Stocks: 4 things to know before the open

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HONG KONG (CNNMoney)

Here are the four things you need to know before the opening bell rings in New York:

U.S. stock futures were practically flat as investors showed little interest in getting their feet wet.

"I think the market is somewhat apprehensive coming into this week because of the amount of data that we're likely to see going into the week," said Tom Beevers, chief executive officer of StockViews.

He was referring to the gross domestic product and monthly payroll reports due later this week, as well as the meeting of the Federal Reserve policy meeting scheduled for Tuesday and Wednesday. He said that investors are trying to gauge "when the first rate increase is going to occur."

1. Merger Monday: housing and discount shopping: Zillow (Z) confirmed that it plans to buy Trulia (TRLA) for $3.5 billion in stock. The acquisition merges the two biggest names in online housing, and CNNMoney reported last week that some real estate agents were nervous that the sites' combined depth of local housing data could make in-person brokers irrelevant. Shares of Trulia surged 15% in premarket trading. Zillow was halted around the announcement.

Family Dollar (FDO) shares surged more than 25% on news that it's getting bought by another discount retailer, Dollar Tree (DLTR), for $8.5 billion. Dollar Tree's stock climbed over 11% premarket.

Related: Fear & Greed Index backslides to fear

2. Stocks to watch: Tyson Foods (TSN) reported earnings before the bell. The stock was up nearly 4% on plans to sell its Mexican and Brazilian poultry units for $575 million. Herbalife (HLF) will report after the close. T

McDonald's (MCD) continues to be embroiled in a rotten meat scandal in China. Shares of the fast food chain have dropped 3.3% in the week since a longtime McDonald's meat supplier was accused of processing expired meat.

Keep an eye on another American fast food chain, El Pollo Loco (LOCO), to see if it continues to fly high -- shares surged more than 60% in its first day of trading Friday.

Related: CNNMoney's Tech 30

3. International markets: Most European markets were mixed in afternoon trading, with France's CAC 40 up 0.3.%.

Russia's Micex index was lower after an arbitration panel in the Hague ruled against the state, finding the government had illegally sold off the assets of oil company Yukos. Former major shareholders were awarded $50 billion in damages.

Most Asian markets advanced Monday, led by a 2.4% surge on China's benchmark Shanghai Composite. Stocks in Mumbai fell 0.8% in afternoon trading.

4. Friday U.S. markets recap: U.S. stocks fell Friday. The Dow Jones Industrial Average closed down almost 130 points while the S&P 500 and Nasdaq finished the day off about 0.5%. The three major indexes ended the week little changed.

First Published: July 28, 2014: 5:04 AM ET

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Kristen Bell invests. Now what?

This Bar Saves Lives founders: Ryan Devlin, Kristen Bell, Ravi Patel and Todd Grinnell.

NEW YORK (CNNMoney)

Their enterprise really began in 2008, when Devlin and Grinnell used their celebrity to fundraise $30,000 to build a bridge in war-torn Liberia. They took meetings, shook hands and toured a clinic in Monrovia, where they saw starving children being fed Plumpy'Nut, a well-reputed RUTF (Ready to Use Therapeutic Food) that keeps kids alive in war- or disaster-torn regions.

The sight of those kids stuck with them. In 2013, the two launched This Bar Saves Lives, a company that would distribute one package of Plumpy'Nut for every granola bar it sold.

Support rolled in -- from Ravi Patel with whom Devlin had shot a pilot, and Kristen Bell, with whom he'd acted on Veronica Mars. Patel became the company's third partner and now heads up finance. Bell came on as a founding partner and brand ambassador. The two were also instrumental in the company's first round of funding, investing one-third of the overall $250,000.

Related: This startup thrives on a four-day workweek

"Everybody always wants a celebrity spokesperson or somebody who has 2 million Twitter followers ... that was the low-hanging fruit for us," says Devlin. What they lacked were connections in the snack food world.

Devlin and Grinnell had tried making samples of the product themselves -- what Devlin describes as "really terrible granola bars." They knew they needed help and put the first round of investment into hiring a graphic designer, attorney, and especially food scientists to develop a salable product.

