tv First Business KICU November 11, 2013 4:00am-4:31am PST
janet yellen takes another step closer to becoming the next head of the fed. in today's cover story...on this veterans day, why coming back to america is getting easier for our nation's heros. and....wheeling and dealing. why lenders are shifting back into "subprime mode" plus...what a record low harvest, could mean for the cost of food. you're watching first business: financial news, analysis, and today's investment ideas. good morning! its' veterans day, november 11th.i'm angela miles.in today's first look: the dow rips higher on robust job growth. the blue chips hit a brand new record in trading
friday closing at 15,761. that's after the labor department reported 2o4,000 jobs were added to payrolls last month. much better than expected. although, the unemployment rate ticked up to 7.3% along with the dow's triple digit rally, the nasdaq gained 62 points, and the s&p 24. gold fell below 1,300 and oil inched up 11 cents. reaction was especialy strong in the bond market.the 10 year treasury yield made the sharpest one day rise since july, on concerns the fed made slow it's bond buying sooner rather than later. and, sac pleads guilty to insider trading charges. the firm will pay a record $1.2 billion dollars. mark sebastian of swan wealth advisors is keeping tabs of the market for us today. good morning mark. good to see you back on the show. > >good morning.
> >will we see follow through from the jobs number in the market today? > >i think it's entirely possible. it's a bank holiday, the bond market's closed. expect volumes to be pretty light but i wouldn't be shocked to see a little push through and follow through from friday's action. > >did the jobs number cause fears to rise over fed tapering? > >yeah, it did but maybe that's a good thing. on friday we saw the 10 year yield rally and the stock market rally at the same time. maybe the stock market's telling us that if we get good enough numbers a rally in the 10 year yield is pretty ok. > >what do you think about your buy list? what's on your list right now? > >i really like the financials. xlf, citigroup. morgan stanley crushed earnings and is a great turnaround story. the other name i really like is michael kors. they are just absolutely crushing coach right now. if you're in the mid-tier or high-end luxury brands then i like michael kors a lot. > >what are you staying away from?
> >coach. and i would be staying away from tech. i think apple, facebook, twitter, google are all probably dead money for the next few months. > >good to have you on the show. have a great trading day. > >thanks for having me. there is a significant push throughout american business to hire veterans.edward jones and other financial firms have programs to recruit men and women who've compeleted their service to our country.but as our cover story explains, it is a mission that still has challenges on both sides of the job interview. rob smith of mandeville, louisiana served in iraq and in dozens of other countries. after twenty years in the marines, he came home to his family and became one of the first veterans to enter a program sponsored by financial firm edward jones to train veterans to become financial advisors. "moving to a civilian life was a challenge. so was not having a background in finance." but smith persevered. found mentors and is now one of more than 18-hundred veterans employed in this role at edward
jones. the firm's advice to military personnel is don't wait until you're out to figure out what you'll do next. "start early before you get out and seen how you can translate skills afterward while serving our country." "today's military is not all about hand-to-hand combat." rodrigo garcia, assistant director of veterans affairs in illinois, says veteran face a series of perceptions before they even apply. businesses, he says can be wary of hiring reservists for fear they'll be deployed, and hesitant to hire combat veterans--concerned that they may suffer post-tramatic stress disorder. he admits, it can be a tough sell. "their commitment, dedication, ability to make decisions is what sets them apart and adds to the bottom line."
but employers say analyzing a spreadsheet is different than assessing threats to a village. garcia says the biggest challenge facing veterans is lack of education. during the last four years, the post 9/11 g-i bill has provided more than 30-billion dollars for tuition, book stipends and other expenses for a million veterans to get the sort of education they'll need. last week, the university of phoenix offered retired army colonel garland williams on the subject. "coming out of the military, they don't have the educational degrees to get their foot in the door." the potential labor pool is only going to grow. it's estimated that one-point-two million service members will come off active duty within the next five years.
confirmation hearings getting under way this week for federal reserve chairman nominee janet yellen. current chairmain ben bernanke leaves the job in january. yellen will be questioned by the senate banking committee. she is expected to win approval from the panel, although a full senate vote might not happen until january. senator lindsey graham is threatening to delay it unless survivors of last year's bengahzi attack are allowed to speak with congressional investigators about the obama administrations response to the attack. meanwhile--, a 60 minutes reporter now admits her report on the administration's role was not accurate. as ben bernanke winds down his term as fed chair. he's making it clear the fed has power as a "crisis fighter." bernanke addressed the banking topic of "too big to fail" friday at a conference sponsored by the international monetary fund. bernanke says the federal reserve is drafting rules to close large insolvent banks "without" destroying the entire u.s. financial system. bernanke believes that "not" having a systematic process in
2008 left the regulators with the "terrible choices of a bailout or allowing a potentially destablizing collapse. on the heels of a strong jobs report for the month of october. president obama "questioned" whether the hiring spree "could" have been stronger. "there is no question that the shutdown harmed our jobs market. the unemployment rate still ticked up. and we don't yet know all of the data for this final quarter of the year, but it could be down because of what happened in washington. now that makes no sense." the president spoke friday in new orleans where he admitted the launch of healthcare.gov was marred by technical troubles. and suggested the state of louisiana take advantage of provisions in the affordable care act to expand medicaid to the working poor.that suggestion was quickly rejected by republican governor bobby jindal. the president went on to call on congress to approve government spending for roads, bridges and ports to increase exports from america.
