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Transcripts For KICU First Business 20131008

congress will raise the debt ceiling by the october 17th deadline. monday the dow fell 137 points the nasdaq lost 38 and the s&p 15. gold added $13 dollars and oil lost 71 cents. treasury secretary jack lew is scheduled to testify on capitol hill thursday about the dangers of failing to increase the debt limit so the nation can pay its bills. and the madoff 5 go on trial today.the are 5 employees who worked in the bernie madoff's inner circle but are pleading not guilty-- some claim they were unaware of the multi billion dollar ponzi scheme. jim richter of performance trust has his eyes on the bond market for us today. good morning. is the bond market on edge over this government shutdown? or is it not that big of a deal. > >good morning angie. i would say it's not that big of a deal. over the last week or so since the shutdown, bonds have rallied a little bit over the course of the last week but for the most part there has not been a whole lot of volatility in the bond market. > >what would you say about bond inflows and outflows. are people seeking any kind of safe haven with the bond market? > >i would say yes and no. since the beginning of 2013, we have seen a pretty significant exodus in municipal bond funds this year and a lot of that coming in august and september. but overall, fixed income bond funds have only had a little bit of withdrawals when you add in the taxable bonds how well they've done. > >we start off a new round of earnings today. are you set for that with trading? how will it effect the bond market and the stock market? > >that's an interesting question angie. if you take a look at the beginning of this year, earnings are up 6-7%, somewhere in that range. and yet the s &p is up closer to 18 or 19 percent on the year. there's really two questions you need to ask when you're looking at the equity markets---where do you think earnings are going and where are risky assets going to price? clearly right now there is an appetite for risky assets because the market's paying a significant premium for every dollar worth of earnings relative to what they were paying earlier in the year. > >thank you and have a good trading day. the congressional clash continues. the government shutdown is now in its 8th day. and the stakes are rising. the wall street journal reports the social security administration warns if the government does not reach an agreement on the increasing the debt ceiling -- there will be a limit on the number of americans receiving social security benefit checks. on capitol hill, democrats are pushing for a clean spending bill that would extend the debt ceiling for one year. house speaker john boehner contends that a clean bill cannot pass the house, and slammed the president for not negotiating. "the president's refusal to negotiate is hurting our economy and putting our country at risk." but the president says he "is" willing to negotiate--even on his signature healthcare plan "if" congress ends the shutdown and raises the debt ceiling. monday- president obama thanked workers at the federal emergency management agency and urged the house to vote on a spending bill. "just vote. let every member of congress vote their conscience. they can determine whether or not they want to shut the government down." corporate america is chiming in. at&t ceo randall stephenson says the mere discussion of default poses great risk to the economy. also, thousands of tourists from china. who traveled to the u.s. for the chinese holiday known as golden week, are being greeted with closed parks and monuments closed due to the government shutdown. almost all of the 350-thousand furloughed department of defense workers will return to their jobs this week. defense secretary chuck hagel said over the weekend that the recently passed pay our military act allows him to recall employees who provide direct support to the military. the move prompted lockheed martin to reduce the number of emplyoees it planned to lay-off to 2-thousand from aroud 4,000. sikorsky, the maker of blackhawk helicopters has canceled temporary layoffs for 2-thousand of its workers. meanwhile-- 400-thousand civilian government workers are now in their second week of furloughs. banks are making preparations for when the economy recovers and people start pulling money out of safe, low-paying accounts. since the financial crisis, cash has poured into banks as safe haven. but, as the economy recovers, interest rates will rise and investors will want to move their money to places where they can get a better return on their investment. regulators are urging banks to have plans in place to cover withdrawals that could come all at once. the economy in greece is set to grow next year. the government predicts .6 percent growth in 2014. it's the first upside forecast since 2007 and the global financial meltdown. the deputy finance minister of greece notes a rise in investments, exports and even the possiblity of jobs. for this year however, the economy is expected to shrink 4%. the supreme court began it's new term and of the 47 cases the justices have agreeed to hear, 28 of them involve or affect business interests, according to the u-s chamber of commerce. our cover story has a look at some of those decisions that may affect your workplace. the court will consider more limits on union activity in private and public sector jobs. "as we've seen in recent years, public sector unions are under attack and this would be another blow to public sector unions." the court will also determine whether president obama's appointment of three out of five national labor relations board members without senate confirmation was consitutional. the n-l-r b enforces federal labor laws. "this could significantly reduce presidential power when the senate refuses to confirm presidential nominees." and justices will hear the case of shaun mccutcheon, an alambama businessman who gave to 16-federal candidates, wanted to give to 12-more and give 25- thousand dollars to three different political committees--exceeding federal limits in a two-year period. mccutcheon argues the limits go against his freedom of speech and his case is supported by senate minority leader mitch mcconnell, who is scheduled to address the court, this morning. "they could go as far as throwing out all contribution limits as unconstitutional." and in an extension of 20-10's citizens united ruling which granted corporations free speech rights as individuals, the justices will soon decide whether to hear a challenge to obamacare's requirement that employers provide insurance coverage for contraception. corporations object saying the requirment violates their right to religious freedom. chaos and confusion--that's the way the first mate describes the night the costa concordia cruise ship ran aground in january 20-12. yesterday in court-- the ship's first mate said the captain confused and seemed "completely lost". captain francesco schettino, is on trial for the deaths of the 32 passengers. he is also charged with abandoning ship. the next phase of the civil trial against b-p oil is underway and the company is facing billions more in penalties. one key question in the trial is how much oil spilled into the gulf following the horrific drilling accident in april 2010. the oil giant claims 2.45 million barrels spewed into the gulf. the government says 4.2 million. the fine would be around $3 billion if bp is right, however the penalty could reach $18 billion if the government's figure is correct. the insider trading trial continues for dallas mavericks owner mark cuban. yesterday in court cuban testified he said on multiple occasions he planned to sell his stake in internet search firm mamma.com. cuban is accused by the sec of unloading 600,000 shares worth $7.9 million dollars to avoid a $750,000 loss. cuban insists he did nothing wrong. a british court says it will hold an inquest into the death of bank of america intern moritz erhardt. 21-year-old erhardt was found dead in his london apartment in august. an autopsy determined he died of epilepsy but he had also apparently worked several all- nighters in a row. the inquest is set for the morning of november 22. bank of america says it is reviewing working practices for junior employees. an activist investment firm is taking a large stake in the owner of redbox. redbox rents movies at kiosks and is owned by outerwall. jana partners reports taking a 13.5% stake in outerwall. the activist investment group considers the stock undervalued-- and is exploring options including possibly selling the company. in twitter chatter investors are apparently confusing "twitter" which is not yet available for trading with "tweeter"-- as in tweeter home entertainment group. the penny stock jumped 1,800% friday and 684% monday. tweeter shares trade under ticker twtr-q. twitter's ticker will be twtr. talk of potential tech companies making a bid for blackberry is giving a lift to the stock. shares popped around 4% monday on a report. the smartphone is in discussions with cisco, google, sap along with cerberus. sources also tell reuters blackberry is reaching out to intel, lg and samsung. fairfaix financial holdings already has a bid in for $9 per share. boeings loss, is a big gain for airbus. airbus scored a 9 billion dollar order this week with japan airlines. boeing and airbus -- locked in a rivalry, are closing in on a critical time for sales. currently airbus is beating out boeing for the first time in more than a decade. gas prices are plunging at the pump. the average cost of a gallon of regular unleaded is $3.34 down a nickle from a week ago and 23 cents from a month ago. the most since november 2012. the lundberg report cites refiners passing along lower costs for crude. crude futures have ben dropping during the past month. however, analysts do not expect the decline to continue. two superbowl regulars are sidelined this season. subway and cars dot com, seen here in last year's ads, do not plan to advertise during the superbowl broadcast this year. cars dot com says it will spend more, on more ads throughout the year. while subway cited cost concerns. a 30 second ad costs a record 4 million dollars this year. university of chicago economist allen sanderson predicts mostly rivals and newbies will pay up for the air time. "the likely contenders bidding for superbowl ads, down the road will be new companies. a new company or startup coming on the market. whether its monster dot com or whatever it may be, as well as some other market where there is a close rivalry. a pepsi -coca cola, a miller / budweiser." sanderson notes that the nfl is running a risk by holding the game in new jersey's metlife stadium this february. he says those opting out of advertising may fear bad weather, and fewer viewers. fifth and pacific -- the parent company of trendy clothing label juicy couture, is selling the label's intellectual property rights for $195-million to brand-licensing firm authentic brands group. fifth and pacific also owns lucky brand jeans but wants to focus on its number one brand -- kate spade. still to come: the shockers that could come out of this seasons new round of corporate earnings. plus...what carries more clout on wall street: washington politics or company profits. could buying a home hurt your investment goals in the long run? bill moller gets into that after the break. i'm going to pass chemistry, and i'll take it from there. i'm going to do what makes me happy. i'm going to work hard. be independent. live large. make the most of every opportunity. i knew i wanted to go to college. but figuring out how to pay for it? i didn't have a clue. the u.s. department of education has over $100 billion. and that's a lot of money. to help students pay for college. and the free application? you mean the fafsa. i did it online. it was easy. i'm never giving up on my goals. i will make a difference. i'm going to find out how to pay for college. i'm going to college.gov. we take for granted the one of life's greatest investments, that maybe our most important asset is the home we own. the american dream of wealth building right? or is that the case? heather wagenhals is a columnist, speaker broadcaster and author on matters of finance - you're also a licensed real estate broker yet you say home ownership is a huge economic scam? > >it can be and it's a shame because i grew up here in arizona and we saw the boom of all of the development. and with what happened, we have kind of created this myth about homeownership that everybody was entitled to it and it kind of started in the 90's. after we got the rtc cleaning up our real estate market after our first banking debacle---we saw unprecedented growth. but the growth that we saw at the turn of the century had nothing to do with home ownership or value. it started simply with scarcity in our marketplace and then with the advent of all of these loans, we got people into homeownership who weren't ready and prepared for that investment. > >heather, is this a problem right now or will this always be the case? is this because of the recession we just came through? will it once again be the best asset and the best investment we can make? > >it could be but it depends on what your goals are. the average person moves every 3-5 years now. so we are a much more transient society than what we were. if we're not putting big money down into our properties and we're not servicing them as an investment---because investments have returns---and unless you're charging your dog and your kids for rent, you're not cash- flowing that property. without putting money down, it doesn't make it the great investment that it once was. > >how about someone who is thinking about buying a home for the first time? how should they think about this investment? should they consider renting perhaps? > >they need to think about what they want to do ultimately with themselves. are they wanting to travel? or do they want to drop some roots and raise kids and a family? because with the way mortgage rates are and with the way the real estate markets are, if you're not in that property very long, liquidating it, when you got to move on to the next property because of a job transfer or family reasons you're going to wind up getting stuck with it or maybe losing money on it. > >heather wagenhals, thanks so much. coming up, what matters more to the market? the government shutdown, raising the debt limit or corporate earnings. and has alcoa lost its appeal as the leader of the pack of this earnings season...? we'll be right back. ♪ ♪ ♪ ♪ ♪ the corporate earnings parade kicks off today with alcoa and yum brands reporting in. but will the shutdown overshadow that? joining us now is sheraz mian of zacks.com. thanks for coming on the show. > >sure. thanks for having me. > >what do you think here? > >yes it is. so, if we don't resolve this matter, if we don't put this behind us and it continues for the rest of this week and next week then we are on to the debt ceiling deadline. the market wasn't too concerned about the government shutdown, but the debt ceiling is a big deal and then nobody will talk about corporate earnings. > >estimates on corporate earnings have been ratcheted down considerably. why is that? > >we have seen that angie consistently over the last six quarters that management teams have steadily been guiding lower. it's not a new phenomenon. at the time when q3 got underway in july, the expectation was for earning growth of about 5%. now it's close to about 1%. we are seeing that repeatedly the same thing happened with q2, q1. so it's not a new phenomenon we are seeing in q3. i think the more interesting issue is what happens to expectations with q4 because everybody has been pinning their hopes that the eventual turnaround in growth arrives in q4. > >the banks have been key to earnings for the past couple of seasons. where do you peg the banks? > >they're still instrumental. the overall growth rate is relatively lower after what we saw in q2. but if you strip out the bank earnings growth--- which is about five or six percent in q3----then we have flat earnings. now growth outside of the banks. so banks are still the biggest driver of keeping overall earnings growth in the positive territory. > >among all the sectors, do you see any possibility of some surprises lurking out there? > >i would say consumer discretionary is overall had less negative revisions in the recent past compared to others. finance i would say could surprise positively too because the overall sentiment has been kind of down on the sector with all the mortgage refinancing behind us. so finance could surprise. consumer discretionary could surprise. expectations for tech remain low and the sector has been underperrforming for the last few quarters, so maybe we see something positive from that sector as well. > >sheraz mian of zacks.com, thanks for stopping by today. > >sure. thanks for having me. just ahead-- more on what traders see in the charts for alcoa and yum brands after the break in chart talk. >> now, a paid presentation for the amazing new sheer cover studio mineral makeup, giving you radiant, flawless-looking skin in seconds. hosted by brooke burke-charvet, with special appearances by stars of "csi: miami," "scrubs" and "hall pass," "the young and the restless," and "the bachelorette." brought to you by guthy renker. imagine if you could make any flaw on your skin instantly disappear. what if you could have that beautiful, air-brushed glow that the celebrities have? 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Transcripts For KICU First Business 20131125

