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
The Millennials – America’s Lost Generation
Today’s young American adults have had to endure one of the worst recessions in 70 years and then watch as their futures seemingly evaporate before them. Many are well educated, but are stuck in dead-end jobs or unemployed. A record number of those in the 18-34 age group, dubbed Millennials, have been forced to live with their parents (21.6 million by some estimates) or seek government assistance.
“If these persons are not quickly reconnected with the economy and the workforce, we are truly looking at a lost generation in terms of upward mobility and productivity,” said Joe Minarik, director of research for the Committee for Economic Development, a nonprofit, public policy research group.
A recent report by the Federal Reserve Bank of New York sheds some light on just how severe the jobs crisis is for young adults. Using U.S. Census data, the researchers found that the percentage of unemployed young adults has risen steadily since the 2001 recession and currently stands at about twice the national average. For those Millennials who are working, they are either underemployed or employed in jobs that do not require the degrees they hold. Research indicates that through 2012, about 44% of young, working college graduates were underemployed and the quality of jobs held by those individuals has declined, with today’s recent graduates increasingly accepting low-wage jobs or part-time work.
This youth jobs crisis is costing the U.S. economy and may continue to do so for years, further hindering this generation’s ability to contribute to economic growth. One report from a youth advocacy group called the Young Invincibles, measuring only lowered tax revenue and safety net costs, found that high unemployment among Millennials, ages 18-34, costs the U.S. more than $25 billion annually. And jobless rates for Millennials have been in double digits for nearly six years.
Higher unemployment and underemployment for young workers is not unusual as they generally have a tougher time in the labor market because they are the least connected to the workforce. But some economists believe this is more than a cyclical labor trend. A report published by the National Bureau of Economic Research found that since 2000, businesses have needed fewer people to perform the high-tech jobs that initially drove the information economy. Hiring of college graduates sank after the information technology revolution of the 1990s reached maturity, forcing college graduates farther down the occupational ladder.
“The demand for this group is slowly going down, but we’re also educating still more people, and so that makes the situation very difficult when you don’t have a lot of demand,” said Paul Beaudry, co-author of the report.
Contrary to popular belief, the data show that the jobs crisis cannot simply be ascribed to the Great Recession. This presents a bleak outlook for this group of young workers who, according to economists, are already more likely to see permanent negative effects on their wages because they began their careers in a weak labor market.
“Once the larger economy is fully recovered from the after-effects of the Great Recession, this cohort will still be feeling the effects because the effects of entering the labor market during a downturn are severe and last a long time,” said Heidi Shierholz, an economist for the Economic Policy Institute.
Does a Failing Nook Mean the Final Chapter for Barnes & Noble?
Barnes & Noble is the last big national bookstore chain remaining since the collapse of its chief rival, Borders. The company has struggled as readers have begun shifting from physical books to e-books and its own e-reader, the Nook, has failed to remain competitive with Amazon’s Kindle. In its most recent quarterly earnings, which did not include the holiday season, Barnes & Noble reported a drop in revenues but a jump in earnings as it trimmed expenses.
Late last year, Barnes & Noble’s chairman, Leonard S. Riggio, abandoned plans to buy the company’s bookstores. Mr. Riggio backed out over concerns about shareholder lawsuits that might have followed such a deal. That failed deal followed the company’s halting of talks with Microsoft, already an 18% owner of the Nook business, about a full takeover of that unit.
Now, G Asset Management, a little-known investment firm has offered to acquire 51% of Barnes & Noble in a deal that would value the bookseller’s shares at $22 apiece. If G Asset Management cannot take control of the full company, it said it would be willing to acquire 51% of Barnes & Noble’s Nook business, valuing the e-reader unit at $5 per share. The investment company, run by Michael Glickstein, said it believed that breaking up the company would unlock shareholder value. But the highly conditional offers are subject to obtaining financing, conducting due diligence, and negotiations with the company.
The Nook sold well after its launch in 2009, but the e-reader has not kept pace with the aggressively priced Kindle from Amazon, along with rival tablets from Apple and others. Enter any Barnes & Noble location, and you cannot miss the bookseller’s Nook tablets. They are presented front and center in their own special section, amid the rows of books. Despite their prime location in stores, Nooks have continued to drag down the bottom line for the company, leading to disappointing quarterly reports and a new CEO for the firm, Michael Huseby.
This year’s holiday sales tallies have not brought any cheer to this story. The company says that Nook sales plummeted by 60% for the 2013 holiday season compared to the previous year. In addition, Barnes & Noble claimed that its share of the e-book market has declined to 20%.
The Nook faces unyielding competition from Apple’s iPads as well as Amazon’s Kindles (not to mention Amazon’s ability to sell its e-books generally for less than Barnes & Noble). Throw in all of the other Android tablets and the ever-increasing range of Windows slates, and the Nook has a hard time standing out. It also does not help that there were no new Nook models released this past holiday season.