For this, they turned to JPG Resources -- founded by food scientist Jeff Grogg who helped grow Kashi. The company consulted with This Bar Saves Lives "in every operational aspect of our launch," says Patel.

"They put us in touch with all their contacts in the snack business, and were able to lend their 25-plus years of experience to every major decision," says Patel.

Without them, says Devlin, "we would have been bankrupt in six months."

Related: Refugees cook for the masses

The company went through five versions of samples under JPG's guidance before soft launching with three flavors. Devlin said customer feedback on those bars -- the blueberry was a little too sugary; the vanilla was too crunchy -- allowed the company to make crucial tweaks.

The actors knew that celebrity endorsement might encourage single purchases, but the only way to create steady Plumpy'Nut aid was to draw repeat customers with a superior product.

They use non-GMO, organic and fair-trade ingredients -- and that standard comes at a price. Plus, Plumpy'Nut costs 34 cents per packet, which is factored into the bar's $2.69 retail price.

To keep costs down, the actors balance their startup roles with their day jobs, making up lost time at night, over weekends and when the camera turns off. (Devlin spoke to me from Puerto Rico where he was filming for MTV.)

Related: Facebook launched my business

"What we normally give away on our aid is what most companies peg as their profit margin," says Devlin. Nevertheless, according to Patel, their gross margin remains in the 40%-50% range, after their donations.

"Margins will continue to improve with scale, and currently all profits -- as well as deferred founder salaries -- are being reinvested into our aggressive growth," Patel explains. The company is on track for profitability within the next three years and has projected sales to double each year for the next five years.

Thus far, This Bar Saves Lives has sold over 214,000 bars and distributed that same number of RUTF's through Save the Children in South Sudan and in the Philippines. They're sold in Sprouts Farmers Markets nationwide and will expand to most Whole Foods (WFM) by August. And whether star power or taste is helping sell the bars (or both), hungry children are receiving emergency relief.

"We're all acting way less, and when we do act, we are still putting in at least ten hours a day," says Patel. "What I'm saying is, we are tired, but it's been so worth it."

First Published: July 28, 2014: 10:59 AM ET

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Richard Branson's Virgin America files for IPO

Virgin America has filed for an initial public offering.

NEW YORK (CNNMoney)

While the West Coast-based airline got its name from Branson's Virgin Atlantic airline, it is not mostly owned by Branson, Virgin Atlantic or Virgin Group. That's because Americans must own most of an airline in order for it to fly between U.S. cities.

The carrier 's primary hubs are Los Angeles and San Francisco. But it's expanding operations at New York's La Guardia Airport, Washington's Reagan National and Dallas' Love Field, getting the opportunity when the Justice Department required American Airlines and US Airways to give up some gates as a condition of approving their merger.

By selling shares to the the public, Virgin America will be able to bring more cash into the airline from U.S. investors.

Virgin Group and Cyrus Capital Partners, a distressed debt fund manager, are listed as the principal shareholders in Monday's filing.

The filing did not disclosed how much money the airline intends to raise with the stock sale or an estimated value of the company.

It did disclose that the airline lost $395 million between 2009 and 2012 before it made $10.1 million last year. It reported another loss for the first quarter of 2014. Revenue nearly tripled between 2009 and 2013.

Related: 5 airline fees we hate the most

Airline stocks have been very strong performers in recent months as consolidation in the industry, rising demand for travel, higher fares and increase revenue from various passenger fees have resulted in record profitability at many carriers.

First Published: July 28, 2014: 8:35 AM ET

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Zillow buys Trulia for $3.5 billion

NEW YORK (CNNMoney)

Trulia shares jumped 12% on the news that it's selling to Zillow.

Zillow will continue to operate two separate websites, where consumers can search listings of homes for sale. Zillow and Trulia together attract more than 130 million visitors a month.

Both companies post detailed listings of homes for sale, and charge agents to post their names alongside their listings. Some agent teams spend $20,000 a month with Zillow, Trulia, or both.

Still the websites' revenue only add up to about 4% of the $12 billion the real estate industry spends on marketing via newspaper and television ads, billboards, direct mail and the like. Zillow CEO Spencer Rascoff sees an opportunity to capture more of those marketing dollars via mobile.

