tv First Business KICU April 1, 2014 4:00am-4:31am PDT
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a new month, a new quarter. as we skip ahead to spring... what is in store for the economy. in today's cover story.... behind the scenes with janet yellen... more fallout from the fed chair's market moving commentary. plus....mary barra faces congress today as a new recall grips general motors. and...man versus machine! do high frequency traders make it impossible for the average joe to have an advantage in the markets. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! it's tuesday, april 1st. i'm angela miles. in today's first look: a strong finish for the quarter. the stock market logged its fifth straight quarterly gains...as investors propelled the market higher monday. caterpillar is accused of a
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$2.4 billion dollars tax dodge by senator carl levin. the equipment maker disputes the allegation. a cook county judge throws out a lawsuit by a chicago law firm in connection with the malaysia airlines flight 370. the judge called the filing improper. and the fbi is now investigating possible criminal wrongdoing in high frequency trading following a 60 minutes report. a new trading month and a new quarter get underway at the sound of the bell. joining us now is matt shapiropresident of mws capital. good morning matt. >>good morning angie. >>what do you think about the new month in trading ahead? >>yesterday we had a rally out of nowhere at the end of the quarter which is unusual. a lot of times there is profit taking in the last couple days so i'm really optimistic. this week we're going to have a lot of economic news followed by the
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big jobs report on friday so we'll have to see what happens over the next few days. >>you say the market action was unusual. what do you mean by that? we've never had this happen before? >>we've seen it before but i would say 1 out of 4 quarters only. most of the time, end of quarter there's a lot of rebalancing and the market tends to fall. >>let's look at some solar stocks. this has been a hot area in the market. would you buy solar stocks at the current levels? >>first solar is the leading one and if you look at the fundamentals its really got some momentum. investors out there want to try and find something that's the new big thing and solar is kind of gaining momentum. there is first solar, there's solar citywhich is the tesla guy, elon musk's stockand is wildly overvalued. then there is sunpower corporationfirst solar seems to be the class of it. so if you have a taste for the solar stuff, these are some of the names you should be looking at. >>thank you matt. >>you're welcome.
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as the 2nd quarter starts today the economy may be ready to brush off the winter blues-- and bloom. economic indicators including manufacturing, home buying and retail sales cooled off in the first quarter as consumers were forced to stay indoors as winter beared down. but now, juli niemann of smith moore and company believes change is in the air. the change in the economy is definitely one of growth and while it's not a snails pace growth anymore it's more a turtle's pace growth but we are headed in the right direction. niemann says this spring she is stocking up on shares of transportation, manufacturing, and materials companies for her clients. diane moca is filling for chuck coppola this morning with a report on how the federal reserve is monitoring the economy.. good morning. angie... in today's cover story... fed chair janet yellen warns conditions in the labor market are worse than the unemployment rate suggests. during her first public event
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as fed chair... she talked about what the fed can do... machine turning on and humming the machines were humming... and the students were singing the praises of an advanced manufacturing program... as janet yellen toured the city colleges of chicago. she applauded the inexpensive... short-term program.. teaming up business professionals and academics to try to close the skills gap... but said such efforts aren't enough to lower nagging unemployment -- declaring the fed's 'job is not done.' "i think this extraordinary commitment is still needed and will be for some time." yellen "also" told more than a thousand community development professionals that the fed has its eyes on 'slack' in the labor market. that's when the pool of "skilled" workers seeking employment.. outweighs the jobs available. " no amount of training will be enough if there aren't enough jobs to fill."
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the fed head hints that interest rates will likely remain low until unemployment declines further... an attitude that turned into a market mover. "today's rally suggests that longer easy monetary policy is in store for the market, and that's why equities are going to outperform." yellen's comments contrasted those implying a tightening of stimulus a few weeks ago. "if we look at what we need to get to those lower unemployment levels and those higher participation rates is we need 200,000+ a month, and that wasn't previously expected for friday. but it is now." yellen said the steady decline of unemployment isn't sufficient because...it's too gradual... the long-term unemployed are shunned by employers... and those finding work are suffering long-term wage reductions or only working part-time despite efforts to find full-time jobs. "the recovery still feels like a recession to many americans, and it also looks that way in some economic statistics." yellen told the crowd that the fed will continue to expand its
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efforts to promote community redevelopment. and she asked the community leaders at the national conference to do their part... by collaborating more with each other... and with business and government... to achieve success. gains and glitches.the obama administriation met its goal of getting 6 million americans to sign up for health care insurance. however from the starting day to the deadline the government's health care exchange website was plagued with problems. monday-- applicants were temporarily blocked from creating accounts as the site apparently crashed under the crush of more than 100,000 people rushing to sign up at the same time. "there has been a remarkable story since the dark days of october and november which has resulted in a situation on here on the last day of enrollment we are looking at a number substantially larger than 6 million." the number may even exceed 7 million. americans who started their application proces will have a grace period to complete the process. as gm ceo mary barra heads to capitol hill... general motors is issuing a "new" recall of 1.3 million cars. the automaker says certain chevy malibu, malibu maxx, hhr and cobalt models, along with saturn aura, ion and pontiac g6 models, may have a power steer defect. barra testifies in a house
