it's the bulls versus the bulls. if you thought the market had hit its stride, just wait till you hear our traders. in today's cover story, is the affordable care act slowing the pulse of one industry? plus, suit up. how investors are looking to lawsuits for a moneymaking opportunity. and, why the sequester budget cuts could kill the buzz of your summer vacation. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's wednesday, may 8th. i'm angela miles. in today's first look: the runaway record rally. the dow did it! yestersday's session ended with the blu above 15,000. the nasdaq gained 4 points, and the s&p shattered another record with a new closing high. the s&p is now in bull market territory, up roughly 20% since november lows. in earnings after hours, disney

was a hit with investors after reporting earnings and revenue that topped expectations. the mouse house noted strength in its theme parms and film studios. and jc penney had a sales fail. sales dropped 16.6% in the first quarter. larry shover of sfg alternatives joins us now to talk about this mack truck of a market. good morning to you. are there any signs of a slowdown here? - well, it seems like no. everybody is tired, it seems like the stock market is tired, everybody is looking for that catalyst of why we should fall, why we should crash, and nobody is seeing it. so i think we are going to continue to grind higher. - so for people who are not fully invested, what are some stocks that are poised to pop? - i think you need to look at the stocks that didn't do well the past three or four months, and that would be financials

and materials. a lot of those stocks really did not do well, especially when you compare them to some of the household names, consumer discretionary stocks. so, banks, insurance companies, and even some materials stocks are probably really good stocks to buy, if we continue to grind higher. - are traders positioning at all, larry, in stocks such as amazon and ebay just in case something happens with this online tax and consumers go out and spend like crazy ahead of having to pay taxes? - you know, amazingly they are not, and i think it is because the market is building in that the house will never pass this measure. it did pass quite easily through the senate, but getting through the house would be a whole different story. so, surprisingly, it really has not affected ebay or some of the other stocks that would get hit hard with this. - that is interesting, because the market can be very wise larry. - yes. - thank you for your time today. have a good trading day. - you're welcome. the senate judiciary committee is the group that may illustrate

just how hard it will be to pass immigration reform. on thursday, that committee will begin a weeks-long review of the new legislation proposed by the "gang of eight" senators. that bi-partisan proposal is coming under fire from republican critics. during the review period, any number of amendments could be offered that might alter several aspects of the legislation. microsoft admits making a mistake with windows 8. after a rocky launch that included consumer compaints, the company says a fix is on the way. a change to "key aspects" of the operating system will be available this year. analysts are comparing this about-face to coca-cola's botched launch of new coke back in 1985. but independent tech analyst michael krigsman says we shouldn't jump to any conclusions about the health of microsoft overall. "don't forget, in a company the size of microsoft that has so many products, so many people, it's very hard to take one piece of the company and then extrapolate out and say the entire company is doing well or the entire company is not doing

well. it's just more complicated than that." microsoft's launch last october of windows 8 was seen as the tech giant's attempt to compete with apple. in our cover story, battles over the affordable care act still being fought. siemens heathcare, a manufacturer of medical equipment, wants to repeal the excise tax it pays on every machine it sells. the company says healthcare reform is costing it money for research and development. under obamacare, siemens and every other manufacturer of medical equipment such as mri machines has had to pay a 2.3% excise tax on each one sold. collectively, it's totaled more than $450 million since january first - money, the companies say, that cuts into their budgets for research and development. "we see this as a challenge to our business, impacting our ability to invest in r&d dollars." the medical technology industry

says it's also a jobs issue - nearly two million people work in the medical technology industry. although most analysts say it's more about how much of what's made goes to the portfolios of siemens shareholders and how much is reinvested in r&d? "they're trying to return the maximum profit to their shareholders. that's what their job is, right?" in 2011, siemens healthcare reported overall revenue of $16.3 billion. it spend $1.56 billion in r&d. "over the last year, these companies have gained 20% in stock price. the market has determined that this tax won't affect them much, and that's because of how we pay into our healthcare system." "this basically gets passed on to consumers. and the way we'll see it is our premiums are going to rise." right now, the house and senate are exploring alternatives that may reverse the medical device tax. meanwhile, siemens released a survey that found a majority of americans want more diagnostic

testing, even if they have to pay out of pocket for the test. it would have been almost unthinkable just a short time ago - foxconn moving beyond apple. the chinese manufacturer of iphones relies on apple for 40% of its revenue. but bloomberg reports that the company is seeing a decline in apple's "aura." foxconn will focus on developing its own products, such as tvs, instead of just manufacturing products for others. foxconn has been a target of criticism for harsh working conditions and low wages at its plants. devastation continues in bangladesh. the death toll following a recent collapse of a garment factory has risen to more than 700 people. bangladesh generates revenues of about $20 billion for the

