a cloud over wall street the insider trading case that could have a domino effect. in today's cover story, finding middle ground: how economic trends are eroding america's middle class. plus, travel secrets from the pros, including why hotel deals may hinge on when you check in. and, in traders unplugged the guys guess which celbrities are flush with cash. first business starts now! you're watching first business: financial news, analysis and today's investment ideas. good morning! it's friday july 26th. i'm angela miles. in today's first look: traders and investors are waking up to an earnings hangover. the after-hours

session last night was action- packed. starbucks profits perked up traders' interest with its strongest 3rd quarter ever. amazon had higher sales but posted an earnings loss. zynga stock was zapped after the outlook fell short and the company said it is nixing plans to get a gambling license. in trading yesterday, there was green across the screen with all three indices along with gold and oil gaining ground. a house committee is pushing a bill forward that would end saturday & mail deliveries to your door. and the fda plans a mystery announcement today. larry shover of sfg alternatives joins us now. it could be a wild trading day larry, based on what we saw in those earnings releases after the close last night. good morning. - good morning. - let's start with starbucks and amazon and get your take there. - starbucks, it's like people are realizing it's just not

growth in asia and latin america, but the fact is they're doing a great job in the u.s. making some key acquisitions, they're doing very well in the retail market with k-cups and with via, so it's just not focused on outside the country. they're doing well everywhere. - what about amazon? - amazon's a different story. their p/e ratio is through the moon right now, and we have growth that's struggling outside the united states. it's ok here in the u.s., but outside the u.s., not so good; and the fact is, growth is decelerating right now. they're spending a lot of money on infrastructure, they're spending a lot of money on kindle, etc. long-term it might be good, but it's a $300 stock - at least it was yesterday - so, really risky up here. - and then there was expedia. - expedia, expedia disappointed as well. expedia did well outside of the u.s., especially asia, specifically japan and korea, but the revenue is going down. volume's up, but revenue

is down, so that's not really good for a business. they're expecting to have more on the top line. - and zynga had a huge disappointment while facebook rallied yesterday like crazy. - yeah. facebook's a different story. they've finally figured out how to better monetize their ad dollars, and especially expand outside the u.s. dollars with advertising in mind. zynga on the other hand, i mean right now it's a $3.50 stock, and they have a new ceo who's got a lot of challenges. they've lost most of their executives. the fact is, they haven't come up with a game that's been sticky ever since they developed farmville back in 2009, so they might have to resort to online gambling to resurrect the company. but for now, they're just trying to find something, some way to get users to go from the computer to their mobile phones or their tablets, something that will stick. - larry, i'm glad you're sticking with us. we appreciate all your comments this morning. take care. - thank you. in our cover story, big box retailers are facing resistance from some communities who want the jobs that come with the grand opening to be a wage residents can live on. often that is higher than minimum

wage. besides education, some say the approach is one of the options those on the fringe of the middle class are counting on. this fall, a wal-mart super- center will open on chicago's south side, bringing with it 400 jobs starting at $8.75 an hour. it's not the $10 an hour local politicians wanted, but as one said, "it's better than a vacant lot." economicst lawrence officer says it's a trade-off: a job, but not a living wage for a family and farther still from middle-class. "recession did it. and the global economy killed manufacturing, which was the pathway into the middle class." local officials in washington d.c. are trying to force retailers grossing over a billion dollars a year to pay employees $12.50 an hour. but with wal-mart, target, macy's and home depot threatening economist lawrence officer doubts retailers will cave and may even backfire. "wal-mart isn't going to pay $12.50 an hour. the market will dictate things. they'll just open one in virginia."

chicago and washington d.c. are among the latest battlegrounds for those seeking a living wage from work that, until now, has paid less than that. "surviving in the city is the hardest if you're making minimum wage. it's the hardest way to live." "it's a starting point. the idea is you move up and live better." for a lot of people, moving up just hasn't happened. the commerce department's median middle class family of four lives on $81,000 a year, lives in a home worth $230,000 pays $5100 a year in medical bills and can afford a one-week vacation costing around $3,000. if the aspiration is middle class, the low-end threshold may surprise you. "it's $42,000. if you make less you are at poverty level, according to the government." in jacksonville florida, president obama said short-term partisanship is not the path to middle-class prosperity. "we've got to stay focused on how do we build the economy that works for everybody. that's

