debates reveal about where the candidates stand on jobs and the economy. in today's cover story, why more shoppers are getting a jump on their christmas lists. plus, a money manager who only invests when congress has left the building. two traders weigh in on why cheese could be considered a commodity. and, we'll focus in on financial stocks as some of the big players get ready to release earnings. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. it's october

12th. i'm angela miles. in today's first look: traders are prepping for the friday trade. yesterday a 30,000 drop in jobless claims ignited a rally in stocks, but that fizzled out later in the session, with the dow and nasdaq especially losing momentum. gold gained 4 dollars, while oil pumped up more than a dollar. a setback for apple today. a u.s. appeals court overturned a ban on the sale of samsung smartphones running on google's android system. chip-maker a.m.d. cut its forecast, sending shares down more than 5% last night. and it's bye-bye to refillable glass coke bottles. the last one rolled off the production line in minesota. let's get a trader's take on the day. larry shover of sfg alternatives is ready for this friday. good morning to you.

> > good morning. > > yesterday, the market had quite a bounce off the jobless claims number, and then it fell apart throughout the session. what was going on there larry? > > i think traders looked through that number and realized it was the lowest in four years, but a lot of it had to do with one state's seasonable adjustment. so, i don't think traders were really bullish on that number, but just waiting to see what happens next month. > > jobs are jobs. let's move on to spain. there's a lot of pain there. that country is still deciding what's going to happen next with its debt crisis. > > right now we're very macro- focused as opposed to micro- focused with regard to spain. the rumor is that now they're going to wait until january to activate omt, and so that's getting the markets a little bit nervous. but, we're sitting in a very tight range. it doesn't seem like the market cares right now. > > why is oil holding up? things can't be that bad if oil is up at these levels. > > just keep in mind oil has fallen off the map just the last couple of weeks, and i

think it's just taking a corrective rally right now. supplies are thinning out. they were much higher even two weeks ago. so i think it's just a correct bounce. just look for oil to level off and perhaps go a little bit lower in the next couple of months. > > larry shover of sfg alternatives. thank you larry. > > thank you. 2 debates down, 2 more to go. the spotlight moved from the presidential race to the vice presidential candidates last night. v.p. joe biden and republican contender paul ryan stepped up to the plate in danville, kentucky, to spar over the economy and more. who will pay more in taxes who will pay less? the middle class will pay less and the people making $1 million will pay slightly more. the continuation of the bush tax cuts--we're arguing that tax cuts for the wealthy should be allowed to expire. you see, there aren't enough rich people to tax to pay for all their spending and so the next time you hear them say don't worry about it, we'll get a few wealthy people to pay there fair share, watch out middle class, the tax bill's coming to you."

the next round of presidential debates happens tuesday. on the heels of jp morgan's earnings out today, reports say the bank is considering changes at the top. the cfo, douglas braunstein, might leave his post, but will remain at the bank. ceo jamie dimon continues to be under fire for that multi-billion-dollar trading loss earlier this year. third quarter revenues are expected to climb to $25 billion, topping last year, mostly due to the improving housing market and it mortgage lending business. goldman sachs has the results of its "muppet" hunt. last march, an op-ed in the ny times by former goldman employee greg smith said the term "muppet" was frequently used to describe clients. now reports say the firm cracked down on the language by searching through e-mails. 4,000 muppet references were found, but that doesn't necessarily imply guilt. goldman says most of those were refering to last year's muppet movie.

