politics and money: lawmakers take up issues from investment banking to life down on the farm. in today's cover story, the high price teachers pay to stock up on school supplies. and, what's in store for today's session now that the market is in record territory. plus, the latest odd move coming from a trendy retailer. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's friday, july 12th. i'm angela miles. in today's first look, it's turning into a record week for stocks. the dow and s&p both closed at all-time highs! the nasdaq had its best finish since october 2000. the market

is reacting to comments from fed chairman ben bernanke that economic stimulus will continue for now. homebuilding stocks were among the sectors helping the market pound out gains. gold bumped $37. oil slid $1.90. meanwhile, at the treasury, a $117 billion dollar budget surplus as the government took in more than it paid. mortrgage rates are on the rise. the 30-year fixed jumped to 4.51%, the highest in 2 years. 15-year loans rose to 3.53%. j.p. morgan and wells fargo both report earnings today. joining us now, scott bauer of trading advantage. on the trading floor, what is the trader talk today? will the banks set the tone? - not only is it going to set the tone for today, angie, i think it's going to set the tone for the rest of the earnings season, and going into the last quarter of the year, quite frankly. with the recent rise in interest rates that

we've seen, that really may affect wells fargo more than it's going to affect j.p. morgan, that that's going to give a great insight into what they think this housing market is going to do the rest of this year. i think both banks are going to report very strong earnings, but it's the guidance that worries me a bit on both sides there. - scott, we are back to seeing record levels in the stock market. what levels in particular are you watching? - what's really interesting, angie, is when we get these levels back in may, the vix, the volatility index, what people call the "fear gauge," was actually rising at the time. it had bottomed out, it was on its way up. it's different now. now we're seeing the market right up here at those same levels, but the vix is still falling, and it's falling really quickly. to me, that tells me that the market is not near the top yet, and it's still going to be trending a little bit higher. - there's more room to run. thank you for helping us out today. - thanks, angie. in today's cover story, public

school teachers spent $3.2 billion on school supplies last year - half of that, $1.6 billion, out of their own pockets. now, there's an effort to make the public aware of all the materials teachers themselves provide while on the job. in six years of teaching, belinda carucci spent more than $21,000 out-of-pocket on books, chalk and other supplies for her students. 16 years ago, she decided to open the chicago teacher store and hired other teachers to run it with her because of what all teachers know - they pay for a lot of what they use in class out of their own pockets. "the first couple of years is spend, spend, spend because you're building your classroom." teachers paying out of pocket is nothing new, but the amounts are getting higher. in 2005, the average was $552 a year. now, the national school supply and equipment association, a trade group, says the average public k-12 teacher spends more than a $1,000 a year. "for me, personally, it's going to be a lot, because i'm moving to 2nd grade, and that'll be more expensive than as if i'd

taught the same grade 2 years in a row." a survey by online coupon site retailmenot.com found 87% of teachers reach into their own pockets to pay for classroom expenses - more of them in urban districts, and more in the western u.s. "we are a coupon site, but we want to help people shop more wisely." but there's more to it than encouraging coupon use. it has to do with priorities. the nonpartisan center on budget and policy priorities found school funding in 35 states last year was below 2008 levels. "my hope is that post-recession we see an improvement, but i can't guarantee it." the retail-me-not survey also found nearly nine out of ten teachers say they led fundraising efforts to help offset the expense of paying for classroom school supplies. on capitol hill, the house has approved a farm bill by

stripping out government funding for food stamps and nutrition programs. the final vote was 216-208 - the no votes came from every democrat and 12 republicans. president obama has said he would veto a farm bill that does not address a food aid policy. republican lawmakers are pushing for the end of fannie mae and freddie mac. new legislation drafted by house republicans aims to revamp the housing market by decreasing the government's role, something the gop has pushed for since the financial crisis. democrats agree to limit freddie and fannie's power, but believe the government should have a role in housing. mavericks from the senate are out with a new version of the glass-steagall act. originally, glass-steagall barred banks from operating as investment firms. the law was enacted in 1933 and repealed in 1999. by 2006, the finanical industry was headed for disaster as banks took huge bets on the housing market through derivative swaps. senators elizabeth warren and john mccain want to