Despite a steady stream of bad news for the Nook, Huseby is convinced that the company needs to continue offering its own devices in order to succeed in the digital market. Recently, he told The Wall Street Journal that, “Your best chance of success for selling digital content is on your own dedicated devices which have your brand or a co-brand on them.” That has certainly been the case for Apple and Amazon. But third place in this race is looking more like earning a medal made of tin than bronze.
Sources:
1. http://www.cnbc.com/id/101427859
2. http://dealbook.nytimes.com/2014/02/21/barnes-noble-receives-conditional-offer/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Mergers%20&%20Acquisitions&action=Click&pgtype=Blogs®ion=Body
3. http://www.zdnet.com/closing-the-book-on-barnes-and-nobles-nook-7000025045/
The Good News Is . . .
• The overall Consumer Price Index (CPI) eased to 0.1% in January after gaining 0.2% in December. The core CPI, which excludes volatile food and energy price changes, held steady at 0.1%, matching the December pace. Within the core CPI measure, upward pressure came mainly from housing, up 0.4%. The report showed that inflation continues to be subdued. This may lead the Federal Reserve Board to reconsider the timeframe for ending its program of quantitative easing.
• Hewlett Packard Co., a leading provider of computer technology, reported earnings of $0.90 per share, a 9.8% increase over year-ago earnings of $0.82. HP’s earnings topped the consensus estimate of analysts by $0.06. The company reported that revenues were $28.2 billion. Management attributed HP’s performance to sales gains across its portfolio of products and services, as well as progress resulting from its two-year-long turnaround efforts.
• Brookdale Senior Living and Emeritus Corporation announced that they would merge in a deal valued at $2.8 billion. Company executives expect $45 million in annual cost savings from the deal, and noted that the combined companies (operating under the Brookdale name) will have a real estate portfolio of more than 1,100 assisted living communities. They also want to take advantage of what they say will be $4.5 billion in annual health care expenditures from their combined 100,000 residents. After the merger, Brookdale’s service offerings will include dementia care, skilled nursing, and independent and assisted living in 46 states.
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 Insuring Recreational Vehicles
According to the Recreation Vehicle Industry Association, approximately 8.9 million households own a recreational vehicle (RV). If you own, or are considering purchasing an RV, you will want to evaluate your insurance options. While it is true that your auto or home insurance can cover your RV, it may be a good idea to purchase a specialized policy, since these are large vehicles that can be subject to a lot of wear and tear, and maintenance can be very expensive.
Understand what is covered – RV insurance normally includes furnishings, fixtures, appliances, and personal items, whereas car insurance may not provide this protection. Coverage for your personal belongings is another important item in any protection plan, but auto insurers may offer limited coverage within their RV policies. However, many RV policies will allow you to set the limit of coverage for your belongings so you can insure as many or as few items in your vehicle as you like.
Consider extending your coverage – There are several other options for providing extended coverage that you may want to purchase. These include:
- Collision and Personal Liability – This coverage is a must since it can help cover the cost of damages if you find yourself in an accident. Also, having personal liability is a good idea in case someone is injured in your vehicle, or even at your camp site.
- Total Loss Replacement – If you purchased a new RV (or plan to), then you may want to explore this protection plan. Most insurers protect the first five model years. This plan will replace the model in the case of a total loss. The advantage of this plan is that it generally covers the cost of the new model even if the price is higher than the original.
- Full-Timer Liability – This is more akin to homeowners insurance, to be used when the RV is parked and used as a residence. This can also cover the costs of emergency treatment and medical costs of those injured in the proximity. Traditional RV policies are not usually written with full-timers in mind, so you will likely need to ask about a special policy to obtain the coverage you need.
Consider suspending coverage while your RV is in storage – You can suspend portions of your RV’s coverage while the vehicle is not in use. This helps to reduce RV expenses while it is in storage.
Do your homework – Research RV insurance the same way you would regular auto insurance. It should be based on the many policies available that will cover your needs, and not on finding the lowest price. Look for the best price for the best coverage available to you. You may qualify for discounts, so do not be shy when asking an insurer what types of discounts are available.
Sources:
1. http://changingears.com/tip-cat-insurance.shtml
2. http://www.allstate.com/tools-and-resources/power-sports/rv-insurance-101.aspx
3. http://carinsurance.about.com/od/RvInsurance/a/Do-I-Need-Rv-Insurance.htm
4. http://www.aarp.org/travel/travel-tips/info-07-2011/buying-RV-insurance.html
5. http://www.streetdirectory.com/travel_guide/215418/rvs/rv_insurance_tips.html
6. http://blog.randmcnally.com/2012/03/29/rv-insurance-three-quick-tips/
7. http://www.rvia.org/?ESID=FAQs