down 69 centstwitter's first weekly loss.the stock closed down 6.8% for the week.and homeowners in new york and new jersey are already making money on the superbowl by renting space on sites such as homeaway. the big game is feburary 2nd at metlife stadium. let's check in now with scott shellady of trean. joining us now to talk all about the market. good monday morning to you today and of course we are facing a holiday week here, so what do you anticipate as far as as far as volumes in the trading market? > well volumes are going to be thin. we are not open on thursday. it's the end of the month, you have to be careful these quiet markets tend to be volatile and because there's not a lot of selling behind you it's hard to get short. quiet markets tend to gravitate sideways to slightly higher, be careful about getting short because you are going to need that calvary to come in, let you out and then sell it back to you. it's an ominous there and like some good advice. thank you for that scott. moving on to your plays. are you doing anything with the s&p 500 right now? > you know we are. we have continued to stay long, we have added the long positions and calls that are expiring in jan. we think that we don't see any decent economic indicators that are gonna make a change our mind about the economy still. staying difficult and going forward we also have bought some 10 year treasure puts because we think that taper talk is probably going to play with eo worry there. we we bought some 10 year puts and we're staying on our s&p calls because we think that the economic indicators aren't going to change, we're going to grind higher in equities and a tapered talk is going to drive down those treasurys. is this a bullish stance new for you? > not really. i mean i have to go with what is going to happen verses what i think it's going to happen. we've gone from alan greenspan in 1996 and a rational exuberance to ben burnanke in 2013 in a rational empathy. we set an all-time high on friday and you didn't see it in the news media or the trucks outside like we did the last time around. so i'm cautious up here you need to be taken some stuff off the table but, there is no reason we have seen any change in the economy and arguably with yellin on the spot. if she sees anything bad what if we put the foot on the gas here. so we have to keep a big eye on it. well they are taking money off the table on gold. how low will we go here scott? > you know what, golds a hadge against inflation. we don't see any inflation, in fact hardly any at all and if we have a deflationary environment, which i think the fed are worried about. how expensive is $1,300 or 12 hundred $50 gold in a deflationary environment. that is pretty expensive. always a pleasure to have. thanks alot >alrighty new delays for the affordable care act! americans now have until december 23rd to enroll online for a plan, for coverage beginning january 1st. the open enrollment period is also pushed back by one month to november 15th through january. it comes after disappointing numbers from the october launch. on friday jeff zients, a management consultant says by saturday the site will be able to handle 800- thousand visitors a day and 50- thousand at any one time. in its first month, healthcare- dot-gov signed up fewer than 27-thousand people for insurance coverage. roughly 70-thousand more have enrolled through exchanges run by individual states and the district of columbia. last week the president addressed the glitches, sounding optimistic. "one of the problems we've had is one side of capitol hill is invested in failure, and that makes, i think, the kind of iterative process of fixing glitches as they come up and fine- tuning the lawi think, the kind of iterative process of fixing glitches as they come up and fine- tuning the law more challenging. but i'm optimistic that we can get it fixed." so far, we've found insurance brokers quite tenacious once you log on and start poking around for sample rates. after logging on for about a minute, more than three weeks ago, calls from brokers keep coming. president obama will be on the west coast this week. today-- the president is expected to make a speech about the importance of passing immigration reform. he will speak from a parks and recreation center in san francisco's china town.. then on tuesday-it's on to hollywood where he will likely talk about job creation in the movie and tv industry with a stop at dreamworks animation home of the hit film shrek. the president is also planning fundraising stops in california. one report says tickets to his events are selling at a discount. hiring is picking up nationwide. job postngs and hiring rose to five year highs in september. help wanted postings increased 69-thousand to 3.9 million , the most since march of 2008. hiring jumped 26-thousand to 4.6 million, the most since august of 08. the hottest hiring is in construction, retail, trade, transportation, and professional and business services. jp morgan will pay that record $13 billion dollars settlement by in a mortgage securities scandal . bank of america could also pay up for loans sold by countrywide in a scheme called "the hustle. joining us now to talk about bad bank behavior this morning heather wagenhals.. host of unlock your wealth radio. welcome back to the show.. in the you thing that these type of scandal are still happening in the mortgage industry? > yes, thanks for having me on. and unfortunately these mortgage products that cause the first first collapse are now creeping back into marketplace. low documentation loans, low down loans. the problem or these banks are packaging these loans and selling them off to these big mortgage pools and they're not what they're supposed to be. how can someone protect themselves? because at the end of the day we all pay for this. > you are totally right. will we need to do is take a look inside and find out who is doing the underwriting and figure out where the compliant issues of falling short of. this is all in sufficient, you can make some phone calls and find out what the health of a portfolio is. or, you can just call a friendly mortgage lender because they will tell you what's gone on in their industry and that will give you a good indicator whether or not you stay with i stay with mortgage vac securities or maybe i'll pullout and move into another investment products of that will suit my needs better at this time. heather thank you for that update. now onto an update on the the bank of america intern who collapsed in august. according to a coroner's report... 21-year old moritz erhardt died of an epileptic seizure after working three straight days for the bank. an autopsy found he was regularly taking medicine to treat epilepsy. erhardt didn't tell bank officials about his condition, according to medical forms. college enrollment is declining. generic shots of college students on generic campuses avoiding school logos if possible. moody's ratings agency reports-- 40% of universities and nonprofit colleges should expect lower tuition revenue growth.. the agency blames depressed family incomes and competitive job prospects for new grads. federal investigators are looking into whether a unit of caterpillar has been scamming customers, then dumping rail parts into the ocean. according to reuters-- "progress rail" allegedly dumped brakes and other parts into the sea to conceal evidence it was replacing rail equipment that was still in good shape. caterpillar is cooperating... and said in a statment-- "this matter will "not" have a material adverse effect on the company's consolidated results of operation, financial position or liquidity." investors holding shares of hologic are bracing for the next move by billionaire carl ichan. bloomberg news reports-- ichan has a 13% of stake in the company and may seek board seats. hologic shareholders have adopted a poison pill plan to defend against a hostile takeover. the massachuettes company has a product line of imaging equipment for mammograms and lab tests. the stock is up 13% for the year comcast is considering a bid for time warner cable in a potential multi-million-dollar deal time warner says it would prefer comcast, rather than another possible bidder, charter communications, due to its size and ability to pay shareholders. the deal could close this weekend. time warner jumped nearly 10 percent to 132 dollars. and comcast was up more than four percent to 49 dollars. more on comcast is coming up in chart talk.. 3 newcomers to the stock market are making connections with investors.. in our ipo watch... on friday-- shares of new york clothing company vince holdings-- rose 43%. the stock priced in at $20 and ended the session at $28--- the ticker symbol is vnce. sungy mobile-- a chinese mobile internet products maker is selling stock in the u.s. that stock moved up 19% from $11 dollars and closed at $13. the ticker is gomo. and another company out of china--this one an online sports lottery company-- named 500.com priced at $13 dollars and surged 54% to $20.. the ticker wbai. pandora is pumping up its listener volume. in its earnings report pandora reports having 20% more users than a year ago. it also says mobile ad revenues, are up. however, the company missed the mark on earnings expectations due to higher spending on development and marketing. earlier this year apple launched "apple itunes radio" -- which does not seem to be having an immediate effect on pandora's user numbers. pandora's stock fell one and a half percent on friday. pandora's competitor "spotify" is getting a financial tune up. according to the wall street journal-- the "swedish" onlne streaming music company is attarcting funding from silicon valley. spotify raised $250 million in new funding. led by technology crossover ventures. which values spotify at more than $4 billion dollars. motorola launches into a new dimension. the company's mobile unit has teamed with a 3d printing company. "3d systems" it will help motorola in its latest venture, "project ara" which will let customers customize their own smartphone. motorola's mobile unit is owned by google. 3d systems closed up one and a half percent friday. shares of footlocker jumped on earnings.. the stock traded up $1.50 after the shoe sports store reported profits raced up 8%, topping analyst's view. footlooker is also on track to meet its full year guidance goal. something that could cause the stock to stumble -- the retailer is concerned about the shorter selling season this year between thanksgiving and christmas. this saturday marks the fourth year of "small business saturday." a day dedicated to drumming up support for independent businesses. online, a "vow to shop local" movement is circulating fast. elizabeth gardner of the women's business development center says consumers are becoming more conscious of where their money is going. "they know now instead of putting their money into a large big box retailer, if they put a little bit of their money into local economies that it will create a tax base for their community, it will create jobs for people in their community. " research firm civil economics estimates for every 100 dollars spent at a local store 68 dollars stays within the community. versus 43 dollars at a chain store. still to come how to make the stock market work for you. plus... putting the "green" in walgreen- how the retailer is making a name for itself in the alternative energy space. and, just say no. the retailers you can't count on being open this thanksgiving. first business continues after this. this is a big year for early bird shopping "on" thanksgiving. however, a number of stores will remain closed. that list so far includes: no nordstrom, dillard's, home depot, costco, bjs, t.j. maxx, marshalls and ross stores. usa today report those stores plan so keep doors locked to give employees time off to spend with their families. last year, 35 million americans shopped on thanksgiving. but one retail analyst says its yet to be proven shoppers really want or need to buy on the holiday. there's more emphasis on "green" at walgreens, these days. the nation's largest drugstore chain is testing with a variety of energy-saving systems to cut operating costs. and as our cover story shows you, it's put all of them into one store in evanston, illinois as a retail "science experiment." two wind turbines in the parking lot and 850-solar panels on the roof generate electricity. geothermal technology taps energy sources more than 500 feet into the earth to heat or cool the store, and low energy-consuming leds light the stores nearly 14- thousand square feet. "i read about it. i saw the solar panels. i think that is pretty sweet." walgreens admits, it costs more to install these energy-saving systems. how much more, it won't say. but it hopes the combination pays off later-- cutting operating costs by 20%. the goal---net zero energy. that means it produces more energy than it uses.walgreens plans to sell the excess energy back to the utility. shoppers are informed of all this in placards throughout the store. "this is very nice. this is my favorite walgreens this is where i fill my prescription." "are you more inclined to shop here? yes, because it demonstrates that it's a business that cares." "like any other business, we're trying to reduce our operating costs. we figure with everything, we'll cut our usage by 700-thousand megawatt hours." already, some of this stores features are a hit. "one of the things we did find is that we're ready to put in more led lighting in our stores, like the one you saw in our store in evanston. (how many and how soon?) we'll plan to put them in new ones under construction. this year, we plan to open about 150 stores." the energy-saving walgreens is just slightly smaller than the average walgreens but it's expected to cut by more than half, what the average walgreen consumes in energy use. thanks chuck! coming up.... a "don't miss" if you have if you have never bought a stock in your life, details with bill moller are still to come. and later on in chart talk... a trader is watching for big potential in one cable stock. stay with us! you know what the hardest part of starting an investment plan is? starting. it just seems so daunting. but morningstar, the respected fund and stock research firm has developed investor starter kit -in fact that's what they call it - that makes it easy. christine benz is director of personal finance for morningstar.com. okay - take me there through the process. you have 5 things you have to consider, 1, figure out how much you need (upon retirement) > right, and this is easier said than done. the key thing that you need to contend with is; what inflation will mean for your savings and unfortunately $500,000 today will not buy you in 20 years from now we can purchase today. so use a calculator? use a online calculator. we've got one on morningstar.com, their plentiful on modern. use that as a starting point make sure its factoring in inflation and make sure it's also factoring in reasonable rates of return for what you might earn on your investments. 2-find the right investment mix (to get you there) > this is key. a lot of people proceed straight to investment selections they start picking funds and stocks. you really need to step back and make sure that you have a plan. how you apportion your money among stocks, bonds, and cash will be a key determinant in that portfolio return and also, its risk level. pick your investments (what's appropriate in your 20s, may not be inappropriate in your '40's and 50's) > that's exactly right. so you need to give due care to that question of what goes into your portfolio. i tend to like really plain vanilla investments types that give you. target date funds, you are fan of? > target date funds, i am a big fan of. these are the funds that to get more conservative as you get closer to retirement. they do all lot of the heavy lifting for you. implement your plan. get off the dime and do it. > exactly. you need to think about you will actually get this thing up and running. will you put money into the market their regular intervals. i think that's a great way to invest. also, think about how you will allocate your money among the different vehicle types. so are you going to be in a wralfire, 401k, or will you save in a plain old textbok bridge account. and do not just set it up and forget it. stay abreast of it, monitor your holdings. >moniter it, but not too much. i always say a good checkup once or twice a year his plenty. if you're plugging into your portfolio, which is easy to do now as we see the markets go up and up and up. that's too much, because you might be inclined to chase performance. less is more when it comes to montiring. and you can fly all the information about the investor starter kit at your website morningstar.com. christine thank you! >thank you bill. just ahead-- the cable company stock that has a potential buy signal. a trader explains next in chart talk . as we mentioned earlier in the show cable companies are talking about coupling. joining us now is james ramelli of keene on the market dot com. happy monday to you and no doubt you are in this to watch for the possibility of a way to make money here, so what do you see on the comcast's side? > so, comcast has had some extremely bullish order flows on friday's trading sessions. we saw calls out trade puts almost 10 to one. that's a huge ratio and some very, very bullish indications that the market expects comcast stock to continue higher. they're involved in this deal with twc now and charter communications as well. we saw three of those stocks hit higher on friday. it should be a good thing for any of these companies if there's more consolidation in this space. i'll have an upside target in comcast for the end of this year around $52 which is a little bit more than 4% higher from its current levels here. i will be looking to play comcast to the long side at that target. is comcast a stock you like technically or fundamentally? > i like it in both a technical and fundamental sense here. you know we saw the stock having a really good technical set up going into earnings and then pulling back some off of its 52 week highs and then entering a period of consolidation and then breaking out on friday session. that price action that i love to see and i really like the fundamental story behind comcast now as well here. so i think that it's kind of a all in long here for me. i'm buying with both hands. all right there you go. so is this a long term play or just a quick in and out? > i think this could serve as both here. like i say we can use the options market to project upside targets as far out as we want here. i have this 4 percent upside target for the end of this year but, i will be looking to play it further up as we move further out and get into to next year's trading. james, always good to have you on the show. have a great trading day. > thank you. as we take for today.. a reminder to catch our show tomorrow. for tips on charitable giving to the phillipines as the death toll rises above 5,000---- as well as how to plan for end of the year donations. from all of us at first business..have a good monday. >> the following is a paid advertisement for scalp med, brought to you by modern health labs, incorporated. >> special television offer from scalp med. stay tuned and find out how you can try the amazing scalp med hair regrowth system for only: that's right, try the complete scalp med hair regrowth system for only: details just ahead. ♪ >> i really can see the difference, i can see this hair coming in. >> i have hair on my head. i can brush my hair now.