separate traditional banks from investment banking, insurance, and hedge funds. doubts are high the legislation would pass. even though it's an oil company, bp will have to follow the same rules as banks. the cftc now requres companies that trade more than $8 billion per year in swaps to register as dealers. 80 investment banks face new oversight of dervatives business. bp becomes the first oil company to be added to the list. opec predicts by next year the world will need less of its crude oil. in its first forecast for 2014, the 12-member group forecasts demand for crude will slip by 300,000 barrels per day as fracking and other drilling techiques uncover oil from shale. executives at british drug maker glaxo smith kline have confessed to a massive corruption scandal. executives admitted to bribing doctors, hospitals and government officials in order to boost drug sales in china. a spokesperson for the company says it is cooperating with the

investigation. as the investigation continues into the crash landing of asiana flight 214, new questions are being raised about the plane's seatbelts. doctors treating victims of the crash say many injuries are related to the lap-only-style seat belts. the national transportation safety board will investigate whether a different seat belt could have prevented those injuries. the crash of flight 214 is having a ripple effect on air travel this week. flyers across the nation face delays as san francisco's airport recovers from the crash, which shut down one of the hub's four runways. bad thunderstorms also impacted travel out of new york, atlanta and detroit. 375 flights were cancelled, and 3,900 flights were delayed. americans did more buying than browsing in june. retail sales in june rose 4.1%, beating out forecasts of 3.7%. warmer temps, falling gas prices and

more people working helped improve the mood of shoppers compared to last year. gap was one of the retail standouts. june same-store sales edged up 7%. costco sales grew by 6%. microsoft has a new focus. ceo steve ballmer told employees thursday that he wants to concentrate on devices and services, by dissolving its eight product divisions and creating four new ones. some analysts think it indicates trouble at the company, but most believe it's a huge step in the right direction. "the new organization is going to help unify the company, and this is precisely the goal. so in the long run, this is going to be beneficial to microsoft because it's going to make the company more responsive and closer to its customers." tech consultant michael krigsman says in the short-term, the reorganization may cause chaos, but overall it's a major benefit for the company. microfsoft is criticized for struggling to keep up with competitive tech trends. changes are also happening at the federal reserve. elizabeth duke, who has been a fed governor since 2008, is resigning and will leave august 31st. duke was appointed by president george w. bush. fed

chairman ben bernanke says she brought fresh ideas with her deep knowledge of lending and borrowing in the banking industry. permanent hiring is holding steady as temp jobs are ticking up. 44% of employers plan to hire full-time staffers, according to careerbuilder.com. 25% plan to hire part-time workers, and 31% will add temps. part-time and temp hiring is up 21% from last year. target is launching a "bonus" black friday - today and tomorrow, shoppers can save on items in every department, similar to the holidays. also, ahead of back-to-school season, target is planning a youtube reality show. starting monday, characters will live in a target-styled dorm room. viewers can click and buy items from the set. the countdown has officially begun. hostess has launched a new ad campagin "complete with a countdown clock" in anticipation of the return of the twinkie. the treats will back on store shelves monday. last year's labor fight at

hostess shut down production, sending consumers into a sugar- crazed stampede for the final boxes. a cooler coca-cola is now on the market. check this out: the new bottles are made entirely out of ice. the coke stays cold, then the bottle melts after you drink it for an eco-friendly treat. for now, it is only available in colombia. still to come, room to run: which tech stocks have hiidden value. later, we hit the trading floor to see which scandalous stocks may be worth a buy. and, is a massive bubble about to burst in china? first business continues after this. i wanted to be in the military since i was a kid.

