tv First Business KICU August 23, 2013 4:00am-4:31am PDT
an unprecedented day for the stock market. behind the trading trouble that took down the nasdaq. in today's cover story... the president's aggessive plan to ease the burden of college debt. plus....the conversation over employee wages goes rogue in traders unplugged. and....the wheels are in motion for high speed transit... a look at the 3d blueprint. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas good morning! it's friday, august 23rd. i'm angela miles. in today's first look: trading turmoil at nasdaq-- traders and investors will
recover today from the exchange shut down yesterday for more than 3 hours.the broader market rallied thursday, despite the trading halt. gold and oil also edged higher. in earnings after hours-- pandora reported growth among mobile internet radio listeners.however it also had a larger loss.shares fell 4% after the close.a report says i-tunes radio will be ready to play next month.the internet radio is apple's answer to pandora. and, mortgage rates rise.concerns the fed will start tapering its bond buying program is pushing mortgage rates hgher. the 30 year fixed jumped to 4.58% the 15 year is 3.60%. both are the highest level since 2011. let's find out how scott bauer of trading advantage is preparing for this trading day. scott the nasdaq had huge trading troubles yesterday.
will that leak into trading today? > >it doesn't look like it angie. it looked like everything was back up and normal by the end of the trading day. in fact the nasdaq crossed at the end of the day on the close, it was fine--it was normal. so i don't anticipate there to be any more problems today but you know what---given what happened earlier in the week with goldman. now yesterday what happened. it has just got to be on the minds of the retail investor. they have to be questioning is it safe to put orders out there? is it okay? > >it's definitely looking questionable lately. what about that tweet from carl icahn talking about doing dinner with the ceo of apple coming up in september. he's been moving the market. especially with apple. > >well, it was interesting because when that tweet came out, apple was halted at the time because of the nasdaq so it was about an hour after the tweet when the market reopened. teh stock opened up $3-4 and i think it had time to digest. i think that the market has already though priced in what
he tweeted last week or 2 weeks ago with that big run-up. > >the economies in europe and china are looking better. the united states keeps rolling along. what will be your game plan for trading on this friday? > >we'll see what the new home sales bring out in a couple hours here. and really going into next week, i really just want to be flat because we're at this inflection point where the s &p's----we've been here already, can't seem to break through to the upside, so i really just want to be flat, see what happens over the weekend, and start a new week next week. > >thank you for your insight scott. > >have a good one. a major outage in the nasdaq sent shockwaves through the trading community thursday. the glitch forced a three-hour shutdown of the index, making it impossible to trade stocks and options of big names such as apple, google and microsoft. traders took to twitter in frustration, as trading did not resume until after 3pm. nasdaq said the glitch was the result of problems with the
system on which trades are recorded. its the latest in a string of technical problems-- including this week's 100 million dollar goldman glitch, and last year's facebook i-p-o flub, for which nasdaq paid a 10-million dollar fine. trader john voorheis of keene on the market says, this event could be a turning point for high- frequency trading. "i think it's a loss of confidence in the measures being taken with electronic trading.you've had people calling for more regulation of high frequency trading and of electronic trading for some time now, but i think this is really going to raise awareness, given the scope of the glitch." nasdaq says it is working with other exchanges to investigate the issue. it notes the trading halt occurered to protect the integrity of the markets. now on to jackson hole, wyoming where federal reserve presidents are meeting. this year's monetary conference is expected to focus on central banks around the globe. leaders of the bank of japan
and bank of mexico are slated to speak according to bloomberg news. u.s. officials will likely debate "when" to start wrapping up the monthly bond buying program that has been stimulating the economy. fed chair ben bernanke is not attending this year's summit due to a scheduling conflict.his term expires in january. president obama says america's colleges need to be more accountable for the value they provide students, their families and taxpayers. but as our cover story explains---he left open precisely how that value is measured. in buffalo, new york, president obama said rising costs are making college out of reach and a disturbing national trend reflects that---student loan default rates have now climbed above 9%--the highest it's been in 17-years. "bottom line is this, we've got a crisis in college affordability and student debt." so the president proposed the following reforms: first, a federal college value rating that could be tied to federal funding. second, the president wants to better prepare
