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tv   First Business  FOX  July 6, 2009 5:00am-5:30am EDT

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states in financial crisis it's down to the wire for a handful of states as they race against the clock to close massive budget gaps. plus madoff is in jail but the blame game continues... why more parties may be held responsible for the scam of the century... and.. what some consumers are doing to stay fashionable... even in this recession... those stories and more all ahead on this edition of first business. first look starting a new week with the dow holding onto the 83-hundred mark many are expecting this selloff could continue.... to possibly a 10% correction... joining us now is dan of scotland equities he's over at the chicago board options exchange. what is your take welcome calls more selling
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pressure in the stock market? a couple of things i think we are looking at this week i think the bond auction this point to take place in the government issuance of notes of bonds brought the week are going to be the theme for this week. i believe that we need to see how that did come in and we need to see that there is still solid demand from that which we are still issuing to cover up this financial situation. that is certainly a good point we are looking forward to a second quarter earnings seizing chevron to get off earning season and that could be a big test for the market. it sure could be lucky said chevron this week and even moving out you have coming over the next couple of weeks have the earnings season were kicking it off in the market is teetering now i don't like the fact that the s&p 500 closed below 900 last week. technically dead does not look good so we'll see but there is some pressure in the market right now. thank you so much and we'll see you later in chart
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talk. thanks. a handful of states are going down to the wire facing immense pressure to pass 2010 budgets ... but the massive budget gaps have been difficult to iron out resulting in political log jams that threaten to shut down state governments. going into this year... all 50 states had to deal with budget shortfalls totaling 121 billion dollars.... because of a dramatic drop in revenues.. including sales.. personal income.. and corporate taxes. to close budget gaps - the debate has centered around tax hikes... and spending cuts. "local gov't is at risk.. states are cutting support for schools.. we'll see teachers laid off.. cuts in afterschool programs.. that kind of thing." in addition many states have already made budget cuts to k through 12 programs... shortened the school year ...
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consolidated schools.... but critics say .. politicians are completely missing the target " they'll attempt to make cuts in areas where people are most vulnerable.. old people .. young people.. those with disabilities... but they don't focus on the big savings.. cutting salaries and pensions.. in fact if you tally up wages.. pensions... and other benefits goverment workers make 45 percent more than private sector employees... a recent study shows state and local government workers earn more than 39 dollars and hour... including all wages, and benefits... compared to a private sector employee.. earning an average of 27 dollars. "the #1 area we need to address is pensions and salaries that are out of line with the private sector.. if we don't address it now when we are in a
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crisis i have little faith we'll ever address it.. we'll have this problem repeat itself over and over again." in fact brian costin with the heartland institute says if the state of illinois were to make a 10% cut to salaries.. it would result in a 3 billion dollar savings... and each day that politicians continue to debate their states' budget those in the worst financial shape.. like california... are getting closer to impending disaster... that could have a ripple effect across the nation. if california defaults.. people will lose confidence in borrowing.. credit rating agencies are under a lot of pressure to be tougher with states... and states will find it harder to borrow in the the future. while a handful of states battle over their budgets some have enacted temporary budgets.. while others are calling for
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special sessions to begin this week. with last week's sentencing of ponzi schemer bernie madoff, one chapter of the multi-billion dollar fraud has come to an end. but for the victims who are trying to recoup losses and for feeder funds under fire for their role in allowing it all to happen, the scandal is far from over. "i don't think that there's any question that we're in about inning 3 of a 9 inning ball game. bernie madoff is done. now the question becomes, who else are the prosecutors targeting. in addition to the 150 year sentence handed to bernie madoff, essentially the top of the pyramid scheme, the s-e-c has filed charges against cohmad secuirites plus its top executives, and money manager stanley chais for their roles in the fraud. "prosecutors are really dotting their 'i's' and crossing their 't's' . it may take a while, but i expect to see a dozen indictments coming down in the next 6-12 months." securities fraud attorney andrew stoltmann believes the
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so called feeder funds, that passed along investors money to the madoff hedge fund, will face srutiny for failing to do proper due dilligence. what we're seeing is that the feeder funds just took the money from investors and passed it on to bernie madoff. i think its going to be really difficult for the feeder funds to establish that they fulfilled their fiduciary responsibility to investors." but as far as getting any money back lost in the fraud, stoltmann is skeptical that investors will have much success. "i've been called by probably a dozen clients about representing them, but i think its going to be such an uphill climb for these people to recover as far as their being a pocket to collect from, i think its gong to be too difficult to hard, so i'm not taking any of the cases. now regardless of whether or not those victimized by bernie madoff are able to get back any of their money, for all investors, avoiding these types of scams will obviously be a priority going forward. for insight on the lessons to be learned from the madoff fraud,
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joe ponzio, author of f wall street and co founder of portfolio management firm the meridian business group joins us in the studio. joe thanks so much for being here. what's the number one lesson we can learn from all this madof madness?