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japan's economy is headed for a comeback. for the first time in more than two years, the bank of japan used the words "moderate recovery" to describe conditions. the economy faltered following the earthquake and fukushima disasters in 2011. new prime minister shinzo abe's liberal views on free trade are boosting exports. japan is now growing faster than any of the "group of 7" economies.

not everybody will agree that japan's economy really is in a recovery mode. and what about china, which many feel is in more of a dire strait? what does this mean for the united states, which is well along in its recovery? let's talk with chris martenson. he is the man behind peakprosperity.com. why don't you size up japan first of all? they call it a recovery. - yes, and bill, i'll call it a speculator's market. right now we have the japanese central bank over there running their famous 2-2-2 program. they're going to double money. it created a lot of hot inflows, and the nikkei went up 70% even as the yen plummeted. we saw pair-trading speculators just dive all over that, and they're looking for something that i don't see in the data yet, which is strong recovery. - all right chris, what do i need to know if i'm an overseas investor as to what's going on in china right now? - china, by official statistics, is weakening, and we all know that the official statistics are overstated. china's power consumption tells this story. we look at electricity generation, it's much weaker than headline economic growth. i tend to trust the power numbers. so it's weakening, and they've just declared war on the shadow banking system over there, and we'll see how that turns out.

- don't you think things look very bubble-like in parts of china's economy? - goodness, the real estate bubble is the largest of any that i've ever studied. we got very concerned at peak prospertiy when the u.s. property bubble approached priced income ratios of 7, 8, 9 if it got really extreme, and in many cities in china, it's over 20. - you talk about the central bank cracking down on the shadow banking. will that make a market difference? - it absolutely will. shadow baking is a very large component of their overall banking system, just as it had been in other parts of the world. they're going to have to contain it. by definition it's hard to get your arms around it, so it's hard to really contain, so they're going to have to take some harsh measures. they have, and it's already created some liquidity conditions over there. we saw overnight rates spike as high as 25% for the interbank lending. it was very uncertain there for a while. - and chris, give us your sense as to what the impact of all this might be in asia with the u.s. economy and its recovery. - well, we had a very mysterious rise in interest rates that started, let's call it early june in the u.s., about

may across the rest of the world. we were seeing a lot of selling of treasuries and other a long-dated interest rate products from around the world - maybe china was not buying as aggressively in that sphere. that's one possibile spill-over. but, if we see interest rates continue to rise across the world, that's going to create all kinds of difficulties for our key asset markets, not just the bond markets, but equities and real estate as well. - chris martenson from peakprosperity.com. thanks so much. - you're welcome. coming up, color code: is the ceo of abercrombie and fitch risking stock value for style? that's next.

time now to head to the cme trading floor for traders unplugged with stock studs alan knuckman and andrew keene. good

morning, and topic #1: black out! the ceo of ambercrombie and fitch doesn't want to sell the color black in his stores with his clothes, and he doesn't want his people wearing it either. this is the same guy who doesn't want to sell anything over a size 10. is abercrombie in trouble? - i think that's just a weird story, but looking at abercrombie stock, it's been trading in a channel between $55 and $45. retail has doubled the s&p in the last year, so it's getting a little too rich for me. i look for upside, but you get a pullback. it's gone up 20% in just the last three weeks. - i actually don't think it's that weird. i think it's weird for him to publicly say, but you can keep it under the radar and just not sell black clothes. if you think about it, they have a lot of colorful clothes. their catalog's of little risque as well. - he says that black is too formal. is that too formal? i don't think so. - but, their opinion's right in the line with gap, so they're not really expensive, they're