Transcripts For CNBC Closing Bell 20130820

feels the end game may be the government is trying to break up jpmorgan and the culture created by jamie dimon. we'll talk about it, dick coming along. a great conversation. >> always great guest. also, two very special exclusives coming at you. cyprus ceo founder t.j. rodgers is with us. he penned "targeting the wealthy kills jobs." and also the head of the chicago mercantile exchange, terry duffy, getting his take on the soft stock market, the fed, bank regulations and a lot more coming up. >> so many moving parts and pieces. we'll get terry's take on that. and the new buzzword in silicon valley. wearable tech. i mean, there's google glass. and now, apple appears to be gearing up to make a big push into this area based on some new key hires that they have made. but some are doubting that people will actually wear wearable -- would you wear -- how about google glass? >> i think for me, i feel like it might be too much going on. >> i agree. that, or the smartwatch. not many people wear watches anymore to begin with, right? >> i know. it's true. >> we have a lot coming up on that, taking a closer look at wearable tech on today's program. >> really interesting. let's check where we stand in the final hour as we approach the final stretch of the dow jones industrials average, up pretty steady the last hour or so. up about 36 points, about .25% higher. the nasdaq higher today, big move in technology, one of the big movers, up almost 1%, 29 points higher, and the s&p, looking at gains there, about 10.25 on the standard & poor's. bob pisani, how is it looking as we enter the final hour? >> not bad. by the way, bill, i wear watches. look, here's my watch from detroit. >> me, too. >> i love it. a great watch. >> yeah, how old are you, bob? we all have watches, too. okay? >> okay, all right. >> ask the intern. >> i did try the google glasses, though, whether they were down here. the google guys. you're right, maria, an awful lot going on. that one i'm having a hard time getting used to. i love my shinola. crummy 6% gain in the s&p 500. it's the best day since august 1st, believe it or not. that's how tough things have been. the emerging markets are a little calmer today. that may be helping stocks and bonds, up here in the united states. a little bit of flight to safety. it is again light volume. bear that in mind. we'll get more news flow, thank you, tomorrow, the home sales and fomc minutes will be out. people keep asking me, should i get out of emerging markets? can i point out, attempts at bottoming in china and brazil, over a month ago. china is up this month. brazil is up. and a lot of economic flow news out of china that's notably better. a lot of internet stuff playing around. sign is a big one, internet stock. that's been up notably. even in brazil, i know it's been tough on the emerging market front, tough with commodities, but companies like gerdal, a huge steel company, coming off the bottom there. there's been temps to buy the bottom here. that's been over a month now. here in the united states, while we're generally to the upside, there's a group of industrials, big global industrials that haven't gone anywhere today, you going ge. former parent. these stocks have big exposure overseas, showing some of the concerns that exist. here amongst the retailers, of course, great numbers overall, a huge surprise out of best buy. penney was good. tjx was good. home depot was terrific. i had concerns about that, whether there would be enough orders for the big-ticket items, but the orders were tremendous there. i think there were concerns the margins weren't as strong. but that stock, remember, up 80% since 2012. that's the big, big play on the overall improvement, home improvement area. and so far, it's been working terrific. back to you. >> it really has been. thank you so much, bob. we want to get into the "closing bell exchange" and talk about that and the market. tom is with us, and bill stone from pnc asset management, vince and our own rick. >> how many of you are wearing watches? raise the watch hand. anybody? >> everybody here. >> it's not a technology watch. >> that's the thing. people look at the iphones now for the time. good to have everybody. thank you so much for joining us, gentlemen. what's your take on the markets going into the fall? do you want to be putting your money to work here? >> bill stone? >> oh, i'm sorry. yes, i'm sorry. i think you should. i think you take the opportunities that the market gives you, you know, in the midst of some worries, not today necessarily, but in the worries about the taper. at the end of the day, we say if they taper it's because things are getting better. frankly, i come to the point where i say, well, it's kind of like i got this, you know, band-aid on, i want you to rip it off and let's get to the taper already. and i think that actually once we feel the results, which i don't think will be much, it sets up the market to go higher. >> yeah, just depends on how much the wound has healed under that bandage when that he take that off. tom carston, you are expecting a pullback. but you're still bullish in this market, aren't you? >> we are, yeah. i think that we have to acknowledge that the economy is in a recovery. the growth we've seen in the u.s. and really around the world has not been as robust as we'd like to see. but we still think that the market is fairly valued right now. and we think that -- we are due for a pullback. there's a lot of uncertainty with fed action upcoming in september. that's been all across the news. and with rising yields on bonds, you have to think at some point, a lot of the cash that's been coming in to buy when the market pulls back at a 5% to 7% level, and kind of buoys it up, at some point bonds do look a little more attractive to some investors, and there's a lack of that cash flowing in to stocks and creates a little bit more of a pullback. but overall, we think if you're selective, there are good values right now, still in the market in individual stocks and sectors. and so, we're taking advantage of that as we place money for clients into those specific areas. >> but do you think we will see that great rotation, that the money that came out of the bond market will, in fact, eventually find a home in stocks? that would be a driver for stocks, right? >> yeah, it certainly would. you know, that was a -- a comment, in a discussion we had in our investment committee meeting this morning, what's the income replacer for bonds? you have a large portion of the population that's coming in to retirement, looking forward to retirement, and they need income from that. so more and more, i think they start to look to the equity markets for some of that income, and where does that money go? but certainly, that's going to be a longer-term tread, we see, that it will be a bear market for bonds and that cash is going to ultimately flow somewhere, and i think that that's most likely going to be into equities. >> rick santelli, i want to ask you, a lot of the analysts have come through here are very bullish on the dollar. they figure if the fed's going to start tapering, rates are going up, the dollar will have to go up at the same time. but yet the dollar index is down almost 5% since its peak in early july. what's going on there? >> man, you hit it. that, to me, is the area you want to focus on. now listen, we all know that the dollar index is majorly euro centric, so when you look at the lira or the rupee, yes, they are going down dramatically against the dollar. but those don't really impact the dollar index. this animal is between the dollar and the european currencies like the pound and specifically the euro. and if you look at a chart, you can see that bill's referring to that significant bottom after those twin peaks of volatili volatility -- >> right. >> -- and that prices around 80.50 to 80.60. we're a third of a cent away. bill, i can try to explain to you why it's so counterintuitive, but what i've learned over the years is sometimes you just have to look at what the market's telling you and let the fundamentals fall in live, but don't get stuck with the conventional wisdom, because this is a very, very nasty-looking chart potentially. >> what about emerging markets, guys? what's your take on emerging markets right here given the fact that these outflows have persisted? >> how about vince lowery on that? >> well, i think in terms of the emerging markets, maria, you know, we look at things on valuations, and we believe the valuations in emerging markets are developing and is very, very strong now. particularly brazil, china, chile. all of these emerging markets are developing real value. you know, last year at this time nobody believed in europe. and all of the developed countries -- japan was a big surprise. we had germany. we had france. we had all of the developed countries out of europe, when everybody thought europe was dead, they rose, and they rose dramatically. the u.s. had a good year. the u.s. was trading -- over the last 20 years, in noninflationary market -- the u.s. generally trades about $1.50, $1.50 for every dollar in capitalization. that's right where we are right now. the market is right where it should be. the real values are in emerging markets. i'll tell you a couple of problems developing that i see that creates headwinds. is that over the last two years, we've only -- we've only grown revenues in the s&p 500 by 1.8% a year. the historical average is between 5% and 6%. the real problem isn't about tapering. the real problem is why is the interest rates -- why are bond yields so low? they're half of the historical level, roughly a little over 3% across the curb. it's usually around 6%. this market can absorb higher rates. the problem is that rates are -- are down, because there's no growth in the market. and i believe -- and i'll just say one thing why i think this is. you know, ronald reagan did a couple of things in 1980, '81 that generated the baby boom, and that was he cut interest rates, he reduced restrictions on businesses, but more importantly, he was one of the greatest cheerleaders this country ever had, and we have all -- and in those three areas, generated the last great economic expansion, all of the opposite's happening in washington right now, and that's why we're not getting growth in this country. and that's why we're not getting growth anywhere. you can get valuation in the emerging markets. >> got it. bill stone, what do you expect the fed minutes to show tomorrow? is that a potential market mover, or is it a snoozer, do you think? >> you know, i think it's a potential market mover. i think, you know, everyone, including myself, is going to be trying to figure out, you know, whether there's some clue in there around the timing of the taper. i think that's really probably people pay more attention to that than jackson hole now, because you really don't have the big players, at least speaking, even, or even there, and i think at the end of the day what it will say to you is you'll have to watch the data to know when they'll taper. >> do you think they would actually discuss a potential timetable for when they would plan to taper, and would that show up tomorrow? >> i don't think they're going to say a specific time -- >> i don't personally think they will, no. >> -- parse for clues. >> okay. vince, what were you going to say, quickly? >> no, i don't think they'll show their hand. i don't think ben bernanke -- >> okay. >> -- has any intention of tapering at this point in time. he's going to turn that over to someone else. >> really? >> there's no reason for him to push for tapering at this time. the markets are too weak. interest rates are telling you that the global economy is slow. and there's a reason for that, and that -- tapering is not in the cards right now. >> yeah. >> and i believe the tapering doesn't matter at all. >> thanks, everybody. really appreciate your time today. we'll see you soon. >> thank you. >> thanks. heading toward the close, about 50 minutes left in the trading session. yes, we're trying to break the three-day losing streak for the industrials. i guess four days, wasn't it? how time flies, as it says on my watch here, that i wear on my wrist. [ laughter ] up 39 points on the dow jones industrials. up next, another day, another investigation. what is the government's end game with jpmorgan and jamie dimon? a series of charges and probes against the bank, and its employees, dick says he thinks the administration wants the bank broken up. he's here next. and shares of ibm hitting new low, 52-week low, second day in a row. is this a buying opportunity or sign of long-term trouble on the horizon for big blue? what's wrong with big blue these days? coming up. and terry duffy, chairman of the cme group, will join me as the special co-host of the hour. we'll get his take on the regulation and the fed. and he'll tell us about the one trade that changed his life. that and a lot more coming up. stay with us. 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(announcer) scottrade. awarded five-stars from smartmoney magazine. all right. here's the story. jpmorgan back in the spotlight for, i don't know, in the cross hairs of the government -- >> yes, probably it. >> it would seem be the case. last week, as we know, two employees were indicted on matters related to the london whale trade. then, it was the firm's hiring practices in china, and whether bribery was taking place in exchange for hiring the children of powerful people there. now, it's the company's energy trades, the justice department is investigating whether any manipulation took place in that regard. >> let's not forget, this all comes after jpmorgan has already agreed to pay more than $400 million to settle allegations raised by the federal energy regulatory commission that the bank manipulated energy markets in california and the midwest. dick bove of rafferty capital markets is connecting the dots today, and he said this is the government's effort to break up jpmorgan. he joins us along with dan levy, former assistant u.s. attorney for the southern district of new york, he just left his post. he will join nicole smith's new york office in september and also joining the conversation is our own jeff cox. good to see everybody. thank you for joining us. >> thank you for having me. >> got to kick this off with you. you've written so much about this and have been talking to so many people about it. you think the government is just trying to break up this company. so add as much pressure in all different areas to get them to succumb to a breakup. >> yeah, i don't think there's any question about it. i think there's no doubt about it. i think it is the policy of the united states as articulated not just by the president, by the congress, by a number of fed governors, by the presidents of some of the district fed operations, that the too big to fail situation is not tenable, and that we've got to get rid of it in this country. in addition to which we've got any number of sets of regulations that are coming out, basil 3, the leverage ratio, the liquidity ratio, geared to the same thing -- break up the banks, get them smaller, get them out of the place where they could be a systemic risk to the system. the net effect is we have eight agencies of the government supposedly six lawsuits coming out of the justice department, supposedly the justice department talking to places like the southern district of new york and the attorney general of new york, all to sue the bank. it doesn't -- it doesn't make any sense for them to do this in terms of assisting the u.s. economy, but it does make sense for them to do it if their goal is to break up the bank. >> dan levy, what about that? you just left southern district. you oversee wall street. you have insights presumably. i know you're going to say it's a coincidence. you have to admit the timing of all of the investigations sort of clustering at this time is sort of interesting, isn't it? >> if what the investing public wants to know is why is this happening, why is this confluence of events happening, it is not because there is a grand plan among various regulators and prosecutors to break up or take down any particular bank. it is much more likely the fat -- the function of jpmorgan chase, or other particular banks being money-center banks that operate in dozens of countries with dozens of lines of businesses, and they're being various regulators who look at different parts of banks' businesses. there is no grand plan to take down or break up that bank. >> are they just an easy target than the others now? are they vulnerable after what they've been through lately with london whale and so forth? >> it's not a question of vulnerability. it's a question of what facts are coming to light and what information do different parts of the government have at any particular time. there is no grand plan. i speak not based on knowledge of these particular investigations, but having been a prosecutor for 11 years. that's simply not how investigations unfold. >> but we all know that they don't want jpmorgan to be so big. i mean, are the benefits of being big slowly being removed as a result of all of these hits? too big to fail. is that the big issue here? would you like to see jpmorgan broken up? >> i have no view about the matter, but i think the point is, who is the "they"? if the they is the government at large, different parts of the government don't necessarily speak to other parts of the government, and coordinate a plan to destroy a particular institution. that is not how -- based on my experience -- the united states attorney's office for the southern district of new york functions. it simply does not function that way. >> -- just break up, not destroy it. but break it up. >> it doesn't -- >> make it smaller. >> it doesn't -- it doesn't unfold within -- the investigations don't unfold with an eye towards breaking up a particular institution. that's simply not what prosecutors are about. they are about getting to the facts -- >> i just can't believe that that's true. i can't believe that anything that was just said is valid. >> why, dick? >> well, let's look at the most pathetic of all of the actions of the u.s. government, which was this s.e.c. leak to "the new york times" this weekend. you know, why would the s.e.c. go to "the new york times" with what "the new york times" calls the confidential document about, you know, the supposed bribery occurring in china, when we know thousands of firms -- nbc has hired president clinton's daughter. you know, there are thousands of firms in every country of the world that are doing exactly what jpmorgan is accused of doing, and called bribery in china. if the s.e.c. really believed that this was an inappropriate set of actions, why are they just going after one company in one country when they could go after dozens of companies in dozens of countries? let's look at this more -- more idiotic suit, which was going after the, you know, the bear stearns situation, suing jpmorgan shareholders, because this is not a bunch of companies -- >> well, i think that -- i think that -- >> we haven't forgotten about you, jeff cox. >> thank you. >> let me get dan levy to respond to this, first. >> yeah, what's your response? >> if the investing public wants to know which is the more likely scenario -- a grand plan by various parts of the government to target a particular institution, versus a function of the fact that an institution does business in dozens of countries across the world, has dozens of lines of businesses, and there are dozens of different regulators who look at particular institutions, i am happy for them to figure out -- to choose between one of those two scenarios. the one i aposited or the one dick aposited a moment ago. >> jeff cox, you've been covering this story. >> i read everything dick writes about this subject. he always raises interesting points. i think just to address this, generally speaking, there's an old saying, one time is an accident, twice is a coincidence, three times is a pattern. i think dan levy's old boss, preet bharara, has made it clear how he feels about jpmorgan, even though he doesn't come out and sometimes name names, that kind of thing. you know, dick's point, though, about everybody does it, i mean, we're all kids once, we tried using that excuse with our mothers and i'll bet it didn't work for any of us. i do think that jpmorgan will have to answer questions. but look, if everybody does it and jpmorgan is being charged for it, or being investigated for it, then i think that you can draw a pretty straight line for, you know, what the intent there is, is somebody coming after jpmorgan? i think it's clear that this bank, in particular, has drawn the attention of investigators, and as a shareholder in jpmorgan, you've really got to pay attention to that. >> yeah, you really do. dick, let's wrap it up from an investment standpoint at this point. we know these investigations are not going away. this is the new normal. even the federal reserve now in terms of its capital standards might be tightening the screws here, and perhaps putting dividend payments, increases on the back burner for jpmorgan and a lot of others. so what is the investment play here? should we be avoiding this stock? >> this is -- this is a dead-money stock for the short term. i don't think there's any question about this, because the actions of the government will definitely harm this company. it will harm it with its customers. it will harm it with its employees. and it certainly will harm it with its investors. i am not going to pull my buy recommendation on the stock, because i'm so upset at the government. but the fact of the matter is that if you think about it, if the united states government is intent on breaking up this company, and if the united states government is intent on every week leaking something to some paper somewhere, which is negative about this company, it's going to be very difficult for this stock to do well in the short run. >> all right. gentlemen, thank you. >> thank you so much, guys. >> dick, always good to see you. dan levy, thank you for defending the other side of that trade. appreciate you joining us today. jeff cox, before we let you go, you wrote a story today, as well, about an intern at bank of america in london who died after reporting for work for three straight day -- working three straight days. what can you tell us about that? >> yes, it's a terrible tragedy. this gentleman's name was moritz erhardt, a 21-year-old intern with bank of america in london. we had mentioned about him working three days straight. that's not been officially confirmed, nor has it been denied. it was known he is a hard-working guy who had been putting in a lot of hours, was found in his flat in london. authorities are still investigating it. you know, it just brings up the whole culture of the interns working at these banks and getting put through a lot of long hours. i had a chance to speak to a senior person at bank of america who told me, look, you know, it's a terrible tragedy, everybody feels bad about it, but this is -- this is what interns go through. they come here to learn how we operate. we want to see how they operate. and, you know, hopefully somebody gets hired when it's all through. but just a terrible, terrible tragedy, getting a lot of readership, posts up now on cnbc.com. >> all right. thank you so much. jeff, we'll check it out. we'll see you later, jeff cox. 35 minutes left in the trading session here. the dow holding steady with a gain of 34 points. breaking a four-day losing streak potentially. meanwhile, ibm going the other way. touching a fresh one-year low today, and the stock is down nearly 15% since it hit a record high back in march. up next, we'll hear from somebody who sees a big buying opportunity in big blue. also, t.j. rodgers says president obama's tax hikes on the rich will hurt the middle class and the poor by killing jobs. it was a controversy -- controversial op ed, and now rodgers is here to explain it in person. that's coming up on the "closing bell." stay tuned. make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you start using active trader pro today. so you want to drive more safely? 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[ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ right now, 7 years of music is being streamed. a quarter million tweeters are tweeting. and 900 million dollars are changing hands online. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together. time to have new experiences with a familiar keyboard. to update our status without opening an app. to have all our messages in one place. to browse... and share... faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. welcome back. the stocks are trying to snap a four-day losing streak. josh lipton is breaking down the stocks drawing the day. josh. >> reporter: some of the movers on the radar. let's start with what's working. a number of the retailers like best buy. reports and pleases, easily beats wall street's expectations. the stock has been a monster, up more than 180% this year. urban outfitters also well in the green. the specialty retailer posted earnings that bested expectations. the street reacting, jeffries, rbc, among those raising the price targets. for its part, jcpenney did report sales that continue to fall hard last quarter, but the retailer also did say the back-to-school season has so far been encouraging. companies said sales trends had improved every month in the quarter. we also heard from a dow component, home depot, delivered second quarter earnings that topped expectations, also raised its full-year guidance, although as analysts point out, the company did outline potential headwinds in the second half, also some worry that rising interest rates could stymie the housing recovery. on the other hand, have a look at barnes & noble. tanking. posts a deeper quarterly loss and its founder halts his plan to buy its stores. and we'll end here on ibm. edging higher right now. but it did hit new 52-week low for the second-straight day. ibm currently having the most negative impact on the dow so far in august. negative impact of some 77 points. big blue now down some 5% just this month. bill, back to you. >> all right, josh, thanks so much. so is this weakness with ibm a buying opportunity, or will it get worse from here? let's talk about it in "talking numbers." with us on the technical side is rich ross, and on the fundamentals side, it's blaze tangerly. good to see you both. rich, this was such a leading stock for so long. what happened, and what do you do about it right now? >> well, i don't know what happened, but i'm going to tell you what you do. you buy the stock here. i'm not going to tell you that it's been a strong stock. it's one of only three dow stocks down on a year-to-date basis. i am going to tell you where the compelling entry point for short-term alpha generation. simply stated, that means the stock's going higher. you see the multiyear trend that we've broken just months ago. but we're testing that critical support around 185. and if you look at a shorter-term chart, you've seen that each time we've gotten down here over the past year, the stock has rallied sharply. 15%, 16%, 12% in a matter of weeks. i think history repeats itself. you want to be a buyer here ahead of that type of advance. >> all right. blaze, anything worries you fundamentally about the company, or would you buy here? >> i think fundamentally, you know, we put a short sale recommendation on this stock back on july 22nd. the stock was about 195 then. and after we had looked at the quarter, we became very concerned that ibm's back to being revenue challenged, and that sort of lack of revenue growth was a very, very big factor in holding this stock down throughout the whole 2000s, you know, basically from '03 to 2010, the stock couldn't go anywhere. earnings, you know, financial engineering that's going on, buybacks putting the earnings up. you simply don't have the top line. >> do you have a downside price target? >> you know, the stock has moved down a good wit bit, still off $10 where we said. it has another 10 to the downside. we're looking for the stock to move down to 165, 167. at that price, i think it's fair value and -- >> bill, i don't think we get anywhere near that. keep in mind there's a small omaha based financial concern that has 14% of its assets involved in ibm on the long side. you've retired 34% of the shares outstanding over 10 years, net interest margins have doubled to over 17% over the same so-year period, aggressively shedding costs. i think you have to be a buyer here. >> all right. opposing opinions, that's for sure, on an important company in the dow jones. good to see you both. thank you. >> thank you. 30 minutes before the closing bell sounds. we have a market that's higher. showing a gain of 46 points, moving up the last few minutes. when we come back, oh, boy, a hedge fund fee fight. is the hedge fund industry about to lower its huge fees in order to be more competitive and attract new clients? we'll hear from a top hedge fund manager on that issue coming up. also, the marijuana business flying high, but now investors are being warned about an increasing number of marijuana stock scams. talk about investments going up in smoke. >> aye, aye, aye. >> ba-dah-bump. if you're serious about taking your trading to a higher level, tdd#: 1-800-345-2550 then schwab is the place to trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading to tdd#: 1-800-345-2550 learn how you can earn up to 300 commission-free online trades tdd#: 1-800-345-2550 for six months with qualifying net deposits. tdd#: 1-800-345-2550 see how easy and intuitive it is to use tdd#: 1-800-345-2550 our most powerful platform, streetsmart edge. tdd#: 1-800-345-2550 we put it in the cloud so you can use it on the web. tdd#: 1-800-345-2550 and trade with our most advanced tools tdd#: 1-800-345-2550 on whatever computer you're on. tdd#: 1-800-345-2550 also, get a dedicated team of schwab trading specialists tdd#: 1-800-345-2550 who will help you customize your platform tdd#: 1-800-345-2550 even from the comfort of your home. tdd#: 1-800-345-2550 and talk about ideas and strategies, one on one. tdd#: 1-800-345-2550 get all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 call 1-888-284-9410 or visit schwab.com/trading tdd#: 1-800-345-2550 to open an account. tdd#: 1-800-345-2550 and learn how you can earn up to 300 commission-free tdd#: 1-800-345-2550 online trades for six months with qualifying net deposits. tdd#: 1-800-345-2550 our trading specialists are waiting to help you get started. tdd#: 1-800-345-2550 so call now. tdd#: 1-800-345-2550 welcome back. hedge funds known for their hefty returns and their hefty management fees. the term 2-and-20 has been the standard, meaning a flat 2% fee on the total asset value, plus an additional 20% of any profits made. now, the numbers may come down in the face of more competitive pricing. >> yeah, let's talk about that. with us more with what's happening in the hedge fund pricing world is jane buchanan, from pacific alternative asset management company. they have $9 billion under asset management. and our own ron insana, who has worked extensively in the hedge fund industry, as well. jane, welcome. thank you for joining us. i mean, is it as just as simple as econ 101, when there's more competition, it drives prices lower? is that what's going on? >> that's essentially it. you're exactly right. the other factor that's really affecting it is large institutions are entering, and they're giving larger allocations. so it is econ 101, both in terms of more competition, but also more assets coming in and then able to demand that they get fee discounts. >> yeah, what about performance, ron? isn't that part of it? a lot of the hedge funds have been underperforming just the basic averages as investors go for the indexes and etfs. they'll have to give back, right? >> well, i don't know if they have to, maria. >> they don't have to but -- >> they don't have to. it will be a multitiered process. when you see newer funds come to market, when you see funds without the spectacular returns, there mighting some discounting. it has to be across and available to all investors in a single fund. you can't treat investors differently within a single fund. those, however, who have continuously and have for a long time now put up very good numbers, i don't see -- i don't think you're going to see much fee compression there. the high-priced funds that have put up 15%, 20%, 25% a year for an extended period of time, i don't think will feel that compelled to give discounts. >> or they find themselves under investigation by the government. >> that's a separate story, yes. >> ron, would we be having this discussion about pricing if market conditions were different, if we hadn't been through a financial debacle for the last five years, and if interest rates were much higher than they are today? i mean, it's tougher to make a buck these days, so you have to lower the bar to bring more people under this tent, right? >> and it's also really tough to raise money right now. having said that, though, you know, i do think that, as i said before, a multitiered process. and where i think the hedge funds of yesteryear will face more competition is not necessarily among themselves, but what they call liquid alternatives, mutual fund alternatives that behave like hedge funds. that could create pricing pressure that the hedge fund industry hasn't to date had to deal with. >> do you think, jane, that these moves will actually make hedge funds more accessible for broader range of people? >> i think it depends. i mean, clearly, you're seeing the retailization of hedge funds. but you have to be careful about the fees involved. taking an institutional count of $200 million, the cost of acquiring and servicing that account are substantially less than small accounts. so i think the small investor needs to be very careful about the distribution fees and the other costs affiliated with it. >> and do they take fewer risks? i mean, hedge funds are known for taking their risks so they can get the bigger gains. if they're bringing in the smaller guy, presumably -- i don't know, do they take fewer risks? what do you think, jane? >> it's a different risk-return tradeoff. in the fourth quarter, the market was down 40 basis points by the s&p 500, but hedge funds were up 200 basis points. so they moved in a different direction. so far this quarter to date, the market's up 330 plus a little bit more today, and hedge funds are only 60 basis points. so it's a different return tradeoff, and that's the way i like to think about it. >> yeah, i think also we should be focused on net of fees. i think it makes a real big difference with respect to how much a fund can charge when their net returns have been consistently high. we always look at the gross. we look at the 2-plus-20, the 3-plus-30, but nobody looks at the 4% load and underperform the s&p. that's an area for retail investors to get involved and in some instances could get better results if they have access, but can't get in because they're not accredited or qualified investors. >> everybody is getting poked in some way or another because of the etf industry, as well, because the etfs are coming, taking market share from mutual fund, mutual fund taking market share from hedge fund. there has to be pressure to take fees down. >> jane? >> yes. no, i wouldn't general -- i wouldn't agree with that. you have to be careful about the expense versus fee arbitrage. be careful they're not burying fees below the next layer. you want the all-in cost. for retail individuals, if there's a sales load, you want to be aware of that. >> all right. we'll leave it there. great to have you on the program. >> thank you both. see you later, ron. so from high fees to a different kind of high. [ laughter ] a warning about stock scams involving marijuana-related companies. mary thompson has the -- she's the lucky reporter with this story. mary? >> reporter: well, bill, mary jane thompson, if we have to be named. so named. i don't think my parents had this that in mind in 1963. they want investors to be on high alert for stock scams linked to medical marijuana, fearing investing in the scams will prove to be a downer. here's why. using texts, e-mails, they make outlandish claims about the power of pot, about the ability to cure the common cold and the potential of them with a toke hold in the budding marijuana industry. the aim? pump up shares of the companies and then dump them, leaving duped investors holding the bag. it's no laughing matter. jerry walsh says when there is a next new thing, you see fraudsters swarming like vultures to get in on the action. with 2.4 million current users, the medical marijuana industry is seen hitting $1.5 billion this year and quadrupling in the next five, and making it the next new thing for scam artists. while the industry is home to perfectly legal firms, they remind investors not to buy into half-baked investment ideas. many of the companies are in the development stage. their stocks are thinly traded and the companies have little revenue and few, if any, profits. if they do want to reap an ounce of profit, investors need to weed out what firms have a real business, and which ones may just be blowing smoke. bill, back to you. >> so to speak. i think it's amazing how prescient your parents were with your name. >> i know. isn't it amazing? >> great stuff. thank you, mary jane. >> thanks, mary. heading toward the close. i don't know. if you bought into any of the marijuana scams, i'd want to know what you were smoking, right? >> that's a good one. >> thank you. >> you have a lot of good ones. >> i've been waiting all day to tell that one. >> a good one. >> as our staff knows. we have 17 minutes left here. the dow is up 29 points. so it looks like we could break the four-day losing streak. the emerging markets may have to be renamed, re-emerging markets. up next, michelle has the latest on an area of investing, changing by the day. and after the bell, from sweatsuits to smartwatches, to wearable glasses. wearable technology is booting up and apple is making hires to help, but the question is, will people wear wearable technology? >> i don't think so. >> back in a moment. creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, our flexible, collaborative approach helps forward-looking companies not only run better, but run different... to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present. all your important legal matters in just minutes. protect your family... and launch your dreams. at legalzoom.com we put the law on your side. and launch your dreams. 