Transcripts For KICU First Business 20140519

Bounced above 102 per barrel. Boeing reportedly is set to fight an unfair labor ruling. The National Labor Relations Board said last week it was wrong for the jet maker to video tape peaceful marches by Union Workers in 2012. Malaysia airlines loses more money. The airline recorded a net loss of 137 million as missing flight 370 stressed the company. And hershey is making a billion dollar bid for Russell Stover according to the wall street journal. Trader Philip Streible of rjo futures joins us for monday morning look at the stock market. Good morning to you. Good morning to you. We had a market bounce on friday, do you expect to see any followthrough . You know, i think that the markets probably going to see another downturn here. On friday it was some of the comments out of one of the fed president s that had pushed up along with the option expiration to try to get the s p back up to the 1875 level now here with monday we dont have much Economic Data coming out. So i anticipate the markets probably gonna start that push back down to the 1860s. Almost every trader i know is watching the russell. Should we continue to worry about the russell . The russell thats one of your Small Cap Index and what it does is it gauges a lot of the smaller business in really mainstream america and if you start to see that really aggressively move down, it that means that theyre tightening up on the smaller businesses. Youre probably going to see Economic Activities start to contract. Thats why Interest Rates have moved so low recently and i think people are starting to get defensive on their portfolios. Traders will take off for the memorial day weekend what do you expect in the market . Will we have that holiday feel with volume . Well this is typically a sell in may and go away so i think we will see a spike up in volume coming into it, and after that i think traders square up their positions. Remember the stock market has had just a phenomenal move upwards and i dont think that theres any reason why people want to overstay their welcome. So i think prices start to pull back, volume lightens up and a lot of people start taking the summer off. Thank you. Thank you. And Chuck Coppola joins me now with what could be a long road of settlements for gm. In todays cover story u. S. Transportation secretary anthony foxx puts all manufacturers on notice. If they dont report safetydefects immediately. The maximum fine, 35Million Dollars doesnt sound like much to a hundred billion dollar automaker, such as gm. But it may be just the beginning. The national Highway Traffic Safety Administration fined General Motors 35Million Dollars in Civil Penalties for failing to notify government regulators about safetydefects that transportation secretary anthony foxx says gm knew about for yearsbut said nothing. This is one fine. Gm still has to pay 7,000 a day for questions to congress it hasnt answered and that was weeks and weeks ago. The penalty is for gms ten year delay of recalling more than two and a half million cars for a defective ignition switch, which came after dozens of accidentsin which 13 people were killed. I think its difficult to tell what information regulators have access to in a defect investigation. So far, gm has more than doubled its number of safety investigators. From 20to55. And last week, announced nearly threemillion more vehicle recalls for faulty brake lights, windshield wipers and headlights to shut off. But unlike the ignition switch recall of cars no longer built by gm, the most recent recalls involve 2014 pickups and 2015 chevy suvs. Gm has auto liquidity of 37 billion and 27 billion cashon hand on its balance sheets. I just dont think itll structurally hurt them. The fines imposed so far on gm are less than the 1. 2 billion toyota agreed to pay earlier this year, following the justice departments investigation into sudden acceleration problems. But gms fines could surpass toyotas, with a number of civil lawsuits, criminal investigations and compensation packages as yet unresolved. The u. S. Is on track for a record year of recalls as automakers are quicker to report defects. According to the la times, Car Companies are becoming more aggressive in admiting fixes to avoid massive fines, criminal charges and lawsuits. One Auto Industry analyst predicts companies will work harder to root out defects in cars earlier on in the production process. An online Auto Research and sales business is gaining traction with investors. True car shares zipped 20percent higher on the first day of trading, after pricing in at a lowball, ninedollars. And, chinese Cosmetics Company jumei, rallied 24 in its debut. That ipo priced above range at 22 dollars. This week jd. Com will hit the Public Market on thursday. The Ecommerce Company plans to price between 16and 18 dollars. It will trade under Ticker Symbol jd jd. Com is considered a rival to the much hyped alibaba which will go public later this year and could become the biggest tech ipo in history with a market value of 250billion dollars. Financial regulators in china are out with new rules intended to rein in runaway debt. Economists believe the countrys Financial Stability is threatened by 322 billion in lending that is happening off bank balance sheets. The guidelines stop banks from doing backdoor transactions that disguise risky corporate loans. Some of the loans are transacted on the internet. The new rules take effect immediately. Indias newly elected Prime Minister has given the countrys stock market a push. Indian stocks rose friday following an early call of Narendra Modis victory. The stock market advanced 14 , year todate, on anticipation of his win. Investors hope modi will lead india to growth after years of high inflation and sluggish manufacturing. Modi ran on a campaign of Economic Reforms promising a new day of industrialization in the nation. Abbott labs is making a latin American Connection as it seeks healthy growth. Abbott is buying chilean generics drug maker cfr pharmaceuticals for 2. 