foreclosures fell to the lowest level in 5 years in september. it's the second plunge in a row. although there were some declines, the top 5 states with the highest foreclosure rates are florida, arizona, california, georgia and illionis. however, illinois is out with an innovative plan to keep people in their homes with a beneveolent hedge fund backed by the treasury that buys up deliquent loans. "we had our first couple of big purchases of loans. these are loans that are delinquent. we purchased them at a discount anywhere between 40 and 50 cents on the dollar. and, our intent is to take that 50 cents on the dollar savings, leverage it, modify the existing homeowners' mortage to a level they can afford and keep the homeonwer in the home." that was mary kenney of the illinois housing development authority. standard hedge funds foreclose on the homes and then sell the property. more americans are beginning their december holiday shopping in october. retailers have noticed this trend in the last few years. and as our cover story explains, one reason is that it helps consumers lessen

the impact to their monthly budgets. in a poll by market research company ipsos commissioned by online coupon site retailmenot.com, 40% of americans surveyed start their december holiday shopping before halloween. and 32% are done by the monday after thanksgiving, dubbed recently "cyber monday" for all the online shoppers back in the office after turkey day. even if you aren't done, a lot of people have made a sizable dent. "i'd say maybe 50%." "maybe 40%." "we started calling this 'christmas creep.' it helps consumers absorb the impact on their budgets." the national retail federation, the world's largest retail trade group, predicts holiday shopping to be up 4.1% - not as high as 5.6% in 2011 - with online holiday shopping projected to be up 12% from last year. "i think this year is better." "me, personally, i'm more confident this year because i've

got a better job than i had last year." free shipping continues to be the most valued discount. and layaway plans are back and starting at some stores in october. "kmart and walmart are waving layaway fees from october through december so you can spread your payments over three months and pay no interest." but we're also beginning to hear consumers say they're going to avoid the post-thanksgiving crush of shoppers - call it "black friday backlash." "i don't adhere to those 'cyber monday,' 'black friday' things. it's a madhouse. i think it's crazy." paying for it all is a part of the early start, and spreading out the cost. one in four people surveyed said they worry over how they'll afford the holidays this year.

barnes and noble is finding its niche with the nook. the bookseller expects sales of the digital nook, combined with college bookstore sales, will generate revenues of $3 billion this year, mostly from growth in e-books. for the first time, b&n is selling nook e-readers outside the u.s. and plans to be in 10 foreign markets by june 2013. pre-orders for the new nook tablets, which ship later this month, are up 240% compared to previous launches. sprint nextel shares surged 14% on merger talk japanese cellphone maker softbank is considering taking a 75% stake in sprint. sprint has been in deep debt for the last seven years. softbank is one of japan's biggest cellphone makers. sprint closed at $5.76 on thursday. ending benefits for retirees is the latest plan by kodak to emerge from bankruptcy. health, life, survival and dental insurance will all stop by the

end of the year for 25,000 employees with a judge's approval. kodak would wipe a reported $1.2 billion in obligations off its books. in exchange, the company would give the retiree committee an estimated $7.5 million or possibly more to cover some costs. more companies are taking the plunge into public territory. ipo activity has risen 5.4% this year. this week, real estate giant realogy, owner of coldwell and century 21, debuted on the markets. it's the largest real estate ipo ever, and yesterday shares began trading on the higher end of the ipo price range. meanwhile, online photo site shutterstock priced in at 17 dollars, exceeding its 13- to 15-dollar range. intercept pharmaceuticals also priced in yesterday, at 15 dollars a share. royal gold, a precious metals company, and tech firm workday are expected to launch their ipos today. the ag department is out with one of its most critical crop

reports of the year, and the latest harvest check sparked a rally in corn and soybeans. soybean crops fared better than expected under the summer's sweltering heat. however, for the 4th consecutive month, the department is lowering estimates for corn, which is the nation's largest cash crop. drought and heat damage reduced corn production to the lowest level since 2006. consumers are likely to feel the pinch as dairy and meat prices rise next year. pigtails are still in style. fast food chain wendy's is giving a makeover to its logo for the first time since 1983. wendy will keep her signature red pigtails, while the image surrounding her will get a more modern look. still to come, traders unplugged. we're hearing about hot stocks and the cost of cheese in today's edition. that's later. but first, how decisions made on

capitol hill have a ripple effect on your portfolio. that's right after this.

