drama on wall street. the stock market falls more than 200 points in a manic monday. is it time to run for cover or the buying opportunity of a lifetime? in today's cover story, as the sequester deadline inches closer, how the military is bracing to take a hit. plus, the ceo of yahoo may be pulling the plug on working from home. what the pros have to say about office connections. and, more reasons why younger generations are shifting away from buying cars. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's tuesday, february 26th. i'm angela miles. in today's first look: the shocking slide in the stockmarket. in the last hour

of trading, a panic sell-off sent the dow spiraling 217 points, ending the sesson below 14,000. the nasdaq dropped 46 and the s&p 500 broke below the critical 1500 mark. money rushed into gold as a safe haven and oil drifted slighly lower. the reasons for the dramatic market moves are coming up in just a moment. there will be capitol questions for fed chair ben bernanke today. the federal reserve chairman takes a seat before the senate banking committee for two days to field questions about the economy. and storm watch 2013: a nasty blizzard with powerful wind pounded the great plains. wild tornadoes could next spawn across southern states. fed ex is among the companies reporting delays in stormy states. larry levin of trading advantage is here to help us navigate the trading day. it could be a critical day here. good to have you on the show larry. what caused that big move

yesterday in the market in the late trading session? > > to me it was about the sequester, everybody knew the politicians were going to come on financial tv and kind of start sparring back and forth, and it certainly doesn't look like we are getting closer to a deal, and we are getting closer and closer, and the market finally had enough and started selling off. > how concerned should we be about that massive move in the vix? it jumped about 28% yesterday. > > i think you should be quite a bit concerned. it was up, like you said, 25 or 30% yesterday. if it is up 25 or 30% again today, it is not because the market is going up, it is because it is going down and we are hitting new lows. > ben bernanke, the fed chair, will be on capitol hill today. what do you make of that? will it make a difference to the market? > > you know, to me, it can only bring it down. it's not like he has some miraculous thing he is going to say that's going to make everybody feel better. so, i think he is just going to add more fuel to the fire, and that is not going to be good for the market. > some people were saying that the market fell apart yesterday because of the italian election. do you buy into that? > > there is some of that,

right? we started dropping a little bit when that was going on, as far as discussion. but to me, really the key thing was everybody knowing that the politicians are coming out, and everybody expected them not to say anything good, and that is exactly what happened. > overall, are you bullish or bearish on this market, larry? > > i am bearish until they get the sequester thing out of the way, or even kick the can down the road. > thank you larry, have a good trading day. > > thank you. the president travels to the tidewater region of virgina today, an area where nearly half of its economic output depends on the federal presence in shipyards and other facilities. our cover story takes a look at how some are bracing for the worst should automatic cuts known as the sequester begin friday. looming cutbacks and budgetary uncertainty led the navy to warn workers in virgina that it may cancel a $287 million maintence contract on 11 vessals later this year. the virgina ship repair association says as many as 10,000 workers would be furloughed or laid-off directly, and 30,000 more indirectly throughout the region's ship repair industry. "it would be a disaster and probably irreversable because those workers would go elsewhere and we'd lose that talent pool."

and for every two people in the area facing cutbacks, crow says another job, in retail or a restaurant, for example, would be affected. "retail merchants would lose customers who would have less money in their pocket." in chicago, acting treasury secretary neal wolin said ongoing political stalemate is taking its toll beyond communities that count on federal contracts. "washington's been going from one manufactured crisis to the next, and it has damaged consumer confidence and affected business decisions. and i'm sure everyone here will agree, these political standoffs must come to an end." so far, the countdown continues. "companies are preparing layoff notices. families are preparing to cut back on expenses. the longer these cuts are in place,

the bigger the impact will become." "instead of using our military men and women as campaign props, the president should sit down with harry reid and address our problem." another aspect of the sequester, federal loan guarantees for small businesses would also be afffected, cut by more than $900 million. the seneate finance committee is expected to vote up or down today on the nomination of jack lew as the next treasury secretary. while in ofice, lew was one of the creators of the budget deal that tied in the sequester if the obama administartion and the congress could not strike a new deal. following the confirmation by the committee, lew could next need approval from the full senate. if confirmed, jack lew replaces tim geithner. italy's elections for prime minister contributed to market moves in the u.s. the stock market was shaken by

yesterday's news from italy that italian democratic leader pier luigi bersani shot ahead in exit polls. bersani's party opposes austerity measures, which brought fear back into the minds of u.s. investors, many concerned that italy's current debt load poses a threat to the eurozone and global economy. bersani is the secretary of the democratic party of italy. italy's outgoing prime minister, mario monti, accounted for just around 10% of the vote. "bp was blinded by greed" and the castrophe was preventable. that's what attorneys figthing against the company had to say opening their remarks in the bp trial. bp attorneys contend multiple parties are responsible. the oil giant is on trial for thde explosion in the gulf of mexico back on april of 2010. 11 workers were killed and oil gushed into into the ocean for 3 months. behind the scenes, the department of jusitice reportedly has a $16- billion deal on the table. $6 billion would settle the clean water act violations, $9 cover damages to the gulf coast, and $1 bllion for future environmental issues.