my focus. the fight for a living wage is often associated with minimum- wage service jobs. in comparison, the commerce department's average hourly wage for a middle-class worker is about $17.50 an hour for men, $14.50 an hour for women. the federal indictment of the nation's largest hedge fund is rocking the finanical world. yesterday, manhattan's u.s. attorney handed down an indictment against sac capital advisors. the firm faces a number of charges, including criminal responsibility for insider trading committed by numerous employees on a scale without known precedent in the hedge fund industry. the case could have a ripple effect on wall street. "a lot of people are going to be hauled in on this, so the fallout is going to be how far does this go. was it contained just with this one hedge fund or will it be all of the people who were trading with the company as well?" sac, responding to the indictment, says the firm never encouraged, promoted or tolerated insider trading and

will continue to operate. sac also blames a few bad apples who face prison time for bad behavior. sac's billionaire founder steven cohen has not been charged, but will face an sec hearing next month. glaxosmithkline is attempting to clean up its act in china with a new boss. the company's senior vice president of europe will take over as general manager in china. the former chief in asia will stay with the company to help with the bribery investigation. gsk is accused of a multi-million- dollar scandal involving bribes to government officials, doctors and travel agencies. four executives have been detained, and one has been banned from leaving the country. the faa is ordering safety inspections on boeing's 787 dreamliners. it follows a fire this month aboard a jet that was parked at heathrow airport in london. the problem was traced to an emergency beacon made by honeywell international. the faa is ordering boeing to remove or inspect the emergency

localtor transmitters for pinched wires in the casing and evidence of heat or moisture. starting next month, the cruise industry will become more transparent. royal carnival, and norwegian cruise lines are agreeing to expand reporting of "at sea incidents." findings by the senate reveal since 2011, hundreds of crimes on board have gone unreported. out of nearly 1,000 crimes logged with the fbi, only 31 have been made public. this week, lawmakers are urging stronger industry oversight following dramatic high-profile problems on popular ships. "these particular incidents, which received significant media attention, did underscore the challenges and discomfort that passengers can be subjected to including days without power or plumbing, and raise questions about the protections afford to u.s. passengers." royal caribbean's stock was recently rocked after a fire broke out on a ship in may. yesterday, the cruise line

reported second-quarter profits that beat wall street expectations. the company says bookings are up. a massive cyber-crime case has been cracked. u.s. prosecutors are charging 5 people, 4 from russia and one from the ukraine, with involvment in a credit and debit card theft ring with losses amounting to $300 million. it's considered the largest hacking fraud case in the the nation's history. nasdaq, the dow jones, visa, jc penny, and jet blue were all hit in the scandal. as mentioned earlier, facebook became an overnight sensation on wall street after reporting blockbuster earnings wednesday evening. the stock yesterday traded above $34, the highest level since its $38 ipo in may 0f 2012. according to ceo mark zuckerberg, teens remain "highly engaged" in the social network. recent reports said teens are leaving facebook out of concerns of privacy - and using the same social network as their parents. facebook has now topped a billion members. in our earnings roundup, gm reported profits that topped a billion dollars in north america. the company also reduced its losses in europe. however, it cites weakness in asia. shares of mead johnson shot up 5% yesterday on word that the baby formula-maker

stands by its 2013 forecast. it says price cuts in china will even out due to higher sales in the hong kong market. boston scientific shares also surged on word of higher sales of medical devices. and crocs hit the floor, falling 21% after the company missed the mark on its expectations. the outlook may be growing bleaker for blackberry. the company is cutting 250 jobs in its new product testing facility in waterloo, ontario. the layoffs stem from weak blackberry 10 phone sales. however, company officials call it the "next stage of a turnaround plan." shares closed around $9 thursday. 20 years later, the chevy impala is back on top. for the first time in 2 decades, consumer reports ranks the sedan as the best in its category. it's a huge turn-around story. last year, the magazine called the 2013 model not worthy of driving. ouch. the 2014 edition

gets high marks for handling similar to a luxury car. tesla and the bmw 1 series top the all-around-best list. americans are spending hundreds of dollars on "sneaky fees." the so-called "gray charges" typically come attached to "free trial services" offered with magazine subscriptions and music streaming services. after the free trial period ends companies automatically tack on charges. a report says the fees are not illegal, but add up. it cost americans a combined $14 billion per year - or around 200 bucks each. still to come, feeling right at home: how to score a great deal on a summer vacation rental. plus, it's a traders unplugged friday. our traders explain how to shake off your fears of investing. but first, spending breaks on car insurance. you'll be kicking yourself if you miss these tips. first business continues after this.