financial reforms along with the u.s. response to the global crisis are working to heal the economy. that statement is coming from u.s. treasury secretary timothy geithner. he says the economy is growing at a better-than-expected pace. critics, however, say the economy needs fewer reforms. how much does congress play

into your portfolio? perhaps more than you think. eric singer manages the congressional effect fund. he's the author of the new book "trade the congressional effect," and he's here right now to explain how to profit from congress' impact on the stock market. good morning. thanks for joining by skype. > > thank you angela, pleasure to be here. > > how does your fund work? > > i went back and looked at the stock market going back to 1965 day-by-day, and i found that on the 7900 days that congress is in session, the market went up less than 1% annually in price. and on the 4100 days they were on vacation, the market has gone up 16% in price. so i launched a mutual fund to mimic that, and that's the strategy of the fund. we only invest in the market on the days when congress is on vacation. > > that's interesting. your fund is up 2% for the year. what does that say about our

lawmakers? > > it says that this year they're having a little bit better year than most years. but, while the fund invests on a day-to-day basis, it's really a long-term approach. in 2008, most funds, the average fund was down 40 or 43 percent that year. this approach we were down 2% that year. so the purpose of this fund is to avoid the risk that congress creates when they change the healthcare laws, when they change the banking laws. in our fund investors don't have to worry about the rules being changed for an industry because we're trying to sidestep that. > > how do you plan to utilize this so-called "fiscal cliff" and possibly make money with your fund? > > the goal of the fund is to allow people to get most of the return of the s&p while taking half the risk, and right now we have a quarter of the correlation with the market. so, this is an ideal time to invest in the fund. when

congress comes back into its lame-duck session, we will be flat when they are in session. but there's a lot of risk in this lame-duck session. the fiscal cliff is not resolved, i don't think it's going to be resolved during the lame-duck session. asia seems to have economic slowing problems, and maybe a little saber rattling - the same for the mideast. it's really kind of a dangerous time in the market, and this is a fund that is unusually low- volatility, low beta fund, so it's a place where you can get some relative safety. > > eric singer. thanks for joining us today. > > thank you. still ahead, which companies will make it or break it this earnings season? that's next in traders unplugged.

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now on to a couple of guys who always give us a charge. pro traders alan knuckman and jared levy are here for traders unplugged. we can't wait to hear what you have to say today. round 1: upside or downside? it's earnings season. alcoa reported in on tuesday. what's the most critical on earnings, the top line or the bottom line? > > you've got to look at both. revenues have been on the way down. the past year has been horrible for revenues. we've seen a drop almost in the double digits, and in fact, this quarter versus last quarter, on the bottom line now, looking for a drop of 3%. i think you need to look at both. in the financial services alone, we lost 9000 jobs in the third quarter of q3. > > so you're saying they won't be able to continue to cut

expenses? > > where are they going to cut them? they're going to have to release more people. > > the performance is what's telling us a whole different story. so even though they've had this very, very low bar, every quarter we've achieved better-than-expected results. so maybe we don't achieve that, but maybe if we just come in line- > > so with the olympics then we're not going to have the high jumps, we're just going to- > > we're still going to do fine. > > round no. 2: bank of america. are you looking for a break-out or break-down on this stock, and can it sustain into the double digits? > > what's hard to deal with here is, it was at $3, now we're approaching $10. so you look at it and say, "do you want to buy it now?" but looking at it technically, it still has a lot more upside. i think at bac you've got a very strong trade. if you can get through that $10, we're looking at $15 or so. from a technical standpoint, that would be the retracement, and it's very possible. > > i've got mixed emotions on the financials and i think they're really predicated upon who takes the presidency, and obviously that fiscal cliff. listen, i think there are great companies out there to own, like goldman, like bank of america. but again, a romney victory would spell probably a better future for bank of america right here. i kind of agree with alan, i think there is some upside to