not really cheap. as alan talks about, it's in the middle of a range right here. i think the stock is going to pull back on earnings. i think it's going to have weak earnings, so i'll keep an eye on that. - buy it on a pullback. - topic #2: milking profits: there's an investigation going on into price-fixing in china over baby formula. several companies have been cited, such as abbott labs and nestle. are either one of these stocks a buy? - i don't think so. i wouldn't buy any of these. anything linked to china - i talk about this all the time - pricing- [alan laugh - anything linked to china! china's a big place. go ahead. - ok, fine. their growing, right? they're growing. they're growing a lot faster than we are, they're growing a lot faster than brazil or mexico. but the fact of the matter is that these are kind of irregularities. you can have a company out in china, you don't have to have your statements audited by the government. you can make up your own accounting! so i would say anything linked to china- - ok, so let's get into two stocks, nestle and abbott labs. - abbott i would choose. - i like abbott labs. healthcare- - they have less exposure to china. - good answer. - topic #3: grapes of wrath - the government has a quirky raisin program that started back in the new deal era where the government holds back on some

raisins, actually takes them from farmers. what do you think about this one? - it's just also a very unique issue. it happens in agriculture all the time. they try and support prices, they take things off the market. some farmer, he tried to take this to the supreme court to get his money back, but, looking at the use of raisins, all i could find was serial. so i could find kellogg's and... - general mills. - general mills. so pick which one you like. - they're both at 52-week highs. if i was into either of these, which i am not, i would be taking profits right here. these both seem a little bit toppy. corn prices keep going down, which should be good for them- - helps margins. - all they do is, corn prices go down, just like starbucks, commodity prices go down, and they raise prices, so it should be good for both of them. it could be a little bit toppy at 52-week highs. - look at general mills. even though i am a kalamazoo fan from michigan, looking at general mills, which is not from there, look for it to move up about 13% based on the technicals. i'm looking for it to get to $57. - here's your bonus round question for this week, guys. because of bank earnings rolling out today, name the first bank to list on the new york stock exchange. was it bank of new york, bank of america, or bank on fees?

- i'll take a. - i take c, i didn't hear that. - it is a, bank of new york. congratulations - i don't think i've ever gotten one of these wrong. [alan laughs - good job. first business news continues right after this.

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tim biggam of tradingblock joins us on this friday for a look at microsoft and yahoo. tim, good morning. - good morning, angie. - back in the day, as in not too long ago, both of these stocks were stagnant, but they are starting to move again. let's start with microsoft. it's in the news. what do you see in the charts for microsoft? - microsoft certainly in the nasdaq heyday was one of the four horsemen, but really has fallen on hard times. finally got moving a little over six months ago, and i think it has room to run here, probably another 5-6% upside. certainly

on a comparative valuation basis this is not an expensive stock, and you've got a nice dividend yield, plus you always have that stock buyback program in microsoft, which is immense, so, a lot of support underneath this stock. i think another 5 to 7% is in the cards over the next year or so. - and what about yahoo? this is another one that gained speed. forever and a day it was trading around $14, then $16. now, the options market is indicating that this stock could start to get closer to $30. what do you see in the charts? - absolutely, and a little chatter out there - remember, not too long ago this stock was in play a couple times, and that chatter kind of returning in little bit. so, a little riskier stock, certainly, than microsoft, but i think the upside possibly more, and they're finally starting to unlock some of that hidden value in yahoo, so, i look for, if yahoo does get going, it could really pop here, maybe another 10, 15% upside. again, that $30 level may be in the cards, in the not-too-distant future. - yahoo has earnings coming out

on tuesday. will you be positioning for that at all? what do you anticipate? - i usually wait 'til post- earnings just to have the uncertain become certain. i tend to be a little bit more of a value player. but, positioning in front of earnings, you are taking that kind of earnings risk. it can be good or bad, but i tend to kind of wait. but, certainly if the stock drops off at any time, i might come in and scoop some at a lower level. - thank you for your trader insights, tim. - thank you, angie. we are running out time for today. coming up next week, the art of the elavator pitch. whether you're hunting for a job or starting up a business, tips on how to sell your talents in 60 seconds. from all of us at first business, have a great friday!

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