garment industry, while average worker wages near just 38 dollars a month. retail analyst jim dion says it's another example in the chase for cheap labor that begins here in the u.s. "we can't afford to manufacture the low-end products in the united states, and so every year our workers are earning less and less money and really being forced to buy cheaper and cheaper product. and there's no happy ending to that picture." dion says it's part of the labor cycle that has moved from china to india to vietnam and will likely head to parts of africa next, as bangladeshi workers protest following the massive disaster. general motors is celebrating approval from the chinese government to build a cadillac plant. the u.s. automaker wants to key in on the fast-growing luxury car market in china. currently, audi and bmw dominate the market. gm intends to spend $1.8 billion building a factory that will make caddies in the country. it also allows

the car company to avoid paying large import taxes. in earnings news, profits at london based hsbc doubled to $8.4 billion. cost-cutting, selling of assets and a decline in bad debts led to the better- than-expected results. hsbc's ceo tells reporters challenges are still ahead. the bank will give investors a progress update next week. closer to home, protesters are at the ready for today's bank of america shareholder meeting. police blocked off streets a day early as protestors began to arrive in charlotte, north carolina, near the bank's headquarters. they are demonstrating over foreclosures and the banks' financing of the coal industry. bank ceo brian moynihan will be speaking with sharehoulders about mortgage lawsuits as well as the future of the financial firm. bank of

america shares are up around 7% this week. the debate over the keystone xl pipeline is not over. bloomberg reports brigham mccown, former pipeline safety regulator, calls this "the decade of pipelines." mccown says the debate will continue, and more u.s. companies will likely support the plan. the government is still undecided on the deveopment of the keystone xl, which would transport oil from canada to the gulf of mexico. enviormentalists argue the pipeline could make climate conditions worse. more americans may notice the effects of sequestration budget cuts when they go on vacation this summer. from north carolina to hawaii, national parks are feeling the squeeze. that translates into longer lines, locked bathrooms and fewer - or no - tours available. hertz is on the move. the car rental company will take its headquarters from new jersey to florida. its new home in lee

county has offered $19 million in economic stimulus. 200 new jobs will be added. hertz is also toying with the idea of leasing cars, including luxury automobiles. wine prices are rising with a vengeance. after sampling 5,000 establishments, restaurant sciences found the price of a bottle or glass of vino rose just under 2% at casual dinning venues, 5% at high-end restraunts, and 8% at family- affordable eateries. the study found prices are rising as consumers venture into different brands, wholesale costs increase and restaurant owners charge more money. meanwhile, coca-cola is making a juicy venture into florida. the company will pour $2 billion and plant 5 million trees into florida orange groves. coca- cola owns minute maid and simply juice brands. it will dramatically boost citrus production in the sunshine state, which fell after the housing crisis.

a new peek at cities around the world with the most millionaires has a surprising finding. wealthinsight ranks tokyo as the city with the most millionaires, topping new york. the survey says the reason why new york is number two is because many of the wealthy choose to live outside the city limits. also on the list, london, paris, and frankfurt. still to come, bullish behavior: what records are ahead for the market? that's later. but first, why lawsuits could be the next hot investment. bill moller explains, next.

imagine this. you want to sue a company for, say, harassment, but you don't have the financial reserves to go after the big, bad, wealthy company, so a 3rd- party private investor who has no relationship to either side steps up to underwrite your lawsuit, with the condition that they get some of the winnings, provided there are any. well, it's now starting to happen, and it raises all kinds of questions. john riccione is an attorney at a 120-year-old law firm, and john, i have never heard of this. - litigation is expensive, bill, and there are new, creative ways being developed to figure out how to pay for it. - how common is this now? - it's creeping into our system, the american system. it

started over in england, and firms are springing up, large investment houses, some spinning off from banks, and collecting money and gathering funds in order to foot the bill for litigation. - so these private investors, these third-party investors, typically are investment houses. - yes, correct. - such as? names? - like hedge funds. credit suisse has spun off a division of a fund, to fund litigation. - and what kinds of cases, what kinds of lawsuits are they looking at? - they run the gamut. they could be class-action lawsuits on behalf of employees, on behalf of consumers. they can be ip, intellectual property-type, lawsuits: a product that has been stolen or intellectual property that has been taken and used. they really span the gamut. - what about the question of conflict of interest? - that is a problem. a number of american bar associations are looking into those issues, because, as a lawyer, you are sworn under oath to protect your client's confidences and to devote your full-time energy to your own client. and if you

have another third party in that mix who's funding the litigation, and that person, or fund, in this case, has a different idea on how to litigate the case and when to settle the case, when to try the case, that may conflict with your client. that really puts the attorney in a bad way. - is there talk of regulation of this? - there is. i know the new york bar association initiated some talk about new bar rules to regulate this industry, because it is quite scary. attorneys need to be protected, and most importantly, the public needs to be protected. - third-party lawsuit investors. very interesting. john riccione, thanks so much. - thanks very much, bill. thank you, bill. still ahead, the bears are in hibernation. we turn our focus to two traders with bullish calls. that's next.