many drivers are missing out on insurance discounts. we found out the secret is to simply ask for them. "many people are getting automatic discounts, perhaps for being a good driver or having a safe vehicle, but there are so many other discounts that are out there that you may not

be getting if you don't know to ask for them." that was laura adams of insurancequotes.com. she says switching to paperless statements, improvements in your credit score, and getting married are ways to qualify for insurance discounts. hotel costs are driving higher but renting a condo or a home this summer is open to negotiation. no one knows that better than gabe saglie of travelzoo.com. good morning, and for people who are not familiar with your business you negotiate great deals on venues all the time. so, what would you do in this situation if you're talking to a landlord? - certainly keep in mind what their need is. so if you're looking at a summer rental you want to look at destinations where there is in fact a need period during the summer season. florida is a perfect example where there's not just a need over the summer months, where the temperatures go up and demand softens, but there's a lot of competition on the

ground. in hawaii, for example, summer they do just fine but later summer into fall more availability, you've got more negotiating power there, because there's just more need to get people into a lot of these homes or apartments or condos or villas or what-have- you. so i think seasonality and need is going to be a major player and certainly be prepared to jump on a deal when you see it. if it's a price point that you're comfortable with, ideally below what you were planning to pay it might be a deal worth taking. - when do you know that final offer is the final offer? - i think that when you get to know who you're talking with and realize what the wiggle room there is, i think that for a lot of destinations, if demand is there, they're not going to spend a lot of time with you going back and forth. if you're seeing a lot of openness from the person you're dealing with that means that they probably have the need, and therefore you have a little bit more muscle to flex. - and if somebody doesn't want to deal with a landlord situation, they do want to stay at a hotel, what's the negotiation effort there? what should they do? - as far as negotiating, a

company like us does that right off the bat. once you're dealing with a hotel directly oftentimes the advertised rates are sort of what you're going to get. your next best opportunity to negotiate is when you're at the desk checking in. i always like to tell people to check in a little bit later in the day - 5:00, 6:00, when hotels can better gauge who's canceled how much availability they've got, and then start seeing what you can do to perhaps get an upgrade or perhaps get some of the amenities that might come with a larger, better room, but at the price point that you locked in. - thank you very much. that's gabe saglie of travelzoo.com. thanks again. - thanks. autumn airfares are dropping. prices this fall are estimated to be 30% lower than summer airfare. a usa today travel expert says it's best to book now for great deals to destinations such as seattle phoenix, denver, minneapolis, austin, san antonio and new orleans. coming up, the majority of americans fear the stock market while most wall streeters are fearless. how to end those worry woes is still to come...

time to turn up your tvs - joining us now, the dynamic duo of alan knuckman and andrew keene. they are on the floor of cme group and ready to go for traders unplugged. hi guys. - hi angie. - topic #1: stock scaredy-cats. people are fearing getting into the market. what do you make of this? - i think it's a bit of an irrational fear. this market's all about controling risk. as a professional trader, you're right, you're wrong, but you need to control your risk on each trade. people don't look at it that way. people kind of look at it as an all-in type thing which i think is wrong. - i definitely agree with that. if you think of the history and the study of this, if you actually invest money in the stock market on the same day of every month, you're going to have better returns over the

long-run than it just going all-in. if you have $10,000 to invest, instead of going all-in on the market highs, put a little bit in every month. you get a better return. - we're not doing surgery here. people aren't dying on the table. it's money. you can always earn more. but control your risk on each investment so you live for another day. - all right, let's move on to topic #2: pepsi or oreo? a famous activist investor suggests that perhaps pepsi should do a spinoff and buy oreo's maker instead. what do you think about this one? - if you look at it, nelson peltz owns about $1.2 billion in mondelez, mdlz- - that's a lot of oreos. - he owns $150 million in pepsi. so if they came out and pepsi bought mondelez for, let's say $36-38, which he was talking about, it's a 20% premium. so what does that mean? that means that stock goes up 20%. does that mean pepsi goes down 20%? no. so of course he wants it to be bought! he's going to make money off it! - i don't like the idea of selling an out-of-favor stock that's already had a huge move - as we've seen in pepsi, pepsi has broken out at its highs - but if you look to mdlz, it had a big drop from $40 down to $25