"Mobile is becoming the medium of choice for home shopping," said Rascoff.

Trulia's current CEO Pete Flint will continue to head Trulia's operations and report to Rascoff.

The two real estate portals have transformed the housing market over the past decade by making information that was once only available through realtors easily accessible to consumers. The sites have made the home buying process much more transparent and stripped real estate brokers of their traditional role of gatekeepers of information.

Related: Chinese homebuyers are flocking to these states

Zillow, for instance, has its own home value algorithm called Zestimates. Trulia offers extensive rankings on crime, public transit and schools.

The ultimate fear: Zillow and Trulia could make brokers irrelevant.

The new Zillow will still have plenty of competition from other sites such as Realtor.com, Homes.com as well as from Coldwell Banker, Re/Max, Century 21 and other real estate brokers.

But it will give the combined company the leverage to charge realtors more, said Steve Murray, editor at Real Trends a real estate communications and consulting company.

First Published: July 28, 2014: 9:15 AM ET

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Investors yawn on another Merger Monday

click the chart for more markets data.

NEW YORK (CNNMoney)

The Dow, S&P 500, and Nasdaq all fell in morning trading. Investors are probably focused more on the deluge of economic reports coming later this week: a read on gross domestic product (GDP) for the second quarter, a meeting from the Federal Reserve's policy committee and the July jobs report.

"I think the market is somewhat apprehensive coming into this week because of the amount of data that we're likely to see going into the week," said Tom Beevers, chief executive officer of StockViews.

But here's what to keep an eye on today:

1. Housing and discount shopping deals: Zillow (Z) confirmed that it plans to buy Trulia (TRLA) for $3.5 billion in stock. The acquisition merges the two biggest names in online housing, and CNNMoney reported last week that some real estate agents were nervous that the sites' combined depth of local housing data could make in-person brokers irrelevant. Shares of Trulia surged 8%, while Zillow slipped around 6%.

Family Dollar (FDO) shares rallied 22% on news that it's getting bought by another discount retailer, Dollar Tree (DLTR), for $8.5 billion. Dollar Tree's stock also climbed.

Related: Fear & Greed Index backslides to fear

2. Stocks to watch: Tyson Foods (TSN) shares were up after the company announced in its earnings report that it plans to sell its Mexican and Brazilian poultry units for $575 million. Herbalife (HLF), which skyrocketed last week after hedge fund manager Bill Ackman failed to convince investors of his case against the nutritional supplement company, will report after the bell.

El Pollo Loco (LOCO) continues to look appetizing after its initial public offering last week. The stock shot up 17% Monday, following a more than 60% gain in its first day of trading Friday.

Related: CNNMoney's Tech 30

3. International markets: Most European markets were down in afternoon trading.

Russia's Micex index was lower after an arbitration panel in the Hague ruled against the state, finding the government had illegally sold off the assets of oil company Yukos. Former major shareholders were awarded $50 billion in damages.

Most Asian markets advanced, led by a 2.4% surge on China's benchmark Shanghai Composite.

4. Friday U.S. markets recap: U.S. stocks fell Friday. The Dow Jones Industrial Average closed down almost 130 points while the S&P 500 and Nasdaq finished the day off about 0.5%. The three major indexes ended the week little changed.

First Published: July 28, 2014: 9:48 AM ET

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Dollar stores joining forces

NEW YORK (CNNMoney)

Dollar Tree (DLTR) is buying its larger rival for 23% more than Family Dollar's closing price last week, for a total value of $8.5 billion.

Dollar Tree plans to continue to operate both the Dollar Tree and Family Dollar brands. Dollar Tree stores sell all items for $1 or less and CEO Bob Sasser told investors Monday they will continue to do so. Family Dollar stores sells many items for more than $1 and will stay with that pricing policy as well.

Dollar Tree stores are found mainly in suburban areas. Family Dollar stores are primarily in either urban or rural locations.

Combined, the two chains have more than 13,000 stores and annual revenue of $18 billion. That would surpass the current leader in the dollar-store sector, Dollar General (DG), which has more than 11,000 stores and revenue of $17.5 billion.

