tv First Business KICU April 25, 2013 4:00am-4:31am PDT
panic on the trading floor. what this week's mini flash crash is exposing about the stock market. in today's cover story.... fighting for fair wages. why these protestors want more money. devastating damage. recent flooding could leave thousands financially underwater. plus.... disney attempts to strike first with a summer blockbuster hit. first business starts now! you're watching first business: financial news, analysis, and today's investment ideas good morning.it's thursday, april 25th.i'm angela miles. in today's first look: mixed market, mixed messages weak news on orders for durable goods and profitable news out boeing landed a mixed session on wall street wednesday. the dow fell 43 while the nasdaq
and s&p remained unchanged. gold rallied $21 dollars, and oil gained $2.47 . earnings after hours triggered high volume trading after the bell. zynga fell then, bounced back some on a weak forecast.qualcom also fell on its outlook. however, akami shares jumped 16%.. after topping earnings and revenue expectations. and today, federal regulators will detail threats to the financial industry--including high frequency computertized trading. scott bauer of trading advantage is at the ready for some trader talk this morning. scott, who's buying this market? > > i don't think the big money fund managers are out there dipping their toes in up here. what you're seeing is the retail investor who maybe has not been able to participate over the last 6,12,18 months. anytime we see any kind of minor pullback at all they're the ones really dipping their toes in the
water now. > > is wall street worried about the economy? i know we have a big gdp number coming out on friday for instance. > > it looks like wall street is a lot more worried than just the mainstream investor because the economic numbers that have been coming out recently are not so great and that's really being reflected in many of the consumer staple stocks that we've seen report earnings with shortfall on revenues and maybe just lowered guidance so wall street, i think, has a different opinion than main street. > > what will be some of your earnings plays scott? > > we saw qualcomm come out last night. they actually beat on the top line and the bottom line which for this earnings season we have not seen many companies be on that top line. the stock was down $3-4 dollars after hours trading down to that 62 and a halfish level which is some pretty major support. i think you're going to see a lot of buyers come in. you're going to see that stock rally after earnings because that earnings number actually looked pretty good. > > thank you for your thoughts
scott. > > thank you angie. parts of the midwest are preparing for flood damage. the national weather service reports flooding threatens rivers in illinois, iowa, indiana, north dakota, mississippi, and michigan. parts of illinois have already been hit hard. officials will be on alert throughout the weekend. bankrate dot com reports only 13% of homeowners have flood insurance. the average cost is about 50 dollars a month. "the typical claim paid out for flood insurance was paid out for about 30 thousand dollars, so there is ample return on your investment if you need to tap into your policy. " that was doug whiteman of bankrate. he notes flooding is the most common type of natural disaster in the u.s. labor rights groups question the deadly collapse of a clothing factory in bangladesh. the new york times reports around 90 people were killed, hundreds were injured and others trapped in the debris. bangladesh is becoming popular among retailers as chinese workers demand higher wages. bangladesh employees earn an estimated 14 cents an hour. proponents say the pay lifts millions out of poverty. critics say little is done to
protect workers. this is the 3rd tragedy in 6 months. walmart is investigating -- however reports say walmart, h&m, sears, gap and more -- use bangladesh factories. in our cover story---more than 500-retail workers in downtown chicago walked off their jobs in a one-day strike to raise the minimum wage. it follows a similar walk- out, three weeks ago in new york. retail and fast-food employees led a one-day strike through downtown chicago's richest shopping district. they want illinois' minimum wage raised from 8.25 and hour to 15-dollars. "i know overall, my co-workers bring in a thousand dollars an hour in sales and that should not just come to the company." "do you think someone who makes 8.25 an hour, should be expected to live on that? i suspect it's hard in chicago." "i think the minimum wage should be raised but it's going to take a lot of work. (if it was raised, would you as a
