is the market rallied out? traders shed light on where stocks are headed in the new year. in today's cover story.... a look at a provision of the affordable care act that has both sides of the aisle agreeing. plus....could an uptick in mortgage rates stall strides in the housing sector. . and..... the underperforming stocks that could soon stun the market... first business starts now! you're watching first business: financial news, analysis, and today's investment ideas. good morning! i'm chuck coppola, angela miles has the day off. it's friday, january 3rd. in today's first look:stocks take a turn.it was a down day on wall street with the dow falling 136 points, the s&p down 16, and the nasdaq slipping 34. gold was up 12 dollars, with oil dropping over 2 dollars. a new year, and a new start.reports

from the hill say a resolution for a budget deal looks optimistic in congress.a one trillion dollar omnibus spending bill could be released as soon as monday.the bill will need to be passed by the 16th of this month to avert a government shutdown. a fed farewell.outgoing federal reserve chairman ben bernanke speaks today in philadelphia at the american economic association. bernanke will particpate in a q&a in addition to his speech looking back on his time as fed head. and...the nation is rocked by an epic snow storm. deemed "winter storm hercules" ... the near-blizzard condtions continue across the country...with the majority of the snowfall today hitting the northeast . mark sebastian of swan wealth advisors joins us now for some trader talk. hi mark! happy new year. >>happy new year. >>i'd like to ask you, we're starting off this new year and the dow is down, gold is up. what's going on? >>i think now that the fed has begun tapering, the market is to be much more economic report driven than it's been the last few years. things like ism non

farm payrolls which already matter are going to really start mattering and really driving the market. we had a huge year in 2013.we were up almost 30%. we need economic reports to follow through with that if the s&p is gonna hold. otherwise this is not gonna be anywhere near like 2013 in 2014. >>do you think that we're moving into an area where maybe political influences may take a larger effect on the market? >>i'm less convinced that it's politics. i think it's economics, economics, economics. if the economy grows and inflation is under control, the s&p will have a great year. if we see either weak economics or an increase in inflation that forces the fed's hand to move too quickly, i think the s&p could be in for a very rough 2014. >>i'm glad you brought up the s&p. a number of sources are making their projections for 2014. a lot of them are up. one of them has it up 6% for the year. another one has it up almost double that maybe even a little more than that. first of all, what's yoru take on the s&p for 2014? >>i like to look at history and try to find equivalents. it's not a perfect equivalent but i think 2013 looked a lot like 2006. we had sinking volatility in the market and a market that was just rallying all year. i think that's a lot of what 2013 looked like. i think 2014 could end up looking much like 2007 where we saw the s&p rally and

the vix rally at the same time. so what do i think could happen in the s&p? i'm looking at 8- 10% but we could see the vix a couple of times this year approach 30%, possibly 40%. cyclically i think we're moving toward---we're gonna start seeing volatility go back into the market especially at the fed trying to taper its bond buying. >>warren buffett is making a play for a pipeline technology in north dakota that may help him move oil from that part of the region to refineries. what do you think of what he's doing? >>if warren buffett likes oil then typically his trades are bad at first and then turn into really good trades. if i had a 5 year time frame in some sort of oil play, i would be looking to piggy back warren buffett. that's usually the duration of his trades---about 5 years. if warren likes it it's probably a smart play and might bode well for keystone. >>always good to chat with you

mark. mark sebastian of swan wealth advisors, thanks very much. >>thank you. the new year began with more than two million americans signed up for the affordable care act. it went into effect this week, but officials advise consumers call their selected plan and confirm their coverage before going to see the doctor. in most states, consumers have until january 10th to make their first payments for coverage that began january first. the nonpartisan kaiser family foundation estimates 17-million americans are elgible for a tax credit to buy private insurance. for an individual, that's anyone making less than 46- thousand a year or 94-thousand for a family of four. the next deadline---sign up by january 15th, if you want coverage as of february first.joining us now for more updates on the affordable care act, paul eggers. paul? chuck--though most fundamental provisions of obamacare will be new this year, some, like a tax on medical devices, have been in place since 20-13. in today's cover story, a closer look at the tax and why moves to repeal it are a rare sign of bipartisanship in the bitter health care debate.

