of the new rules so people who have a prescription are still buying medical. a lot of recreational purchases are from tourists coming in from
out of state. >> you were at the cannabis summit and what was the most interesting thing you picked up there? >> reporter: it's the wide varlt of people getting into this. you have shady characters and people who you get the impression are trying to pump and dump and then you have legitimate investors and established vendors who never would have expected to be in the pot business. architects and plumbers -- >> jane, thank you very much. . >> that's the show for today, i'm becky quick. you can keep it here. we're "on the money." have a great one and i'll see you next weekend.
female narrator: through monday, get 36 months through monday, get 36 months interest-free financing and save up to $400 on beautyrest and posturepedic. even get three years interest-free financing on serta icomfort and tempur-pedic, but this special financing offer ends memorial day at sleep train.
[ticking] >> are you guys happy, glad that you decided to come to seed? >> both: yes. >> do you think you'll stay here till you graduate? >> both: yes. >> you're certain of that? >> both: yes. >> why are you so certain? >> 'cause i know this is where i want to be, and this is where my future is gonna start. [ticking] >> most of the men got here by committing violent crimes: assault, rape, and murder. it's not the type of place you'd expect to walk into and find the inmates studying 18th-century european history. >> if you brought with you-- and i hope you did-- olympe de gouges' declaration of the rights of woman and the female citizen... >> inmates in college programs