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[ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ welcome back. stocks have taken a hit recently on fed tapering talk. we know that. it's the emerging markets, though, that have really been feeling the pain on those fears. cnbc's chief international correspondent michelle cabrera -- sorry, bill. >> that's lert. what have you got here for us, michelle? >> reporter: i'm going to talk why the emerging markets are getting hit so hard, even though we're talking about u.s. monetary policy. why are they connected? well, when u.s. interest rates start to rise, everybody else's interest rates start to rise. we're considered the best credit risk. so whatever we pay, everybody else pays more, because they have to pay a premium. as a result, we're seeing a big sell-off in the emerging markets. look at what's happened to india. very hard hit in the last two days. indonesia, et cetera, brazil as well. one of the reasons why is when interest rates start to rise, you get worried that an economy is going to slow down, right? we all talk about it here. you worry about it in foreign countries, as well. plus, if you're an investor and you've invested overseas, but suddenly get a higher interest rate in a more developed country, why would you take the risk in a less developed country? so that's part of why we see the sell-off. then, that leads to a big knock-on effect in those countries in the currencies. like the indian rupee has gotten hit hard. why? when a hedge fund sells assets, some securities in india, they get paid in rupees. they don't want rupees, so they go to the bank and they sell the rupees to the bank. guess what? lots and lots of folks are doing that. that means a huge supply of rupees. so that currency has been falling. what people in emerging markets really worry about is something called a sudden stop. vernacular that came out of the latin american debt crisis in the '80s. that's when suddenly dollars stop flowing to a country. it becomes a real problem for that country. because they can't buy things like oil, which has to be bought in dollars. the other issue is, what do do you? do you just let your currency fall or do you step in with interest rates? a lot of countries don't have flexibility, because they have high inflation. >> those countries will have to rather than let currencies do the automatic stabilization of the country, they'll have to increase rates. here we have india, we have brazil, we have near, we have turkey, appear to be countries more in need of foreign financing, and will probably suffer more of an impact. >> reporter: imagine they have to keep raising interest rates at the precise moment when they'd rather not, because their economy needs the help. but then it doesn't happen. so that's why it's a tough, tough ripple effect in emerging markets. guys, back to you. >> yeah, it has been tough. thanks, michelle. >> thanks. 10 minutes before the close. we have a market up to 17 points. we're losing it, bill. we are well off of the highs. >> if we do finish positive, we snap a four-day losing streak for the dow. when we come back, we'll talk about whether the bulls are back or if the recent pullbacks are getting started here. later, cme group chairman and executive chairman terry duffy will join me. we'll find out how the regulatory environment is impacting his business. that's coming up on "closing bell." [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪ a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. welcome back. we have a market that is up, but off of the highs, bill. up 15 points. >> very much. let's talk about it with jeremy hill and tim spees. are you buying the dip, or what are you doing here? >> it's great for the long-term investors, which we'll talk about, but there could be pullbacks and volatility depending on upcoming move. to see the treasury pullback, that could cause skittish in the markets. >> you think the long-term trend is higher? >> yes. >> that's a big deal. it tells me, do i want to wait to get in at better prices? >> ugh, but it's hard to time the market. that's the problem. >> are you raising cash? >> we're -- we have our clients that are moving monies from cash into equities. >> into equities. >> some are waiting. of course, you know, there's great -- you know, talk about municipals, but even some great municipal bond yields now that considering your risk tolerance could be appropriate. >> jeremy, what are you doing? >> we think the market's really paranoid right now. to quote william burrows, paranoia is based on facts, and the facts are pretty obvious. the fed has told us we'll taper. so the sell-off right now, we think, is pretty rational. we think when you look at equities, it's obviously a cash flow. it's discounted by the cost of capital. the cost of capital is going up, off of higher rates. of course, we're selling off. we actually like europe more than the u.s. for a shorter-term trade. >> that's been increasingly the sentiment. that europe seems to have bottomed. what about emerging markets? >> well, i wouldn't go anywhere near emerging markets. >> okay, okay. >> risk is too high there. the fundamentals in europe are definitely better. if you look at the spread, it's -- it's coming together. and that's a very positive sign for the markets. >> if you're looking for a lower entry point, you have it with the emerging markets. >> true. but emerging markets, historically, have continued to disappoint. certain countries, of course, certain countries in asia now which look good, again, from a longer term, many of our clients have gotten in to certain funds, if you will, that are focused on specific countries. you know, here in the states, there's really no doubt. you look at the employment figures from last month, you look at the new home sales from last month. you know, almost 500,000. the most since may of '08. so things here look good. the retail sales are -- overseas, you have to be very careful. e.u. is coming back, of course. portugal, italy, the other -- but that's still -- i would have exposure there, but you have to be cautious and patient. >> having said that, we know that interest rates in the u.s. are going to go up. is there a strategy for higher rates? what do i buy in a higher-rate environment, jeremy? >> we like taking advantage of buying the regional banks off the back of higher net interest margins, and also short the homebuilders. we think that makes a lot of sense. if rates are going to continue to rise in a linear fashion. but they might not. >> gentlemen, thank you very much. >> thank you. we're losing altitude here. >> big time. >> quickly as we head toward the close. we'll see whether we can finish positive or not when we come back for the "closing countdown." >> join us for the cypress interview. t.j. rodgers is with us, defending his op ed. it raised eyebrows about how targeting the rich only ends up hurting middle and lower-income americans. t.j. rodgers is with us coming up. at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally. a quarter million tweeters is beare tweeting. and 900 million dollars are changing hands online. that's why hp built a new kind of server. one that's 80% smaller. uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this&is gonna be big. hp moonshot. it's time to build a better enterprise. together. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. okay. final minute. a quick recap. we were down in the open, asia down big. we thought we might have had a bigger sell-off. it didn't happen. rallied. looked like we'd break the four-day losing streak. and it's looking like we may do that. let's see the last five days for the dow. because we have had these four down days. now it looks like we'll be positive for the day. terry dolan, what are you doing with this market? you've been buying dips here. are you still accumulating? >> well, off its highs, we started accumulating around 215, 250. yeah, we've taken a little bit of a brunt of it. we don't see much more vulnerability than 14-8 or so in the dow. >> we're making much of the eight-point gain. big deal, right? >> yeah, you have the summer still, you don't want the market to pull back too much, because you have money on the sideline, and you also have vulnerable stocks out there that we all know about. >> yes, we do. thanks, terry. an annual event. the candlelighters of new york city honoring childhood cancer month. the closing bell ringers today. it does look like we're going negative all of a sudden on the dow. we'll have more on that in the second hour of the "closing bell" with the special guest host today of terry duffy of cme. i'll see you tomorrow. [ bell ringing ] and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market losing altitude in the final hour of trading. the dow falling for a fifth consecutive day. it had been positive for much of the session. let's look at how we're settling out on the street with the dow finishing down about 6 points. nasdaq composite had a good day. technology, one of the leaders on the upside, 24 1/2 points higher at 36.13 and the stand & poors finishing up. the dow on a five-day run in negative

Transcripts For KICU First Business 20130821

and oil slipped $2.18 in earnings after hours...shares of analog devices fell more than 2%. even tough the chip maker beat forecasts and tax software company intuit earnings met expectations with sales topped estimates. and ready to hit the road.triple a predicts-- 34 million americans will travel this labor day weekend.. the most since the recession. at the sound of the bell it's larry shover of sfg alternatives here to talk about this choppy market. good morning larry. it feels like we have hit very volatile days here. > >we have. it's summertime. we have a lack of liquidity, lack of attendance right now. let's keep in mind---we have three housing numbers coming out. we have pmi's, we have the fed speaking. so really the market's just looking for a new impetus to go one way or the other. > >not to mention, these retailers reporting in really shake up the market as well. what do you we'll expect to hear from say target or lowe's today on the heels of home depot yesterday? > >let's keep in mind yesterday home depot---the bar was set very low given what happened with walmart. right now the bar is low and i think target is going to beat expectations given that the bar is so low and consumer spending isn't as bad as what we thought it was even a couple weeks ago. > >moving on now to the treasury market, what do you think is likely to happen there? will we see as much volatility as we now see in stocks? > >that's really hard to say. let's keep in mind that since may, the 10 year has gone up 120 basis points and at the same period of time, the s &p 500 has gone up 25 points. so, right now the treasury is finding a home. it's getting used to tapering, the expectations of tapering and at some point we're going to find a home somewhere between 2 1/2 and 3% > >larry, thanks as always. have a good one. > >you're welcome. the plunge in india's currency has become a free-fall. the rupee, in case you've forgotten from "slumdog millionaire" has lost 15% of its value against the dollar since may.our cover story dives in and tries to catch up with the cause of it all. it now takes more than 63 rupees to match a u-s dollar. three months ago, it was 53. headlines ask: will the slide continue?it's got some half-joking that the currency's new symbol includes a slash across its throat. but it may also be the global impact of the federal reserve. "what's going on is the u.s. since we are the largest economy, as we go, other countries often go." as the federal reserve bought bonds, keeping interest rates low in the u-s, a lot of investors took their money to the international bond market. instead of 2% interest on u-s treasuries, you could get 5% in indonesian bonds and 7% in indian bonds. now that the federal reserve may taper its bond buying, it may take away some of the incentive that drove investors overseas in the first place. in the anticipation, traders are engaged in a sell-off. "'now that the interest rates are picking up and the economy in the u.s. is better, hot money' looks for where it can get the best and safest return at the same time." there are other factors tugging at india. india's trade with its largest trading partner, china has slowed as china's economy has cooled from the double-digit growth of only a few years ago and has built india's budget deficit. as far as u-s trade, india is the u-s' 13th largest trading partner of goods, slightly ahead of taiwan. u-s india trade represents 58- billion dollars' worth of business. but its not enough to overcome the shortfall that led india's finance minister to ask the people of india to not buy gold---because it is imported and paid for in dollars-- draining india's foreign exchange reserves. for its part, india's government has raised short-term interest rates, limited indian companies from overseas investment. jp morgan chase is back in the headlines.. this time the "justice department" is investigating whether the bank manipulated u.s. energy markets. jp morgan was accused earlier by the federal energy regulatory commission of manipulating energy markets in california and the midwest. the bank settled by paying $410 million dollars. now the justice departments want a closer look according to the wall street journal.. jp morgan responds: 'we're working hard to address regulatory concerns." the bank is said to face at least 6 ongoing investigations. a hedge fund manager who was once a star on wall street-- will be fined and banned from the securities industry. the sec says philip falcone will admit to wrongdoing,be banned from the industry for at least 5 years and his fund harbinger capital partners will pay more than $18 million dollars. the original deal for 2 years and no admission of wrong doing was reportedly considered too lax by the new sec chairwoman mary jo white and others and was toughened up. a disturbing story out of london involves bank of america. the new york times reports-- a 21 year old intern working at the bank's london office.. died just one week away from completing his internship.reports say moritz erhardt- was an exchange student at the university of michigan was found unconsious by british police last week.the bank called him a diligent intern with a promising future. unconfirmed reports say he had epilepsy and pulled three all nighters just before he died. for-profit educator, career education will pay ten-and-a quarter miilion dollars to settle a suit brought by new york's attorney general. the company has been the target of a two-year investigation and stood accused of inflating its success rate in placing graduates in jobs. $9.2 million of the settlement will go to five-thousand former students. career education is one of the largest for-profit college coprporations in the country. it operates more than 90-campuses around the world. the number of teens working summer jobs dropped this season. according to employment trend watchers at challenger, gray and christmas.. 1.4 million young people between the ages of 16 and 19 landed jobs. that's 3% fewer than last summer when it appeared job growth in the demographic would continue to climb.instead, the economy slowed and retail sales slumped in may and june causing stores not to hire additional summer help. one thing students are increasingly learning -- how to not pay so much for textbooks.text book prices have jumped more than 80% in the past 10 years and recent studies show those numbers may be a tipping point. 