a 2.3 percent tax on the revenues of medical device manufacturers achieved the impossoble in 2013 -- it brought democrats. " i rise today with many of my colleagues to repeal the medical device tax." and republicans " many of us would argue that this will result in less access to healthcare and in lowering health care costs." together on obamacare. 260 congressmen co-sponsored a bill to squash the tax, a move that ultimately failed. " the healthcare reform horse has left the barn now. people are being insured now, we have that increased access and we have to pay for it." the tax projects to raise 30- billion dollars over 10 years and is now hitting --albeit softly -- the bottom line of device makers. " on the whole, its about 100

basis points on their profitablility. that really doesn't have an impact on the cash flows of these companies. it just does not." debbie wang of morningstar says that the industry will shift operations throughout the year to make up for that 1% hit on profitability. " by moving manufacturing to lower cost locations like malaysia or costa rica, they've actually been able to make some adjustments to accomodate this tax so that it doesn't have that much of an impact on their bottom line" as for her picks in the space, wang of morningstar named medtronic as a favorite for its wide range of products. the stock climbed more than 10 percent in the last half of 2013. italian automaker fiat has struck a deal with the united auto workers to buy out the union's 41% stake in chrysler. it sends 4.35 billion dollars to the u-a-w's retiree health care fund.here's the deal---fiat pays 1.75 billion dollars in

cash.chrysler pays 1.9 billion and another 700-million over four years. as a result of the deal, fiat absorbs chrysler completely and becomes the world's 7th largest automaker. "we'll have to see what unions in europe take this as a signal of because obviously the uaw got a big, big part of what it wanted. we'll have to see what happens in terms of product. this allows the new fiat/chrysler to merge all operations, even moreso than they already have, and get a lot of different products in the global markets." it's clearly good news for fiat stock - up 15 percent on the news thursday. ford is hoping for sunny days ahead. the automaker is releasing a concept car that runs on solar power and does *not have to be plugged in.solar panels line the roof of the car and use the sun's energy to charge the vehicle's battery.the model also has a gasoline engine for backup.a small charging station where drivers could leave cars to catch some rays for a longer period of time is also in the works.the car will offically

launch at next week's consumer electronics show. turbulent times for machinists in washington state...the president of the international association of machinists has called for local members to approve today, a slightly revised contract to build boeing's triple-7-x aircraft in the puget sound area. this comes after 22-states have tried to lure boeing production work, since the vote.local machinists may not go along, though. some say the offer is no less filled with pension freezes and other concessions.observers say the international sees the possibility of losing millions of dollars in union dues if boeing jobs are moved to state where unions are weaker. manufacturing in the u-s is picking up steam. though the institute for supply management index of manufacturing activity slipped to 57 in december from 57-point-three in november.the number remains the second- highest reading in the past two-and-a-half years. and growth expanded for six straight

months previously. any reading above 50 signals growth, according to the i-s-m. economists say growth should last through 20-14, as americans make bigger purchases on homes, cars, and household goods after holding back during the sluggish economy. "problem" brokers are at risk of getting the boot from wall street. the financial industry regulatory authority or "finra" is keeping an eye on firms that hire brokers with a record of misconduct. the regulator also wants to scrutinize brokers if they worked at firms that were expelled from the securities industry.many individuals were not barred because of their firms' issues, but could bring unethical ideas with them, according to finra.still, the regulator says only a "small number" of brokers have engaged in a pattern of misbehaviour that could harm investors. popular social messaging service "snapchat" is scrambling to deal with a hack attack. user names and phone numbers of over 4 and a half million people

were posted online this week.the majority of those affected live in the u.s.reports say the hacker was attempting to reveal snapchat's potential security flaws.the site is not commenting about the security breach and the site that posted the user data has been taken down. you can check if your information has been leaked by going to snapcheck dot org. macy's and martha stewart have reached a truce.stewart's company, martha stewart living omnimedia, and the retailer have settled a breach of contract lawsuit with j-c penney.m-s-o and j-c penney signed a merchandising deal in december 2011 to develop mini martha stewart shops.macy's planned to sue both companies for violating its exclusive agreement with martha stewart. its lawsuit against j-cpenny is ongoing.settlement terms with m- s-o are confidential, but the two say they look forward to a long partnership. some of the world's most notable billionaires are stepping up their chartiable donations.

