lawmakers head back to capitol hill today as the irs scandal gets down to "brass tax." in today's cover story, venture capitalists roll to the marijuana business as some legal barriers evaporate. plus, with changes in health insurance quickly approaching, surprising ways most americans are planning for the switch. and, paycheck outrage: why ceo pay just keeps climbing higher. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's monday, june 3rd. i'm angela miles. in today's first look: beware the june swoon? it's an old trader saying, but so is

"sell in may." the market did indeed fall apart at the end of the session on the last day of may, but for the month, the dow added 1.9%, the s&p 2%, and the nasdaq nearly 4%. stocks posted the first gains in may since 2009. a biotech company that has a cancer-fighting drug is flying high on wall street with its ipo. shares of epizyme opened at $15 and closed at above $22. that's a 53% gain in the first day of trade. and, more tourists say "aloha." the sunny state of hawaii is on pace to shatter a record in tourism spending. visitors to the state are spending an average of $42 million per day. lincoln ellis of strategic financial group gets it going for us on this monday morning. happy to have you on the show today, lincoln, and are we in

for a june swoon? - well, the close on friday certainly suggests that the sentiment in markets has certainly changed, and that is not only identified by the equity moves that we saw last week, but really by the move in treasuries and german bond yields, up some 30 to 50 basis points, really repricing risk in the market. so investors are going to have to take that into consideration as they wade through the week. - let's talk about that treasury tumble. is that because the market is so on edge over the fed's next move? - it's certainly part of the question, but i think what investors have begun to do is to reprice the economic environment in which they are operating, and that will ultimately suggest that rates are artificially low, and that they should be slightly higher. that helps reorient risk and helps investors to be able to reallocate their resources more appropriately in the capital markets. - oil also dropped on friday.

do you think this is the start of something big, or just kind of a move that was going along with the rest of the market? - certainly opec leaving their numbers up high is going to push the prices lower on crude oil. - lincoln, thanks for being on the show today. - you bet, angie. with lawmakers back on capitol hill after a week-long recess, the irs scandal is back in the congressional spotlight. more hearings are scheduled this week. this morning, irs acting commissioner danny werfel will tesify in front of a house subcommittee following allegations that the irs targeted conservative political groups. werfel will detail how the irs is addressing the situation. tomorrow, another committee will hear from organizations that were allegedly targeted for seeking "tax exempt" status. the sec votes wednesday on new rules covering the $2.6- trillion money market fund industry. during the financial crisis, large investors quickly pulled money out of the funds, leaving smaller investors in a lurch. the sec will vote on a

proposal allowing shares' prices to float rather than the current fixed $1 share price rule to avoid a "run" on money market funds. it's round two of the student loan rate debate in congress. on july 1st, rates on government-backed loans are set to double from 3.4% to 6.8%. last year, a deal in congress locked in the rates for one year only. if congress does not come up with an agreement in the next month, those rates will automatically double. on friday, the president said the higher rates place more of a debt burden on students. "here's the thing: if congress doesn't act by july 1st, federal student loan rates are set to double, and that means that the average student with those loans will rack up an additional $1,000 in debt." the gop and president obama both want to tie rates to interest on the 10-year treasury note. however, under the gop plan, rates could fluctuate. president obama is aiming to lock in rates. starbucks put new rules on smoking into effect over the weekend. the coffee chain is banning smokers from lighting up within 25 feet of its shops.

a starbucks spokeswoman says the intent is to expand the indoor no-smoking policy to the outdoor seating areas. starbucks hopes to resolve the issue amicably with smokers who are fuming over the ban. in our cover story, jamen shively plans to open "the starbucks of marijuana." shively, a former microsoft executive, is banking on a trend - 18 states have approved marijuana use for medicinal purposes, and two more, washington and colorado, allow adults to purchase small amounts for recreational use. jamen shively, flanked by vicente fox, former president of mexico, used an icon of the cold war to convey freedom to buy pot. "the berlin wall of the prohibition of cannabis is weakening. just as it was with the soviet union, members of the old guard are walking away." washington state has allowed medical marijuana for the last 16 years, and this year, along with colorado, added recreational use. vicente fox says legalizing it further would reduce crime that has ravaged his country.