exports are picking up around the globe. in china -- shipments jumped in october, signaling solid economic recovery. china is now on track to meet its growth target for the year. in germany, a surge in exports is drawing criticism from european union officials. the country's chancellor angela merkel was warned germany must curtail an export surplus, to prevent an imbalance of trade within the entire euro zone. fallout continues from the government shut down. the office of management and budget finds: 850 thousand furloughed employees will receive 2 billion dollars in back pay for the partial shutdown that lasted for nearly 3 weeks. the shutdown also took a toll on national parks which lost nearly 500 million dollars in revenue during the closure.the budget office also says the irs was forced to delay 4 billion dollars in tax refunds. blackberry's interim c-e-o is getting a sweet deal. john chen was hired to turn around the company while it looks for a permanent replacement for outgoing ceo thorsten heins.
chen will get $3 million in salary and bonuses, and stock valued at $85 million. fairfax financial recently pulled its tentative bid for the struggling smartphone maker. it's now offering a $1 billion debt sale that includes several major investment firms. a report says bernie madoff was set to receive a major loan from jp morgan right before his arrest. a trader on trial-- who worked for madoff asked to borrow $200 million from the bank, that was twice madoff's credit limit. allegedly it was an attempt to hide madoff's ponzi scheme from his clients. jp morgan says it was unaware of madoff's fraud operation, and the loan "wasn't suspicious." dominick's is warning of mass layoffs as its chicago-area stores prepare to close. more than 56 hundred workers were notified that their jobs will be eliminated by the end of the year. all 72-stores will close by dec. 28. some workers may be hired by other grocery chains. jewel-osco has purchased four of dominick's locations, and plans to retain 450 workers. and upscale grocery chain
mariano's has expressed interest, also. retailer gap surprised wall street with solid sales for october. that stock gapped $3 dollars higher in trading friday as investors cheered positive news ahead of the critical holiday season. gap stores sold enough, jeans, sweaters, khakis and other apparel last month to improve revnue by 4%. the company is also lifting its earnings out look for the 3rd quarter. profit results will be out november 21st. a measure to hike the minimum wage is gaining support from the white house. the obama administration is backing a bill that would hike the federal minimum wage to 10 dollars and 10 cents an hour from the current 7 dollars and 25 cents. the changes would take place gradually over two years. the bill faces hurdles on the hill. in march the house struck down a proposal to hike wages. republicans argue higher labor costs could hurt job growth. tax refund robbers are working overtime. the number of people
missing out on a tax refund because their identity was stolen is growing at epic levels according to an irs watchdog group. last year, 1.2 million taxpayers were ripped off. in the first half of this year-- the number shot up to 1.6 million. the report says the irs is making progress to stop the crimes, but it's becoming challenging to catch the identity theives who are taking other people's tax refunds because many scammers are overseas. and are constantly changing tacts to steal identities. detroit is at a standstill. the city is awaiting a ruling from bankruptcy judge steven rhodes to determine its elibility for chapter 9. closing arguments in the trial wrapped up on friday. rhodes will deliberate after hearing 50 hours of testimony over the past several weeks. if the city is eligible, officials say they will submit a plan to restructure by the end of the year. a vote this week could determine where production of boeing's new 777x jet lands. the 777 is
built in seattle, but friday boeing warned its considering producing the supersized jet in another city. the warning was issued after a top member of the international association of machinists union strongly opposed the proposed labor contract set for a membership vote wednesday. union workers in seattle are facing competition from "non" union workers in the south who reportedly earn less money. iphone troubles could soon cost you a whole lot less. the company will soon offer repairs for its newest models in its retail stores. costs range based on what you need fixed, but will save you from having to buy a brand new phone. still to come: subprime lending is making a comeback in the auto market.....find out if a *crash is ahead. plus...the ag department is expecting less corn this year...why it could be a price plus for consumers. and next...are golden days ....ahead for one of the most watched stocks in the market.
mcdonalds is beefing up sales in the u.s. and abroad. the company said october sales rose in the u.s. and europe but, cited a slowdown in asia. mcdonalds has ramped up its dollar menu and adopted new menu items to keep up with changing eating habits of consumers. its stock is trading near 97 dollars.