the company- > > the stock has- > > but more so if romney is elected. > > the stock has come up how many hundred percent, so i wouldn't say the last president held them down. but you can look at it as an option that never expires. it's a single-digit stock, and you can buy the shares and forget about them, and think about it as an option that never expires. > > i'll have to think about it for a while. > > round no. 3: canadian contraband cheese. now cheese, apparently, is a hot commodity in canada, and it costs a lot of money. so people are smuggling it over the border because of loonie power. > > the canadians are doing something right, or obviously we in america are doing something wrong. the canadian dollar has been screaming against the u.s. dollar for the past year, it's looking strong. unfortunately this is one of the outcomes. there are other actual things taking place within commodities, and in fact timber, there was an issue with timber not too long ago, with the grading of timber. but what's your opinion here on the cheese? what do you do? > > the great white north, obviously they're resource-rich, and that's going to be the area of emphasis, because you've got to look at commodities, they have not kept pace with the equities market. so that money is going to flow. you talked about metals, mining, timber, and food, and here's an interesting tidbit: 83% of the world's population are in emerging markets, and what do they want? > > cheese. > > they want better food. they

want to improve their diet. so it's a commodity play, and canada is one of the world's commodity leaders. so look for that canadian currency to continue, and i'm looking at $1.08 as the target. > > time for the bonus round for you today. give me the ticker of molsoncoors. > > c o o r. > > b e r. [buzzer > > t a p. > > tap! > > i was close. > > thanks for being on the show. good to have you. still ahead, are jp morgan and wells fargo stocks ready to break out or break down? chart talk is next.

tim biggam of tradingblock joins us now. good morning to you tim. > > good morning angie. > > we have some big financials reporting in today with earnings, j.p. morgan and wells fargo. j.p. morgan trading near a five-month high. is this a stock that you would buy? > > it's interesting to see it. we're back pushing toward those highs of march, that $45-level. it will be interesting if we do get some good news out of j.p. morgan. certainly they've recovered all that loss post

the whale trade, so the stock, and banks generally, i think, kind of feeling the benefit of what the fed is doing as they're able to in essence layoff some of their mortgage rate back to the fed and take it off their balance sheets. so, we'll see what kind of reserves they need to bring forward to kind of meet their number. that's kind of the key to the bank earnings reports both on j.p. and on walls fargo as well. > > is wells a buy here? > > wells has been the relative out-performer. it really didn't suffer too badly. the news we saw a couple days ago i think will provide a little bit more caution here. on a comparative basis, i kind of like j.p. on valuation and also on earnings verses wells going forward from here. > > there's lots of buzz on sprint. it could actually have a deal in the works here. is this stock a buy or something you would stay away from? it

certainly looks like more of a trade at this point. > > absolutely. sprint certainly has suffered over the past several years in comparison to verizon and the like. but, with the softbank news breaking yesterday it gave certainly a nice 15% pop on the stock. i think going forward, adding to positions, i may be a little more cautious up around $6, but if it drops back around that $5, $5.50 level, for long-term holders, sprint does have some cash they're not burning, so on a value play i think, somewhere on a pullback i'd be a buyer. but up around here i'd kind of wait for the froth the come out of the stock. > > good to get your perspectives today. that's tim biggam of tradingblock. have a good weekend tim. > > you too. thank you angie. that's it for this week. but we are taking flight next week with the editor of travel zoo. we'll have tips on how to get the best deals on travel this holiday season. from all of us at first business, have a great friday and enjoy your weekend!

a home in vallejo surrounded by police overnight after a 911 call by the homeowner. the crime that was going on inside. the heated exchanges during last night's only vice presidential debate. >> we can win this, think about it. we battled all yearlong. the challenge ahead for the

giants this weekend as they advance in the playoffs with a historic win. all ahead on the ktvu channel 2 morning news. good morning, thank you for joining us on this friday morning, october 12th, i'm pam cook. the roads are wet this morning. let's check in with steve. >> very cool. it felt like fall yesterday. that was a wide spread one. low clouds. higher clouds coming off the sierra. there are still clouds wrapping back around and under mostly cloudy skies and occasionally drizzle and light rain. highs today will be very cool. 50s and 60s again. here is sal. steve, right foul the roads are wet. you might want to leave the house a little early. you might want to plan that put that into your plan look at highway four here. looking good. also the morning commute looks good on interstate 880 in front of the coliseum. in both directions. le