tv MONEY With Melissa Francis FOX Business April 9, 2013 12:00am-1:00am EDT
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the situation in europe today for example. it is the knowledge and confidence to aspire to that you have a right melissa: "money" with melissa francis is next. melissa: i am melissa francis and here is to make money today. investors short alcoa, the aluminum giant kickeoff earnings season after the bell. alcoa says it is optimistic it will have a better year than 2012. shares trading down after hours. investors and pharmaceuticals are rolling in the money. chinese gulator is approved an antiviral drug as three more infections of the deadly new strain of the bird flu reported in china today. shares soared up more than 10% based on 35% of the past week. you are happy if own that.
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also, the former athletic director of rutgers was fired over the mi mike rice scandal. but he's getting $11.2 million in salary and also getting an ipad, car allowance, health insurance. you're welcome, new jersey taxpayers. even when they say it is not, it is always about "money." ♪ melissa: all right, starting off, a critical week for the market has just begun, and will be a surefire test of investors optimism for sure. stocks, what is expected to be a weaker earnings season could turn it all around. alcoa, the first big company releasing earnings a short time ago. as we said reporting mixed results. are we going to be hearing, we
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are going to be hearing from jpmoan and wells fargo on friday as well. an all-star team here to look ahead so you can make money this week. the assistant editor of the "wall street journal" editorial also has mark. james, let's start with you. this is it, this is going to be a real test. the market has been on a tear. earnings could really be a stumbling block especially when we look at guidance. what do you think? >> he said it would be a test of investment optimism, it could be a test of how much investors are watching the fed. believing they are going to be continuing to print money. i am not sure whether earnings are great or not great, people will be pushed away from stocks. there is really no place else to go right now. melissa: that is a great point. what has the feedback than from companies so far.
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guidance will be the big thing when you look at the economic picture out there and how it was great to start out the year, but now it feels like it is softening. >> we got a teible jobs report. i'm kind of interested in whether we will see real growth, real topline growth, revenues in these businesses or if they will be doing what they have been doing the last few years. credit to american business finding ways to cut costs in a tough environment, but will this be growth or will it be cost-cutting? looking at the friday employment report, tremendous, terrible. yet where we were before the news came out, which suggests that people are kind of factoring in a lousy economy but if i want to get returns, have to go to stocks in the fed will keep printing money anyway. melissa: absolutely. i promise you an all-star panel.
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as it isn't enough for everyone, he is. oh look, there is somebody else. also an author of the book "trade like a stock market wizard." thank you for joining us. what do you think of this coming season? what is in store for us and will it be the thing to trip up the market that you have been on a tear? >> you have to have more than just cost-cutting. if companies cannot grow sustainable earnings based on productivity enhancements, you need revenue. even the earnings are quite paltry. coming off of the depressed levels we came from, they should be reporting huge results because they have such easy comparisons so i'm a little concerned these are too weak. melissa: that has been a story for a while and they still continue to have good earnings and make the best of it so why do you think now that will turn
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around? has there been a change the economic climate at the beginning of the year that you think will make the future looked more sour for this group? >> that has been the story so far. it is having less and less of an effect. bumping against all-time highs. the s&p is where it was 13 years ago. four and half years to get even, back down, four and a half years to get even. this is not a secular bull market like people are calling. he went 15 fold. every year the market was higher. so we are right back to where we were. not much gain for all of the stimulus. melissa: the bottom line is always don't fight the fed as long as they will set out there and keep pushing people into the stock market by virtue of making bond yields so very low, doesn't make sense to get out. that is the argument you always here. what do you think? >> that is what is happening
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now. stocks have been good. i guess i would agree in that sense this is not sustainable long-term. you hope at some point the fiscal authorities, in this case specifically president obama realizes you have to embrace growth economics. there is a limit to how far ben bernanke can create prosperity. melissa: what is the tipping point? that is what everybody asks me when i run to them in the street. companies are not growing that well, the economy is not terrific but at the same time you don't want to fight the fed. so i want to stay in until i have to get out. when do i know to get a? >> we have both of those to our favor. the correction would be normal. five to 10% would be a normal correction. it will not work forever. at some point the economy will have to turn and if unemployment starts turning up, you will get a situation where we had unemployment improved and he