the usda is predicting this year's corn harvest will be smaller than expected. jack scoville of price futures groups joins us now from the floor of the cme group. thanks for coming on the show. > >i'm happy to be here. thanks so much. > >this number was widely watched. the u.s. is world's largest corn exporter and the government shutdown caused a delay in the crop report. so was it a shocker to traders? > >i think it was a little bit of a surprise anyway. everybody expecting the usda to call for production over 14 billion bushels and we didn't get that. we got just under 14 billion bushels so that produced a bit of rallying interest. and then usda showed a little higher demand than we had been expecting as well. > >do you think the rally will continue into today? > >yes i do. when you take a look at the charts from friday's price action. we had----and that usually means that we'll see some follow through buying for a couple of days. if the funds decide they need to pull out as well, that usually takes two or three days. all indications are after the reports on friday that we've probably seen some harvest lows
here so we should be sideways or drift higher probably through the end of the year. > >will americans see anything at the retail level? > >i sincerely doubt it. if anything, longer term it's probably beneficial to the consumer because the lower corn prices that we're seeing right now aren't gonna go away. they're gonna stay relatively cheap and that allows the cattle and hog producers and the poultry producers as well to contiue to expand production and that should lead to lower meat prices down the road. it might take a while but they should get there. > >how have you been making money off this report? > >i had my buy side clients were kind of long going into the report just fearing that prices were cheap enough and knowing that usually we have a post harvest rally anyway and
we're getting to that point. i've been generally buying the market and of course today it really worked out great. > >thank you jack. happy trades to you. > >thank you. coming up...is shifty behavior in the auto market spelling serious trouble? and later on in chart talk.....one trader is placing his bid on sothebys. we'll be right back. 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.
subprime lending is shifting into overdrive in the auto industry. bloomberg news reports more than 27 percent of loans for new vehicles were given to buyers with spotty credit. greg mcbride has his eyes on the industry for us this morning. good morning greg. > >good morning angie. > >is the increase in subprime lending to car buyers becoming problematic? > >no, i don't think it's problematic. keep in mind, we have a lot of pent up demand. there are a lot of people that have put off buying a car for a
few years either because they couldn't get credit or financially they just weren't in a position to do so. now with the economy on better footing than we've seen in the past couple of years and better credit availability i think you're seeing a lot of those sales happen particularly for people that have weaker credit profiles and would have had difficulty over the past few years. > >do people who have poor credit wind up paying more for the cars even though they are able to get the loans? > >oh, sure. you're going to pay a higher interest rate if you have no credit or if you have weak credit. the good news is for people with strong credit, rates have never been lower. but make no mistake, if you have weak credit you're going to pay a price for that in the form of a higher interest rate. > >the report also says that late payments are not out of control. is that a sign that borrowers are acting responsibly? > >it's a sign i think of both borrowers and lenders acting responsibly. the performance on auto loans tends to be pretty good because people realize if
you want to keep driving that car you gotta keep making the payments. if you miss more than one payment, it's not gonna be in the driveway in the morning. that's another reason why credit availability is so much better in car loans than say in mortgages where it can take more than two years to get somebody out of a house after they've stopped paying. > >exactly. subprime lending was a big problem in the 2008 meltdown. but this sounds like it's not going to be that bad if something starts to erupt here. > >well, because i think you'll see a couple of things. first, if the low performance starts to deteriorate, lenders can always tighten up. that's what happened in 2008. it's only started now to loosen up a little bit. so if conditions deteriorate they could tighten that up. also, people realize that they're gonna have to make some tough choices, and if they want to keep the car they gotta keep making the payments. there's a lot of people in years past that made the payments and they didn't make the mortgage payment because they wanted to keep the car and they really didn't care about keeping the house. > >thank you for your time as always greg. > >thanks angie. just ahead-- a trader who is ready to take a plunge into seaworld's stock. despite recent negative publicity. chart talk is ne.
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in chart talk this morning trader andrew keene, president of keene on the market.com joins us with a couple of earnings plays. good morning and happy monday. > >happy monday angie. > >let's start with sotheby's. this is an interesting stock. it popped on friday and as you know there is a billionaire
hedge fund going after this company. what do you think? > >yeah, dan lam's going after this company and it's not as much of an earnings play as an activist play. so i think that the stock will move higher. if you look at the chart on the daily chart it's in a strong bull channel. every single pullback gets bought. on thurday it pulled back down to 49.60 so that could be my bogey that i could get long in here around the 51.10 level. i think it gets up to the recent highs of 53.50. put a stop under 49.60. i think sotheby's bid can get through 55 dollars. > >most traders though like to stay away from these stocks that have hedge funds coming after them. this is pretty impressive. > >so if you look at a chart, there's no reason to not be in the stock. the chart here is fantastic. it reminds me of domino's pizza, dpz, heavy pull back gets bought. so i did pull back on thursday. the s &p pulled back on thursday as well. so as long as i leave a tight stop of only about $2 i think it sets up a good risk to reward setup. > >you are also watching sea
world, which ipo'd this year and has that damaging documentary out about blackfish and what they're doing with those orca whales. what do you think about this stock? > >the chart is kind of interesting here. it got up to $39 and it recently sold off to $27. it bounced back from this $27 level. it's trading around 30.50. it doesn't trade that much in the option. the stock only trades about 150 thousand shares in a day. but we saw disney running up into earnings and then disappoint. i think it could be the opposite here in ceas, sea world. i think a lot of the bad news is priced in. i think it can get there and i think it can climb throughout the rest of next year. > >you're taking a couple of rambo plays on the show today. thank you so much. > >thank you. that's it for today. coming up on tuesday, a venture capitol group focused on struggling startups by young people. find out more about this last ditch rescue effort tomorrow. from all of us at first business, thank you to our veterans and men and women serving our country now.
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