You are cordially invited to the Investor Symposium hosted by Matson Money.
When: Thursday, July 31, 2014 – Saturday, August 2, 2014
Where: Horseshoe Casino & Conference Center
1000 Broadway, Cincinnati, OH USA
Speakers Include:
Arthur B. Laffer, PhD: Chief economic advisor to Ronald Reagan
Terrance Odean, PhD: Professor at Cal-Berkley, expert in the field of investor behavior
Lyman Ott, PhD: Expert in the field of statistics, providing validity to Free Market Portfolio Theory
Concert featuring country singer (and former leader of Hootie & The Blow Fish) Darius Rucker
Seating is limited. RSVP by emailing reservations@matsonandcuprill.com. Admission is free to all Matson & Cuprill clients and their guests.
In The Headlines
Will the U.S. Get Economic Frostbite from the Harsh Winter?
This winter has been tough on the U.S. economy. Over the last several months, large parts of the country have been gripped by freezing temperatures and snowstorms. And the impact of all that polar weather is being felt across many parts of the economy.
U.S. manufacturing output unexpectedly fell in January, recording its biggest drop since 2009, as cold weather disrupted production. This is the latest indication that the economy is off to a weak start this year. Factory production fell 0.8% last month, the largest decline since May 2009, according to the Federal Reserve. The Fed attributed the first decline in factory output to “severe weather that curtailed production in some parts of the country.”
Manufacturing joined retail sales, real estate, and employment in suggesting a backward step in growth early in the first quarter due to abnormally cold weather. For example, real estate agents in the Midwest and Eastern U.S. blame this winter’s slower home sales on the harsh winter weather.
Sales of existing and newly built homes were down in December from November, and year-over-year existing home sales were down nearly 9%. Reports of lackluster buyer traffic in January do not bode well for improvement in those sales numbers either.
“Those weather patterns have impacted the listing market,” said Richard Smith, CEO of Realogy, whose brands include Coldwell Banker, Century 21, and Sotheby’s International. “So until we see some relief there, you’re going to see lower inventory levels.”
Retail sales fell 0.4% in January, led by a slide in automobile sales and categories like clothing, furniture stores, and restaurants that depend of foot traffic. Economists had expected retail sales to hold steady. Adding to the report’s weak tone, December sales were revised to show a 0.1% dip from the previously reported increase of 0.2%.
The Labor Department announced that initial claims for state unemployment benefits rose by 8,000 to a seasonally adjusted 339,000 in the week ending February 8. Economists had expected them to slip to 330,000. Bad weather was likely behind the rise in filings last week.
Economists fear the weather could put a crimp in consumer spending as well. Freezing temperatures have boosted demand for heating, and the higher utility bills consumers will have to pay could force them to put off some purchases until well after the snow and ice have melted.
Comcast + Time Warner = the Future of TV?
With its proposed $45 billion takeover of Time Warner Cable, Comcast could significantly alter the media and telecommunications landscape. The deal solidifies Comcast’s reputation as an enterprise with grand, even audacious, ambitions. Started 51 years ago with just 1,200 subscribers in northern Mississippi, Comcast has grown into a giant conglomerate that now has one foot in the broadband and cable businesses and another in content, thanks to its ownership of NBCUniversal.
The deal to acquire Time Warner Cable is certain to face scrutiny from the government and opposition from consumer groups. But if approved, it will make Comcast a national player, adding millions of subscribers in major markets like New York City, Dallas, and Los Angeles.
There are plenty of skeptics. It is tempting to think that legacy players such as Comcast will not be fast enough or savvy enough to keep up with new entrants like Netflix, Amazon, and Apple, which have already proven adept at creating sleek new products that cater to the changing media habits of consumers. In this view, by acquiring the country’s second-largest cable provider, Comcast will emerge bigger, slower, and less likely to navigate its way into the living room of the future.
But there is also evidence that Comcast’s post-merger corpulence could prove to be an advantage, not a liability, in the competition for the future of TV. There are several reasons why Comcast may be better-positioned than its leaner, more nimble competitors, to determine the shape of things to come. These include:
- Comcast’s strengthened broadband base – Comcast is not only the country’s largest player in the gradually eroding world of cable TV distribution, but also the country’s largest broadband provider. A merged Comcast and Time Warner Cable would have nearly twice as many high-speed Internet subscribers as the next largest company and would control roughly 38% of the high-speed Internet market.
That is a highly lucrative position to occupy, and it is one that is much better insulated from new competitors than the Pay-TV business. Broadband is not only a much faster growing business, it also has higher gross margins and comes with much fewer headaches such as paying high prices for programming. In the years to come, Comcast’s expanded post-merger broadband business will throw off large amounts of cash. This provides Comcast with the option to invest that cash in developing superior, next-generation TV-distribution services.
- Increased leverage in next-generation TV platforms – Some industry observers believe that Comcast is currently well positioned to launch a national Internet TV platform to compete with rival technology firms. The company has a mobile app called Xfinity TV Go, which allows its paying subscribers to watch a growing library of on-demand programming and to stream dozens of channels inside and outside of the home.
- Comcast’s growing advantage in data collection – The future of TV appears to be data rich. As has been the case with rapidly growing markets such as search and social networking, companies in a position to harvest significant amounts of consumer data tend to reap huge benefits. This is thanks to the endless quest by advertisers to improve their targeted messages to consumers. With more than 30 million residential subscribers in dozens of states around the country, Comcast will be able to collect enormous amounts of data on the consumption behavior of traditional and next-generation TV viewers.