"in mexico, we welcome this because the war is unbearable." shively, a former executive at microsoft, says he's raised nearly $10 million to convert some of colorado's medical marijuana dispensaries into retail marijuana stores within three years. similar plans in other states may follow. "we have waited for some sort of green light from washington, d.c." john bintz, a venture capitalist, says it's actually more of a stop light. "it's against the law, so you'd be fighting the federal government." so far, the feds have not tested what some call a states' rights

issue. despite a shift over the last 40 years in which more people now favor legalizing marijuana, bintz remains wary. "the risks are: it's illegal, the government could shut you down, and the rules could be changed at any time. that's what you're going into." if permitted, retail marijuana would be heavily regulated, which may discourage some investors. it may also be taxed heavily. one study calculates the state of washington may gain $2 billion in revenue over five years by taxing retail marijuana sales. boeing is preparing for natural disasters and labor strikes by spreading out its operations. engineering design centers are being set up in washington state, south carolina and southern california. the centers will compete against each other for work at the lowest cost. the chicago tribune reports 300 jobs will be

relocated from seattle to the new locations. pulte group is pulling up stakes in michigan. the company plans to move its headquarters from detroit suburb bloomfield hills to atlanta, georgia. executives say it's closer to customers. pulte, one of the nation's largest home builders, has 92% of its business outside of the midwest. more evidence is emerging the weatlhy are becoming richer while average americans are falling behind. according to the federal reserve, average american households have recovered just 45% of their wealth since the financial crisis. the rise in home prices is helping; however, this is where the real money is being made: the stock market. stocks have rallied to never-before- seen highs, and the wealthy are piling on cash by investing. the fed says 80% of stocks are held by the top 10% of the u.s. population. more discouraging numbers out of europe. the jobless rate yet again hit a new high, to 12.2%

in may. 19.4 million people are out of work, and the numbers are expected to keep rising. the number of unemployed youth is particularly staggering. in spain, more than 56% of young people are without work - more than 62% in greece. the european central bank meets this week. analysts do not expect any shift in interest rates or other policy changes to come out of that meeting. caterpillar has reached a tentative deal with union wokers in milwaukee, wisconsin. a union vote on the deal is set for june 11th. details of the new cat pact were not disclosed when the agreement was announced. the 6-year agreement covers united steelworkers. they rejected an earlier offer that would freeze wages, increase healthcare costs and eliminate job protection for senior employees. ford is enjoying hot hybrid sales. ford sold 37,000 hybrids so far this year, passing its 2010 record. the l.a. times reports sales are also revving up in california, a competitive state for hybrids. the car

company sold 3,000 fusion hybrids in the state in the first four months of 2013, compared to 400 in the same period last year. ford says the sales success is "energizing the whole company." an airline passenger is suing over spilled coffee on a continental airlines flight in 2011. a texas woman is asking for roughly $170,000 in damages from united continental airlines. she claims coffee spilled into her lap when the passenger seated in front of her reclined. she claims it caused second-degree burns, permanent scarring and disfiguration. catching up on the latest news in the newspaper biz, a painful round of layoffs at the chicago sun-times: the paper said goodbye to its entire photography staff. it now plans to work exclusively with freelancers. meanwhile, another chicago paper is facing pushback. readers are protesting the sale of the chicago tribune to billionaire conservatives charles and david koch. and warren buffett takes another stake in print:

berkshire hathaway's media group purchased the roanoke times, which oversees 29 newspapers in 9 states. here's the skinny on the ceo of mcdonald's: don thompson, who runs the fast food chain, revealed at a recent analyst conference he lost 20 pounds. thompson says he did it by working out and did not change his habit of eating at mcdonald's every single day. mcdonald's is among the corporations facing scrutiny for obesity in america. self-doubt could be stunting career growth for some women. a study finds that 25% of women did not ask for a raise in the last year. 38% admitted they do not aspire to move up in the ranks of their current workplace. 41% said there were few opportunities for a promotion, and 30% did not want to sacrifice family time. however, here's some encouragement: of the women who did ask for a raise, 75% received one.