9 billion. The deal is expected to add 900 million in sales to abbotts bottom line in the first year. And possible double digit sales growth in the next several years. The sec warns investors to be on high alert of sketchy pot stocks. The sec has received an increase in complaints about the accuracy of company information. And has temporarily suspended trading in the following companies fusionpharm, cannabusiness group, grow life, advanced Cannabis Solutions and Petrotech Oil and gas. Investors may check with the sec or the state to make sure the company is registered. Pinterest has a serious capital cushion. The social media site has raised a new 200 Million Dollars in funding and is now valued at a staggering 5 billion. Pinterest plans to use the money to invest in advertising, technology, and expand overseas. The site allows users to pin photos and other items of interest from the web. Apartment buildings are going up at the fastest rate in 40 years. That momentum pushed Housing Starts 13 higher in april. Economists say the demand is coming from baby boombers tired of paying for lawn care, workers who want shorter commutes and new demand from young people. The boom in apartment construction that were seeing makes up for shortfall that we saw in some types of construction over the past five years because lots of young people were living with their parents, that depressed demand for some type of housing thats reversing now in the recovery. Jed kolko of trulia adds Single Family Home Construction remains sluggish because it was so overbuilt during the housing bubble. Darden is loosening its claw on red lobster. The Restaurant Group is selling the chain to Golden Gate Capital for 2. 1 billion dollars. Darden chose golden gate because it is an allcash deal. The restaurant chain will use the money to pay off debt and buy back shares. Red lobster is dardens worst peforming chain. It will focus on olive garden which has also been fallng out of favor with customers. Darden stock fell 4 friday closing at 48. Cloud Computing Company rackspace is floating higher on buyout talks. Shares shot up 17 , the highest in six years. The san antoniobased it company hired Morgan Stanley to explore linking with other Tech Companies to compete with amazon and google. The result could be a partnership or acquisition from a larger competitor. Cheseapeake energy plans to spin off its Oilfield Services unit. The New York Times reports it would give chesapeake a 1 billion break on its in debt. The new Oilfield Services company would be called seventy seven energy. The spin off should be complete by the end june. The plan was greeted with about a 4 selloff. World wrestling entertainment shares were slammed on its new contract with nbc universal. The stock was down 43 at fridays close. The deal keeps hit shows raw and smackdown on nbc and raises the price from 90 million to 150 million annually. But analysts expected a better deal, saying new tv deals around the globe are worth 200 million. After a miserable winter and cool spring. Americans are breaking out this memorial day. Triple a predicts the roads and the skies will be busier than usual with 36 million travelers. Were seeing increases on the road, were seeing increases in the air, higher Consumer Spending out there as well with more disposable income for people to play with. It really tells the story of increased air travel, which we are seeing so much of this weekend. For people traveling by car triple a recommends traveling before 1pm thursday, 1011 on friday and after 7 on friday night. The average for a gallon of regular is 3. 64 cents. Triple a expects the price to fall through the holiday. One of the downsides to being president Everybody Knows your financial business. The white house disclosed the obamas had a wealth of between 2 million and 7 million in 2013. The release also shows they mostly own u. S. Treasuries. N pay a 5. 6 Interest Rate on the mortgage on their chicago home. And, up to 400thousand is stashed away in a 529 savings plan for daughters, malia and sasha still to come one trader is sold on a Housing Stock. Plus. Resume lies. How an online scam is spreading to the job market. And. If you thought outlet malls were so over. Think again. But first. At a time when funding for medical research is being cut back, siemens and stand up to cancer are raising awareness and raising money for breakthroughs in cancer research. Stay tuned for more in todays siemens answers message. When shoppers are hunting for a bargain, outlet malls have become one of the hottest ways consumers are spending their money while Industry Developers pour millions into new and current properties. Desert hills premium outlets outside of los angeles is just one of the several Outlet Centers expanding to meet the demand by adding new Luxury Brands and amenities for their bargain hunting shoppers from both the u. S. And overseas. Its a very Popular International destination. Our International Shoppers are up 50 from last year. Were just seeing that a lot of people are coming to the outlets instead of fullretail and getting a great deal. Market Research Estimates the outlet apparel industry is worth 12 billion luring new players into the growing outlet industry. In 2012, the us saw 8 new outlet malls and in 2013, that number grew to 11 new centers. Experts