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tv   First Business  KICU  January 16, 2013 4:00am-4:30am PST

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the president addresses the nation on how to curb gun violence today. historic changes could be on the way. in today's cover story - where's the pork? the debate over relief money for superstorm sandy on capitol hill. a disappointing announcement has some investors asking what's left to like about facebook. plus, a push for more transparency in corporate america. and, filmmakers shoot for a better business scene in china. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning. i'm angela miles.
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it's wednesday, january 16th. in today's first look: apple crunch: for a second session, apple weighed down the nasdaq in a dramatic fall. this week the tech stock has erased more than $17 billion from the u.s. stock market. well, here it is: facebook has a new way to search its site. "that" was the big announcement. a new report says a deal to take dell private could be revealed in a couple of weeks. the price could range between $13.50 and $14 per share. customer service agents at american airlines rejected a union's offer to represent them. the bid fell short by just 150 votes out of nearly 6,000 workers. andrew keene, president of, joins us now for a closer look at the trading day. good to have you on the show. and andrew, we have to talk about apple. the bigger they are ... > > ... the harder they fall. > and that is what's happening. how far down will this stock go? you know this stock backwards and forwards.
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> > i have a level here at $443.68, which is a gap level from a decade ago - not really a decade ago, but about a year ago. i have been talking about apple. there are only two ways i trade apple: i am either flat it, which means i am neither long nor short, or i am short it. i actually didn't participate in the move under $500, but i have been usually playing apple to the short side. if you look, every single stock is hitting a 52-week high. we will bring up the chart of apple. it looks so weak. if you took the four letters off the top, aapl, the chart looks really week. i think it is headed lower for sure. earnings next week should be interesting. > will facebook be a flop? i have to ask you about this, because i know so many retail investors own this stock. they are just waiting for a comeback. will they ever get it? > > i am actually short facebook via puts, so i am long puts in facebook. i did it before the announcement, the announcement came out, and i bought some puts in facebook, and it worked out really well. facebook is right at the $30 level. this is a key, critical level. we saw this yesterday. it dipped under $30 twice. right again under $30 it popped back
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higher. i was talking about it in the trading room. if i was bearish, which i am, i wanted to see it close under $30. if i was bullish i wanted to see it above $30. huge, huge volume yesterday. 170 million shares, average volume of, 68 million shares. so it should be very interesting to see what happens the rest of the week. you do have these bank earnings today, we have consumer sentiment as well, so we do have some economic data. we have a couple more days. but facebook, $30, keep an eye on this one. > and what do you think about the market winners? microsoft, caterpillar, and google surged yesterday. > > what happened is facebook was talking about what they're building, and they're building a search engine, right? that was the big rumor. and the minute they came out and said they are going to have a search engine, but they are going to have a search engine on facebook to try to give users more time to stay on facebook, what happened to google? google was off to the races. it rallied about $12 when facebook came out with disappointing news. facebook sold off, and what was bad for facebook was good for google, so that one rallied. google is another one with earnings within the next week, so i am going to keep an eye on google for earnings. they disappointed majorly last time on earnings, so it should be interesting to see what happens in that. > good to have you on the show. thanks andrew. > > thank you. members of the house trimmed down the amount of federal assistance included in a bill to help millions affected by superstorm sandy. what may be lost in discussions is that the cuts didn't involve direct aid to the northeast, but, as our
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cover story explains, earmarks attached to the bill that added an additional $10 billion. it was under the large umbrella of disaster aid that led politicians to add a variety of projects that did not involve rebuilding communities in the northeast, but had some link, though not geographical. fishing in alaska, hurt by global warming, was looking for a $150-million boost from sandy aid, a storm many say global warming intensified. "a poison pill would sink the whole bill." one of these so-called "poision pills" involved allowing construction companies to pay their lowest earners less than the federal minimum wage. out of more than 90 such amendments, 13 were kept by the house rules committee. "it's just one example of why these bills are dangerous..." the assistance package was broken into two parts: $17
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billion for the fema disaster relief fund, transit aid to new york and new jersey, repair to hospitals, roads and utilities, as well as to the manhattan va hospital; and an additional $33 billion to fema, emergency aid to public transportation and to help other communities struck by hurricane sandy or any other disaster within the last two years. fema has spent more than $3 billion in disaster relief money for shelters, restoring power and other immediate needs in the northeast. the house has already approved changing fema regulations to speed up the disaster relief process. later this morning, president obama will deliver a series of concrete proposals to bring gun violence under control. in response to the horrific sandy hook school shooting, vice president joe biden has met with the nra, healthcare
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professionals, gun control groups and a rep from walmart, the nation's largest gun seller. the president will lay out the measures created from those meetings. likely on the list: a push for an assault weapons ban and better background checks. the president speaks at 11:45 eastern. children who wrote letters expressing concerns about gun violence in schools will join him. a new york city school bus driver strike starts today, affecting 152,000 students. more than 8,000 drivers and support workers are walking off the job to protest a lack of job protections. new york city mayor michael bloomberg has proposed a competetive bid process for school bus contracts in order to save money. the union is upset it may impact current drivers. this strike is the first such job action by unionized new york school bus drivers in more than three decades. massive job cuts are happening around the globe. the world's largest platinum producer, located in south africa, is closing 4 mine shafts and letting go of 14,000 employees, which is 24% of its workforce.