still to come, are ceos worth their massive price tag? that's later on. but first, booster shot: with healthcare reform on the way, how startups are benefitting from the changes. details are coming up.

healthcare startups are getting a boost from "obamacare". health-related startups received an injection of nearly $5 million in the first quarter of 2013. most of the venture capital money is going to small businesses that aim to solve healthcare problems, such as apps that compare healthcare costs or software that updates medical records. and as a bonus, the new laws give entrepreneurs more options to buy health insurance. the majority of uninsured americans are undecided on how they will handle buying health insurance when it becomes mandatory january 1st. laura adams of insurancequotes.com has more on that indecision. good to have you on the show this morning, laura, and what were you able to learn from the survey? how are americans preparing? - what we found is a really surprising large number of people don't know what they are going to do next year. we actually found that 65% of our respondents to a recent survey said they, even though they know there is a penalty coming up, they don't know what they are going to do. they don't know

if they are going to buy insurance or not. - what do they think is going to happen? - it's interesting. many of the respondents feel that healthcare costs are going to go up as a result of the healthcare reform. and only 47% feel that health of americans in general is also going to improve as a result of the reform. - are most people feeling uninformed? - i think that is the case. i think 58% of the respondents said that they are not sure. 58% said they don't know if they are even eligible for the tax credit subsidy. so i think right now, we still have a lot of confusion, a lot of misunderstanding about what this means for people in terms of how it's going to impact their wallet. - why take this survey now? is it too early? what do you gain from this? - i think we are trying to take the pulse of the uninsured right now to find out what is the knowledge gap. and what we are seeing is there is a very large knowledge gap that needs to be closed. and it needs to happen quickly. we only have four months before open enrollment. that's when the

exchanges are going to begin doing business and allow people to go online or call an 800 number to begin comparing policies and shopping for plans. - laura adams of insurancequotes.com, you'll have to keep us posted. come back again. thank you. - thank you. still ahead, if you've ever wondered why ceos can demand outrageous salaries, stay tuned. we'll hear the strategy behind the fat paycheck. that's next.

the ceo of goldman sachs tops the list of the best paid bankers in north america. in 2012, mr. blankfein took home a $26 million paycheck. he's in good company. analysis shows ceo pay at 300 u.s. corporations rose 3.6% to a median of $10 million in 2012. much of that has to do with rising stock values. joining us this morning via skype is michael doriff. he's a professor at southwestern law school. good morning to you, and you have spent more than a decade studying the relationship between ceo pay and performance. is lloyd blankfein worth $26 million per year? - i don't want to speak about mr. blankfein in particular, but ceos on average are not worth the compensation that they are being paid. - why is ceo pay so inflated? - ceo pay is inflated because, starting in the 1970s, economists started pushing directors to use performance pay to tie ceo pay to how their

companies were doing, and in particular to share prices. that, combined with a historic bull market in the '80s and '90s, skyrocketed ceo pay - again, without giving us any corresponding boost in corporate performance. - does that mean we should prepare for higher salaries? the stock market is on another record bull run. - i think we should be prepared for ceo pay to continue to rise. there is increasing pressure from shareholders to tie pay even more closely to stock price. so, if anything, if the bull market continues, we will probably see ceo pay go up even more. - what should corporations do? you suggest perhaps directors should go for the #5 candidate that costs less, rather than the #1 candidate. - i don't think directors really are as capable of distinguishing between the #1 guy and the #5 guy or woman as well as they think they are. when we're talking about these kinds of very high-talented, highly trained individuals, the

