Lost in Translation: American CEO Stuck in China

Rick Newman analyzes the morning business headlines.
8:14 | 06/25/13

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Transcript for Lost in Translation: American CEO Stuck in China
Market futures up today. Because isn't good economic data this of course coming off a disappointing day -- in the stock market that was driven by worries in China I wanna bring in Rick Newman from Yahoo! finance to break down the top business headlines. Of the day average -- are durable goods numbers -- -- -- Other very good there are ups three point 6% from the prior month that the big factor there is aircraft so that means Boeing. Orders for the new dreamliner 787. But if you take bowing out of a tie those are still pretty good numbers there that there's it's there's not a breakaway. It's it's a trend here but steady growth is what you we see. And I think it's important -- -- economists are saying. This is not driven by a big buildup in inventories in other words there's not a lot of stockpiling going on these are real orders needing to meet. Business needs today so it looks pretty good. All right we like good news -- let's talk about China and we you know it caused a big worldwide drop. In markets some believe the Central Bank has come out against excessive lending but others are wondering if this is because -- a big pile of debt that China doesn't want to talk about so what's really -- Well we don't know what's really going on I think that's part of what's unsettling people but. A lot of economists think that China has kind of a credit bubble similar to what. We saw here in the United States going back to the big housing bubble 20052006. A lot you know they've been easy lending over there pushing property values. The question is is there are a lot of bad -- -- a lot of bad loans out there. And then is can the Chinese Government do something about that so where -- we saw just in the last 24 hours. The Central Bank in China. Basically saying they're going to take some steps to deal with -- which was very reassuring that actually almost -- turn markets around from us really deep route into just basically almost a flat day show. The question in China has really been about about the government's ability. To smooth out problems in for as -- -- it's been over there the government generally has been able to do that so. It's now kind of -- wait and see situation with regard -- this presumed credit bubble in China. I -- of China there is apparently an American CEO there. Refusing to pay severance he's suffering some consequences -- the full story. This is a funny story. Apparently -- this guy he runs a medical supply company in north of Beijing. And he laid off some workers and gave them fairly generous severance packages. And the workers that did not get laid off. Thought that they were going to get laid off in the future and they were not going to get severance packages so they are. I'm sort of holding this is CEO under house arrest they say there are no weapons involved but they just won't let him leave. And he has he he's he stands in a window where he can talk to people who -- who passed by. He's he's trying to figure how to way to get out of the window. And the Chinese authorities are not intervening so far they're just sort of letting this guy worked it out -- -- employees probably because there's some sympathy for the employees. So this is -- -- it's a serious story but it's kinda funny because. The guy can't leave his own factory. So he he he gave great -- to some employees in the employees that weren't being laid off want assurances that they'll get that severance down why does that. Apparently he's moving part of his operation to India. But there clearly are some misunderstanding share. -- apparently his employees think he's going to close the entire company. And that they feel like they're gonna get -- without severance so. He says that's not going to happen he says he's laid off everybody he needs to lay off in that these workers. Who are asking for severance aren't gonna get fired so why would he offer them severance. It sounds like they need a translator here. -- -- Somebody in between he says they're putting documents in front of him there in Chinese -- Asking him to sign and he doesn't know what -- signing but he's doing it just to get them off his case a little bit it's a very bizarre situation. You know we saw that in a movie we wouldn't believe -- right I suppose not. Let's take it back home the president proposing a new carbon tax policy today obviously that's something the markets might be anxious about. I honestly I think the markets have enough to be anxious and about without this and they are. -- you know they're so worried about what's happening with bond prices. What what's happening Federal Reserve policy -- -- -- president of bombing he's talked about this for a long time now apparently he's actually going to outline some steps she's going to take two to combat global warming and these are things he says he can do without getting. Congress involves -- these would be executive orders. I think by nature if they -- executive orders they probably will be not. That strict on power companies. And and they will just because the president want to do these things doesn't mean they're going to happen some of them will involve local or state regulations. So he's going to talk about some new ideas. Then there's going to be a lot of debate about it -- without a doubt you know the industries affected by it will lobby against things that will adversely affect them and so on so. President Obama says he's beginning a discussion. -- -- some people would say is long overdue because this is something he talked about during his first campaign back in 2008 but nonetheless he's getting around to it. And probably I don't think it's gonna move markets today but probably we will be hearing more about it. Okay home price data has come out new home prices. What is it show. Home prices are taking off honestly we know that we know they've been going up. The latest daily at two -- today showing that home prices. Up up double digits year over year in one. Up significantly in the other this basically tells us what we already know which is that there's a big recovery in the housing market. However there's a lot -- ago because. They're still is a shortage of homes on the market and that's one reason these. These price increases -- are so steep. Oh the -- more people decide it's a good time to seller around but there are there are fewer underwater homeowners are still a lot of those people. Then we will see more homes coming onto the market for sale on these. These huge price. Increases will probably moderate founded the mid single digits -- -- sing religious something like a normal housing market so. Again the housing market is taking off but it's still a very out of -- which is -- -- why we're seeing such big increases when we really need to see just modest increases that's what -- healthy housing market looks like. And certainly people are nervous as interest rates are creeping up they they wanna get the deal to -- before that happens yet -- -- something new -- for sure. All right so you know got -- a look at the market were up right now big change from yesterday we were down I think by 118 at this right at this moment were up by 81. You know it is a volatile obviously we're happy that it's going back up but the volatility. -- -- what does that do for us. Well I. I'm gonna guess that we have sort of been through a big thunderstorm here -- the last three or four trading days. That is finally. About over I don't -- doesn't mean the volatility is over but what's the markets have been doing for the last few trading days. Is digesting this apparent change in are coming change in policy at the -- reserve. So that that was there is a lot of choppy trading. Big bond selloff stocks sell -- However you know like traders and investors do -- generally believe the underlying economy is pretty solid at this point. Which means. That they think the stock stock market is generally going to go up in the future so we could be at the point where a lot of investors say okay we're satisfied we've sort of disgorged. Some of this unsettling news from the Federal Reserve last week let's get back to investing. And I think we may see that today there certainly are some people who are looking for the right moment to buy. By the did Thursday saying we could see some of that buying action happening today. There will be. More volatility in the future because there a lot of things to worry about but this could be we could -- -- a sort of pies in the drama for a few days if you will. But certainly sounds -- -- a lot of folks thank you so much for joining us but before we don't think -- What a quick look at the Dow up 73 points Rick Newman Yahoo! finance -- thanks for joining us tripping night.

This transcript has been automatically generated and may not be 100% accurate.

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