34% of students report downloading materials from unauthorized sources -- that's a jump of almost 15% in just 3 years. professors also report self-publishing or using free or lower-cost web-based materials. " i found a few teachers tried to be kind of accomodating by xeroing pages out of books, but if you didn't have a teacher that did that, you would have to go out of your way to do that." "sometimes i could see if someone else had it, but alot of the times, i ended up having to buy it and didn't end up using it that much." "if i could use the old edition, i would see if any friends had it, but i would try amazon or chegt, anything to get it a little cheaper." students told us they would often share a book or settle for an older edition to save money.on average they told us they spent upwards of 300 dollars per quarter on textbooks. the quick rise of home prices in nevada and arizona are being closely watched for potential bubble trouble. the states were hit hardest during the housing crisis. bloomberg reports homes selling in las vegas for $499,000 were half that price just three months ago. in phoenix, home prices are up 21% compared to a year ago.ken fears an economist at the national association of realtors says the issue this time could be a case of "phantom demand" "what we saw between 2003 and 2006 was a credit bubble. people buying who didn't necessarily or couldn't sustain those mortgages, so that was the source of phantom demand. now the concern is are the investors creating phantom demand? and will they, in the next 3 to 5 years, start selling?" nationwide, home prices rose 12% compared to last year. the housing recovery helped home depot pound out one of it's most profitable quarters...the home improvement chain reported earnings and outlook that topped wall street's view of the ongoing surge in home sales...despite nailing its earnings report the stock fell ---best buy also topped estimates the stock soared 13% jcp reported another big loss-- but it was not as bad as investors had feared. that stock rallied----closing a penny above 14-dollars. the chairman of book seller barnes and noble is withdrawing his plan to buy the chain. leonard riggio first mentioned plans to acquire the chain's 675 stores back in february. this latest move calls into question the future of the book store chain on the heels of dismal earnings and ending production of its own nook tablet. overstock-dot-com tweaks its plan to compete head-to-head with amazon. last month the struggling online discounter announced that it would sell books at least 10% cheaper than amazon-dot-com's prices.however, overstock has since altered that offer and will instead, match amazon's book prices permanently. regulators are sniffing out investment scams now that medical marijuana is legal in nearly 20 states.. the financial industry regulatory authority -- better known as finra-- says potential investors are being pitched by fax, email text,tweets and infomercials.finra warns investors are promised they can double their money with shares of stocks tied to medical marijuana- --which may turn in to pump and dump scams. a free way to check if an investment is legit is by going to this website at finra.org to search for broker information and background. consider it a "high-end" trend.the no-tipping policy is popping up more and more at posh restaurants. such as michelin-rated alinea in chicago. the restaurant banned tipping in exchange for a service charge, which is then split-up amongst the entire staff. the policy may be more accepted at a restaurant where waiters are pulling six figure salaries. however, not everyone in the service industry is jumping quickly aboard the no-tip train. anthony citriglia is a bartender. "being a server or a bartender you are a very personable person, and if you make a table feel great, they're probably going to give me more money than what i think my employer would give me, a flat rate, off of every single table." with hourly pay that hover near minimum wage, citrigila says he relies on tips--often more than 20% of a diner's bill to make a living.alinea's owner tells us the no-tipping policy is a legal issue -- enabling chefs and servers may be considered "professionals" by the u.s. government. still to come: weighing in on what the plan to create a mega airline will mean for frequent flyers holding air miles... plus....why home building stocks are catching a second wind.... also, see if you can guess who is the wealthiest congressmen on capitol hill... the answer after the break.. the annual list of the wealthiest lawmakers on capitol hill is out.. and california republican representative darrell issa tops the list by the hill newspaper.issa made his money with the viper car security system -- earning around 355 million dollars,last year. representative michael mccaul of texas is noted to have a net worth of at $101 million.on the senate side-- democrat mark warner of virginia-- has a portfolio worth 88-million dollars. massachusetts senator elizabeth warren is reportedly worth 3.9 million. signing up for your company's 401k plan is a quick way to build up your own portfolio.but a new survey shows americans are feeling confused and overwhelmed by the process.we have dave gray-- head of the 401k client experience at charles schwab on the line with us this morning.good morning.why are americans feeling so much angst about their 401k accounts? > >i can understand that because if you are uncertain as to how to invest and yet you know that this is your largest or primary source of retirement income it certainly makes sense that it would cause some stress. one of the key things we found in a survey is that americans are really accepting responsibility for their retirement future but the key item here as well is that they're uncertain how to make the most of it. retirement plans are often more confusing to individuals than health care benefits. and i think what that comes down to is that folks really just need help in their 401k to invest better. > >what are some of the best way for workers to maximize money savings through 401k? > >i think there's really a couple key things to maximize your 401k. the first thing is save and save more. essentialy you want to make sure that you're saving at least up to whatever the employer matches in your retirement plan. you don't want to leave any money on the table.take advantage of that employer match. another good thing to do in savings is every year increase your savings by 1%. a great time to do that is when you get a cost of living adjustment from your employer. it makes it such that you don't really miss that additional savings. and then the other key idea for maximizing your 401k is take advantage of that professional advice. have a professional determine your asset allocation for you and manage your retirement account on your behalf. we find that when individuals utilize professional advice, their investing confidence actually doubles than when they're on their own. > >while it can be good to speak with a professional shouldn't investors also consider their own ideas about investing? > >i think a great professional advice approach really involves the individual providing input to the professional advisor about their own retirement goals---their expectations of how they want to live in retirement and their ability to save at this point in their life. it really is a cooperative effort and i think that is one of the best ways for an individual to really own their retirement future. > >thank you for talking with us this morning. that was dave gray of charles schwab. kodak's plan for emerging from bankruptcy has been approved by a federal judge. the iconic photo company's plan means it will emerge as a new company with a different focus -- commercial and packaging printing.a kodak attorney told the court that the company is now very different from the one in introduced generations to home movies, snapshots--and also filed for bankruptcy protection last year. coming up.... help around the trader plays that could build up your portfolio...thats later. but first...is there an expiration date on your frequent flyer miles if american and us air merge? the answer, is coming up next. ♪ ♪ ♪ ♪ ♪ the merger of american airlines and us air is causing a scare among frequent fliers.joining us now is chris lopinto of expert flyer. good morning. is it true that american gets top marks for its frequent flier program? > >good morning. great to be here. yes, that's true. the american advantage program is not only one of the oldest but the most favorative among frequent fliers. > >what happens if this deal goes through? this merger happens? is there any chance that fliers will lose some of their mileage? > >well, no they definitely won't lose any of their mileage. what will happen is that if the merger goes through the miles will be retained and if someone has an account with both us airways and american they'll be combined into one account. what may happen however, which happens over time in general, is that the miles that are retained are worth less and you may be able to do less with them depending upon what happens post merger. > >how should passengers prepare? is there any way to prepare? > >the advice that we generally give---and this holds true whether there is a merger or not---is don't wait. use your miles now. what happens is that over time there is mile inflation where airlines give out tons and tons of miles. especially through credit card purchases. so there's a lot of miles out there---more miles than ever. chasing fewer frequent flier seats than ever so you have this inflation effect. so our advice is always to use your miles now when you can---don't wait. because it's going to get harder over time and there's going to be--- especially if there's merger consolidation---less frequent flier seats over time. that's what generally happens. > >at the of the day, is this merger good or bad if you're holding frequent flier miles? or not even holding mileage? > >i guess it depends on which program you're coming from and what your point of view is. it may be good for travelers in the sense that now they'll have more routes and more flights in order to redeem their miles on. but you're also competing against more people who are a part of the other program competing for those routes so there are two ways of looking at it. the other thing to consider is us air miles program and the it. the other thing to consider is us air miles program and the american advantage program i'm going to pass chemistry, and i'll take it from there. i'm going to do what makes me happy. i'm going to work hard. be independent. live large. make the most of every opportunity. i knew i wanted to go to college. but figuring out how to pay for it? i didn't have a clue. the u.s. department of education has over $100 billion. and that's a lot of money. to help students pay for college. and the free application? you mean the fafsa. i did it online. it was easy. i'm never giving up on my goals. i will make a difference. i'm going to find out how to pay for college. i'm going to college.gov. tim biggam of trading block joins us now for chart talk. good morning tim. and the retailers have been giving investors big clues as to what's going on in the home sector. what do you see in toll brothers which reports earnings today? > >we've seen toll brothers come way off the highs. almost 20% or so. actually underperforming housing stock s whichcertainly have gotten hit here once that tapering talk came on but right around that 30 level it bounces off twice back in june and november. looking for the bounce again here so i kind of like the valuation down around these levels. that 31 level seems to be an attractive level to get long in. > >this has been a trader's play and here's the reason why: we had a big buildup on some of these homebuilding stocks and then it was too late to get in. eventually they did come back down though. so is this the second wave? > >absolutely and i think it highlights that patience does pay off and chasing never seems to work out too well so certainly down and around these levels i look for the stock to head back up around that mid 35 level---tapering more than factored in in my opinion. i don't think interest rates are going to sky high from here and toll being at the upper end is certainly the most immune to an increase in interest rates as well. > >what other stocks in the homebuilding or housing sector do you like tim? > >i kind of like dh horton around these levels here. certainly that has kind of a more mid tier kind of exopsure. i would avoid some of the lower end names. but overall i think housing given the fact that it's been a really big underperformer here is kinda looking attractive to me as a value guy. > >thank you as always. that's tim biggam of tradingblock. have a good trading day tim. > >thank you angie. we've come to the end of the show for today coming up tomorrow in movies and money the budget back story on the butler and how it could effect all of hollywood. from all of us at first business.. have a great day and thank you for watching.. >> now, a paid presentation for the amazing new sheer cover studio mineral makeup, giving you radiant, flawless-looking skin in seconds. hosted by brooke burke-charvet, with special appearances by stars of "csi: miami," "scrubs" and "hall pass," "the young and the restless," and "the bachelorette." brought to you by guthy renker. imagine if you could make any flaw on your skin instantly disappear. what if you could have that beautiful, air-brushed glow that the celebrities have? 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Transcripts For KPIX KPIX 5 News At 6pm 20130822

this is a large-scale project. the $15 million task involves a minor aesthetic face-lift and a major infrastructure overhaul. >> water in the pipelines under the street is over 100 years old. >> reporter: when it's done there will be fewer lanes and wider sidewalks. >> every ounce of effort is put into making sure the work gets done faster and we're out of here. >> i'm anxious to see the numbers start coming back. >> reporter: for business owners, they can't wait for the recall costly effect to be over. -- they can't wait for the costly effect to be over. stores are offering more deals now to get shoppers here on the street. live in burlingame, ryan takeo, kpix 5. >> now, the work will be done in segments until next summer. merchants are getting one break, though. construction will stop for the new at 6:00 whole foods is hoping to succeed where its competitors could not, in downtown san jose. people in the neighborhood say they could really use a new store. but len ramirez asks, is the high-end chain really the answer? >> turn it over, why ay! whoo! >> reporter: whole foods markets broke ground today on the first large-scale supermarket to be built from scratch in downtown san jose in decades. >> we have an awesome quality of life already and this is just the icing on the cake. >> reporter: it will be built on the alameda near the s.a.p. center arena. a 28,000-square-foot food store will feature the first microbrewery and beer garden for the chain. >> a lot of unique things that are more than just a supermarket. it's a community gathering space. >> reporter: the plans have been in the works since 2006 but several factors including the recession led to delays but now there's an uptick in the economy. thousands of new residents are buying into downtown condo projects. plus another 1500 luxury units are under construction. so the timing may be right to supporan upscale market. >> whole foods tends to draw people from a larger area and a whole foods has cachet. >> reporter: but is that what most downtown residents really need? whole foods has high quality and high prices. right now, there's only one discount supermarket serving the downtown area. one by one, other supermarkets have come and gone and some have closed even after fat city subsidie and the area's largest latino food store is on the ropes after filing for bankruptcy. where is having an affordable grocery store on the list of necessities in your neighborhood? >> right up there with bringing down crime. >> reporter: omar torres is a downtown neighborhood activist. >> i'm glad that it's in the downtown vicinity from walking distance from other downtown neighborhoods. but i think our more lower income neighborhoods, people won't be able to walk here and buy here because it's unfortunately a high-priced grocery store. >> reporter: torres worries eventually low to moderate and fixed income people could be priced out of the downtown area. whole foods says it will offer a range of food options and prices and will provide about 100 new jobs when it opens next summer. in san jose, len ramirez, kpix 5. >> this will be san jose's second whole foods. and the company's also opening three new stores in the east bay. a driver slammed into a home in the oakland hills this afternoon. take a look at this. the car lodged into the side of the garage. it hit the gas line and that touched off a fire. flames damaged the garage and part of the home. the driver was okay. nobody inside the house was injured. the countdown continues two of them in fact. the last cars will cross the old bay bridge one week from tonight. commuters will be traveling the new span in a little more than 12 days. and that could take some getting used to. kpix 5's phil matier on the new commute and why caltrans is already warning drivers to keep their eyes on the road. phil? >> reporter: that's right. they want you to keep your eyes on the road but they also want to make sure everybody gets this message one more time: so here it is. i just want to remind everyone that we are one week away from the bay bridge closing so one week from today august 28th at 8 p.m., the whole bridge will be closed. >> reporter: when the span reopens a few days later, the ride will look something like this. >> you are going to see the tower and the cables immediately and you will get these great views of the east bay, but we do ask despite that wow factor that drivers leave the gawking to the passengers. >> reporter: one thing drivers won't be seeing anymore is the dreaded temporary "s" curve outside yerba buena island. you know the curve, the one that slowed rush hour traffic down to 35 miles an hour creating backups all the way to san francisco. >> i don't know if that change will happen right away. people might be taking their time getting used to the new bridge but in time, we will see that traffic flow get better. >> reporter: first, however, they are going to need to shut down the span on both directions to connect the new bridge. so drivers should start planning. >> unless someone has been on a completely different planet, they should know about this closure. so therefore, they need to adjust their travel plans in order to avoid getting stuck in the closure anticipating where they're going. >> reporter: it's being done as fast as possible to beat the countdown clock that governor brown started live on kpix 5 earlier this year. so far, the governor himself says he is going to be out of town for the opening, something that local transit officials are trying to put the best face on. >> i have to say, i'm not a whole lot focused on the party or really on the opening of the new bridge. i think the main event is closing the old bridge for good on wednesday night because that means that everybody is safe. >> reporter: as to when the new bridge opens, they are using a little wiggle room. they think they might get it done monday and they might do it. >> i interviewed the chief engineer about taking down the old bridge. that's going to take a long time and that too will cause people to do exactly what you're doing. they are going to