sequester watch is on. so why isn't wall street worried? in today's cover story, from airline passengers to homeowners, how the massive budget cuts could affect mainstreet. fantasy movies top the marquee at the box office this week. will it lead to animated ticket sales? plus, why a new toy for adults could be a sign that the economy is rolling along. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's thursday, feburary 28th. i'm angela miles. in today's first look: it's the final countdown. just hours are left for lawmakers to put the breaks on massive budget cuts set to take effect at midnight. wall street is

shaking it off. stocks soared yesterday, with the dow once again topping 14,000. the s&p is reclaiming 1,500. gold lost $18, and oil inched up. it could be a rough day for jc penny and groupon following earnings. after the close, jcp shares fell 10%. the retailer racked up more losses. and groupon fell 29% in heavy trading because of poor earnings. and the senate voted to confirm jack lew as the new treasury secretary. the final vote was 71-26. we are ready for liftoff on this thursday with mark sebastian to take a look at trading. he is with option pit mentoring. good morning to you. should investors worry today about the sequester? > > i don't think so. i really don't think so. if you watch the political channels, they are talking about it. if you walk around the floor, nobody is really talking about it in terms of financial markets. and

nobody seems to really care. and if the financial markets were really worried about this thing, we would have seen them selling off, as opposed to yesterday, where we had this massive rally. > but there is big news for the financial markets to follow, and that is cap spending. businesses are spending again in a big way. what does that mean to you? > > i think that is really huge. that could really lead to the next boom. two numbers i am going to be really watching for the rest of the week, chicago p.m.i. this morning, and, i.s.m. on friday. i think if those come in good, you will see the dow break its all-time high on thursday, if not friday. > we are at a five-year high with the dow. you have been talking up stocks. are you still in the bull camp? > > absolutely. i think you have to be in the bull camp until we have proven that you are not in the bull camp. we have this terrible news out of italy early in the week, and we are now higher than we were before that news came out. i think you look at these dips as a chance to possibly get in. > groupon's earnings came in after the close. the story was not good. what would you do

with this stock today? > > i certainly would not buy it. this has been a continuously bad story. don't be surprised if it tests those all- time lows. everything about this company says going to, possibly, the pink sheets. > good to have you on the show. that is mark sebastian of option pit mentoring. > > thank you. in our cover story, the faa and others warn that flights through some of the nation's busiest airports could be delayed up to an hour-and-a-half due to 10% staffing cutbacks as a result of the sequester, and as many as a hundred control towers in smaller cities may be closed. and blistering criticism toward congress from the head of the nation's air traffic controllers. the national air traffic controllers' association says nationwide, the sequester would cut the number of takeoffs and landings managed by fewer controllers and "significantly affect" airports in new york, atlanta, dallas, houston, los angeles and chicago. along with regional airports such as rogers, arkansas, utilized by

walmart, kraft, tyson and their vendors; and victoria, texas, used heavily by caterpillar and shell. natca president paul rinaldi criticized congress for "compromising the safety and efficiency of the nation's airspace." getting to the gate will take longer, too. at more than 450 airports around the country where transportation security officers screen nearly two million passengers a day, the head of the tsa warned that delays would be inevitable. "if it does go into effect, then the longer it goes, the greater potential impact it has for us." the tsa has had a hiring freeze for federal air marshalls for nearly a year-and-a-half. sequestration could expand that further. "we would look at a hiring freezse for the tsos, security officers and then cutting back on overtime." in washington, president obama has called a meeting with top

congressional leaders for friday, the same day automatic spending cuts begin. "he hopes to have a constructive discussion to prevent sequestration." the cuts would be widespread. according to the white house, the sequester would mean 2100 fewer food inspectors, 2700 schools losing federal funding, 30,000 teacher layoffs, and more. some think it could even affect the fragile housing recovery. however, some argue that the effects of sequestration may not be as dire as the white house and others predict. air traffic controller furloughs need 30 days notice before going into effect, and the conservative nonprofit heritage foundation says educational reforms would empower states and parents. federal reserve chairman ben bernanke continues to lift the mood on wall street. in day two of his testimony, he told a congressional committee the fed intends to maintain its policy of buying bonds to keep interst rates low, similar to what he told senators tuesday. while on the hill, he also noted the uptick in the overall economy and in jobs. "consistent with the moderate pace of economic growth, conditions in the labor market have been improving gradually. since july, nonfarm payroll employment has increased by

175,000 jobs per month on average, and the unemployment rate declined 0.3% to 7.9% over the same period. bernanke adds that it's likely to take 3 years for the unemployment rate to fall below 6%. rising fear and uncertainty in the stock market this week is driving up activity in the cboe voltatility index, better known as the vix. the vix set a record with the most options contracts traded in a single day, nearly 1.4 million, as the index made major gains and losses. vix futures also hit record volumes this month. chicago board options trader dan deming of stutland equities offers this explanation for the busier-than-normal week on the trading floor. "there appears to be some money out there waiting to jump into the volatility space to kind of protect against the possibility of a downside move. and we saw some of that initiation over the past couple of days, when the market started to break some key technical levels." one of those key technical levels was the s&p 500 breaking below 1,500.