students for the global economy. but some fear that may curtail long-range thinkers in favor of short-term fixers. "we will essentially just graduate people responding to market demand but not create people who can see what's around the bend." thirdly, the president wants to make more graduates eligible to repay college debt gradually. "if we move forward...we'll help more afford college." at the university of illinois, where 80% of students at its chicago campus are on financial aid and graduate 21-thousand dollars in debt, proposals to limit debt by tieing future financial aid to course completion, doesn't help those just getting started. "right now, we can disperse money in advance of school but if that changes, a student may not have money for rent or money for books." another factor in college costs--the amount of public funding colleges receive.in 38- states, colleges recieve less money than they did five years
ago. in some cases more than a third of the state's contribution has evaporated. the sec will soon propose new rules on ceo pay. corporations face critism for doling out massive pay packages to company leaders---creating a large gap between the amount ceo's make compared to rank and file workers.the new rules the sec is planning however are reportedly a lot less strict than what lawmakers originally ordered. eli lilly is the latest drugmaker slammed with bribery allegations. a former senior manager for the company was quoted in a chinese newspaper saying that bribery and illegal
payments at eli lilly's china operations were widespread. the report says illegal payments totaled close to 5 million dollars. the company says its deeply concerned about the allegations. it follows similar investigations at china offices of glaxosmithkline and novartis. jc penney is using a "poison pill" strategy to prevent a takeover attempt. a jcp spokeperson tells reporters there is not current takeover attempt.but, reports say just in case the company has a poison pill plan in place from now until next august. the tactic allows shareholders to buy more stock at very low prices if someone comes in tries to take the company. jcp is vulnerable as it struggles to recover from a nearly billion dollar loss. walmart wants to bring back manufacturing to the u.s. the retailer is holding a two-day summit this week with retailers, suppliers and goverment officials to increase the number of products made in america. walmart hopes to boost sagging sales. critics say wal- mart is backtracking after sending manufacturing jobs
overseas for cheap labor. slow back-to-school sales are putting retailers at war to attract shoppers walmart is already rolling out layaway plans for christmas shoppers. others are promoting deep discounts and holiday sales. "i would certainly think that as we move torward the fall and the holiday shopping season that you're going to see a number of retailers come out with specials. they're going to announce these things far in advance, because i think most retail companies are a little unsure of whether the consumer is going to open their wallets and spend a little more money or whether they're going to be more tight-fisted." scott wren, equity advisor with well fargo adds--- while consumers may feel unsure about the economy now there confidence get a boost in the next few months. more retail stocks are falling short of expectations. teen clothing store abercrombie and fitch lost nearly 18% yesterday on a dismal earnings report. the store reported sales fell 33% in the second quarter.
meanwhile sears also took a hit, reporting a loss of 194 million dollars in the quarter. that stock dropped more than 8% yesterday. starbucks will be boycott target this weekend. a non profit group called moms demand action for gun sense in america is up in arms because starbucks allows customers to carry loaded guns at cafes in 43 states. the moms are petitioning and are calling for a nationwide boycott of starbucks this saturday to put pressure on the coffee chain to change its policy.recently gun rights groups sponsored starbucks appreciation day. microsoft is launching a pilot program to provide internet search engine called bing to schools free of advertising.presently, google search is used about 67% of the time.bing's market share is about 18%. "if you look at microsoft's business model, they make money on software. yes, they're trying this ad free in the schools in hopes that you try it in the home as well but in a head-to-head comparison, if you
look at google's search engine, it is laden with ads." more than 800-thousand students across the u.s. may see ad free web searches if their schools participate in the experimental program. yahoo has topped google in web traffic for the first time since 2008. the latest numbers from comscore show yahoo had more people clicking on its sites than google during the month of july. microsoft, facebook and aol round out the rest of the list of the top 5. don't be so quick to recycle your old iphone. reports say now is the best time to trade in apple's older models for cash. historically,resale values drop dramatically right before apple releases a new phone. currently trade in site gazelle is shelling out 300 dollars for a 16 gigabyte iphone 5 in good condition. however sources say prices will
drop between 15 and 20% in the six week period surrounding apple's announcement on september 10th. it may pay to read the fine print on credit card rewards. card hub.com finds some rewards from using your credit card come with fees attached. and often those fees are buried in the fine print. based on clarity of reward rules-- the study ranks american express with the most confusing credit card application followed by barclays, and chase.capital one is noted as having the clearest credit card application.there are currently no regulation requirements on rewards. well, that was fast! a utah design firm has created a 3d model of "hyperloop"---that's the high speed transit system that would get passengers from la to san fransico in 30 minutes, created by tesla's ceo. a proposal for the project was released earlier this month.whiteclouds design firm was up to the task. this 3d blueprint was created in just 24 hours.