do, whoa, look at that! it's a distraction. exactly because they are not going to blow it and drop it. they are going to take it down piece by piece. so, yeah, that will be something else you can watch coming and going and if you are stuck in traffic, it ought to be quite a sight for the next year as they take it apart piece by piece and lower it down to the water and cart it away. >> it's going to take years. all right, phil, thanks. again, the bridge shuts down a week from tonight. now is the time to make your commute plans. stay with kpix 5 and kpix.com for continuing coverage. all hands on deck tonight to fight out of control flames near yosemite national park. the rim fire exploded in size overnight. now burning more than 25 square miles in stanislaus national forest. it's only 5% contained. that isn't the only wildfire keeping crews busy. they are fighting the american fire in placer county and the swedes fire in butte county. cbs reporter andrea menniti takes us to the front lines of the rim fire where firefighters are working into the fifth night. >> reporter: elizabeth, firefighters are calling this blaze erratic because it keeps on changing directions and growing. the rim fire raging out of control and changing directions. >> erratic, erratic. it's horrendous out there. >> reporter: the massive blaze is threatening tuolumne trails a nature camp for special needs children east of groveland off 120. a dozen helicopters and planes are attacking the fire from the air. the blaze's unpredictable behavior has neighbors on edge. >> i think i'm still in a little bit of shock but i'll be balling my eyes out when i start to calm down because this is my backyard. >> reporter: fire crews are working to keep flames from spreading to the populated area of groveland and east to nearby yosemite national park. the blaze is threatening more than 2400 homes and has consumed a pair of houses and seven buildings. neighbors continue to pack up. >> it's been really nerve- racking trying to gather all the things that i find important to me and try to get ready to prepare when they told me to leave. >> reporter: another neighborhood evacuation order issued today but not everyone is willing to leave. >> i feel confident. i'm staying put. i'm not going to evacuate. i have a well and i have city water so i have two sources of water as long as the power doesn't go out. >> reporter: firefighters say dry weather, rugged terrain and high winds make it challenging to contain. >> it's bad. i'm not going to kid anyone. it's a real bad fire. >> reporter: firefighters say the blaze could become even larger. there is no time when they think they will be able to get a handle on the fire. >> thank you. the bay area is joining in the effort to get the rim fire under control. these trucks left from alameda county yesterday and were joined by teams from oakland, fremont, hayward and east bay regional parks. they will be helping the more than 900 firefighters already on scene roberta gonzales is in the weather center and it looks like firefighters will soon get some relief, roberta? >> locally, we have had that red flag warning. it was supposed to expire at 3:00 tomorrow morning. it has now expired. this is our live hi-def doppler radar. we are not picking up any kind of activity as far as precipitation is concerned on lightning. however, in the high sierra, we're still picking up a lot of activity. in fact, you can see, look very carefully, you can see the lightning bolts. this is live data so this is lightning as it is happening right now over topaz lake, to the east and also to the north and all this is drifting gradually up north towards carson city. sure, we still have that same area of low pressure anchored about 170 miles due west of monterey bay and the precipitation is wrapping around in a counterclockwise fashion around that low drifting into the high sierra. tomorrow is a different day a different story as all this exits north and finally some relief in sight for the firefighting efforts in the tuolumne county. we have your own local pinpoint forecast. elizabeth, allen, that's still straight ahead. >> see you then, roberta. right now supporters of bradley manning are rallying in san francisco's justin herman plaza. ♪[ music ] >> the former army intelligence analyst was sentenced today to 35 years in prison. he was convicted of leaking hundreds of classified documents to the website wikileaks. his supporters call manning a hero and say he deserves a presidential pardon. in addition to his sentence, the 25-year-old will be dishonorably discharged and forfeit all pay and benefits. after the sentencing, manning's attorney read a statement on his behalf. >> "when i chose to disclose classified information, i did so out of a love for my country and a sense of duty to others. if you deny my request for a pardon, i will serve my time knowing that sometimes you have to pay a heavy price to live in a free society" > manning will get credit for time served so he will be eligible for parole in about eight years. it's absolutely too big. i'm thinking it's going to cause car accidents. >> a vegas style sign stopping traffic in the north bay. the controversy over who really gets to cash in on this giant billboard. >> in just 7 months, three people have been hit and killed while bicycling. >> risking their lives every time they ride to work. why san francisco's cyclists say they are facing an uphill battle getting important safety changes. >> a tragic turn for a young man trying to get ahead. how an intern may have literally worked himself to death. >> the america's cup known more for its accidents but finally a breakthrough on the bay. what the racing teams did for the first time today. ,,,, goodnight. thanks, olivia. thank you. so you can make a payment from your 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(speaking french) so you can express your gratitude... in the moment. chase quickpay. so you can. female narrator: the mattress price wars are on the mattress price wars are on at sleep train. we challenged the manufacturers to offer even lower prices. now it's posturepedic versus beautyrest with big savings of up to $400 off. serta icomfort and tempur-pedic go head-to-head with three years' interest-free financing. plus, free same-day delivery, set-up, and removal of your old set. when brands compete, you save. mattress price wars are on now at sleep train. ♪ your ticket to a better night's sleep ♪ security guard. kpix five's cate cauguiran on the encou earlier this morning that led to a a man breaking into parked cars in san jose did not count on running into an off-duty security guard. kpix 5's cate caugiran on the encounter earlier this morning that led to a shooting. >> reporter: an off-duty security guard says he was on his way home near the intersection of coleman and almaden expressway. it was just before 1:30 this morning. >> he had just got off work when he confronted a suspect who was breaking into his father's vehicle. >> reporter: san jose police says a secured garrett tried to catch the suspect -- security guard tried to catch the suspects but he got away into a car. it almost hit the guard. then a passenger got out of the car. he told officers he thought he saw the suspect reach for a weapon and fearing for his life, the guard shot his gun towards the suspect. the suspect got back inside the car and drove off. >> we did locate that vehicle a short distance away from where the original shooting occurred and the vehicle was unoccupied. that vehicle was a reported stolen vehicle out of san jose police department. >> reporter: they were able to find the suspect with a gunshot wound and took him to a local hospital where he is expected to be okay. police say he will be taken to the santa clara county jail on burglary charges after his recovery. >> we are looking for the other three additional suspects and we are hoping that information gleaned from this investigation and from interviews will hopefully help us track those other three suspects down. >> reporter: the security guard was also taken in for questioning this morning. no other people were hurt. cate caugiran, kpix 5. >> as of this afternoon, authorities were still questioning the security guard. it's unknown if the guard will face any charges from the shooting. other bay area headlines. a former united airlines baggage handler who stole from passenger luggage will have to pay his victims more than $30,000. george reyes was arrested in may after a sting operation. police placed ipads with gps tracking in suitcases. they later found the items in his car. reyes pleaded guilty and was sentenced to six months in jail. electronic billboard outside the oakland coliseum asks for your help to find a missing 21-month-old. daphne webb hasn't been seen in six weeks. the ad posts a picture of the girl and a tip line to call. her father says someone took her from the car at 79th and international boulevard in east oakland. just this year, three bicyclists have been killed by large trucks in san francisco. and after last week's death, one group is demanding a safer way to share the roads. the san francisco bicycle coalition is gathering signatures demanding the city make folsom street say ther for cyclists. the coalition wants measures similar to those used on market street such as a physical barrier between bikes and cars. >> because we have streets that are very much designed for freeway-like conditions. the city has not shown the urgency it should for safety on south of market street. >> it takes time and money to get this work done. >> transportation authorities say the changes would take years. but if the city acts now, there could be a short-term pilot program within a year or so. and then a long-term solution by the year 2017. the louis vuitton cup has been plagued by high winds and breakdowns. but as kpix 5's don ford shows us, today for the first time, it was smooth sailing. >> reporter: so we are off and running race number 4. racing teams are trying to complete a race without a boat breakdown. today was race 4. the fourth attempt to get both boats across the finish line. but before the start of the race, the director was nervous. >> we all have our fingers and toes crossed we'll have two races today and two boats finishing in each race in a close race. >> reporter: and before the race, team members had a moment with their families. luna rossa helmsman spent time with family. >> they are fragile and difficult to sail and very easy to break and we need to sail smart raise and cleverly to be sure we are in the race and we don't damage the boat. >> reporter: luna rossa sails better and better with every race if they don't break something. the good news is they finished today's race in one piece. the heavily favored new zealanders however still won. >> in race one today it's the kiwis who reign supreme. >> reporter: today was only half done. but both teams still had a second match. another chance to earn points. another chance at glory or disaster. >> with the tide only just changing for the second race we should get two races and let's hope both of us get round the traffic. >> reporter: the wind and tides stayed within the safety limits. the start was close and the second race was under way. neither boat had any technical issues. neither boat lost anyone overboard. neither boat had to quit. luna rossa still lost, but every race gets closer. >> new zealand is obviously, you know, the favorite boat and but luna rossa made huge strides. >> reporter: after millions of dollars and years and efforts the louis vuitton cup series has finally been able to complete a race with two boats across the finish line. the next races are scheduled to begin this coming friday. at the america's cup, don ford, kpix 5. >> planning for the america's cup has cost san francisco nearly a half million dollars. city documents show the $482,000 bill was for the costs associated with putting on a large event. but far fewer people than expected have attended the yacht races so far along san francisco's waterfront. the chairman of the organizing committee says had they known it was going to be a smaller event, the costs would have been lower. >> costs a fortune to put on a big event like that. roberta, today the weather was perfect for a race. >> the area of low pressure that's been causing the very gusty afternoon winds is now finally lifting up in a northerly direction. and now, however, as high pressure is trying to nudge in and the marine layer is developing, the winds are increasing again. let's go outside now. this is inland. notice a tree wavering a bit? that's because there in dublin the winds are blowing out of the west an onshore wind 20 miles per hour. current air temperature from the 60s in san francisco through the 70s in the tri- valley to right around 70 degrees around the peninsula and mountain view, as well. let's head to the coast now, this just developed in the last 45 minutes. we had clear skies at the coast. we still have some clarity out there so we could still say while the coast was clear, now that marine layer is pushing onshore. it's 59 degrees west wind at 17 miles per hour. tonight official sundown is at 7:55. and by the time it comes back up tomorrow these clouds will have made it inland at least a good 45, 50 miles. with the blanket of clouds, mid- 50s around benicia, martinez, american canyon. 50s into brisbane. san jose overnight 58. this is interesting. see it right there? look at the spiral. oh, that's so pretty. that's that area of low pressure 170 miles due west of monterey bay. that's gradually lifting up in a northerly direction. as it does so, we'll have the drier air mass filter in. right now in livermore, the humidity still at 45%. that's very high for this time of the year. all this rain, the thunderstorms over the high sierra will lift up in a northerly direction, as well. tomorrow, with the sunshine, once the clouds lift, 60s at the beaches. mid-60s around san mateo. then jumping to the mid- to high 70s around redwood city. up to 80 in los altos. mid-80s the further south you go to the almaden valley towards morgan hill and gilroy. to the east of the bay, 80s. in fact, what you're looking at is really a seasonal summer day. 80 in benicia, low 80s in pleasant hill. then you notice around the central bay from the 60s to the low 70s, we jump up to the admits to around the north bay and then all the way up to 90 in ukiah and 80s in the north bay. extended forecast, warmer friday, seasonal over the weekend and we'll hang on to this weather pattern through wednesday. a little hint about something? i was looking at the extended forecast and right now your labor day is looking a little wet. >> oh-oh. >> what? >> yeah. >> i know. >> i was shocked when i looked at the extended models. we'll check back at 6:48. the man behind the social network wants to make a huge social impact. mark zuckerberg's plan to bring the entire world online. >> a peep show owned by the strippers themselves now a famous san francisco landmark is closing its doors. the last stand for the lusty lady. you're on timeout leo! ♪ ♪ some things won't last 25 years. ah! woof. some things will. save up to 20% on an ikea kitchen. ♪ ♪ [ male announcer ] introducing live tv from southwest. now you can turn your device into your television. try it for free today, only on southwest airlines. on the air. in the air. with live tv. [ male announcer ] wouldn't it be great if all devices had backup power? the chevrolet volt does. it's ingeniously designed to seamlessly switch from electricity to gas to extend your driving range. no wonder volt is america's best-selling plug-in. that's american ingenuity to find new roads. right now, get a 2013 chevrolet volt for around $269 per month. you're o♪ ♪meout leo! some things won't last 25 years. ah! woof. some things will. save up to 20% on an ikea kitchen. 72 hours straight. 21 year old moritz erhardt collapsed at his london apartment a bank of america intern died after working 72 hours straight. 