the election in italy played a role in rattling the stock and commodity markets this week. for now it appears the anti- austerity party appears to be in control and the italian people have elected pier luigi bersani to become the premier. that's causing concern for the eurozone, because he is against bailout money from germany that requires severe budget cuts and tax increases. "for europe it just means a lot of uncertainty and instability. so far the markets are taking it pretty well. we'll see how long it lasts or if we'll see another flare-up of the eurozone crisis." that's jack ewing of the international herald tribune. bersani is said to be still trying to form a government. president obama's pick to head the securities and exchange commission is catching flack from congress. in january, the president named mary jo white as his pick for the job. now, the new york times reports, senate banking committee members are asking white to answer detailed questions regarding her past experience. lawmakers are concerned due to white's time

spent representing wall street as a defense attorney. white responded, stating she has an established track record and a reputation of being tough but fair. she will attend a senate confirmation hearing on march 11th. boeing is running lab tests on lithiom-ion batteries for its 787 jets, grounded since january. but the faa wants to see the results of those tests before deciding whether to allow test flights. some published reports indicated that federal regulators were close to allowing those flights, but that was refuted by the faa. the ceo of apple is still avoiding money talks. yesterday, apple shareholders gathered for the tech giant's annual meeting. ceo tim cook would only reiterate that the board is holding "active talks" on the massive amount of cash - $137 billion - on apple's balance sheet. the company is under pressure from hedge fund manager david einhorn to return some of the cash to investors. target is the latest retailer blaming end-of-year uncertainty

over the fiscal cliff on weak sales numbers. target's first- quarter and full-year profits fell short. retailers whipped consumers into a black friday frenzy. target, similar to other retailers, experienced a lull after that into christmas. tj maxx also fell shy of consensus, but plans to increase its stock buy-back and increased its dividend. dollar tree guidance was below expectations, but fourth- quarter profits were solid. some hostess bakeries are on the auction block today. meanwhile, wonder bread and several other hostess breads will soon have new owners. flowers foods made a bid of $360 million for wonder bread, nature's pride and three other brands; and so far, there have been no competing bids. together, hostess says those brands generated just under a billion dollars in sales last year. the deadline for bids on hostess snack cakes division, maker of twinkies and ding- dongs, isn't until mid-march. flowers foods stock traded higher on the news, ending the day at 28 dollars. in the latest round-up of horse meat headlines, burger king and mcdonald's reportedly are ordering meat suppliers in europe to test for horse dna in hamburger. a spokeswoman for

mcdonald's says there's no indicattion there's an issue. ikea, however, plans to stop seeling wiener sausages after tests confirmed a few traces of horse meat. ikea already removed its meatballs from stores. anheuser busch is accused of watering down its brew. a class action lawsuit filed accuses the beer company of watering down and mislabeling some of its products. ten products are suspected, including budweiser and michelob brands. an attorney in the case says the cost-cutting measure also cuts the alcohol content from 8 to 3 percent. anheuser busch says the lawsuits are "groundless." a billionaire from australia is launching blueprints of a replica of the titanic. the original titanc sank april 15th, 1912. only 700 of the 2200 passengers survived. titanic 2, will have state-of- the-art lifeboats and, due to global warming, the ship's builder, clive palmer, says less chance of hitting an iceberg.

still to come, layoffs point to trouble in fantasy land for dreamworks. that's later in movies and money. but first, why travelers are trading in four wheels for two. that's next.

the ceo of oracle just bought a hawaiian airline to go along with his hawaiian island. according to the wall street journal, larry ellison just picked up "island air." terms of the deal remain under wraps. last june, ellison purchased 98% of lanai island for around $600 million. ellison is the 6th richest person in the world and is reportedly testing electric cars and converting sea water into fresh water on the island. meanwhile, in southern california, a real estate developer is "living the dream." when the real estate market tanked, the developer left the industry and has been happily coasting along since. ky sisson takes us to costa mesa. a scooter - made for adults.

"this is a lot more fun than being in the real estate development business." bentely kurr of irvine, california, decided to leave his full-time job in real estate development during the recession and take on his vision of what is now the "current coaster," which is turning heads - and making sales. "people are buying it in this down economy. we are getting all kinds of positive feedback from all different demographic segments." and the bicycle industry is poping, totaling $6 billion in 2011. also in that year, sales for adult-sized bikes hit 11 million units, which is 70% of the market according to the national bicycle dealers' association. these numbers were reason for kerr to believe his product could be marketable. will skeeters is the manager at two wheels one world, a local bike shop in costa mesa, california, and says that the current coaster is rolling off

the shelves and giving customers that extra smile. "it brings them back to their childhood. typically a scooter was for a kid, and now an adult can ride a scooter and have the same enjoyment." "my first impression was it caught my eye - colorful, looks like fun. kept on walking around the store and came back to it a second time to take a closer look, and that is when we discovered it was a scooter." kerr estimates that he has invested more than $30,000 and anticipates going as long as two years before seeing a profit. while wanting to manufactor the current coaster in the u.s., quotes were double those from china, where 99% of u.s.-sold bicycles are made. > >after spending a considerable amount of time doing market research on the current coaster, kerr has some advice for other entrepreneurs as they venture into making their products thrive. "i think you gotta keep the dream. you gotta really remember what your vision is and be willing to adjust your vision as you learn more about your market, because it may not be what you thought in the first place." reporting for first business news, i'm ky sisson. for more information on the current coaster, check out: www.ridecurrent.com. coming up next, movies and

money. why one film studio should be afraid at the box office, very afraid.

