tv First Business KICU February 8, 2013 4:00am-4:30am PST
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coughing up profits: how some traders are making money on the flu outbreak. in today's cover story, the chicago auto show revs up. why much of the focus is on trucks this year. plus, romantic getaways. the best placed to jet off to this valentine's day. what to expect at the jewelry store if you are planning to surprise your sweetie. and, restaurants that are shrinking meals while the size of your bill remains the same! first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's friday, february the 8th. i'm angela miles. in today's first look: a small sell-off in the market. stocks and commodities fell yesterday on concerns about the budget battle in europe and profit-taking by some traders. linkedin leap! shares were up
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11% at one point after the close last night. the social media site's profits were well above wall street expectations. 202 million members have signed on, up 39% from a year ago. many are job hunters. coinstar, on the other hand, fell up to 10% on a weak forecast. lance armstrong lawsuit: the disgraced cyclist is being sued for $12 million in prize money from the tour de france. and, despite the new snow and rain, a new report shows severe drought conditions are expanding in key farm states. todd horwitz of the adam mesh group joins us for trader talk this morning. they are calling it "snowmageddon" in the northeast, with the big blanket of snow. will that affect trading volumes today? > > good morning. you know, i don't think so. with today's
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electronic trade, we can trade from anywhere. so you will have people trading from home, they will be trading from their cars stuck in the snow, they will trade from everywhere. the volume has already been so low that i don't think much more can affect it to make it much lower unless it's a holiday. > now that winter is finally here, what do you see in heating oil? > > heating oil made a new high yesterday. listen, if it's going to be cold, there is going to be demand for heating oil, and they're finally going to probably break out and go higher. the market always reacts to what is going on, and right now it is getting cold, it is getting snowy, so, probably heating oil is on its way up. > what is your european trade? with the eu summit happening, is the risk back on? > > you know, the market itself, in levels, is really in consolidation. the euro currency had a big sell-off yesterday, and everybody wants to blame it on what the new policy is. how since the euro currency was up 9%, that it was entitled to a .75% sell-off. i think you want to be looking to short the euro and short europe.
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that is where i would be looking to trade. > todd, good to have you on the show this morning. we have more on europe coming up in the show. > > have a great day. it may be called the chicago auto show, but this year it's become "year of the truck." as our cover story explains, the reason is the rebound that's beginning to happen in the housing market. ram trucks highlighted its eight-speed and 25 miles per gallon on the highway pickup, as well as its truck-based new entry into the commercial van market. why so many brawny vehicles? "the housing market is getting better and sales are directly tied to housing starts." "if housing goes up, the construction guys will need trucks." > > but they won't buy one right away, they've been out of work for a few years. "you're right, but that truck kept aging while they've been out of work." even nissan senses that the
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timing is right for commercial vehicles like the nv 200, built to manuver in congested cities. "the nv goes after the urban, owner-operated businesses. price range? $19,000 and up." ok. vans may not set your pulse racing like jaguar's new f-type convertable, which starts at $69,000, but hopes pinned on both seem to indicate that better times may not be far away. "it's jaguar's first roadster since 1972." > > who's it going to compete with? "porsche. it's priced 25% below a 911." if january is any indication, car and truck sales in the u.s. could be better than last year's numbers, and those were the highest in five years. last year, we spent a lot of time talking about evs - electric vehicles, hybrids and plug-ins. analysts say the buzz is a little less because those
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cars have become a part of the line-up. but fear of being stranded somewhere with no place to plug in is still a concern for consumers. the ntsb is out with its findings about boeing's battery trouble aboard its dreamliner. safety investigators are linking the fire to a short-circuit in a lithium ion battery. the battery caught fire aboard a boeing 787 parked in boston. it's still not clear what sparked the flame, and figuring out could take weeks. investigators are checking into the charge going into the battery as well as the design of the battery. internal emails may expose more about jp morgan's bad home loans. dexia, a belgian-french bank and an investor in jp morgan securities, filed the lawsuit accusing the bank of hiding or adjusting reviews of bad mortgage deals. internal correspondence showed that jp morgan bundled the mortgages into securities and made them appear healthier when the industry was turning out billions of dollars in bad loans ahead of the housing crisis. the case may be used in the federal housing finance agency's lawsuit against banks
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accused of selling questionable mortgages. the irs is aggressively going after identity theives. con artists steal identities in order to get tens of thousands of dollars in tax refunds. following a nationwide investigation, the irs has pinpointed 389 id theft suspects. 109 were arrested. last year, irs investigators prevented $20 billion in potential refund fraud by focusing on the high-risk cities of miami, new york, atlanta, san francisco, chicago and l.a. apple says it will consider a proposal about the future of its stock. the announcement came now that greenlight capital's hedge fund manager david einhorn is suing the tech giant. einhorn wants apple to use some of its $137 billion of cash on hand to prop up the stock price and distribute high-yielding preferred stock to shareholders. einhorn owns a million shares of apple, and his hedge fund is losing money with
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the stock falling from $705 in september to $392 today. hedge fund manager bill ackman has a fresh attack against herbalife. he sent a 40-page series of questions to the vitamin supplier with topics including compliance with california laws, phony retail customers, and earnings disclosure. herbalife had no response. ackman has accused the company of operating a pyramid scheme. analysts say herbalife stock is immune to ackman. it closed at $35.92 thursday. the proposed leveraged deal for dell may be the first in a buyout boom in 2013. this week, michael dell and silver lake, a private-equity firm, unveiled a plan for a $24.4 billion leveraged buy-out. the money would return to shareholders. if shareholders agree, the transaction will be the biggest such deal since the financial crisis began in 2007. analysts say there will be a handful of buyouts of that size in the