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turn back up and went to a double dip recession. watch unemployment. if unemployment turns up sharply, that will be a problem. messa: all right, guys. thank you. good stuff. melissa: we have one ceo who can share his recipe for success. joining me now in a fox business exclusive is the ceo of fatburger. thank you for coming on. >> thank you for having me. melissa: what is the business climate for somebody out in the trenches operating >> selling franchises around the vjráqáh#or small business. for larger companies, there is financing available, packages out there. melissa: easy maybe this is the growth of the onomy, a lot of people saying this. i have to go into business for myself because it doesn't make
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sense any longer to them and anybody else to work for a company. have to make it work for myself. >> it isn't unless you're going to pay all cash. start a business and be a franchisee. to depend on financing is very hard right now. melissa: is a good time to start a franchise? >> prices are at a good spot right now. much more reasonable today. the ability to go into your own business now, franchising is off the charts in terms of popularity. a great way to start your own company. melissa: you are somebody who has such a fascinating personal story of crse. he worked in finance for a long time. a management buyout of fatburger, you went to jail. you still protest their innocence can be pled guilty. he came out to run the business. it is bigger and better than ever.
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>> thank you. melissa: what would you say to people who are not facing those same circumstances, and still feel like they are fighting the tide, pushing against the tide to try and make it for themselves and their family. what will you say to people who are fighting to be prosperous? >> and you find yourself on the canvas to have to pick yourself up and learn from your experiences and try to move forward. what is the alternative? stay curled up on the floor? you have to get up and do something about it. it is all about what you make out of that experience. melissa: do you say that to franchise owners, or do people still look at you and wonder about your past? >> it is so public, everybody knows what my story is. the most important thing is to explain people need to follow their progress. you cannot be stuck with it forever. whether that is the market, real
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estate, when i talk to people in college always want to start their own company have to be nest with them and say do you reize how difficult this is? you shouldld work with somebody else rather than trying to do it yourself. melissa: what makes it one person w should go into business for themselves? >> there has to be passion, a good plan, scalable. you really have to challenge yourself. it is not just about the person, it is about the idea. it is so key, if you're going to make $1 per unit, how are you going to sell a million of them? you have to pay for rent, pay for your people, pay for the product. melissa: you have gone on "undercover boss." you inside your own business to see what the problems are and you found problems related to franchise business. they be not running the business the way you would. >> it was interesting.
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we grow very quickly, 27 countries around the world and half of those are international. i am very worried if we continue to build stores that there could be problems systemically within the companies i wanted to go undercover to see what was going on in the inner workings of the company but did not find its stomach problem where the burgers were not being made right. i found hr problems. employees did not feel appreciated or that they could communicate all the way to the top with their ideas. something i have not expected. melissa: is this setup? i watched that in the first couple of times i am like this is amazing. and after a while don't people get smart and check with the head of the company looks like? >> i did get discovered at one location who knew me personally and could not understand, finally came out and told them. the contestants, or the employees on the show are
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hearing about this employee getting a second chance, starting over in his life to live there to film the second chance pilot series. it is more about their caught up in everything else going on and are not focused on the cameras. melissa: i think of rupert murdoch showed up to do my makeup, i would realize it. thank you for coming on, hope you come back. time for the fuel gauge report. following from a 20 month high. at long last the heat wave is finally hitting the northeast and the midwest. warm temperatures are lowering the gas demand. ge is buying lufkin industries. ge is offering $88.50 per share for the county. shares of lufkin sort more than 30% on the news. environmental groups ask tte white house to delay a decision
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on a keystone@pipeline. saying it should hold up any approval of keystone. environmental assessment is in a public comment time. they want to extend that 120 days. coming up, is carl icahn a shareholder's best friend? or is his battle severa driven t of control ego? and investors betting big on lawsuits. one of the country's top trial lawyers is here and why this is the newest way to make a ton of money. you have got to hear this one. we will be right back. ♪
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three already in 2013. so we're wondering is he a hero to shareholders were suggested in the power of money to move the market for his own profit? joining me now mark stephen, the ceo of msc o..com. and writing about him for the "wall street journal," two of the best guys to possibly talk about this. i always wondered this because he is in there and doea lot of good for shareholders, at the same time he makes money, a lot of it is about ego. >> he could not care less about anybody else but carl. it does not mean the shareholders are not benefiting from what he does. i always said the carl doesn't like anybody. i know the guy really well. we were neighbors in new york. he is the smartest guy i have ever met. i spent time alone with bill gates, former secretary treasury was my client.