still to come: the bears are out of hibernation. what has them all riled up...later in traders unplugged. plus...hewlett packard is in focus....what the charts are revealing about the future of that stock. and,the tragic death of a bank of america intern. why the situation is putting a spotlight on the risk of being overly ambitious at the office....first business continues after this. i wanted to be in the military since i was a kid.
i served in the united states air force. i served a total of 16 years. i was deployed 13 times. on my second deployment four bombs hit my vehicle. and at 19 years old, that was the first time i ever saw somebody die. coming back, i was raging. i started having pretty horrible nightmares. i would wake up in middle of the night sweats. i started drinking a lot.
i felt worthless. i guess i never recognized it in myself. eventually, one day i just walked into the va hospital and said i'd like to see somebody. don't suffer alone. you've got to find that link with somebody that will make you let it go. it all starts with going to the va. there's a whole community of veterans that just want to help you out. it's for the guys who couldn't come back, you owe it to them to live well. because they're not here with their families.
a disturbing report this week about a bank of america intern who apparently died after pulling 3 all nighters in a row--highlights the problem of people who work to extremes. joining us now on set to talk about the dangers of working excessive hours is gail golden of gail golden consulting. welcome back to the show and why do people overwork? > >i think some people overwork because they love their job. and others because they have that perfectionist demon inside them that says, you gotta do more---you gotta do better. but i think in the case of this young man and many others, people overwork because that's the organizational culture. there are expectations and demands. you gotta be macho--- you gotta do it--which i think is extremely dangerous and unfortunate. > >it's subtle but sometimes it is there. what is the difference between a workaholic
and someone who's just a hard worker? > >i think most of us are expected to be hard workers. that's how you get the job done, that's how you get ahead. that's how you learn to be good at what you do. hard work is good for us but being a workaholic is not. it's pushing your body and your mind past the point where you're not even productive any longer. you're running on fumes. and it's not good for business at that point and it's certainly not good for you. > >how do we stop this cycle? > >well, i think we have to get over the notion that this is what real men do. and again, the women in these industries are held to the same standard as the men. it's pointless. it impairs people's judgement. when people are exhausted they make stupid decisions. so it's not good for the business and it really is destructive of top talent within an organization. > >thank you for helping us cover this topic today. gail golden of gail golden
at the ready to tackle hot market topics...alan knuckman and james remali join us from the floor of the cme group. topic number one in this traders unplugged: bearish bias. mark faber says there's another 1987 market crash in the works. is that true or false? alan: i don't think so. nothing has happened to deserve all this tapering talk. we've seen interest rates actually move up based on supply and demand---so that's already happened. we knew that was gonna happen....that's already happened. now what?