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upcoming year, but most will be on a smaller scale. "a lot of that is being driven by the debt markets, which are extremely robust. the debt markets, i would say, are almost hungry for large deals." that was mergermarket's soma biss-was. the lastest sales figures from popular retail chains show consumers were on a bit of a spending spree in january. the ceo of macy's calls the month "outstanding," with the department store's sales numbers nearly 12%. macy's is now raising its earnings outlook. nordstrom, gap and costco all reported close to a 6% rise. holiday clearance signs lured in customers at target, where sales improved by about 3%. in today's look at corporate earnings, we are leading off with sprint. the company lost 243,000 customers in the fourth quarter as competition in the wireless market continues. sprint's ceo said it is not considering making changes to its unlimited data plan or
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current pricing structure. meanwhile, at exelon, the company told investors it's cutting its dividend by 40%. lower energy prices - and disruptions from superstorm sandy - seeped into profits. a couple of holidays are coming up - president's day on the 18th and valentine's day, of course, on the 14th. for some people, those are great reasons to get away. jeanine tornatore of orbitz is here with travel tips. could to have you on the show. let's start with valentine's day. what are some romantic locations and destinations? > > our top destinations include las vegas, which is our number one booked destination; followed by new york; miami; orlando; and new orleans. > what are the prices or packages like to those places? > > they are fairly reasonable. the key is really booking them as a package - combining your airfare and your hotel together. we are seeing airfare prices over the holiday weekend tend to be a little bit higher, but travelers can save a little bit more on the hotel side. in fact, orbitz has a long weekend sale going on through the 17th,
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saving you 15% on hotels. so look for those types of last- minute sales and deals to help you get out there and celebrate the long weekend. > what about presidents' day? i know people in the financial community and people who work for the federal government are looking forward to this long weekend. > > absolutely. in fact, we see with valentine's day leading into the long weekend that a lot of people combine those - celebrate their valentine's day getaway over that long weekend. so, we are seeing that as a popular weekend to get away. now i am here in santa fe, new mexico, today, which isn't one of the most booked destinations for the long weekend, but certainly it is one of the most romantic in the country. and i think what a lot of times people don't think about are some of these smaller markets. looking at these smaller markets, you can oftentimes find great deals, because santa fe, for example, is in the off- season. and you find fewer crowds. > thank you janine. some restaurants are reigning in portion sizes. new healthcare laws will require chains to list calorie counts for menu items. it's pushing some menus to the lighter side. sbarro and
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longhorn steakhouse are two restaurants the new york times says are changing up the menu. the smaller meals won't necessarily save diners any cash, but it's saving companies money on excess food costs. good behavior does not go unnoticed at one restaurant. the owner of an italian resturant in washington state treats children to free dessert if they are well behaved. recently the king family was given ice cream plus a $4 discount because of their courteous kids. still to come, big box stocks. the retailers our traders are eyeing to own. that's later in traders unplugged. but first, the latest country threatening europe's economic stability. a check in overseas is next with bill moller.
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the european debt crisis. remember that phrase? don't think we've heard too much about it lately. well, maybe we should start worrying about it again. but this time, it's not just greece or ireland or portugal that'll be in the headlines. bruce helmer is an award-winning financial advisor and co-founder of the financial consulting firm wealth enhancement group. you have a book out called "real wealth: how to make smart money choices for what matters most to you." france. why should we be worrying about france?
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> > bill, that is a very astute question. in our industry we always use acronyms, so we had to talk about "p.i.g.s.:" portugal, ireland, greece, and spain. old story, old news. germany will get them round up. the problem is going to be france. they have 75% tax rate, and their government is socialist and doesn't want to cut spending. so, that is going to be the next issue with europe. > is this something that again everybody will turn to deep- pockets germany and expect them to figure it out and bail out france? > > probably. germany is strong enough, and it is in germany's best interest to want to see france succeed. it is definitely still a story. it is something we have to watch out for, because europe is a trading partner. we want to sell them stuff, we want them to buy our stuff, we want to go there on vacation. so it matters. but the overall situation, even though france is a concern, i don't think is nearly as bad as it was two or three years ago. > some of the headlines though had been hyping up our worries that we should have about
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europe. does the media get a little bit carried away with worrying about that? > > the media - and we are part of it, you and i are both part of the media, so we are kind of criticizing ourselves - but yeah, media tends to make a bigger story out of bad news and not a big story out of good news. but one of the things about europe that i always said, and i still believe, is that europe will generally follow the u.s. economy. the u.s. economy is by far the biggest economy in the world. so we need europe as a trading partner, we need them to come out of this; but when europe was really struggling, that was not going to crush the u.s. as the u.s. get stronger - and we have been for the last two or three years - that is also going to help europe pull out. > bruce, you are a financial planning expert. what about people who are concerned that maybe they should change some of their holdings because of the worries that they have about europe? > > that is really the great point for a lot of viewers. if somebody is watching this right now, they are thinking, "does that mean i should put my 401k
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plan into cash?" and the answer is no. a well diversified portfolio with stocks and bonds and stocks in a lot of different asset classes, including europe, including asia, still makes sense. just know that there is going to be some volatility. > bruce helmer, thanks so much. > > thanks bill. thank you bill. still ahead: in or out? what's the better retail stock to own, one that's purely online or places where you go to shop? find out next in traders unplugged.