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carl is by far the smartest men i ever met. he amassed a fortune without a company. he jumps on the backs of ceos. melissa: we're going to pause for a second because we have breaking news coming in, jcpenney announced they have let their ceo go. dennis kneale with more on this. what do we know? dennis: quite a fall from grace for ron johnson who left apple, built a business to go into jcpenney and turn it into a slick, hip, output. he wanted to ban sales. he did. this is we have to give him time to turn this around, hit them going with discounts again and now ron johnson is out and a veteran retail executive has rejoined the company as chief executive at jcp effective immediately and elected to the board of directors. coming at a highly accomplished
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retail executive serving as ceo of jcpenney until late 2011. ron johnson is stepping down and leaving the company as the stock of jcpenney after hours popping 11% on the first reports that ron johnson is leaving. when he came in a year ago, jcpenney stock popped on hopes of johnson could do something to add some sizzle to this middle of the road retailer. it is not as hip as it needs to be, not as young as it needs to be. ron johnson tried to establish all of these branded stores within a store. they are now fighting over the martha stuart brand. one of the new store in a store they started. now we will see what happens when the new officer will come in to set the company on the right course. the problem is apple and apple stores were dealing with a product people super loud and exclusive.
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jcpenney was selling run-of-the-mill retail goods you could get almost anywhere where price and discount becomes a way to compete. ron johnson tried to change the entire industry with his approach of everyday low pricing and it failed numerous times in previous years in other sectors. p&g tried it and bacacked off of it. people love the idea of a discount even if it turns out you're giving them lower prices every single day. ron johnson, this is not over for him, he will find another retailer, i will bet you. that might be a better fit. melissa: dennis kneale, great reporting, thank youor bringing us that breaking news. speaking of "power and money," turning turning back to carl icahn. what do you think motivates him? is it all about makingoney? does it serve the shareholder in the end? >> he is a money manager, that is what he does.
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he does not have other investors invested in the hedge fund anymore, it is just carl icahn, the money. melissa: a lot of times look at it as somebody who is powerful enough to have an impact. if i am a shareholder and i don't like what is going on and i try to raise my voice, there isnly so much you can do. he has the power to come in with his voice but does he use of a shareholder benefit or his own personal financial gain? >> del has reached a deal to sell itself to michael dell, founder and ceo. carl icahn thinks he wildly undervalues the share. he bought stock in dell and said this deal isn't worth it, let me make my own offer to buy the company, or let's pay shareholders. >> we're also missing the big point. carl loves this kind of a thing
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where there is a crazy quilt scenario going on, a perfect storm for him. said we want to make this an even playing field. play by our rules. the last thing carl never once is an even playing field. melissa: nobody does. >> he told me once i don't believe in the word "fair." why should anything be fair? that is for idiots. melissa: address this specifically. does he really believe dell is undervalued, or does he know by virtue putting his own money at risk and getting involved he can jam up the value and make money? maybe he came in and blocked blackstone, make an offer at $4.50 for a buyout. in that case he caught bondholders at least money. >> he has a mixed track record,
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everybody has a mixed track record. in this case it may help shareholders whether he makes a higher offer or if blackstone makes a higher offer. it is going to wind up with a better price for shareholders. what his intention is is helping themselves certainly. melissa: he is motivated by making money. maybe you just want to be on his side nmatter what it is. >> he can't always be on his side. he is a magic act, a chess player. his real reason he wins so often if they think two or three moves ahead, carl thinks 12. something like this is ideal for carl. he doesn't even like money. but it is a resentment game.