A big winner in the deal is activist investor Carl Icahn, who holds 9.4% of Family Dollar shares, according to sales tracker LionShares. Icahn acquired most of the shares in the past year.

Shares of the company shot up in June when Icahn disclosed his stake, but have given back most of the gains since. The stock is down nearly 6% for the year through Friday's close.

Shares of Family Dollar (FDO) soared on the news in early trading, while shares of Dollar Tree posted most modest gains.

Shares of Dollar General and Five Below (FIVE), a chain that sells items for $5 or less, were slightly lower on the news. So were shares of Wal-Mart Stores (WMT), the discount chain that is the nation's largest retailer.

The deal is expected to close early next year.

First Published: July 28, 2014: 7:05 AM ET

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Apple welcomes back top Bitcoin wallet app

Apple banned Blockchain and other Bitcoin wallets from its App Store earlier this year. But Blockchain is back.

NEW YORK (CNNMoney)

The software lets people receive and spend the increasingly popular digital currency Bitcoin. Blockchain.info's popular app was kicked out of Apple's system in February. At that time, Apple turned its back on all Bitcoin-related wallet services.

Although Blockchain.info's 100,000 users on iOS could still use their app, no one else could download it.

Related: What is Bitcoin?

But Apple (AAPL, Tech30) recently reversed its antagonistic stance toward Bitcoin and has started to allow a few Bitcoin wallet apps to trickle back in. On Saturday, Apple notified Blockchain.info it could return. The British startup republished its app on Monday.

The app should appear in the App Store as soon as Apple's computer servers update their systems.

"This represents a pivotal change for Bitcoin," said Blockchain.info's CEO, Nicholas Cary. "When Apple banned the last app, they told thousands of developers around the world their time and energy wasn't worth anything. I think this will be a shot in the arm for the whole industry."

Those computer developers instead turned their energy toward Android. Google's (GOOGL, Tech30) mobile operating system has become a hotbed for Bitcoin-related wallets and trading services. Bitcoin developers have also received millions of dollars of support from venture capital firms such as Andreessen Horowitz.

Cary thinks Apple didn't want to miss out on the opportunity.

Apple did not immediately respond to requests for comment.

Related story: New York unveils Bitcoin license rules

Blockchain.info's number of digital wallets has grown from 950,000 to 1.9 million since the start of the year. The startup's attorney, Marco Santori, expects Apple's decision to quickly push that number past 2 million.
Jose Pagliery is also the author of Bitcoin - And the Future of Money, available in bookstores on Sept. 1 (Triumph Books, Chicago).

First Published: July 28, 2014: 10:45 AM ET

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Investors help the rich pay off student loans

Have a law degree from Harvard or MBA from Northwestern's Kellogg? Wall Street may want to buy your student debt.

NEW YORK (CNNMoney)

Social Finance, a company that uses crowdfunding to refinance student debt, just packaged a bunch of those loans and sold them.

It's an increasingly popular form of lending called peer-to-peer, or P2P. Firms like Social Finance (SoFi) and contemporaries Lending Club and Prosper pair people who want income with people looking for credit. It's an end run around traditional bank lending.

SoFi's niche is refinancing student loans. But not just any loans. To even be considered for getting money through SoFi, you have to have attended one of a small number of selective colleges like Harvard, New York University and Northwestern. Their alumni provide the money -- The students must also have a job lined up after graduation.

The loans tend to be debt for law school, business school and medical school. And while these grad students carry a median $77,000 in debt, they are also bringing in an average of $183,000 in salary a year. Their average FICO credit score? 776. It's another sign of how the credit market is only open to a select few.

Related: Big bond investor Bill Gross says rates will be low for years

Packaging these kinds of loans into bonds is a pretty recent phenomenon. SoFi and hedge fund Eaglewood Capital, which securitized a bunch of Lending Club consumer loans last year, are the only two companies to do so.

The big ratings agencies, who serve as a gatekeeper to the big bucks in debt markets, have largely stayed away from these types of loans. But they're starting to warm up.

Canadian firm DBRS has an investment-grade rating on bonds SoFi put together last year. And Standard & Poor's has also recently given SoFi its high-grade blessing.