we are running with the bulls this morning! a couple of traders who often appear on first business made shocking calls months ago that the market was headed for new highs, and here we are. matt shapiro of mws capital and alan knuckman of trading advantage, congrats to you both on your calls. now alan, you were saying 1600 with the s&p 500. here we are. where do we go next? - that is the million-dollar question, but let's talk about how we got to 1600. past performance is not indicative of future results. that was strictly a technical call based on the retracement. the market had a 130-point sell-off from 1470, and also 1600 was the projection if we had a full v

recovery back to the 2000 highs and the 2007 highs, which we've done. so now it is a matter of where we go from here. but you've got to put it in perspective, that even though we are making highs in price, if you adjust these prices for cpi, or 3% inflation, we'd have to get to over 2100 in the s&p, which is 20% higher than where we are now. - and matt, you were predicting 15,000 and above for the dow. but you have an even stronger prediction. what is that? - absolutely. 1700 in the s&p 500, and 15,250. i thought maybe we could get there by february. it took until spring. and you know, the market could always hit a dry spell. so one thing investors out there have to keep in mind is, how do you deal with success? realize in the early '80s, when interest rates were really high, we touched off a three-decade-long rally in fixed-income investments. so, don't just set your sights to, "hey, we have been here, we're not going to go

anywhere." after time, the push and pull of the market is going to essentially predict that this recovery and the momentum of the economy is going to be a lot more than people really believe. - alan, how do you manage this market? we know we get a june swoon and september can bring us some mighty sell-offs. - i try and view the news as just that, as noise, and focus on what the markets are telling me. telling me what the tape is showing us, and we are showing nothing but strength and momentum and optimism right now. again, a lot of the fundamentals are pretty solid. the cash on balance sheets is at record levels. profits are doing fine. trying to expect and trying to predict that next downturn, that is a fool's errand, and we've seen a lot of casualties as the market keeps going up and up and up. i think one thing that can provide another catalyst for the stock market is when the dollar turns lower. we have been in a 25-year downtrend, and some of that safety money that went into dollars over the last few

years, when that comes out, it is going to go back into the marketplace, and that is another leg higher. - matt, how much of this has to do with trader instinct? you've been doing this a long time now, and when you guys are making these calls, it was not a favorable time. a lot was actually going quite wrong. - yeah. it's always easier and more popular to be skeptical about the market, to be negative about america. you don't get as much credit for being positive and looking for the top end of the market. so, keep your expectations in line here, but the market clearly is going to do much better and go much higher than people think over the next few years. - it is very rare that we would take a moment to do this, so congratulations to both of you. heavens knows the market could have gone the other way. but for now, we will enjoy this moment with you. thanks guys. - thank you. still ahead, is this market to be revered or feared? a closer check of the charts is coming up.

dan deming of stutland equities joins us now for a closer look at the charts. good morning to you, dan. - good morning angie. - do you still see indications in the charts, technically, that investors and traders could sell in may and walk away? or is it too soon to tell? - right now it is hard to say angie. that has been played up over the last several months. i can tell you right now, you look at the s&p 500 index, it is up more in 2013 than it was in all of 2012 as of yesterday. so, you've had a pretty significant run-up here in the first five months. so, that kind of plays into this rubber band effect of the market. i think you have to be a little bit aware of where the market is relative to the time of year. secondly, let's look at the technicals in the dow indices. let's look at the industrials, the transports. looking out over may, i think again, the probabilities are, over the last four years, though we have seen some weakness in may, it may not transpire this year. we have got a few

backstops in place. unemployment is picking up, and the bank of japan kind of initiating its quantitative easing the last two weeks ago has certainly helped propel this market higher. - a quickly before you take off, are you long the market? - we have reduced our exposure the last couple of months. we have been able to capture a fair amount of this run-up in the first five months of this year, but we have been kind of reducing some of our exposure to kind of maybe take advantage of a pullback as we roll into summer. - thank you dan deming. - thanks angie. that wraps up the show for today. tomorrow, the blockbuster film that is well on its way to crossing the billion-dollar mark. from all of us at first business, have a wonderful day!

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