As Ad Age recently pointed out, “With about 30 million set-top boxes, it will have an even bigger trove of ratings information, viewing habits, and personal data. Combined with marketers’ own data, that will help planners and buyers laser focus their media selection.”
Sources:
1. http://www.cnbc.com/id/101417530
2. http://www.cnbc.com/id/101414622
3. http://www.reuters.com/article/2014/02/13/us-usa-economy-jobs-idUSBREA1C0YP20140213
4. http://dealbook.nytimes.com/2014/02/13/comcast-adds-another-piece-in-media-plan/
5. http://www.businessweek.com/articles/2014-02-14/3-reasons-why-comcast-is-now-better-positioned-to-win-the-future-of-tv#p1
The Good News Is . . .
• The rate of late payment on home loans has fallen to the lowest level in more than five years. According to credit reporting agency TransUnion, the percentage of mortgage holders at least two months behind on their payments fell in the October-December quarter to 3.85% from 5.08% a year earlier. The last time the mortgage delinquency rate came in lower occurred in the second quarter of 2008 when it was 3.61%.
• John Deere & Co., the leading manufacturer of farm equipment, reported earnings of $1.81 per share, a 9.7% increase over year-ago earnings of $1.65. The company’s earnings topped the consensus estimate of analysts by $0.29. The company reported that revenues were $7.7 billion, up 3.1%. Management attributed the company’s performance to broad-based sales gains, solid execution on its marketing plan, and successful cost management.
• Mallinckrodt, an Irish specialty pharmaceutical company, has reached an agreement to acquire Cadence Pharmaceuticals for about $1.3 billion in cash. Cadence is a San Diego biopharmaceutical company that focuses on products used in hospitals, including Ofirmev, an intravenous painkiller and fever reducer. Industry analysts expect the acquisition to expand Mallinckrodt’s specialty pharmaceutical offerings and extend its product reach in hospitals. The deal is expected to close in mid- to late-March following completion of the tender offer.
Sources:
1.http://www.cnbc.com/id/101410054
2.http://www.cnbc.com/id/18080780/
3.http://www.deere.com/wps/dcom/en_US/corporate/our_company/investor_relations/financial_data/earnings_releases/2014/firstqtr14.page?
4.http://dealbook.nytimes.com/2014/02/11/mallinckrodt-to-buy-san-diego-biopharmaceutical-firm-for-1-3-billion/?_php=true&_type=blogs&_r=0
Planning Tips
Tips for Avoiding IRS Scams
Tax season is here, and so are the scammers. These individuals use a number of different tricks to get access to your personal or financial information. Below are tips to help you avoid being a victim of scams during the tax season.
Understand how the IRS communicates with tax payers – The official method of correspondence by the IRS and local or state tax offices is a U.S. Postal Service-delivered letter. If you initiate contact by phone call or email, you may get a response that way. But the IRS will rarely make unexpected phone calls or send unsolicited emails, faxes, or text messages.
Know the approaches used by scammers – Common approaches used to get your personal information may include:
- Claims of a problem with your filed return. You are asked to “verify” (that is, provide) your personal information and are warned of a phony $10,000 fine for not filing on time. If the message arrives by email or text, you may be asked to click on a link for more details. Doing that can install malware programs in your computer to give the crooks remote access to your files and passwords or even let them take control of the device.
- Bogus claims that you can get $80 for completing a customer survey for the IRS. The message asks for personal and financial information that can be used to steal your identity.
- Fictitious promises of refunds or rebates based on excess or withheld Social Security benefits or for the expired Economic Recovery Credit Program or recovery rebate credit. Each of these scams requests your SSN and other personal information.
- False claims that you can use Treasury Form 1080 to transfer funds from the Social Security Administration to the IRS, enabling a payout to you from the IRS.
- Offers of “free money” from the IRS or other government agencies. These often imply that tax credits or refunds are available without proof of eligibility.
Mind the mailbox – In the first couple of months of the New Year, you will receive W-2s, 1099s and tax related statements from your banks, mortgage company, and investment and retirement accounts. They all include a trove of personal information. In January and February scammers often follow postal carriers to steal just-delivered forms out of household mailboxes. If you have not received a particular form, call the organization that would have issued it. If you suspect it was stolen from your mailbox, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245.
Mail your return at a U.S. Post Office – Why? Scammers can easily steal outgoing returns if you put them in your home’s curbside mailbox. Also, thieves sometimes “fish” outgoing returns from USPS mailboxes in deserted locations.
When in doubt, check it out – Whenever you are asked for personal identifiers related to your tax returns, even if by U.S. mail, ensure the request is legitimate before responding. For communications supposedly from the IRS, you can call the IRS hotline at 800-829-1040. Do not rely on any number that is included in the message you receive.
Beware of phony tax preparers – Scammers sometimes double as tax preparers, offering to do the forms for you or review them for inaccuracies. They are really after all of that personal information on your return. If you are using a new tax preparer, verify his or her license by emailing opr@irs.gov (the IRS Office of Professional Responsibility) with the full name and address of the person or company.
Sources:
1. http://www.bankrate.com/finance/taxes/dirty-dozen-tax-scams-1.aspx
2. http://www.irs.gov/uac/Online-Scams-that-Impersonate-the-IRS
3. http://www.aarp.org/money/scams-fraud/info-03-2013/beware-phony-irs-agents.1.html
4. http://www.irs.gov/uac/Suspicious-e-Mails-and-Identity-Theft
5. http://www.sacbee.com/2014/02/06/6134569/taxpayers-beware-phony-irsftb.html
6. http://www.irs.gov/uac/Newsroom/IRS-Warns-of-Phone-Scam