facebook's mark zuckerberg was the most generous donor in 20- 13. he gave 18 million shares of f- b valued at 990 million dollars to a silicon valley charity. nike's co-founder pledged 500 million dollars to a cancer research foundation.and michael bloomberg awarded johns hopkins university with a 350 million dollar gift. overall...the chronicle of philanthropy reports the nation's wealthiest donors gave 3.4 billion dollars to charity last year. for those of you who really want to stick with your weight loss resolution for 2014.how about a financial incentive? the website "healthy wage" is gearing up for a busy time of year. the site allows users to bet on themselves and their weight loss goal. customers decide how much they want to wager, and if they win, they take home a profit, if they lose...they have to fork it over. still to come:

what's behind the flood of bullish activity in biotech. plus....traders reveal upside potential in "underdog stocks" that's later in traders unplugged. but first.... why one analyst says right now is the "last hurrah" for consumers trying to pay off their credit card debt. stay with us!

increasing mortgage rates! we finished the year with them.now, greg mcbride, financial analyst with bankrate-dot-com joins us with a look at where they're headed in 2014. hi greg, how high and how soon for the 30- year fixed? >>happy new year chuck. i do think that we'll hit the 5% mark here in the 1st half of the year. we could probably go as high as 5.5% at some point in the 2nd half of the year but i think it's gonna be a slow, steady grind not a big jump like we saw last year. >>what about adjustables?

>>the starting rates are also moving higher but we're not anywhere close to that point where we have to worry about resets. eventually we'll have to deal with that but not this year. >>do you think that either of these two will be enough to stall homebuying? >>no i really don't think so. again, as long as we have that slow, steady grind. if we had a big jump that would be a different story because borrowers get that deer in the headlights look but as long as the economy is improving and that's why we're seeing rates move higher, it's that improving economy that's going to get people to but houses. >>what about savers? they've been very patient during this time. will they finally see higher rates in 2014? >>i wish i had better news on that one. it's gonna be another tough year for savers. savings accounts. money market accounts, short-term cds---those yields are all gonna stay in the basement this year. you could see some improvement in longer maturity cds in the back half of the year but it's not gonna be enough to make them compelling. >>what about car loans? a lot of people have held off buying. they're thinking about it this year. what about those? >>we saw record lows in 2013 for car loan rates. rates are gonna stay pretty close to that

level this year. so, the landscape is gonna be very attractive for the many people that have put off buying a car and now is the time they have to. >>a lot of people have put away credit cards or pared down the ones that they had. do you think that credit card companies are going to try and entice us back? >>for card holders that have good credit there's a lot of competition. you see 0% balance transfer offers for as long as 18 months. but my message to consumers with a credit card balance is this: this could be your last hurrah to pay down that balance in an environment where rates---you have the tailwind of low rates rather than the headwind of rising rates. >>bottom line, what's the advice for people starting out this year knowing that we've got taxes coming up in a few months and an economy slowly grinding its way up and a fed that's begun to taper. what do you think? >>well the bias over the next few years is going to be to the upside on interest rates. now is the time to pay down things like variable rate debt as much as you can before those rates start to move higher. >>outstanding advice. greg

mcbride, thanks for joining us. >>thank you. coming up...behind the headlines. the guys tell us how much "market milestones" really mean to them. that's next in traders unplugged. plus... why traders are closely watching a recent move by the fda. stay with us.

let's get ready to get riled up.the guys are here for traders unplugged. alan knuckman and scott schellady join us. topic number one: wish list, what is your one wish for traders? alan: i wish people used more discipline. i wish stops were mandatory. when you bought or sold something that you had to put in a stop clause. it could only be a small percentage of your account. no one trade could ever hurt you badly. scott: of course, alan knows more about your trading than you do--- alan: i'm trying to protect you from yourself. scott: i'm going to go for fair and equitable trading which means that i think that the market needs to get rid of the algorithmic traders and the high frequency traders. i think that's something that the genuine old fashioned traders have been having to deal with as of late and i don't think that's been good for the market. they

serve no real economic function. alan: who cares? it's one penny here, one penny there. it doesn't matter if you're holding something for 10 years. scott: i've got nothing to worry about alan. you put my stops in for me. chuck: topic number two: level headed dow at 16 thousand, s&p at eighteen hundred crude at 100 dollars a barrel. what do milestone levels mean to you? scott: i say absolutely nothing. i think the only one i'm kind of skeptical about is oil being up that high. i think that's because they think the economy is doing well enough to keep it at that level and demand's there, but i think we've got a great supply. i think the dow and the s&p are up there because of the qe, not because of fundamentals. i'm not worried about the dow and the s&p. i think that the oil price is a little bit high. alan: the prices reflect ability to pay. it's what somebody thinks it's worth, that's all it is. milestones mean nothing to us. we're mere mortals, the market doesn't care. the market's gonna do what it's gonna do. it can go a lot higher or a lot lower than we think. where we get in trouble is we start thinking. chuck: some would say we've gone to the dogs but we're gonna call this next category, topic number