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the owners of anglo-american platinum blame slowing demand. platinum prices rallied higher than gold prices yesterday, because closing the mines will lower platinum production. and in germany, air berlin is reducing its staff by 10% by dropping 9,300 workers. the second-largest airline is said to be struggling with competition, high fuel prices and the german economy. australian vitamin and supplement maker swisse vitamins is crossing the pacific pond. the privately-held company will set up its north american headquarters in chicago and start selling its most popular products in walgreens stores starting february 1st. rite aid and target stores will start selling the products in april. the company's ceo says the products it sells will be manufactured in utah and florida. swisse vitamins is positioning itself as a premium product and intends to price its products 5-10% above competitors such as pfizer and
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bayer. the nation's largest retailer is reaching out to men and women in the service. wal-mart is offering a job to every veteran who honorably left the military in the past year. the program will continue for 5 years and is expected to provide work for more than 100,000 veterans. additionally, the retailer is committing to buying an additional $50 billion of u.s.- made products in the next 10 years. the government of japan joins the u.s. government in investigating boeing's 787 dreamliner. the probe is to uncover what caused two fuel leaks on two different dreamliners operated by japan airlines. japan's transport
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ministry said they opened the investigation because the two fuel leaks "occurred in succession." the faa says 787s are safe, but is conducting a comprehensive review to ensure no flaws are present. an end-of-the-year surge of consumer buying gave a lift to retail sales in december. retail sales rose .5%, which was higher than economists predicted and slightly better than the .4% rise in november. much of consumer spending came from people buying cars and trucks. overall last year, car companies had the best year since 2007. nissan's leaf will soon go for less. the automaker said this week that the new model of its battery-powered leaf will cost $6 thousand less than previous models. that cuts the price to around $28,800. nissan hopes the cost cutting will increase sales by around 20%. cadillac is giving drivers a chance to have the "best of
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both worlds" with an eco- friendly luxury vehicle. at the detroit auto show this week, the company unveiled the cadillac elr, which is based on the technology behind the chevy volt. cadillac hopes it can draw luxury drivers to go green. "it is a luxury vehicle, so it will be exclusive from that standpoint. we're not talking about mass volume because the consumers that we are interested in and consumers that we think will be interested in the volt want something that is unique. they want something that is distinctive, something that has a great presence. they also want to associate with companies that are socially responsible." the elr prices in at $39,000. meanwhile, toyota also unveiled a new release this week - a redesign of its top-selling corolla. the furia is toyota's first redesign of the corolla since 2008. no word yet on when the car will be released. hollywood has its sights set on china. reports say filmmakers are making an effort to produce films with greater potential for success in the eastern nation. storylines, locations and actors are all taken into consideration, along with censorship standards. disney's upcoming "iron man 3" and ang
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lee's "life of pi" are both films that have been under the watchful eye of chinese bureaucrats while filming in china. still to come, is facebook fading away? why its latest feature could be too little, too late. but first, corporate america is in the midst of an overhaul. why more information is up for grabs to shareholders in 2013. that's next, with bill moller. ♪
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corporate governance - that is, the system by which companies are governed and directed. also, the relationship among boards, management and shareholders. and, in this new year of 2013, there's a lot going on in terms of corporate governance, regarding laws & trends. let's talk with becky yerak. she is a business reporter for the chicago tribune. one thing i thought that was really interesting is that now we have a comparison between what ceos make and the average employee, and that can be rather an eye-popping difference. > > exactly. if you thought that class warfare was bad during the election and during
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this tax battle, it could get even worse, because under a 2010 law, dodd-frank, public companies are supposed to disclose the relationship between what their ceo makes - that's already public information - but they are supposed to compare it and give a ratio with what their median employee, kind of the typical employee, makes. so this is something that people can compare from company to company just to see how much more - "wow, the ceo makes 300 times more than the typical worker here!" > in some companies it wouldn't be that dramatic - an investment bank, for example. but at other companies - you had mentioned earlier wal-mart - it would be a hugely divergent number. > > take goldman sachs. their ceo makes a lot of money, but there are a lot of people at goldman sachs who also make a lot of money. so the disparity wouldn't be as great maybe as wal-mart or some retailer where you have a ceo who probably makes a lot, but you have a lot of minimum-wage workers. so that is going to be a big disparity. > also in corporate governance, we are going to know a little bit more about ceos. for example, when they are applying for a job, we get a look at
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their background checks now. > > one thing that struck me about a proxy that i saw - i have never really seen this before - where in a proxy statement it will say, "we've performed a thorough background check on this new director. we have checked out all his references." that is something that i haven't seen before. > you looked at other proxies and saw this new love of shareholders now. > > i have never seen so much sort of kissing and telling: "here is what we are doing to keep our shareholders happy. here is our address if you want to write. we encourage you to write to us to give us your tips on how to better manage this company." so there is a lot more outreach to investors. > > one of the trends i saw that was encouraging, but also not encouraging in one way, is the number of women who are directors now. > > exactly. a few years ago, maybe up to a third of companies had no female directors. that has kind of fallen to the low-20s to mid- 20's. but when you think about it, it is still almost a quarter of fairly large, public companies- > have no women at all on the
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boards. > > you're right. > all right. becky yerak of the chicago tribune. > > thanks bill. thank you bill. still ahead, a look at facebook's future. can it survive on the web... and in the market? that's next.