consumer, be willing to pay more for goods and services? yes, because i think everyone should be able to live and be educated." the protesters crowded the sidewalk but allowed shoppers to filter through. then continued to a nearby mcdonald's. a corporate spokeswoman initially refused to answer questions and hung up on us but emailed this statement, in part saying: "employees are paid competitive wages and have access to a range of benefits to meet their individual needs." but competitive to what--other minimum wage jobs? the economic policy institute, a nonpartisan think-tank found since 1968, the minimum wage seen here on the bottom...has slipped below the rates of inflation, the rise in average wages, and below the rise in productivity...if tied to productivity, it would be around 20-dollars.since 1968, the minimum wage seen here on the bottom...has slipped below the rates of inflation, the rise in average wages, and below the rise in productivity...if tied to productivity, it would be around 20-dollars. "we used to think of teenagers as minimum wage earners. now, its families. we need to raise the
pay of these low-wage service jobs if the american middle- class is going to survive." three weeks ago, a similar protest to raise new york's minimum wage from 7.25 an hour took place. their primary argument is that the minimum wage is increasingly becoming the standard wage for families...not just young people or single, unskilled laborers. representatives for dunkin donuts and subway, also targeted in the protest, said hourly wages are set at the discretion of franchisees. late wednesday, a mcdonalds representative said that was also the case at 90% of mcdonalds in the u-s. the financial crisis ended with the rich getting richer. according to pew research center-- wealth for the lower 93% declined 4%.while the net worth of the top 7% households in the u.s. rose 28%.mostly because money was made on the stock market rally from 2007 to 2009. citigroup gets the green light for its executive pay plans. 150 shareholders showed up to approve pay packages for citi's top execs.that includes an 11.5 million dollar package for ceo michael corbat. about half of shareholders
rejected compensation plans in 20-11 under the watch of then ceo vikram pandit. the stock market fell into a free fall tuesday-- on what some traders are calling the "terror tweet".mid session-- a tweet reading: two explosions in the white house and barack obama is injured." created a panic sell off that sent the dow spiraling 145 points in minutes. it turned out to be a hoax and the stock market quickly recovered. may 6th, 2010 the dow plunged 600.. in a high frequency trading incident. in 2010 the market even though it snapped back that day eventually by the middle of the summer traded down to the lows of the flash crash. so in a sense it exposed a weakness and vulnerability of the market. now this micro crash i think it shows you a lot of support under neath this market. even though the market might retrace to those levels in the next couple days, it's only 1% lower" that was matt shapiro, president of mws capital.
the fbi and the sec are investigation the mini flash crash caused by a tweet. twitter reportely is considering tighter security measures to prevent hacking. a successful "whistleblower" program is hitting a roadblock. so called 'whistleblowers' can report illegal activity to the s-e-c for a financial incentive. the new york times reports some wall street firms are taking action to insure employees report wrongdoing internally instead. in other instances, tipsters have been demoted or faced legal pushback from firms. boeing surprised wall street by producing better than expected earnings despite trouble with its dreamliner. profits climbed 20% to $1.1 billion dollars in the first quarter. the jet maker offset losses from its 787-- with delivers of 737 and 777s.the 787s have been grounded since january because of burning lithium ion batteries. boeing is fixing batteries on all 50 dreamliners. "we are projecting it is going to take us 5 days per airplane to
incorporate the modificiations." jets in japan were among the first repaired. airlines there reportedly are considering flying the dreamliners as early as today. . a closer look at this week's earnings-- stellar u.s. sales helped ford report its best quarter ever. profits soared 16% at united technologies, as the company backed a full year outlook. yum brands reported healthy results to investors, but a bird flu strain in china has it worried about kfc sales. meanwhile, at & t took its largest hit since 20-10. as competition from verizon hurt its bottom line. consumer staple procter & gamble fell short of wall street expectations, and issued a weak outlook for its current quarter. and, defense contractor northrop grumman took a hit, as sequester cuts hurt revenue.