believe that the recession fueled the popularity of Outlet Centers as bigbox retailers started to shrink and pennypinching habits were formed by consumers. When we had the great recession, the outlet malls really started to take off. The ability to get financing for the major outlet mall players was available during the great recession. Rizika is a Retail Real Estate broker in Southern California and says retailers are also catching on, planting outlets closer to major malls and creating made for outlet products. There is a different offering. And the different offering is because the retailers are making their own products for the outlet malls opposed to selling seconds and that was a real game changer. The continuing trend in a luxury outlet mall experience has redefined what many consumers remember about discount retailers. Im amazed to see all of the designer brands out here, weve never seen it like this before, its beautiful. Outlet centers are not like it used to be. Back in the day, it would be an old Cardboard Box back in the corner, youd rummage through old clothes, 5 6 years old. Its not like that anymore, its Luxury Brands. That is what is bringing people to the Outlet Centers now. In los angeles, ky sisson, First Business news. Coming up. A trader digs up a Housing Stock he says has portfolio building potential. Plus. How catfishing infiltrating the job market. Thats next with bill moller. The internet is still the wild west. Few rules and a lot of gun slinging of the truth. Who people claim to be is not always who they are and thats a big problem not just for online daters and children but for businesses. Cathing the catfishers is a guide for filtering out the lies and get to the truth online. It was written by Tyler Cohen Wood she is a cyber branch chief for the Defense Intelligence agency in the department of defense. Well this is particularly insidious for businesses because they have a great vulnerability with intellectual property. Absolutely and this book is important for the business sector too because no longer is there a separation between personal and business. We no longer just sit in our office and do our work and were protected by our corporate network. Were always on the go doing our business and were using our personal devices. Were using our tablets and our smart phones and on those devices we have personal applications and we have business applications. Dont businesses also run into problems as well with hiring the online information sometimes is a false front about a job applicant . Absolutely it is very important to read the persons social media because you can get a good sense of their personality type, if theyre going to be a good fit for your company and theres also ways that you can look to see if somebodys going to potentially be an insider threat. What defensive measures briefly should businesses be taking . So businesses need to really look into this application permission creed, they need to go through the applications that their employees have on their devices, set the permission so that its not accessing your corporate ip, and also have a social media policy that dictates what your people what your employees can selfdisclose, and what they can use the devices for. Tyler cohen wood, thank you very much. Thank you very much for having me. Thank you bill just ahead a trader offers constructive view of trading a stock in the housing sector. Chart talk is next Alan Knuckman of one stop options joins us now for chart talk. Good morning alan. Good morning angie. So youre taking a look today at a stock that has been hammered. For the year its a Housing Stock pultegroup. What do you see in the charts here . Well im from the school of distressed assets always trying to find that diamond in the rough and somebody that hasnt participated in the rally, if you look at the Home Builders, the Home Builders had a 150 rally from the fall of 2012 to the recent highs but theyre really stalled out for the last year. Weve been going sideways. The stock im looking at is pulte homes. Pulte has been trading between 14 and 22 for a good deal of time and im looking forward to making a break out of 22 and head into 30. So what is your play here exactly . What will you do with the options . Well what im exactly looking at is leaning on this 18 level of support. Right now were at about 18801890 in the stock. 18 is a significant support level as the midpoint of that 22 to 14 range that i talked about. So for risk reward i can lean on that 18 on a closing weekly basis. What i wanna do is use a deep in the money call option, a 16 call which is below that 18 threshold, and use a 16 call for october. Its going to cost me 3. 25 3. 30 or so. My breakeven on that is 40 or 50¢ higher and like i said, im looking for a big break on the stock and all of these Housing Stocks are poised after this consolidation to make a big move and continue the run. Interest rates remain low and that is very helpful. So fundamentally do you like what you hear coming from the housing sector data . Well again its the supply demand issue. We stopped building for such a long time but can people continue being made . Eventually thats going to catch up and theres going to be that demand and play but i think the low Interest Rates and loosening of restrictions for mortgages is a bigger player right now, but i think there is a lot of built up demand that will be reached here in the future. Thank you, alan. Thank you. That brings our show to close on this monday. Coming up tomorrow the high cost of climate change. How Corporate America is bracing for losses. From all of us at First Business. 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