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still to come a stock picker comes by to shaer his picks ready to profit... and a corner of the retail market that's seeing a rise in customers during the downturn
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welcome back everybody in the past few months it has been difficult to navigate the choppy markets reacting to a mixed bag of economic data are neck stock picker managed to book some profits to woodall joining us is truck with a rise in investments. welcome back. let's go to your previous pick since march 31st technologies have been flat johnson and johnson up 6% laps up 6% and trans ocean up 19% which one of these are you hanging on to? reagan on to all of them there are stocks in our portfolios we like them. transition has had a good run in the stock has the ability to come back along with some of the these racine in world stocks would still like
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the energy and also we like health care. that's right and would you consider adding to any of these power positions? i will feel comfortable adding to all of them. is still a stunt that we like quite a bit like in long-term prospect who sold the stock i will feel comfortable adding to. you mentioned it to like technology and health-care give us a rundown of the stock to like right now. in health care we like a company called his para h s p is the symbol they are a maker of generic injectable for the college dean market the company is going to have a nice earnings growth next year and this year which is something you will see in a lot of companies. good evaluation all in all a solid company became out with solid results in as one would think again a lot of health care stocks and people think we're health-care reform i think a lot of them have been beaten down fairly here i don't think health care reform this point to be as
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onerous for health-care stocks as people think i think those stocks have the ability to rally. 42 percent jump since jane rarely so that's pretty good. again given the evaluation were still plenty of ups. ibm is one of your other picks is not a good dividend but to% solid performer year round. a company that has deep be sent for focusing on companies that can come in with earnings growth this year and next year ibm as a company that will do that the stock is actually hang in there will bring this most recent pull back the we've seen in the market. a good a good volume operating momentum. cbs is another one is up 10% since chamber rate looks like it put in a pretty strong bottom at around $25 a share by the like cbs overall? it has a pharmacy management business in addition to its retail business which is what brings does not. earnings is gonna be better at cbs in walgreen's evaluation wise we've looked at those stocks acting cbs right now for the
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next 12 months is the better value. directv is another stop the to like is benefiting from the switch to digital tv but keep in mind in the first quarter and profits fall 46% on higher costs does that concern you especially woodstock so much competition is specially priced cable? busy to grow their subscriber base and a nice break in another reason we like is that they have this ownerships procter dead during the prizes liberty media when you see that ownership structure cleared up direct offers a takeover candidate i think a company like at&t expand in on the satellite side will take a hard look at the tv. many money managers are expecting correctional markets will be used that to get into the stocks? i would but honestly i don't think you need to wait for a correction i think we like the prices at this time if someone were to buy the non it will be fine. that is so much for your insight as always.
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online items and you can find more stock advice on our website at firstbusiness x dot com. we've got a regular rotation of investment experts that come on the show and all their picks can be found on the website. use the search box, to type in stock pick and watch the videos online at firstbusiness x dot com... plus... the pharmacuetical industry is under more pressure by the fda.. why some future medicines will be more difficult to get into the market... those stories and more.. on our website. and still to come on the show... high-end names at a lower-end price point. how you can profit from a fashion trend that takes off in the tough times.
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for many consumers, spending a lot of money on designer fashion has gone out of style. instead of buying the latest chanel purse or jimmy choo shoes, people are focusing more of their attention and money on the necessities like paying the mortgage or buying groceries. but for those fashionistas who refuse to let style take a back seat to the recession....resale is quickly becoming key to staying en vogue....sukmeke rainey has the story. the motto here at this high end women's consignment shop is "if you can't afford your own designer wardrobe, buy someone else's." denise mcshane carries items from top designers like chanel, diane von furstenburg and marc jacobs. mcshane's exchange has become a destination for stylish women looking for deals, as well as those hoping to make some extra
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cash by unloading the casualties of their latest closet cleaning. "i know for a fact shopping resale there is no longer a stigma. we have taken it out of the closet and if you can't afford your own designer wardrobe you can come to mcshane's and purchase it." and that's exactly what women who are looking for style and savings are doing. resale boutiques like mcshane's allow customers like brenda the opportunity to snag designer pieces without paying designer prices. "it's designer...i have armani..thanks to this store...just about everything in my closet is designer and some of them are brand could buy items here that still have original price tags." these days... many women are holding on to their designer purse strings a little tighter. bargain shopping is quickly becoming the thing to do. according to mcshane even the thought of splurging on clothes
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has become somewhat of a faux paus within the fashion community. "there isn't as much of a shopping frenzy. i think people are paying close attention to the bottom line. i had one lady tell me when she left neiman marcus ..she asked for her purchases to be shipped...i dig it." the shame that's now being attached to high-end shopping is making for good business for those in mcshanes industry. but for high-end boutiques like hejfina where price points hit well into the several hundred dollar range...the recession has had a definite impact. "....i think in general the consumer right now is very weary and they're just trying to survive and make it through whatever economic crisis we are going through right now, which i respect. another indication that shoppers are more conscious about their spending these days...just look
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to the stock market. take the stock prices of discount retailer tj max versus high end department store saks fifth maxx stock price is up more than 52-percent, while saks is just a little above 10-percent. coming up in chart talk din is back with us to talk about where the s&p 500 index goes from here. that is next.
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dan beginning of stock in
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equities is back with us for chart talk he's at the chicago board options exchange the s&p 500 index below 900 how concerned is that? is concerned from a technical standpoint because i think right now we are seeing is over the last month as a series of high it lows a more highs and that's concerned. where the uc support levels coming in here dan? the first support level now we broke the 50 day moving average last thursday which i think was a significant now looks like we're on ahead to the average which comes around 888 in the s&p 500 index. that is going to be important test for the market possibly the uc breaking below that? actually i do because i think the momentum now is turning towards the direction for the south i guess if you wanna put it that way so. cut the ground were gonna go down test and break below and the real significant area is gonna be the area which goes back to them may lows and we need to hold their an escort to be the
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stopping point and hopefully the area of support for this market. into so much as always for joining us abandoning of stolid equities and think you will see you next time.
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