sprint has a hang up with samsung's galaxy s 4 smartphone.the company says in a statement.. "unfortunately, due to unexpected inventory challenges from samsung, we will be slightly delayed with our full product launch."the phone was supposed to launch saturday. samsung claims there's overwelming demand. drugmaker novartis has been sued over an alleged kickback scheme. federal prosecutors accuse the drug company of giving 20 or more pharmacies discounts and rebates in order to promote novartis pharmaceticals instead of generic versions.the suit says the scheme cost medicare and medicaid patients tens of millions of dollars. novartis disputes the claims. the government is suing lance armstrong.the department of justice accuses the armstrong team of "regularly employing banned substances and methods to enhance their performance..." the deparment the team took more than $30 million in sponsor money from the u.s. postal service, then used prohibited drugs.armstrong's attorney calls the lawsuit "opportunitstic. " a study about traffic congestion is clearing up a few things about the economy. data company inrix finds that -- to no surpise-- los angeles
continues to have the heaviest traffic jams in the country. followed by honolulu and san francisco. jim bak of inrix says the rise in traffic indicates more people are on the roads for work. "in 2013, hiring is back again for the most part, and as a result we are seeing traffic back. and now 61 of the 100 worst cities for traffic are now on the rise, and we are seeing unemployment in those cities receding back to levels not seen since the recession." congestion in major u.s. cities has increased about 6% since the start of the year. peta is buying up shares of seaworld stock.the seaworld ipo-ed last friday. the stock is trading around $32 dollars. peta purchased 80 shares.just enough stock to have the right to attend annual seaworld shareholder meetings.peta's first order of business is to demand that seaworld release its killer orca whales including "shamu". new $100 bills will be available this fall. starting october 8th.. the federal reserve will release a re-designed c-note.it has the
added security of a 3-d ribbon and disappearing liberty bell meant to throw off counterfeiters. still to come we're fast forwarding ahead to summer with a look at what films will heat up the box office. thats later on in movies and money. but first -- how billions of dollars in credit card disputes are hurting small businesses. thats next with bill moller.
bet you never heard of this term its a chargeback. i happens to be the scourge of retailers. primarily online retailers. every year consumers disputer billions of dollars of charges on their credit cards. each dispute results in a fee that the merchant has to pay whether or not they're at fault. it is a big and costly headache. for that reason, it's also an opportunity for an entrepreneur to start a company that helps retailers minimize their charge back losses. monica eaton cardone's business is called chargebacks 911. monica, you were a retailer once, how big of a problem was this for you? > >it was a huge problem. needless to say we made every single mistake when it came to being able to manage our chargebacks. and we always thought that the very biggest barrier to having a successful
online business or any business for that matter was just getting customers. however when it comes to dealing with the chargeback problems, that's a very different barrier and one that is very difficult to understand and solve. > > these fees can range from $10 to upwards to $100 or more per transaction. how is it that's becoming more of a problem? > > what happens is with the growing rate of online transactions in the virtual marketplace what's going on with consumers is there's been a lot of incidents of fraud, stolen credit cards, identity theft--- situations like that. and consumers have been getting very educated on how to file a chargeback to defend themselves. unfortunately the education process and giving them these defense tools have in many cases started to work against us as a society for the entire economy. it's effecting all the processing vehicles in the entire chain. so for example, where a consumer would have filed a legitimate chargeback against an identity theft situation, today we're seeing more and more consumers are filing chargebacks for a term called friendly fraud which is just a chargeback in order to get a refund. > >give me three things that merchants can do to minimize this problem. > >the first thing they can do is get a signed sales receipt, either a delivery confirmation or a signature where the customer agreed to the
purchase. the second things is to make sure that consumers are very well aware of what they're getting into. if you have recurring billing make sure they understand exactly what the requirements are for this purchase before they go ahead and give you their credit card. and then, third, is make sure you have good customer service. customer service goes hand in hand with preventing chargebacks. if you don't have good facilities they're going to contact their bank. > > monica eaton cardone from chargebacks 911, thank you. > > thank you. still ahead how disney is making a play for the top spot at the box office this summer. thats next.