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investors in facebook anxiously held their breath ahead of facebook's much anticipated
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product launch yesterday. they were hoping the stock would return to the glory days of its $38 ipo price, while others stocked up on fb, sending shares 18% higher just during the past two weeks. now that the news is out about facebook's new search capabilities, facebook shares are tumbling. joining us via skype this morning, rob enderle of the enderle group, who is following the action. what was your initial reaction when you heard facebook founder mark zuckerberg reveal a graph search? > > well, clearly expectations had been well over-set. this was actually much more appropriate for what facebook needed to do than a lot of the speculation surrounding an e- commerce site or a phone or any one of a number of wild ideas about what they were going to accomplish. but this is the kind of thing they should be doing: creating more value for facebook users so they stop drifting away
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from fasebook and stay with the service. > did facebook overreach though with all this build-up into the product launch? > > facebook is a company that lives off marketing, but doesn't seem to really understand marketing. and yes, they let expectations get over- set. that is what got them in trouble with the ipo and is probably their achilles' heel. they have a tendency to let expectations get overheated. and then of course when they announce, the disappoint. in this case, i think they did something that was appropriate, they just let the expectations get out-of-hand. > is facebook losing friends? it was just reported that 1.4 million people decided to get off of facebook at the end of december. 167 million are still on, but what's going on here? > > that is exactly it: people are tiring of facebook. they are not getting the benefit out of it that they had hoped to get, and the end result is they are finding it annoying and they are finding it to be a time suck. and so they are walking away from it and doing other things - a lot of them are going
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back to doing their work. so the end result is facebook has been bleeding people, and this is one of the things they are doing with this announcement, trying to keep people on board and get back into a growth mode so they are not becoming the next myspace. > will it work? > > they will have to position it better than they have. they are really going to have to show people how to get the benefit out of the service. and that has not been there strength of late. they tend to be an engineering-driven company, so they are long on engineering but very bad about talking about it and getting people to actually use the different features. if they don't fix that, it won't work. > thanks rob. > > pleasure. just ahead, earnings are due out from jp morgan and goldman this week. why one trader remains shakey on the banks. that's after the break.
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tim biggam of trading block joins us now for chart talk. good morning. good to have you
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on the show as always tim. > > thank you. always great to be here. thanks angie. > > here we go with the big banks reporting in: we have goldman sachs, j.p. morgan coming out with earnings. what is a trader's view on the banks? do they think they're going to be profitable here? > > i think they will be profitable. loan loss reserves is always their magic bullet. they can bring those forward almost as needed, and that's their call to make. so, it's somewhat a smoothing effect, or a meet-the-number effect on earnings. so you have to drill down post-earnings report and see what sort of loan loss reserve manipulation they had to bring forward, and then take a look at their organic growth and what are they actually making. that is really the difficult thing going forward here, will be for these big banks, given both the equity and the bond environment and certainly the lack of big deals even though dell had an announcement a few days ago that organic growth - actually making money instead of kind of manufacturing money, so to speak - may be difficult here, given the fact that certainly goldman sachs is near a 52-week high and j.p. morgan not too far away. and the fact that they are employing a lot of leverage to hit their numbers gives me, as a trader, a lot of pause for
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concern here. > so what would be your trade here, or would you just stay away from the big banks for awhile? > > you know, i think we touched on it last week, given the run-up that we've had, i'm certainly fearful, and i'm buying some out-of-the-money puts on the option side here. from an investment standpoint i would absolutely wait for a pullback on any of these names given the run-up they've had here. goldman maybe about a $125 level, so looking for about a 10% pullback across the board. citigroup even a little bit more. j.p. morgan maybe a little bit less. they had some headwinds from the "whale tale" so to speak. > good to have you on the show. that is trader tim biggam of trading block. have a good trading day tim. > > you too. thanks angie. that closes out another edition of first business. coming up tomorrow: films likely to get a financial boost ahead of the oscars. from all of us at first business, have a


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