This should lead to more bond sales, according to Morgan Parkes, head of business development and investor relations for Eaglewood Capital. She argues that more investors will be interested now that some of these securities are getting credit ratings.

For SoFi, the increased attention meant selling more bonds for more money than before. Its first deal was for $150 million in bonds that started off at a 3.75% yield. Its second deal was for $250 million in bonds, the cheapest of which priced at a 3% yield. Bond yields go down when prices rise, so the demand is clearly there for these bonds.

That's because institutional investors -- think pensions and hedge funds -- are eager for anything that yields more than the relatively puny 2.5% rate you get with a 10-year U.S. Treasury.

And big firms like BlackRock (BLK) -- which didn't buy any of the SoFi bonds -- are actively buying Lending Club and Prosper loans, lowering rates for borrowers who can access those platforms.

Related: Investors are hungrier for corporate bonds than before the financial crisis

Still, SoFi doesn't plan to start branching into loans for associates degrees or for-profit schools, where students typically have much more trouble paying off federal loans.

Instead, SoFI CFO Nino Fanlo said the company plans to find ways to follow its wealthy customer base into other areas like mortgages or other consumer loans.

Credit is harder to come by these days for subprime borrowers with less-than-optimal credit, but it's easy to get a loan if your credit's good and you have a decent income.

"If you're a prime borrower, you're paying next to nothing," said Vishal Khanduja, fixed income portfolio manager at Calvert Investment Management, which bought some of the SoFi bonds.

But there are still many people stuck trying to pay off student loans who don't have high-income jobs and advanced degrees from some of the country's best schools. And they won't be getting the same kind of help from Wall Street.

First Published: July 28, 2014: 11:03 AM ET

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Yo backer launches new app

NEW YORK (CNNMoney)

The app officially launched on Monday from Moshe Hogeg, the CEO and founder of Mobli, a mobile sharing platform.

Hogeg is a co-founder of Yo; he invested his own money into the incredibly simplistic app developed by a former Mobli iOS engineer. (The app was heavily scrutinized in June for raising $1.5 million in funding, when all it actually does is ping users with the word "Yo.")

MIRAGE builds on key pieces from Yo's virality: It lets users send messages, videos and voice recordings to their contacts -- with just one tap.

"[Yo] is very, very simple," explained Hogeg. "We tried to imitate this simplicity. This is what makes it very fast and beautiful. After you learn how to use it, it's the simplest tool ever."

A la Snapchat, messages last just mere seconds -- the app automatically determines how many. Videos self-destruct in up to 15 seconds; photos, in three seconds (or slightly longer if there's also text).

"In Snapchat, [at] minimum it will take four taps. In MIRAGE, it's one tap," explained Hogeg.

Related: Israeli startups flock to New York

With certain things -- like telling his secretary to order his lunch -- Hogeg said sending an email or text (and therefore having it logged in a digital archive) simply shouldn't be necessary.

"I would not say to my secretary, please bring me something to eat [with] a video on Snapchat," said Hogeg. "But in MIRAGE, this is exactly how we use it."

A lazy person's Snapchat? Maybe. With a MIRAGE message, lunch can be requested -- not by exhausting your fingers and typing out actual sentences -- but rather in one simple tap.

The free app, which is available on iPhone and Android, connects to one's phone contacts -- even if they don't use the app. This cures what Hogeg refers to as the "loneliness problem." If friends don't have the app, they can still receive the message through a text and view it in a browser.

Hogeg said everyone from friends to lawyers and their clients could be potential users of MIRAGE but is quick to note that there's no predicting how it will fit into people's lives.

Related: 10 best cities to launch a startup

"Exactly like Yo -- we thought certain things and then people took it to other places," said Hogeg. (The app was initially designed as a simple way for Hogeg to communicate with his wife and assistant -- it soon became used by World Cup fans to alert them when their team scored a goal.)

MIRAGE only collects data on what type of message people are sending (i.e., video or photo).

"Everything goes away from our server the second it disappears from your phone," he added.

About 350 people tested the app, and almost all the messages sent were videos, according to Hogeg.