cruise control.tom cruise-- who stars in the new film oblivion-- is at the top of his game at the box office.. our movie man is here with that and more. glad to see you eric. > > thank you. > >just as you suggested oblivion came in at number one at the box office over the weekend. > >tom cruise's second best opening---for non mission impossible films. so you put him in a mission impossible film or a science fiction film like war of the worlds or minority report, he does very well. > > oblivion brought in $37 million over the weekend at the box office...coming out this weekend is "the big wedding" and "pain and gain." > > "big wedding" i hear is a big skip. "pain and gain" with mark wahlberg and dwayne johnson, both were very funny in the film--a michael bay film. he did the transformers films. i think the actors are very
good in the movie. the direction not so much. > >coming up this summer disney is hoping for some smash hits. here's a list of what to expect from disney this summer...which will be the biggest hit of all eric? > > i think it's gonna be "the lone ranger" suprisingly enough. this film was plagued with pre-production problems but once the film got started everything was pretty smooth sailing and this the team that did "pirates of the caribbean" --johhny depp, gore verbinski, and jerry bruckheimer. i think the iconic appeal of it, the july 4th holiday. i think it's gonna cruise through july and be number one for a good portion of that month so i think it's gonna be the big hit of the summer. > >"ironman 3" is right around the corner. > >yeah. we'll be talking more about it next week. it's going to kick off the summer obviously and we're gonna see if it's going to get "the avengers" bump from last year. its coming off of that more than the sequel. or if it's going to do what the other two movies did and if it did that we're still looking at $300 million at the box office. i think it's gonna be the 2nd biggest movie of the summer. > >"monsters university."
> > the sequel to "monsters, inc." the pixar film from 2001 which i personally love. it screened at cinemacon just last week and the buzz on it is extraordinary. i think it's gonna be the big family hit of the summer. > >and "planes" which is like "cars" correct? > >like "cars" instead of talking cars you got talking planes. this is an early august release. family films don't get a huge bump that month. we haven't really seen a history of that. but i think the kids will see it. if they like "cars" why not like "planes?" i think this film will do pretty well in august. > > you're a movie guy but what's your take on disney's stock? it's up 50% for the year over the past year. is wall street buying ahead of the summer films? > > it could be. we're well past the "john carter" disaster from last year and "the avengers." disney's been doing very well since then and i think they're gonna be the studio to beat this summer so watch out for that. > > thanks eric. > >thank you. coming up--- we will slide in a quick chart chat with a trader play on exxon mobile---right after the break.
we are talking big oil this morning with alan knuckman of trading advantage. good morning to you. oil prices have been slowly rising, what do you see in the charts? > > good morning angie. it's a three part chart analysis what i look at is the sector. xle the energy spider has held solid support at 74. that's a halfway point of the november move from 68 up to the march high of 80. so that held solid. oil's broken out to the upside after trading between $86 and $90 a barrel for the past week. its push to the upside is a very positive sign. the stock to look at here is exxon. exxon has been stuck in a range as well between $86 and $92 since september. a tight range for a big company like that. so that target's $98 on the upside on a breakout. > > what's you options play here? > > looking at options that have limited risk and plenty of time to have some staying power.
i'm looking at the january 80 strike. it's an in the money call. it's 950 in the money. it's going to cost me about 1050. so it's going to act much like this stock on the upside and i'm looking for a 10% move in the stock which transaltes to a 75% return in the option if we get that gain. > > what could slow the roll of exxon mobil? > >oil is the wild card but typically price shock potential is usually to the upside that anything that happens in the world. they usually don't drive the price sharply lower in a short period of time. there's an underlying fundamental base in the market of energy obviously and we've been at a 4 year uptrend. so i'm looking at the upside price shock potential with anything that happens in the world and as more and more economies come back online and get better. > > thank you for your thoughts today. > >thank you very much. > >he'll be back tomorrow for traders unplugged -- as the guys decide whether to stick with the old trader adage.. sell in may and walk away. from all of us at first business.. have a great thursday.
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