3: dog catcher. of the 3 or 4 worst performing stocks, at&t, ibm, caterpillar, mcdonalds, which is a buy? alan: i like them all. i like mcdonalds. mcdonalds was the best performer last year and the worst performer this year. mcdonalds is not going anywhere. it's a long term value but caterpillar is making a surge comeback. it's breaking out trading between 80-90, back above 90. it's going to $100 bucks. scott: i have to agree with alan on one thing. i think i like mcdonalds because i don't think the economy is going to do well. everyone can suddenly afford mcdonalds rather than go out to nice restaurants. i think caterpillar is not one to buy because i think caterpillar will suffer with the rest of the farm economy. the fed survey of 219 banks in kansas city said they expect farm incomes and values to go down by 10-20% next year. stay away from caterpillar. alan: land prices are all time record highs. china's coming back. prices are at 3 year lows. optimism!

scott: he's relying on other people's money again. chuck: bonus round question: postal hike---the price of stamps is going up again in january, this time to 49 cents. looking back to the year, 2001 what was the price of a first class stamp? was it 33 cents, 34 cents, or 35 cents? scott: well, that was the eve of alan's 3rd birthday. so i'll go with something like 30 cents. alan: 33 cents. chuck: it was 33 and 34 cents. it rose from 33 to 34 during the year. thanks for playing with us guys. have a terrific day. first business news continues right after this.

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james ramelli of keene on the market dot com joins us now for chart talk. good morning james! >>good morning. >>you're seeing bullish activity in a biotech stock. what are you watching? >>cell therapeutics. ctic. big news on thursday. the fda comes in and lifts the ban they had on cell therapeutics research into their cancer drug. the stock sees a huge move higherup 5% on the session. we saw some unusual bullish option activity leading into this announcement. i was actually already long this

one through this move so i'm very happy about that. what i would really like to seein thursday's session we saw a trader come in and sell 20 thousand of the june ½ puts in ctic. now this is a very bullish trade and represents his very bullish conviction, thinking that there's gonna be some more follow through in this stock. he's obligated to buy 2 million shares of stock anywhere below 1/2. this is a very bullish trade. i want to stay long this one especially when i see signals like this. >>wow, we want to follow that one as well. it's been a rather down day. the dow is down. what are you watching that's performing well? >>one that we're seeing that's doing well today is dg. we saw on thursday, the stock was up a dollar amidst a very weak looking overall market. this move was telegraphed very well by some unusual option activity on tuesday's trading session. what we saw was a trader came in and sold their long january 60 call position to buy the february 62 half calls 16 thousand times. this is a very big block and we call this rolling up and out. they're taking their profits in the front month and rolling out to a more aggressive target the next month out suggesting they think the stock is going to head higher. i'm in these feb 62

half calls. i bought them for $1.60. i sold some today for $1.95. i think there's a lot more upside to this one. they're implying the stock to go above 62 half in february. >>why arewe seeing such a down beginning to the new year? >>it's really hard to say. we're gonna hear a lot of statistics about what having a down day the 1st day of trading in the new year is going to mean for the year going forward and i don't really like to buy into any of that. as we saw the market make a new high on tuesday, i think it was natural for it to pull back a little today especially in the thinly traded market surrounding these holidays and in these shortened weeks. everytime we've made a new high this year we've seen moves like this. we've seen the market correct about this much and then continue on higher. i think that trend is going to continue. i'm net long this market and i plan on staying long this market throughout this year. >>james ramelli, thanks very much. >>thank you. that closes out the day for us.be sure to tune in on monday... we'll hear how seats aboard airliners are getting a makeover in 20-14....and whether extra features guarantee extra fees. you might be surprised. we hope you'll join us.from all of us at first business, thank you for watching.

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