james:i actually agree with alan here. we're still missing some pretty big pieces of information. you look at market action after the fomc minutes came out and the rally in the day following. i think that's going to be indicative of what price action is going to be like until we get those final pieces of information. when is the taper? how fast is the taper going to happen? alan: the market doesn't care. we've been talking about it for weeks. james: right, trying to play a breakout here is going to be a really easy way to get chopped up. angie: topic number 2---going well: wells fargo is said to be cutting 2300 jobs in its mortgage division. what about this stock? james: wells fargo is off of its 52 week highs. momentum has shifted to the downside a little bit. but it does seem to be finding some support at these levels however. banks have led the rally higher here and i think if the market does rollover they'll lead the selloff--- alan: they've done very well with the re-financing boom. but this stock---i was looking at its 20 year chart---tok out the highs by a few cents and then went back up. around 40 is a good level. i think a better play is in xhb, the homebuilders sector. they've come back and its holding a support level. it's 105 off and the momentum level there is still very strong. angie: topic number 3---wage war: wendy's, walmart, and
costco all have very different ways of paying employees. which stock is the best investment? alan: it's interesting here that they have different philosophies---a conuru wrapped in a riddle as far as how to pay their people. and you can see costco pays their employees 20 bucks an hour. they're a great stock and done very well. i think the best out of these stocks right now is walmart. it's about 10% off its highs. and i think its got some solid support at 72. james: i think walmart is not the way i would want to go. the momentum is going to be on the downside from now on. costco is off of its 52 week highs by about 8 bucks. seems to be finding some support at this 112 level. i'd want to lean on that level--- alan: what about wendy's? wendy's has gone from 4 to 8. it still has a lot of upside but its double so it's hard to go after that. and the burger mystery is this---in australia they pay a minimum wage of $16 and they still make a lot of money at mcdonald's there. so there's money to be made---they decide how to pay their employees. it's different. but from a stock play, i like walmart from a conservative
strategy at these levels. angie: and now for your bonus round question---name 3 songs that contain the word "money." james: money by pink floyd. alan: money....don't know. james: that's all i got. angie: alright, how about she works hard for the money and money for nothing by dire straits. thanks guys. good job.
tim biggam joins us on this friday morning for chart talk. happy friday to you tim. > >happy friday to you angie. > >not so happy for hewlett packard. this stock went into a hole on thursday and doesn't seem to be able to dig its way out. what do you think hpq? > >i don't think its gonna be digging its way out anytime soon either. certainly this had been---until the earnings report---one of best performing stocks here. one of the dogs of the dow. but after the report cratering in down some 15% post earnings. i think it will have trouble grinding higher from these levels. i'd be a buyer somewhere in the high teen level. so maybe another 10% lower from here. > >wow, so the floor is somewhere in the teens. let's move onto another stock. a housing stock. you talked about some of the homebuilders on the show the other day and one of our viewers was asking about pulte. what do you think about this stock? > >pulte probably a slightly different story than toll
brothers. toll brothers came out with a decent number. the stock has rallied since then. pulte having a little more trouble going forward here. the stock in that low 16 level. i think about 15 1/2 or so support. i'd probably wait and see if it goes down there and so i think toll is a little more immune to higher interest rates than pulte given the fact that it's a higher end stock. so probably kind of a hold here on pulte going forward. > >what about the overall market? > >overall market absolutely. although i think it will be a long period of digestion here. i think the highs are in up around 1700 in the s &p's and probably the lows as well around that 1550 level. so, just kind of a chop over the next couple months. > >tim, thanks and have a great weekend. > >you too. thank you angie. it's time for us to close up shop for this week.coming up monday... bond basics.a trader will be offering tips on how to trade and invest in the bond market.we hope you will join us. from all of us at first business. have a fabulous friday.
>> now, a paid presentation for the amazing new sheer cover studio mineral makeup, giving you radiant, flawless-looking skin in seconds. hosted by brooke burke-charvet, with special appearances by stars of "csi: miami," "scrubs" and "hall pass," "the young and the restless," and "the bachelorette." brought to you by guthy renker. imagine if you could make any flaw on your skin instantly disappear. what if you could have that beautiful, air-brushed glow that the celebrities have? and what if you could do it all in seconds, with just the touch of a brush?