kfc is issuing new standards to monitor its chicken suppliers in china. the fast food chain is addressing a recent scandal in china that revealed an excessive use of antibiotics to fatten chicken. kfc will stop business with 1,000 small suppliers in an effort to rebuild its brand in the eastern nation. sales fell nearly 25% following the scandal. kfc is the largest fast food chain in china. ikea is taking meatballs off the menu. the swedish retailer is the latest victim in the growing crisis of horse meat showing up in beef products in europe. the company has halted sales of its famous frozen meatballs in 14 european countries because tests confirmed the presence of horse dna. about a dozen different countries have now been affected by the crisis that started a month ago in ireland. tech convention mobile world congress continues today in barcelona. the convention proves that there is no lack of innovation or competition in the market right now.

hp has announced its new "slate 7" tablet. the device, which hits the market in april, is priced at a modest $169, below the $200-and-above range for tablets from amazon and apple. meanwhile, mastercard and visa are locked in a race to develop "e-payments." visa rolled out a service that allows samsung smartphone users to pay by smartphone, and mastercard has launched a new digital wallet called masterpass. the latest place to use wi-fi? you car. general motors is teaming up with at&t to install 4g connectivity in most of its vehicles by 2014. that would include chevrolet, gmc and cadillac cars and trucks. in a similar move, ford has found harmony with streaming music service spotify to bring its service to more than one million ford vehicles. it is spotify's first collaboration with a car company. the head of yahoo.com believes too many of the internet firm's employees work remotely, either from home or anywhere but the office. so ceo marissa mayer has ruled out telecommuting for

yahoo employees. in a memo, mayer called it "critical" to the improvement of communication and collaboration for employees to work side-by- side. employment consultant john challenger sees the benefits. "when you have everybody coming to the office, they share ideas, and that sense of community is easier to create." challenger says yahoo's decision is ahead of the curve. most employers reluctant to allow telecomuting fear losing control of employees on the job. the latest tool helping job seekers is a smartphone, and that shift is leaving some employers behind. according to usa today, almost a third of job seekers now use their mobile devices to look and apply for a job. that's up from just 17% in 2011. but, only 2% of fortune 500 companies make job applications mobile-friendly. on now to a check of the latest corporate earnings. superstorm sandy created higher demand for lowes, helping the retailer's 2012 results. while sales were down in the 4th quarter, net earnings were up, following increased demand from the

impact of superstorm sandy. the company raised its outlook for 2013. shares fell about 4%, closing at 35 dollars. meanwhile, car rental company hertz topped wall street's expectations. hertz recently bought out dollar thrifty, which helped push revenues 15% higher. the stock moved up 1% yesterday, closing at 19 dollars. the possiblity of a buyout is giving barnes and noble stock a boost. shares of bks shot up more than 11% ysterday on word the bookseller's founder, who also happens to the largest shareholder, is considering purchasing the stores. however, his proposal does not include the nook division, which is struggling aginst kindle and ipad.

still to come, what you need to know about the upfront costs of building a business. that's later. but first, what's steering millenials away from buying cars? find out next with bill moller.

what's the matter with kids these days? have you seen the reports, the stats? the car, that universal symbol of adulthood, is no longer the right of passage, even as car- makers try their darndest to get generation yers to swoon again over steel and chrome. let's talk with howard tullman. he is inc magazine columnist and the president & ceo of tribeca flashpoint media arts academy.