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hearing today. she's expected to apologize to victim's familes for an igniton switch issue that is linked to 13 deaths. lawmakers will press barra on why it took nearly 10 years to issue a recall. barra testifies before a senate committee, tomorrow. the ceo of fiat and chrysler is telling competitors to watch out. the brands, which are in the midst of a merger-- are revving up production to 6 million cars a year... a level it says will give it a competitive edge in the global marketplace. the merger between "fiat chrysler automobiles" is expected to be official by the end of the year. hundreds of amazon workers in germany strike again over pay disputes. it follows an earlier strike in the lead-up to christmas. this time, 500 workers are walking off the job. germany is the second largest market for amazon after the u-s. amazon successfully fought unionizing by america. workers. german airline-- lufthansa-- is canceling nearly 4,000 flights as pilots demonstrate. it is one of the bigest strikes
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to hit the airline. the company employs 54-hundred pilots. they are striking over the company's plans to scrap an early retirement program. lufthansa says the walkout could cost tens of millions of dollars. the idea of allowing cell phones on planes gets more static. the powerful global business travel association, a trade group for business travelers, calls the idea of cell calls on planes "detrimental" to its travelers. business travel is responsible for 3% of the entire u-s 'g-d- p' according to a study by the travel association -- giving business travelers an influential voice in this debate. 9 companies will debut stock this week. ims health holdings is among the heavy hitters. the company provides health care consulting services to drug makers. it's the largest ipo of the week. the company intends to raise $1.3 billion and will trader under ticker symbol ims. grub hub-- the online restaurant pickup and delivery service will be the biggest "tech" ipo of the week, with plans to raise $148 million by going to market friday under the
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the ticker grub. and rubicon project-- a cloud based platform for buying and selling digital advertising opens wedensday under rubi with plans to generate $108 million despite its recent lackluster ipo -- "candy crush"-maker 'king digital' is adding jobs. it's looking to fill 165 positions -- according to the wall street journal. the job listings range from development to human resources, however the company isn't commenting on the additions. king digital fell 20% in its market debut. the stock was up slightly in trading yesterday. investors await a possible decision today from the fda about an insulin that can be inhaled by people with diabetes. the fast acting insulin is called afrezza and is made by mannkind. ahead of the fda report-- mannkind shares slid 16%. investors were quick to unload prana biotechnology stock after the company's phase
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two trial for an alzheimer treatement failed to meet goals. that stock plunged 71%. while shares of novartis shot up 4% on word the drug company is seeking approval for an experimental heart failure treatement. johnson and johnson makes a $4 billion deal for its ortho- clinical diagnostics business. global asset mangement company 'the carlyle group' made a binding offer for ortho- clinical on january 16th. the company has invested more than $6 billion in healthcare transactions since its founding in 19-87. the carlyle group closed up almost 2-1/2% yesterday. soda sales continue to fizzle in the u-s. carbonated soft drink sales fell 3% in 20-13. it follows a decade-long trend and a steeper drop than 20-12's 1.2% decline. soda still represents the largest percentage of the beverage industry's sales, but soft drinks also face criticism: regular sodas are under fire because of high sugar content
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and the link to obesity. diet versions have recently been associated with an increased risk of heart disease, stroke and even death. startling new stats about college graduates and jobs. data shows many college- educated grads --are working for lower wages. the bureau of labor statistics finds 260- thousand grads worked minimum- wage jobs last year. one hopeful sign--that figure is the smallest since the recession began. it hit a high of 327-thousand in 20-10. it's a grand slam for baseball salaries. some players are taking the field this season with record paychecks. usa today reports-- 15 teams have an opening day payroll of at least $100 million. the payroll for the la dodgers is the highest in major league history at $241 million. the detroit tigers are guaranteeing 30 year old first baseman miguel cabrera $292 mlllion into his 40-s. what a
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hit. still to come: data driven...the numbers traders are watching during this critical week. plus... how to stay one step ahead of hackers targeting your gadgets. and... what you see isn't what you get ...one author's explosive claims that the deck is stacked against the average investor ....after the break!
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bombshell accusations about how high frequency traders are "rigging" the stock market are revealed in the new book: "flash boys: a wall street revolt" by famous author michael lewis. it was a hot topic on 60 minutes over the weekend and even hotter on trading floors around the nation. joining us now alan knuckman of one stop options. i know traders were buzzing about this. so what are people saying?
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>>there's a lot of shock value to what he said. obviously he's trying to sell books. he's a great writer but i think he's trying to get a lot of attention. investors have never had the tools that they have now to be successful so i think it's a misnomer to say that things are in one person's favor versus another. >>it could be true. michael lewis contends that high frequency traders have a fraction of a second to jump ahead of other traders and investorsalso known as front running. isn't that completely possible? >>no. the answer is no. the spreads now are tighter than they have ever been. we're talking about parts of a penny. so if you're an investor and you're trading for weeks, months, years part of a penny's not going to matter. the markets now are more efficient than they've ever been. spreads are tighter, your commission costs are lower. your overall trading costs are the lowest they've ever been in history.