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you know there was a time when people like me couldn't live here. i'll never forget being told i wasn't welcome in this neighborhood. well i own this building now, the fair housing act made a difference for someone like me. so i can choose where i want to live, free from discrimination. glad you could make it, right this way...
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clorox and costco are on the minds of our traders. joining us now, alan knuckman and andrew keene from the floor of cme group. round 1: sick profits. profits are up at clorox as consumers use more bleach and anti- baterial wipes because of the flu outbreak. but is this a healthy stock? > > i don't like it at these levels. i think it has come too far. we are about 50¢ off the all-time highs in clorox. i don't think it is a good value here. looking at this sector, procter & gamble and johnson & johnson, for your band-aids and your boo-boos, they are also at their high, so i don't know. > > write this one down: he is actually bearish a stock, and i am being bullish a stock. a stock that continues to make higher highs makes hires high and then keeps going. there are no sellers that are going to come into the market. we see at walgreen's hitting 52-week highs as well because of the flu symptoms. so people want to protect themselves, and i think
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clorox is a great play. > round 2: costco qaundry. costco is popular with shoppers and investors, but is it a buy in the current economy? > > it has been trading in a sideways range between 106 and 94 for the last six months, so that does target 118. but i think a better play is going after sam's club with wal-mart. wal-mart has more upside potential. > > i like costco. i have a rule: if i can't buy it online, i have to actually go to the retail store, then i like the company. home depot is an example of that. costco, everything that i buy there, i can't buy online for a cheaper price. i can buy anything at wal-mart on amazon prime for a cheaper price. i am looking to get long costco on a pullback. i don't like to buy up here, but 97.5 is a 50-day moving average. > > a january 65 call is deep in the money. it is going to act like a stock. i think it is a way to play it for the longterm with low, low volatility. > which segues to round 3: it's an option. option trading volume in january was extremely high. is that bullish or bearish for
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stocks? > > i don't think it really matters either way. we see some of the volumes going up in particular sectors and the volumes going down in other sectors. the euro dollar has been a little bit lower, but the vix volume has been a lot higher. i don't think it really gives a sentiment, bullish or bearish- > > was it you girls buying insurance because you were worried? is that what was happening? > > who's long? > > looking at the options market, i think people need to remember that you can profit if the market goes up, down, or sideways- > > you're not answering the question. > > -if your positioned properly. so it is a medium-risk way to attack the market. i think more people are coming around as a way to participate, instead of having the volatility that you do with individual stocks. > > option markets are a lot tighter than they have ever been and are great for a retail customer. > now your bonus round question, and we're doing some options speak: are any of the following fake options strategies? > > i don't know this, so alan, i'll let you have a chance. > all right, here we go: a "put" a "call" a "balloon" a "christmas tree"
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phillip streible of rjo futures joins us now for chart talk. good morning, and we are going to get romantic on this show. we are looking at platinum. some people might be getting ready to get engaged. what can they expect in the prices of rings? > > i would look at platinum prices to continue to move to the upside. you have got a serious discount over previous valentine's days, specifically five years ago, 2008, platinum prices were well over $2,000 an ounce. now they have come down quite a bit from that level, but they are starting to move and head higher. one of the big issues is mining output. you have some problems down in south africa. a lot of these mines are too expensive to run, too dangerous, too costly. so they have been shutting down some of those platinum mines, and what it is doing is causing a small supply-demand shock. supply is down quite a bit, and demand is rising as a result of hurricane sandy and a lot of the
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destruction of cars. they have to replace catalytic converters, which contain platinum, in those cars. so, i anticipate platinum prices to continue to move up. > and a quick check on gold. what do you see in the market for that? > > gold had really quite a bit of an action that we have seen recently. gold prices are trapped just below $1,700. this really has to deal with quantitative easing - how long is it going to continue, will the jobs situation improve at a drastic rate where we get down to that 6.5% where the fed would cut off q-e? i don't think it is going to happen anytime soon, so i anticipate that gold prices continue to climb higher. > > have a great weekend. thank you. > thank you. that's a wrap for this week. join us next week to learn about the importance of making lists if you want to succeed in business. from all of us first business, enjoy the weekend!
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