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a low, middle class family with the establishment. one of the things he told me, i said take this money and the government was after him for 1.2 billion total net worth. said let me think about it, let me think about it. i said put the money in legally after taxes. he said my money is my army and i need my army around me. it is a dig chess game. he doesn't even spend the money. melissa: that is the power of money if i have ever seen it. who is the next carl icahn? >> people asked me that all the time. i will ask you, who is the next steve jobs? melissa: they're all vying for similar titles, laying out a formula.
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can somebodyollow in his footsteps, or is it unique? >> there are a lot of activists that have fallen in h footsteps picking up the ball. we have seen people be really relational, they're kind of following the multiple flags in the air that carl icahn pioneered. melissa: very interesting. great discussion. coming up on "money," looking for new investments? put your money in lawsuits. litigation finance is a booming opportunity. we are going to explain why. plus there is plenty of hype around the next iphone and ipad. what about the next generation of products we already have. one of the top authorities on apple, adam lashinsky, will join us. can you ever have too much "money"? [ lisa ] my name's lisa, and chantix helped me quit.
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♪ melissa: so are you looking to make some money? we all are, right? litigation finance is the latest trend, where investors put up money to pay for or supplement big corporate legal funds and walk away with a cut of the profit if their side wins. u.s. litigation market is estimated to be as much as $200 billion per year. so there is no surpris investors are chomping at the bits to cash in. seems a little bit dirty though. trial attorney here to explain. great to have you on the show. this is a booming business, without question. all the sudden. hedge nds are getting in on it, coming in and they basically finance litigation for a cut of the profits. it makes some sense, finding a
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way to finance litigation, limit risk, what is the problem? >> don't know what is a problem as much, but it has some problems. litigation has gotten so expensive. merck spent over $2 billion. buwhat about the people who are representing melissa francis of the world wanted to fight a company that has $2 billion. how do you do that? you need help oftentimes. some lawyers are doing that. melissa: why does it feel a little dirty? when you break it down okay, here is somebody who needs to pay his bills, needs to continue his life while he is fighting the suit, somebody gets together and pooled together, they sell it, they finance it through wall street, through hedge funds like everything else.
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everybody laying off risk, they can afford to do it because three of these cases are losers, seven are probably winners, i will make my return, i can bear the loss. >> except we want our justice system to be an even playing field for anybody regardless of race, color, creed or money has a fair shot. and that is what it is supposed to be about. when all of a sudden you bring in big money like this. melissa: big money is already on the other side. >> it feels a little dirty to us because we start thinking litigation becoming simply a profit center? melissa: like the stock market. >> all of a sudden it is no longer the center of justice and democracy in america where the jury makes intelligent decision departs from the politics. all is said and how much of this is being pushed by big business? messa: it seems like the genie is out of the bottle. i think it was the "wall street journal."