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also there's more participancyyou can execute your trading plan and get in when you want and get out when you want. that also contributes to a lower overall cost for your investment. >>do you think that the average investor having seen that report on 60 minutes will change their minds about investing in stocks? >>no. they're investing. they're not high frequency traders. and if they think they can compete with those guys in day trading they've got another thing coming and they deserve to not make money. so they're thinking long termyou can get in when you want, get out when you want and really invest for the long future. >>and you're telling me you don't feel any pressure when you're trading against some of these high frequency guys? >>i'm not gonna try and trade against those guys. they're gonna win the war. they've got the technology and the budgets to win that millisecond war. i look at the big picture as should most investors. you want to be looking at things for the long term and not worry about the milliseconds and leave that to someone else. >>so steady as she goes. >>exactly. >>thank you alan for coming on our show this morning. >>thank you. coming up...what a trader is learning from the options market about an education stock that reports earnings today. and... hackers aren't just
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call the veterans crisis line at 1-800-273-8255 and press "1". you've heard the term "internet of things" - the connecting of objects to the internet. refrigerators, dvrs, fitness bracelets, home baby monitors, cars, your home security system - even pacemakers. but by being online, all these things become vulnerable to hackers. jerry irvine is president and cio of prescient solutions and is a member of the cyber security task force. it's already happening! >>yeah, it is. currently there's about 2.5 billion devices that are connected to the internet. most of them being mobile devices and cellphones but by the year 2020 they're suggesting there will be over 30 billion deviceseverything as you mentioned from toasters to thermostats and alarm systems. >>what are hackers doing right now to break into these things?
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>>there are literally over 100 thousand known viruses and malwares that are specifically attacking these devices to gain access to your personal network. the idea is to get into them because they are weak and vulnerable and then get to your pc's to get your financial information. >>give me examples. >>a specific thing that happened back in january was a distributed denial of service attack where hackers went into these "internet of things"specifically in this situation refigerators and toastersput malware on them and use them as a robot to target specific websites on the internet to bring them down. >>and a person with a toaster didn't knowthey're still taosting bread. wasn't the target hack a vulnerability where they used one of these approaches? >>it's been reported that the way the hackers gained access to the target environment was through their hvac company's network to go in and manage their heating and air
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conditioning systems. >>we protect our computers with anti-malware and anti-virus and we don't think about these things. what should we be doing? >>there is no antivirus solution you can put on them and most of them can't be updated like you update your pc's. what you have to do is segment them. don't have them on the same network that your pc is on. put them on a virtual local area network so that nothing can get to them and they can't get to anything else. >>and it's separated from yoru personal financial informationit's not on that network. >>absolutely. >>then, configurate vpna virtual orivate network to access them from your mobile devices or from your computers. >>it's a scary world out there when not just your computer but your toaster can attack you. jerry irvine from prescient solutionsthanks so much. >>thank you. fascinating interview-- thanks bill. just ahead a traders fasination with trading the market this week. and why a wild ride could be ahead. chart talk is next.
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last but certainly not least on our show this morningjames ramelli of keene on the market dot com. what will you be watching for this week? there's a lot of data coming in. >>right, we have a lot of data. monday saw the stock market broadly higher. i don't think we were all that surprised by that move. it was the last day of the quarter and i think that fund managers wanted to show that they were long over the past quarter because the market did end up higher. we've been seeing the spy trading in a range about $5 over the past
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month and i think we're not going to see a breakout of that range until we get to the employment situation this friday. its been a very choppy past month in the market. we're going to wait for this number until we find some real direction. we've been pricing for a turnaround in the data for the spring. we're at the point now where if we get a bad number we can't really blame the weather anymore. i think this is going to be the most important employment number of the year. >>this has truly been a market without direction. as you mentioned there could be a breakout but there could also be a breakdown. so what do you see in the charts? where's the floor? where's the ceiling? >>i think this market has a long way to fall if we don't see that turnaround in the data we've been pricing in all throughout this year. i think the market could test as low as around 17.20 which is the february lows that we put in earlier this year. that's quite a bit lower than we are right now. we're just off of all time highs. i think the market definitely takes those out. if we start to pick up in the data here i think the market could continue to head higher from there. we saw a little bit of a resolution with the situation in the ukraine on mondayit seems like those tensions were easing off a little bit. some of the
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uncertainty is coming out of the market and i think we could head higher if the data supports it. >>apollo with earningswill it be an up or down move? what do you think? >>we've been seeing a lot of activity in apollo. we saw a little bit of put buying today but we did see some weekly call buying for this friday's expiration last week indicating a trader believed there was going to be a short term pop in the stock. i'm going to be looking at this one a little closer to the close, put a trade on it and i'm probably going to be long. >>thank you james. coming up tomorrow...an small busineses owner who is turning raw veggies into a blooming success. from all of us at first business...have a terrific tuesday!
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