This is the company's first app, aside from the original Mobli app. To date, Mobli has raised over $80 million in funding and counts high-profile investors including American Movil (led by Carlos Slim), Leonardo DiCaprio and Serena Williams.

First Published: July 28, 2014: 11:06 AM ET

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Psychics are bullish on stocks

Sidney Friedman, a Chicago-based 'mentalist,' says 2014 will be another good year for stocks.

NEW YORK (CNNMoney)

To answer this question, you could ask an investment strategist. Or you could consult a psychic.

That's what CNNMoney did, and it turns out psychics and investment strategists have something in common. They're both pretty bullish.

The bull market, which has been running for more than five years, still has some life left in it, according to a survey of market strategists CNNMoney conducted in July. On average, the strategists we polled expect the S&P 500 to gain 8.8% this year.

That's all well and good. But what do people with extrasensory perception think?

CNNMoney asked three psychics for their market predictions. Here's what we learned.

'The devil card.' Thomas John, a medium and clairvoyant based in New York, said the S&P 500 will rise above 2,100 by November or December. That's about 6% above current levels. "YIKES!" he exclaimed.

He said he took 20 minutes to "light a candle and do some meditation," before firing off an email to CNNMoney with his predictions.

Related: The 4 biggest mistakes investors are making

He also named specific companies that will perform well into 2015, including Anheuser-Busch InBev (BUD), Ryanair (RYAAY), Google (GOOGL, Tech30), Applied Materials (AMAT), Twitter (TWTR, Tech30) and Zillow (Z). We wonder if John "knew" something about Zillow's just announced deal to buy rival Trulia (TRLA).

The future is also bright for "old materials," such steel and cement, he added.

John said he has advised clients on their investment decisions before.

When a hedge fund asked for his predictions in 2007, John said he saw the name "Lehman Brothers" and that it was under the "devil card," indicating death or tragedy.

He declined to name the hedge fund or whether it made any moves before Lehman went bankrupt in 2008.

Hard to predict with exactitude. Chicago's Sidney Friedman has been a professional "mentalist" for 19 years.

In addition to performing at corporate events, Friedman has been publicly stating his predictions every year since 1996. On average, he's right 72% of the time, according to his website.

"It's very difficult to predict anything with exactitude," said Friedman, who uses dream interpretation and a technique he called the "pendulum principle" to measure "fluctuations in nature and universe."

Related: 6 events that spooked the market in 2014

Earlier this year, Friedman predicted that the Dow would see a "significant dip" in the late winter or early spring, before bouncing back to end the year higher, "perhaps 5% to 6%." He might wind up being right. After tumbling from mid-April to early February, the Dow is now up nearly 3% for the year.

Looking further ahead, Friedman said he sees a significant market event taking place sometime in 2016. "That's when you have to be careful."

However, he stressed that investors shouldn't base their decisions solely on psychic powers.

"It's best to combine the intuitive with actual data," said Friedman.

Feeling the energy of the market. Before becoming an "intuitive guide and consultant," Lisa Jones worked as an accountant at Price Waterhouse and Ernst & Young, as well as a hedge fund.

Jones, who primarily works with business owners and entrepreneurs, still calls herself a CPA. But instead of Certified Public Accountant, she says it now stands for "Channeling People's Angles."

She also warns that investors should not rely on psychic predictions alone.

"I take no responsibility for actual results," she said. "I'm only feeling into the energy of the market."

That said, the energy of the market is fairly positive. While she sees the possibility for "dramatic shifts" over the next few months, Jones expects the Dow to move higher in the near-term.

Related: 5 reasons why the market won't crash

Jones said she "got a very strong feeling" that the Dow will end the year around 17,450. It closed Friday at 16,960.

The energy sector has particularly strong, well, energy. Jones said she sees "volatility in the near future" that could cause energy prices to move higher towards the end of the year.

Jones also gets a good feeling about the technology sector.

"There are some new innovations coming to market, which makes tech stocks hot," she said. But the tech rally could "cool dramatically" after the midterm elections.

Of course, you don't need to be a psychic to know that Apple (AAPL, Tech30) has a new iPhone coming out soon and that Election Day takes place in November.

First Published: July 28, 2014: 11:44 AM ET

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