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investors out there looking into it say it is a big cash cow. a winner for sure. >> this is what scares me. a lot of lawyers i know who borrow money to pursue a case. say they have cases against a drug company so they borrow three, four, $5 million. the problem isn't the case is as subtle as quickly as they thought, interest rate starts racking up on the money the lawyer borrowed in the lawyer has a tendency to settle a case to cheaply to pay f the debt. and that is not fair to the client. melissa: they have more money coming into finance that. >> we don't do this at my firm. it is my money i put into the case. but if i have somebody coming in to say i will loan you all the money you want, all of a sudden i am playing with house money and i can play bigger than i can afford. melissa: we have average
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investors watching who want to make money, is there anywa any o get in on this yet? i know wall street hedge funds and bigger banks put tether funds to do this. anyway for the regular guy to do this yet? >> there probably is. i would be very, very, very nervous about it. you have to really have the right people analyzing these cases. too many cases get lost and that money is gone. melissa: interesting topic. think you for coming on. >> always fun. melissa: our "money" question of the day. would you finance money to finance litigation? everybody who responded said no. all right, next on "money," is apple a must-have for your money? yes, the release is coming, but when is a company going to put out a brand-new revolutionary product? adam lashinsky, one of the foremost apple experts is here with margaret thatcher, better
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than just about anybody in history. why doesn't anybody in the u.s. do it now to save our economy? art laffer joins us with that. [ male announcer ] how can power conmption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. twe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
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replaced. announcing he will get a million dollars in annual salary, jcpenney stock took off after the news sliding negative now. on the news. we will keep a close eye on this one as it develops. let's also bring in fox news contributor adam lashinsky. you are our apple experts, the best person to have in the seat right now looking at this because of course ron johnson came in to jcpenney and his success from apple. why do you think it didn't translate? >> the focus is quite appropriately on jcpenney, but this does a lott about apple and trying to emulate apple. i don't know exactly why he didn't succeed or what his lessons that app did or didn't teach him at jcpenney. came into this jobith a great deal of what could be called hubris. i am going to just try to change this over completely and take a moon shot. why? because that is what his mentor,
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steve jobs, did over and over at apple. what is has shown us if you are not steve jobs and this isn't apple, to be really difficult to follow that model. melissa: it has even become very hard for apple to do that. we were just talking about karel icon in who can be the next icahn, they said who can be the next steve jobs. do you think that person exists? >> now, that person absolutely doesn't exist. by the way, still don't blame ron johnson for giving it a shot at jcpenney. i personally think that is a helluva lot more interesting and fun and exciting and a way to create value to see somebody go for it the way he did then to not go for it. there isn't another steve jobs, and this is a huge, huge issue for apple. do you just follow the playbook or do try to find a way to do something that nobody has ever done before as he did several times. and guess what, this pretty interesting to do something that nobody has ever done before.
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melissa: we talk about taking a flyer or stocks or something else, but almost always doesn't work and that is why they call it a flyer because it is a gamble and you are trying something that is very maverick and renegade, fantastic, most of the time it doesn't. >> the extraordinary thing about apple that steve jobs ran the company before he died was it revolutionized something like four industries. computers, music, telephones, tablet computers. and each one exceeded each of those major innovations succeeded. melissa: that is what makes people nervous aut apple now. can they revolutionize another industry? do they have it in them h it is all they keep doing is updating their already fabulous products, which is great, t not what made apple apple. can they come in and just low away another category?
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what do you think? >> i think that is exactly what they are trying to do. it will be extremely difficult. people don't have the context of knowing how long these things take so we got deduced by apple. they came out with the ipod, the apple iphone, the ipad. it was not even released three years ago, it was announced in january of 2010. if it takes apple another year or two to change the world, i don't think that would be the biggest deal. melissa: do you have the confidence they can really do it without steve jobs? you have to follow this company so closely, do you have confidence they have the talent without steve jobs to come up with the next huge thing the matter what the timeframe is? >> i have confidence they have the talent, i am not sure th have the magic, and i cannot give you any more satisfying
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answer than that. i do believe they're going to try. but in my heart, nobody in their heart can know if they have that special something that will carry them over the top on it. melissa: adam, you're fantastic, thank you for coming on. perfect timing. melissa: two coming up on "money." margaret thatcher broke their backs. what is different now in the u.s.? why can't anyone do that? art laffer, former economic advisor, going to join us to answer that question next.
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>> what the article number is saying is he would rather the poor we poor are provided the rich were less rich. that is where yowill never create the wealth. melissa: marraret thatcher, no-nonsense icon passed away this morning. she led the conservative resurgence and crushed the uk trade unions during her reign, but what can we learn from the
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"iron lady"'s rain today? art laffer, great to have you back on the show. this is a question i was wondering this morning. she stood at this moment in time so similar to what is going on in the u.s. where we see the economy, the growth stalled by the union, redistributing wealthand she stopped it by turning around public opinion to see the free market was better. it feels like no one is able to get that message across today. what is different, art? >> if you remember the ads the conservatives ran on in 1979 was this poster that had all these people lined up for unemployment and said labour isn't working. it is such a perfect thing, exactly what we have today, melissa. at the same stage today as when
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she came in as prime minister and we can turn it around. melissa: how? what could anyone who isn't for a socialist type government, what could they say to make the rest of america, who doesn't accept that kind of decision going on, realize the free market would be better? >> rick snyder just got it in michigan, got them to work. mitch daniels got it in indiana. in 2001. but we are moving very much in this direction, just haven't quite been pushed over, but she did it beautifully. she was right and it worked and the prosperity came back to britain. she put them in their place, privatize industry and cut tax rates. she had sound money and led britain for 11 years i think it was in the prosperity carried over to the u.s. without her.