and you say it has nothing to do, necessarily, directly with the gen y crowd. > > well, look, if you are living in your parents' basement, if you don't have a job, if you are worried about repaying student loans, i don't think you are lining up for that prius right away. so that's one of the issues. but honestly, there are four or five different things that are really driving this change. > one thing is that the emotional bond really isn't there that once had been there. you kind of defined yourself by this car you drove. > > it was your identity, it was your patriotic duty, it was part, certainly, of becoming 16 - you were lined up the night before ready to go and get your license. today, the average age is about 23, and 25% of the gen y'ers don't even have licenses. > one way i stayed connected to cars... at one point... was i worked on the engine, so there was an emotional connection to the vehicle. > > one of the big hits is going to be, not only aren't we going to be able to repair these cars - and god forbid you open the hood, you'll probably breach the warranty - but, if you

looked inside, there is nothing you would recognize anyway. it is all computerized. and this is going to kill not just our attachment, mechanically, but small garages, grease monkeys, all of that is going away. > you need an electrical engineering degree to make it work now. > > you need to make a major, major investment in technology. > how about this idea of the environmental concerns, that the young crowd is very much into ecology and cars are not necessarily- even though they are getting greener, they are not really seen as green machines. > > i think that is right. i think that biking and walking and all kinds of alternative forms of transportation- > including public transportation. > > -play into that. and public transportation for sure is another big one. so, you are right. kids want to rent cars. they are users today, they are not owners. and that is a big, big shift in a lot of different aspects of what is going on today. > and companies like igo and zipcar are taking advantage of that. > > absolutely. i love zipcar. the motto is, "the car for people who don't want one." > howard tullman from tribeca

flashpoint media arts academy. thanks so much. > > glad to be here. thank you bill. still ahead, the truth behind the fees you pay to start up your own business.

one of the first steps to starting up a company is to file to become a corporation or a limited liablity company, an llc. but, depending on which state you live in, fees can vary greatly. elliott richardson, ceo of the small business advocacy council, is here to break down the numbers with us. good to have you on set.

> > thank you so much for having me. i appreciate it. > just how wide is the range on these fees going state-by-state? > > it is incredibly wide. and it also depends on whether you are starting up as a corporation or an llc. it can range anywhere from $500 to as little as $150 to start an llc or to start a corporation, and it really depends on where you are at to determine the fees, not only for forming the corporation, but operating the llc or the corporate structure. > if it is less expensive to do a corporation, say, than to do an llc, is it worth it? should somebody be tempted to go that route? > > it absolutely depends on your business. but so many times, especially in our state of illinois, people will choose to form as a subchapter s corporation instead of an llc because of the fees. but, llcs have so much more flexibility. they are such a better choice for small businesses. > why are they better?

> > if you wanted to have an investor come in, and you have a subchapter s, it is going to be very difficult to have a new investor come and infuse money into your company. also, llcs can provide different membership interests for the cook and the person who is funding the restaurant. not so much for subchapter s's. you can't be tempted by saving a couple hundred dollars, when in the long run you may have to dissolve that subchapter s, reform an llc, and it is going to wind up costing you a remarkable amount of money to do all that. > if someone is starting up a web-based business, they could file in any state and take advantage of a lower fee. is that worth it? > > sounds great in theory, but in practice, not so much. to file as a corporation or an llc, you are really going to want to get an attorney involved most of the time. you don't want to have to go to another state and hire those attorneys. you don't want to have to try to comply with other states' requirements. it is going to be much easier to

do that in your home state. so, just for the filing fees, absolutely not. now, for the tax consequences, you know a lot of folks become llcs or corporations in nevada- > delaware. > > delaware. exactly. and that is for tax purposes, and that is a completely different ballgame, and that is something your account should tell you about. > thanks for coming on the show. > > it is my pleasure! thank you for having me! businesses are sending more employees on the road again. the global business travel

time now for a look at the charts with matt shapiro, president of mws capital. good morning, and i know as a money manager, you must be getting questions from your clients. what are you hearing, and what are you telling them, matt? > > well, there are a lot of investors out there that are asking, with the s&p near all- time highs and the dow at 14,000, where do we go from here? and it speaks to what has

happened over the last decade, where investors have been conditioned not to believe in the fundamentals really of the market, and the fundamentals of investing, because i do see that we are going to probably have some turbulence this week before the sequester. but at the end of the day, i think investors are actually running out of time to get into the market, because there has been a sea change into stocks. > let's talk about that. so you see the fundamentals as strong in this market. what, specifically, are you watching? > > well, what i am watching, for each individual stock, is the value of it as a business. i think over the last decade, again, investors have really forgotten that they are investing in businesses that are actually very profitable, pay dividends, and are successful. there has been so much about market volatility and exposure to all sorts of various allocations and fancy funds, and of course it is not popular to be a bull. you get much more play on the air being negative about the market unfortunately. > good to have you on the show with those thoughts. that is

matt shapiro, president of mws capital. that's it for now. coming up tomorrow, it's a question you may have struggled with - is trip insurance a rip-off or worth it? what you need to know will be on wednesday's show. from all of us at first business, have a terrific tuesday.