last year, so i think it's undervalued, and if you look technically, it's trading between $28 and $32, the target's $36, which is about 15% higher, so i like buying the cookies and getting rid of the beverages. - topic #3: mobility to the max. which company is best positioned for smartphone users? - when this question was written, facebook was one of the answers, and obviously it had a big move, and it looks like it's going to make an attack on its ipo price now that we've gotten above $32. but my play i want to look at is ebay. ebay's got solid support at $50, from a yearly basis, and the paypal angle has given them further mobility. more people are going to be buying things on their phone with paypal. - if alan looked at the earnings report, ebay was an awful earnings report. also they're getting a lot of competition in the paypal space. i would stay away from that one. the one that i actually like is t-mobile tmus. they spun off from pcs. the stock has been on fire. i think they're going to be acquired by someone. we see a lot of acquisition in the mobile space. we've seen veep being bought, clearwire being bought sprint's probably going to get bought. so all these are getting bought- - i just bought something with my paypal on my phone. that just got bought. - let's take a look at the bonus round question for this week: name the famous couple that reportedly is spendng $750,000 on gold toilets for thier new home. - i know this one! kim k. and... - kayne.

- that's it! - excellent. - i got it! i got it this time! - you scored huge. thanks for being on the show, guys. first business continues right after this.

ehicle. when i came here, i... i couldn't move. [male announce david was broadsided on the highway. they weren't very hopeful at the time that he would survive at all.. [male announce an ied wounded mike in afghanistan. i don't remember all of the blast... was over 500 pounds of explosives. [male announce their physical injuries have healed. the traumatic brain injuries - tbis - haven't. the way i describe it is you're just afraid. am i going to start forgetting things? [male announce tbi is as serious as any battlefield injury. you're just not the guy you used to be. [male announce thankfully va has made important advancements in tbi seeing it, treating it understanding it. and they're here to help veterans affected by it.

i can see that what we're doing here at the polytrauma unit is to move from survivability to thrive-ability. [male announce if you think you or a veteran you know has sustained a brain injury, get screened. a lack of fear has settled over the stock market. joining me now is dan deming of stutland equities. dan, what's going on here? the vix is now below 13. - yeah angie, we're seeing the vix under some pressure here. pretty subdued, but i think the thing that's really key right

now is if you look at the market as a whole, you look at the spx basically realizing about an 8% move on any particular day of the last couple of weeks basically the last 20 days. so realized volatility is very low. we've seen the consolidation pattern in the market the last couple weeks, and with that i think that's why you're seeing the vix stay pretty soft around that like you said, just-below-13 level. - now the s&p 500 has been struggling to get above that 1700 mark. that's a big number psychologically. what do you think is going on there? - again, some consolidation and really angie, like you said it's psychological - i think 1700 is significant. the market has struggled, the spx has struggled to get through there. but i think it's really because of the earnings season. we're seen a fair amount of really disappointing news. for every facebook and for every

apple out there, we're getting some disappointing numbers as well, and we're see a lot of stocks kind of take some heat. so right now you're seeing the market kind of wade through earnings. not significant one way or the other, but still being able to hold onto the high end of the range. - exactly, and some of those have been pretty significant names, such as caterpillar which has been a drag on the market this week. so what about some of the smaller-cap stocks? how are those performing, dan? - yeah, interesting angie. yesterday we saw really the dow and the s&p pretty flat, up slightly, but we saw the nasdaq up decent, and i was looking at the russell. the russell was up almost 1% yesterday, so pushing the highs. it closed at like 1054 yesterday, just slightly off its all-time highs. so you are seeing maybe some momentum there in those smaller-cap names that ultimately might be able to propel the s&p through 1700. - and dan, what's the feeling on the floor right now amongst traders? what's the scuttlebutt there? - right now, angie, like i said, we've seen this consolidation pattern, the vix pretty subdued, the market pretty subdued, you're kind of in that summer nonchalant kind of attitude right now. we'll see what happens over the next couple days. tomorrow morning we do have the michigan consumer sentiment number coming out, that could push the market around a little bit. but right now, you'd have to say we're in that summer kind of period where the market's just kind of languishing. - dan, always a pleasure. have a good weekend. - thanks, angie. you too. that wraps up our week. coming

up next week on first business what you need to know about taking out student loans that could very soon have adjustable rates. a bond trader joins us for the break-down. from all of us at first business, have a wonderful weekend! what you are about to see is one ladder-the strongest, the safest, the most versatile ladder in the world. the american-made little giant ladder system. twenty four ladders in one. coming up, you'll see amazing demonstrations and hear compelling testimonials from real people.