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melissa: wasn't it the policy or was she the right persona at the right time? i don't have in front of me what she said, socialism fails and wn you run out of other po people's money. i am misquoting it, but the sentiment is there. is it wrong, do we not have that person? >> we have that person, that person just hasn't had the opportunity to come forward. it wasn't mitt romney. it clearly is not barack obama. ronald reagan on the republicans, jack kennedy on the democrats, tony blair as a labour party prime minister. all of them are able to do it along with lady thatcher. you will have a democrat or republican coming in to fill the void and do the right thing and get e prosperity back. it is well on its way. it really is. and she was so good on it, she didn't compromise when she knew the compromise would make the policies work.
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plus, a lovely lady. fun to be with, a very normal person. very funny, very normal and she is a humanlike ronald reagan was a human, she was very much so thaand i love her dearly. melissa: art laffer, thank you for coming on tonight, we appreciate your time. up next, why would these hijacked more than 5 tons of nutella? they're about to make bank in the black market. the details in your "spare change" next. you can never have too much "money" or too much nutella.
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hmm. [cell phone beeps] hey! [police whistle blows] [horns honking] woman: hey! [bicycle bell rings] turn here. there. excuse me. uh. uh. [indistinct announcement on p.a. system] so, same time next week? well, of course. announcer: put away a few bucks. feel like a million bucks. for free tips to help you save, go to ♪ feed the pig
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♪ melissa: proving tonight. all right. it's time for some fun with "spare change." a dynamic duo. that as a it right? excellent. firstp, and about all of the four-speed -- forcemeat being fed in all sorts of food across the bottom europeansre up in arms about traces support being found in their famous lose me lasagna at ikea. then us up -- they have now halted sales. i don't know what to say about this. would you think it would be the
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other way around, having lasagna that is sausage or pork product. >> that was my son exactly. melissa: i thought there was a typo. >> that's the other white meat. what is wrong with them? melissa: and extended its religious reasons, but i don't think that is what this is about >> my shocker is that people buy food from ikea. and they walk around it with swedish meatballs. are they loose? melissa: to be honest, i've never met any ball that i was willing to eat. i don't know. [laughter] melissa: the whole thing is kind of gross. speaking of food and keeping up with food, mattel has said -- the telex is such a hot commodity that thieves stole five and a half times. that amounts to $28,000 worth of that chocolate goodness called
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nutella. the rear this part is that it was stolen from a parked trailers. a major nutella cold war going on. >> there is a big market for it. in our house nutella is crack. for our kids are talking about hazelnut, chocolate spread the you can put on top of anything. melissa: i'm going to have it tonight. >> but this group has a problem. they apparently tried to do the same thing by stealing energy drinks, so there is a sugar addiction among this cartel. melissa: they still energy drinks? >> a factory not far from that one. this is their stake. melissa: so buzzed. they had to go without thinking about the fact, how the hell will be unloaded 5 trillion tons. >> nowadays you can basically jack anything. there is an open market for anything, including nutella. melissa: folks up their watching the show the china figure out
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how to and make "money." there is. next up. here on "money," we have been keeping a close eye on any astroid watch. i love it. this one has a different spin. nasa is allegedly working on sending a person to iest ridge. the plan to send a probe to capture a small asteroid and rate in the men. thenhat 2021 astronauts will be sent to explore the restaurant. this plan would cost about $78 million. it must be a good use of "money,"lthough it sounds very complicated. the like this? eleven anything *. i love be ride watch. >> it sounds like this is one of newt gingrich's ideas. >> happening under the obama administration, i might add. that hit russia. they want to investigate a litt
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