difference between them is really not all that significant. but directors are prone to think that the difference is very significant. when we actually look at this empirically and try to figure out if there is there some measurable difference amongst these people, we find that the unmeasurable difference is really not very large, and it's not predictable, even more important. - thank you for coming on the show. that's michael doriff, professor at southwestern law school. - my pleasure, thank you. coming up, a trader tells us it's far from game over for gaming stocks. a check on the charts is next! i wanted to be in the military since i was a kid.

i served in the united states air force. i served a total of 16 years. i was deployed 13 times. on my second deployment four bombs hit my vehicle. and at 19 years old, that was the first time i ever saw somebody die. coming back, i was raging. i started having pretty horrible nightmares.

i would wake up in middle of the night sweats. i started drinking a lot. i felt worthless. i guess i never recognized it in myself. eventually, one day i just walked into the va hospital and said i'd like to see somebody. don't suffer alone. you've got to find that link with somebody that will make you let it go. it all starts with going to the va. there's a whole community of veterans that just want to help you out. it's for the guys who couldn't come back, you owe it to them to live well. because they're not here with their families. fer with a deadly disease. i was one of them. my disease was obesity and after consulting with my doctor, i received the effective treatment i needed. please join the obesity action coalition to acknowledge obesity as a disease visit obesity action dot org to sign an open letter pledging your support and for more information about how to talk to your doctor about weight loss and treatment options.

together we can make a choice to end obesity now. a public service from the obesity action coalition. andrew keene, president of keeneonthemarket.com, is here for some fun and games on this monday morning. happy monday to you, andrew. - happy monday, angie. - you are watching some of the game stocks. why now? - if you look of them, both the

stocks i'm looking at - i'm looking at activision blizzard, atvi, and then gamestop - we see unusual option activity to the upside. we have seen call buyers and put sellers in both of theses esred flag. then i go look at the charts, and the charts look pretty good. i look at atvi first. they just had sales, they just hit their 52-week high at $16.12. the stock has sold off about 10%. on friday during the huge sell-off, it sold down to $14.45. i think it is interesting to play to the long side here on the $14.45 level. i want to leave tight stops on this. if the market starts to roll over, everything will get hit with it. if it breaks that $14 level, i will be out, but i think it has momentum to the upside. with this unusual option activity, i think it can get back to $16, even $17. - but we are hearing all these reports, andrew, that the gamers are really in trouble because so many people are online now, so these consoles are kind of becoming out-of- date. what do you think about that? - yeah, activision blizzard is the #1 and #2 seller for all the games. the new consoles coming out will be good for the gaming. all these stocks that i

thought were left for dead - trust me, i was the first one to think sony was going to go out of business, and the sony chart looks great as well - so a lot of these stocks that i thought were left for dead, the charts are lining up, and with the call-buying and put-selling activity, i want to play a reward-to-risk set-up on these stocks. - and i was impressed, as you mentioned earlier, that these stocks kind of hung in there on friday despite that big sell- off. so that was a good sign. - yeah, as the market sells off, everything sells off. on friday, apple sold off $5 within about 10 minutes. so the market sold off, the s&p 500 futures sold off 10 points in a heartbeat. so they sold off. on a risk-vs-reward set up, gamestop is the same way. gamestop is around $33. it had pretty good earnings. it rallied on earnings initially, then it sold off really hard. it looks like it's got a tail on the daily chart around this $30 level, so tight, tight stops on this, but planning on a reward- to-risk set-up, i think you can go up to the recent highs. - thank you, andrew. - thank you. that's it for now. coming up tomorrow, find out if small business owners are feeling better about the economy as consumer sentiment soars. plus, the tablet habit: why americans are giving up their pcs for handheld computers. from all of us at first

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