21-year-old maurice earhart collapsed at his london apartment after reportedly working three consecutive all nighters. police say the german exchange student's death was not suspicious. bank of america would not comment on the claim that maurice had been overworked. the man behind facebook mark zuckerberg wants to connect people around the world. facebook is joining forces with samsung, nokia and other tech companies for a project they call internet.org. the goal is to connect the 5 billion people without internet access. >> here we use things like facebook to share news and catch up with our friends. but there, they are going to use it to decide what kind of government they want. get access to healthcare for the first time ever. connect with family hundreds of miles away that they haven't seen in decades. getting access to the internet is a really big deal. i think we are going to be able to do it. >> the companies want to cut the cost of internet services on mobile phones especially in developing countries. sunday football could be coming to youtube. google started talks with the nfl to explore making a bid for the nfl sunday ticket package. directv's current contract expires after 2014 season. while youtube is the world's most popular video service, google has yet to make much of a dent into television. coming up in the next half hour, a flashy billboard getting backlash in the north bay. why some say only one business stands to cash in. >> from a soviet summit to watergate how the final nixon tapes show a different side of the former president. >> sunbathers sent scrambling. the chaos about some beach- goers who didn't get the memo about this military ship. ,,,,,,,,,,,,,, do you see the 10% back in points, aw baby, i'm seeing triple again. plus another 10%, plus free shipping? yeah. you're good. this is the member triple play deal. this is sears. [ male announcer ] when the a.c. goes out in a heat wave, it's nuccio heating and air conditioning that comes to the rescue. at&t helped nuccio put a complete mobile solution to work. mobile routing to send the closest technician and mobile payments to invoice on the spot. where do you want to take your business? call us. we can show you how at&t solutions can help you do what you do... even better. ♪ catching eyes-- and sparking controversy in one north bay city. it looks like a casino sign something you would see in las vegas. >> now at 6:30, a giant new billboard is certainly catching eyes. it's also sparking controversy at one north bay city. local business owners were told that that new billboard was for them. but kpix 5's da lin tells us, they now believe it is something else entirely. >> it's very big. >> reporter: big and attention- grabbing. the screen is 14 feet high and 48 feet wide. workers switched it on last night and already, the digital billboard is attracting controversy. and it's not the size but the size of the businesses that might be able to rent it. >> i would be very surprised if the rates were such where we could afford to advertise on it. i doubt i'm going to be able to afford that kind of money for that. >> i don't think that's the sort of advertising a small business would do anyway. >> reporter: many small business owners are disappointed because the billboard was originally advertised as a benefit to the community. the advertising company would not tell me the rate but many nearby business owners call it -- >> a casino sign, something would you see in las vegas. >> reporter: -- a casino sign because there's a big casino being built right across the freeway. and it will open this fall. ironically, just as they switched on the digital billboards, the casino today hoisted its name on to the building. some business owners are disappointed that the bill board was originally advertised as a benefit to them. >> reporter: tom jackson oversees the billboard and says it's not a casino sign. rohnert park companies get a 15 to 25% discount and there's a contract with the city that prevents a company from monopolizing the sign. >> the time limit is 30% maximum for any one client. >> reporter: still many businesses think the sign was built to benefit the big new casino rather than the little guys. >> looks like an eyesore kind of looks like las vegas. and we're a small community here. >> reporter: in rohnert park, i'm da lin, kpix 5. >> one rohnert park councilmember admits it may be difficult for smaller businesses to afford the billboard advertising. but he believes other larger locally owned companies will benefit from the new sign. state auditors have denied another request to audit part of california's high-speed rail project. the state lawmakers wanted a review of how the rail authority is acquiring private land. the concern is over farmland in fresno and madera counties that's being purchased through eminent domain. state auditors said the review would have taken six months and they say they have audited the project twice before. it was the first and only unionized worker-owned strip club in america. but the peep show is coming to a close. san francisco's lusty lady heat theater has been a north beach landmark for three decades but it will close after a debate over the rent. today one dancer told us the lusty lady was if nothing else unadulterated san francisco. >> weird seediness but processivety and no shame approach to sexual stuff. >> the sign on the locker room wall sums it up. it's been a good run. the lusty lady's last day will be september 2. an 18th woman has come forward accusing san diego mayor bob filner of touching her inappropriately. she says it happened as they took photos after a meeting. >> he placed his hand on my exterior on the back of my -- on my buttocks. he totally startled me. i feel extremely violated. >> these are the photos diane york is referring to. she says she has witnesses to the groping. filner recently acknowledged inappropriate behavior and on friday, the democratic national committee will vote on a resolution calling for filner to resign. it's supposed to be a place where you can have fun in the sun. >> but for many beach-goers in russia, this was a huge surprise and you can see y amateur video shows a gigantic military ship approaching shore. sunbathers finally started to scramble out of the way. the russian officials say the ship and its crew had been carrying out a routine training exercise and they say it was unclear why people were on the beach. [ laughter ] >> seems clear. fortunately nobody was hurt. >> there are a lot of people on the beach. >> they go to the beach because they wanted to enjoy the beach. >> the sun's out. businesses making changes in the countdown to obamacare. >> how yet another company is failing to deliver on benefits to its employees. >> and your local starbucks may be empty this saturday. how the coffee chain is at the center of the national controversy. >> giving you another look at the new bay bridge. now just one week until the entire bridge closes down for the grand opening. we'll kind posted. -- we'll keep you posted. ,,,,,,,,,,,,,,,,,, sue kwon has this story and other headlines in today's p of consumer news. another company cuts medical coverage in the weeks before obamacare. sue kwon has this and other headlines in today's wrap of consumer news. >> reporter: on the consumerwatch, u.p.s. will stop delivering healthcare to thousands of employee spouses. the shipping service announced it will remove 15,000 spouses from its medical plan who are eligible for healthcare through their own employer. the company says its decision comes because of the costs associated with the affordable care act. these costs include requirements to recover dependent children up to age 26 and other fees. the decision takes effect in 2014 and is expected to save about $60 million a year. starbucks may not be so crowded on the saturdays because a nationwide boycott is being called against starbucks. it has nothing to do with coffee but with guns. the group called skip starbucks saturday wants to pressure the coffee giant into changing its current policy that allows customers to carry loaded firearms into starbucks stores in 43 states where it's allowed. in may, a female customer dropped her purse. a loaded gun inside shot another woman in the leg. starbucks agrees gun violence is a serious issue but the company complies with local laws. walmart is making an early and unexpected move to get rid of the $5 entry fee for customers who want to participate in a holiday layaway program. this is a signal to consumers that retailers including walmart will be trying harder to get your business this fall. the decision comes after the retailer had a dismal earnings announcement and cut its annual profit outlook because discount shoppers are uncertain about the economy still. the no interest pay over time program starts september 13. plenty of time before christmas. on the consumerwatch, i'm sue kwon. if you have a consumer problem or question, call our hotline. 888-5-helps-u. well, something foster children understand as well as anyone. >> don't have nobody on your side. you're going to be a failure. >> meet the east bay man making sure kids in foster care always have an advocate when it comes to getting a good education that they deserve. >> from the kpix 5 weather center, good evening, everybody. the area of low pressure bringing us thunderstorms is moving out. so the weekend never too early to talk about it. we have that pinpoint forecast straight ahead. >> former 49eraj jenkins may be gone but not forgot. could the a's hold their ground against the mariners? that's coming up in sports. ,, female narrator: it's posturepedic versus beautyrest it's posturepedic versus beautyrest with up to $400 off. serta icomfort and tempur-pedic go head-to-head with three years' interest-free financing. mattress price wars are on now at sleep train. ♪ your ticket to a better night's sleep ♪ school inspired a former ter - turned - attorney to take action. kate kelly reports the sobering statistics about foster children dropping out of school inspired a former teacher-turned-attorney to take action. kate kelly reports this week's jefferson award winner is now closing the achievement gap for these kids. >> reporter: 18-year-old tail la williams just graduated from high school. -- kayla williams just graduated from high school, a milestone that less than half all foster youth achieve. >> if you don't have nobody on your side you'll be a failure. >> reporter: but kayla did have someone on her side, a young attorney, daniel senter. >> i remember kayla telling me that it's a lot to hold everything inside all the time to try to control what's going on. >> reporter: kayla has been in the foster care system since she was 5 years old. with each new home she had to change schools. >> trying to complete your algebra class and you're switching schools five times in one year is incredibly difficult. >> i could only take so far and after a while explode and then i would go off on anybody, the teachers, students. >> reporter: kayla's story is all too familiar for daniel, who works at east bay children's law offices, which represents 1600 foster youth in alameda county. a former special education teach, daniel saw foster children changing schools an average of six to nine times and not getting the educational support they need. >> this is in my mind very much a social justice issue. >> reporter: so daniel started the education advocacy program. >> if you can reduce your school changes, you keep your same friends, you keep your same teachers, you keep your same administrators, you're more likely to graduate from high school and that's what we have seen. >> reporter: not only does he help keep the kids in their familiar schools; he works with the school to help identify ways they can support the child, be it tutoring, special education or counseling. >> california youth and foster care have a lot of rights but those rights are only meaningful if somebody is going to stand up for them. that's what daniel does. >> reporter: codger chan is director of east bay -- roger chan is director of east bay children's services. he says dan's program had immediate results. teens are staying in school. >> he helped by talking to them and explaining to them, like, what the situation was, you know, so it's keeping me from getting in trouble in school. >> reporter: kayla is now applying to college and looking to secure a brighter future for her eight-month-old daughter, brooklin. >> dan helped me to stay in school and just go back and, you know, don't give up. >> reporter: so for working to close the achievement gap for foster youth in alameda county,there week's jefferson award in the bay area goes to daniel senter. kate kelly, kpix 5. >> daniel is now helping other counties set up similar programs. to use more, use the link online at kpix.com. click the logo at the top of the page, then jefferson awards to find the story. >> remarkable people here in the bay area doing great things. >> while you're on our website go visit the weather page. we have a lot of lightning being detected. here's our live hi-def doppler radar. nothing locally but let's head to the high sierra. carson city having thunder and lightning. can you see it there? this is all live data as it's happening. a lot of subtropical moisture in the high sierra. locally we're looking out from oakland towards the bay bridge, a little haze and there is also some wind. air temperature in the 60s on both sides of the bay to the south san jose 73 degrees. mountain view now reporting 70. today's highs seasonal muggy with the departure of the subtropical moisture. low 60s in pacifica to 70 around alameda and also el cerrito into oakland. spot on through the delta and 77 in san jose. tonight overnight we'll see the clouds pushing back onshore. temperatures into the 50s. first off coastal cloudiness tomorrow morning gray, then lots of sunshine then seasonal temperatures returning to the bay area. the core 170 miles due west of monterey bay finally lifting north. it takes the subtropical moisture with it. high temperature moves in. temperature in pleasanton close to normal this time of year. the warmest day will be on friday. seasonal through the weekend. we'll pinpoint your neighborhood. 60s beaches, 60s, 70s around the peninsula with west wind at 15. 79 degrees spot on in san jose. 80s east of the bay. central bay in the 60s and low 70s. across the golden gate bridge 83 in rohnert park. ukiah up to 90. clearlake in the highway 80s. the extent the forecast calls for seasonal highs each and every day through the weekend. we'll toss in a longer forecast through wednesday. that's your pinpoint forecast. we have kim coyle in the house with sports right after this. ,, 'til labor day to reward yourself! get 48 months interest-free financing on the entire tempur-pedic cloud collection. not to labor the point... but this sale won't last long! ♪ mattress discounters! the conversations give new insight in new tonight, the final installment of the nixon white house tapes is out. the conversations give new insight into the only u.s. president ever force the out of office. bill plante tells us those conversations include words of support from a future president. >> i'm not a crook. >> reporter: in the spring of 1973, richard nixon was consumed with watergate. his national security advisor henry kissinger assured him no one would remember. >> you have saved this country, mr. president. the history books will show that when they -- no one will know what watergate means. >> reporter: when white house counsel john dean had been called before a senate committee. by the end of april, nixon was ready to fire dean and let his two top aides resign. he spoke to halderman as he prepared a speech to the nation. >> you and john have made the decision. let's just say it's made. >> reporter: following the speech, the president spent the rest of the night taking calls of support. this one from california governor ronald reagan. >> i had to say it. i had to say it. i know how difficult it was and i know what it must be with the fellas having to do what they did and that's right, they had to get out. >> reporter: from billy graham nixon asked about tv coverage of the speech. >> what did cbs do, knock it. >> i felt like? lashing their throats. >> reporter: in the midst of all this he was instructing his envoy to china. [ inaudible ] >> reporter: he asked halderman to destroy the tapes. for whatever reason, that was never done. bill plante, cbs news, washington. >> the a's wish they could erase at least 18 minutes. >> especially when their manager says they are sloppy which is never as a good thing. the a's will begin their toughest stretch of the season friday in william and they aren't exactly hitting the road with a lot of momentum. no establishing shot necessary. right to the highlights. coco crisp in the bottom of the 1st doing his ricky impression with the leadoff homer but the lead wouldn't last. brad miller with a solo shot to right two more homers allowed by aj griffin today make it 30 for the season. that's the most in the majors. the mariners beat the a's 5-3 to take two out of three. >> everything that we did today is what's wrong with us. we didn't add on early. we didn't make big pitches when we had to. we didn't come through in situational at-bats. ugly ugly game for us. >> the giants play-off hopes weren't the only thing well done at the ballpark today. 2-0 red sox in the 2nd. joaquin arias hits a solo shot to left his first homer of the year but that's all the giants would get off felix. barry zito struggled and didn't get help from defense. belt can't find the base and victorino is safe at first. later in the inning the surprise of petaluma jonny gomes loops a single to left. victorino and pedroia score. zito lasted 3 innings. boston with five runs in the 7th, the big blow on a homer from steven drew. the red sox pound the giants 12- 1. braves and mets scary moment for jason hayward. the braves right fielder had a fractured jaw after being hit by a 90-mile-an-hour fastball. he will miss the rest of the season. >> oh. aj jenkins will go down as one of the 49ers' most disappointing first round picks but despite the lack of production on the field jim harbaugh remains in his corner even after trading him to kansas city. >> bloggers and writers say what they have to do. they have a job to do and that's to write reports on players but the guys who drafted me, you know, know with all the expectations they had with me he took a chance and still defended me so that shows by himself the kind of character that that person has. >> i don't think it's fair to bully or label a young player. although i fully understand that people are entitled to their opinion and their perspective. i prefer that the criticism -- i would appreciate if the criticism was directed toward me. i'm responsible and i certainly accept that. actually, welcome it. >> the raiders wrapped up training camp in napa this afternoon. last night the team held its annual rookie talent show and based on dennis allen's review it's a good thing more video hasn't surfaced yet. >> they were terrible. laugh >> yes. [ laughter ] >> in 12 years of nfl football, it's the worst rookie show i've seen. couple of good skits. dj's got a little talent. moore has a little bit of talent but overall very disappointed. i'm glad we're not evaluating them on their rookie show ability. >> no oscar last night but how about this shannon brown won't be headed back to latvia anytime soon. he never got off the ground as he attempted to dunk over three people at a promotional appearance. >> somebody did something to put something on the court. >> banana peel or something. >> slick. it's not the first time he had a bad showing at a dunk contest. >> oh. >> not the way to showcase his skills. >> it's in the shoes. >> thank you. see you at 11:00. good night. captions by: caption colorado comments@captioncolorado.com ,, female announcer: female announcer: when you see this truck, it means another neighbor is going to sleep better tonight because they went to sleep train's ticket to tempur-pedic event. choose from a huge selection of tempur-pedic models, including the new tempur-choice with head-to-toe customization. plus, get 36 months interest-free financing, two free pillows, and free same-day delivery. are you next? announcer: make sleep train your ticket to tempur-pedic. ♪ your ticket to a better night's sleep ♪ announcer: this is joey fatone. it's time to play "family feud"! give it up for steve harvey! [captioning made possible by fremantle media] steve: welcome to the show. thank you very much, everybody. welcome to "family feud." i'm your man steve harvey. we got another good one for you today. we got 2 brand-new families. from atlanta, georgia, it's the brown family. and from atlanta, georgia, it's the mcnulty family. everybody's here trying to win theyself a lot of cash and the possibility--and we do give them away on this show-- driving out of here in a brand-new car. let's go. give me tommy, give me serena. guys, herego

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