the box office will be filled with fantasies for the next couple of weeks. erik childress, our movie guy, is here to explain that. good to have you back. > > thank you. > first off, "jack the giant slayer." this is a huge fantasy film. what do you expect? > > i expect warner brothers is

going to be sweating a little this weekend. > why so? > > one, they are not having a very good year, and now they have this gigantic fantasy film that's budgeted at about $190 million. it is one week removed, next week we are going to have "oz, the great and powerful" coming out, and that is going to be a monster for disney. so whatever "jack the giant slayer" is going to make this weekend, which i don't think is going to be that much, it is probably going to lose its audience by half next weekend, and they are going to have a lot to make up - they need about a half a billion dollars, nearly - to break even on this venture. > what is going on here with animation, because we have some news out this week that dreamworks is taking an $87- million write-down and laying off people. is the animation world just not going well? > > i think that just dreamworks' particular film, "rise of the guardians." > it's dreamworks-specific. > > yeah. we talked a few weeks ago when dreamworks was talking about restructuring its animation division. "rise of the guardians" was a big disappointment for them last november. it only did about $100 million here. it did a little better overseas, but not

enough to keep people's jobs, apparently. > ready to take on "jack the giant slayer," we have "the last exorcism part 2"- oh, you laugh. > > obviously not the last, because it is part 2. > this is true. > > yes. > good prospects for this film? > > well, the first movie was kind of a surprise, a big hit for lionsgate. it did a $21- million opening. i don't think this one is going to do as well. it is not being screened for critics. i think it is going to do ok this weekend. > which you always tell us is a bad sign when they don't screen ahead. > > that's right. > all right, "21 and over" and "phantom." are either one of those any good? > > i have seen "phantom," which is not very good. "21 and over," "project x" last year also opened at $20 million. same people who made this one. it is probably going to do in the teens, so to speak. i think "slayer," "last exorcism," and "21 and over" will be your 1, 2, 3 this weekend. > a lot relying on "jack." > > yes. > all right, moving on to what happened last weekend at the box office: "identity thief" coming in at number one. people are loving melissa... > > reclaiming it. > right, reclaims. "snitch," "escape from planet earth," "safe haven," and "a good day to die hard," bruce willis, at number 5. > > yeah. "identity thief" is going to be the first $100- million grosser by this weekend. so universal is having a very good year. "die hard,"

surprisingly, is going to be the lowest-grossing film in the franchise domestically. it is not going to make $100 million. it is probably not even going to make $80 million. but it is doing pretty well overseas, so it is going to come up at least even for fox, so they are ok with that. > and a quick question about the oscars, will there be any kind of box office bounce there? i know we are a week out here. > > not so much. usually the box office bounce comes with the best picture territory, and "argo," is actually on dvd already, so people can rent that one and buy it, and they should, because it is very good- > it's worth a rent. > > and "silver linings playbook" - this is a time when a lot of studios will announce their dvd releases. now they are like, "the oscars are over, we lost, so here is the dvd." > always better the second time around. > > yes. > good to have you on the show. thanks a lot erik. > > thank you. coming up, there's chatter coach could be a takeover target. a look at the chart is next.

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some people are clutching to the idea that coach could be in for a takeover. matt cavanaugh joins us now with a closer look at the stock. what do you think, is there a takeover deal brewing here, or is this just talk? > > i think it is tough to tell really. if you were to look at it right at first glance on paper, you would say, "who exactly does coach fit?" but, that being said, this is a stock that has really underperformed the overall market. they have had some trouble here in the united states. their same-store sales are a little bit soft. but, there is an emerging theme of mergers and acquisitions. you look at the company on paper, and just on paper it looks cheap. the money is cheap. so, maybe there is somebody out there that says, "hey, we can take this brand, we can expand their european presence, we can grow it, it is a good name brand, and there's not a lot of good name brands that are on sale right now." so maybe there is a possibility. not a lot of people at first glance, but this is a stock that has been beaten pretty good, and relative to the overall market it is

fairly cheap. > oh yes, it has tumbled. is this a stock that you would buy? > > i think it is. just from the theme of maybe playing on a emerging american consumer again, if we really are coming out of this, and also i don't think there's a ton of downside here. it pays a little bit of a dividend. and like i said, mergers and acquisitions are in vogue all of a sudden, so maybe somebody will come and do a little bottom fishing. > we will keep our eyes on it. thanks matt. > > thank you. that's a wrap for now. coming up tomorrow, traders unplugged takes on a "copper tone:" china now has enough copper to wrap around the world. the guys debate the best metals to own. from all of us at first business, thank you for watching.