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
Food Fight: Are Taxes Helping Fuel America’s Obesity Epidemic?
Obesity in the United States now affects nearly 28% of the population and costs more than $200 billion a year in related medical treatment. At the same time, the federal government is handing out billions of tax dollars each year to businesses that produce and market the very products that have been linked to obesity.
A report by the Public Interest Research Group (PIRG) found that the government has doled out at least $19 billion in subsidies over the past 18 years to companies producing corn starch, sweeteners, and soy oils—all key ingredients found in junk food.
“These subsidies are all the more egregious at a time when America is facing an obesity epidemic,” researchers said in the report. “With over 31 percent of the adolescent population now overweight or obese …it is absurd that the federal government continues to finance the production of sweeteners and oil additives.”
The direct subsidies are not the only way the government is subsidizing the creation and sale of these products. Under the current tax code, companies can deduct “reasonable and necessary” marketing and advertising expenses from their income taxes. This is a practice some lawmakers want to end for companies that advertise and sell unhealthy food linked child to obesity—which has doubled in the past 30 years, according to the Centers for Disease Control and Prevention.
Just last week, Senators Richard Blumenthal (D-CT) and Tom Harkin (D-IA) introduced a bill that would do away with this ad tax deduction for companies that are marketing food of “poor nutritional quality” to children under 14-years-old. The bill requires the nonprofit Institute of Medicine to identify which foods would be considered unhealthy. And revenue generated by the legislation would be directed to the Department of Agriculture’s Fresh Fruit and Vegetable Program, which services fruits and vegetables to elementary students in low-income communities. The lawmakers say their bill could reduce child obesity by 7% according to an estimate published in the Journal of Law and Economics.
“Our nation is facing a childhood obesity crisis that demands our urgent attention, and one effective way of combating this epidemic is to ensure that our children are not confronted by persistent advertising from soda, snack, and candy makers,” Harkin said in a statement. The Senators cited multiple studies linking junk food ads to obesity including one from UCLA, which concluded that commercials advertising junk food were related to obesity in children.
Unsurprisingly, the food and advertising industries staunchly oppose the bill. Dan Jaffe, executive vice president of government relations for the Association of National Advertisers told Adage that the bill would set a precedent for eliminating specific tax deductions. “You open this door and I can assure you, there will be a tremendous number of people trying to rush through it,” Jaffe said. He added that such carve-outs would cause “immense complexity to carry out.”
The legislation likely faces an uphill battle from the food and beverage industry, which has previously quashed the Obama administration’s effort to restrict advertising junk food to kids through an intense lobbying effort. A Reuters analysis from 2012 shows that in 2011 more than 50 food and beverage groups lobbied against the federal government’s effort to write tougher (but still voluntary) nutritional standards for foods marketed to children. The report found that these groups spent more than $175 million lobbying since 2008.
Finally: Creating the Next New, New Light Bulb
A startup called The Finally Light Bulb Company has launched a new light bulb made from electromagnetic induction technology that is energy efficient and will retail for about $8.
Over the past decade, there have been ambitious entrepreneurs looking to offer better replacements for the traditional incandescent light bulb. This trend has been accelerated by a 2007 law mandating the gradual phase out of energy hungry incandescent lighting. Among the problems facing these startups are: pricing to compete with incandescent bulbs, complex and costly manufacturing, and lengthy regulatory processes.
Finally Light Bulb Company is led by entrepreneur John Goscha, who previously founded a company that makes dry erase whiteboard paint. The firm’s 25 employees include veterans of light bulb makers General Electric and Osram Sylvania. The company is using its $19 million in venture funding to make a replacement for an incandescent light bulb that is both energy efficient and relatively inexpensive, compared to some of its LED-based competitors. The bulb is 14.5 watts (comparable to a 60 watt incandescent bulb).
The bulb uses electromagnetic induction technology. When you flip the light switch, electricity runs through a tightly wound copper coil, creating an electromagnetic field that transfers energy into a mixture of noble gases contained inside the bulb. The engineers at the company were able to shrink the induction device down to a three-inch antenna wrapped in a copper wire. The resulting magnetic field inside a bulb enables mercury to make ultraviolet light that interacts with a phosphor coating on the bulb to produce visible light. The company is calling the technology “Acandescence.”
The company claims the big advantage of the Finally bulb is that its quality of light is similar to an incandescent—a warm solid glow—but without the high LED prices. Many consumers dislike CFL bulbs because the light can be of such low quality, and until very recently LEDs have been in the two-digit dollar prices. The Finally bulb is 75% more efficient than an incandescent and lasts 15 times longer.
The company says it intends for the first 60-watt replacement Finally bulb to be available in stores in July of this year for $7.99 (you can pre-order it now for $9.99). The 75-watt and the 100-watt will be available in the fall. The firm is manufacturing the bulbs in India, and it has almost all of its regulatory approvals, according to a report in the New York Times.
One potential issue with the Finally bulb is that its $8 price tag may not be low enough to displace the incandescent. Big LED companies like Cree have recently launched sub-$10 LEDs and they have deep pockets to promote and distribute their bulbs. The Finally Light Bulb Company will have to move quickly to grab market share during the slow-moving LED price drop.
One thing is certain. The battle between competing lighting technologies will heat up over the next few years. “We’ve seen more innovation in the last five years than in the previous 125,” says Noah Horowitz, a senior scientist at the National Resources Defense Council. He notes that there are 4 billion screw-in sockets in the U.S., making it unlikely that one technology will conquer the entire market.
Sources:
1. http://www.cnbc.com/id/101717719 – CNBC
2. http://buswk.co/1hqcFbD – BusinessWeek
3. http://bit.ly/RlqmvY – GigaOm
The Good News Is . . .
• The U.S. Census Bureau announced that new orders for manufactured durable goods in April increased $1.9 billion or 0.8% to $239.9 billion. This increase, up three consecutive months, followed a 3.6% increase in March. Orders for transportation equipment, also up three consecutive months, led the increase, rising $1.7 billion or 2.3% to $76.9 billion.
• Intuit, Inc., the leading maker of small business accounting and consumer tax software, reported earnings of $3.53 per share, an increase of 18.9% over year-ago earnings of $2.97. The firm’s earnings topped the consensus estimate of analysts by $0.03. The company reported that revenues rose 14.2% to $2.4 billion. Management attributed the company’s earnings performance to strong growth in its small business accounting and consumer tax software segments.
• U.S. single-family home prices rose in March, according to a closely watched survey, as the housing market extended its recovery. The S&P/Case-Shiller composite index of 20 metropolitan areas rose 0.9% in March on a seasonally adjusted basis, up from the prior month’s gain of 0.8%. A Reuters poll of economists had forecast a 0.7% rise. Year over year, the index jumped 12.4%.
Sources:
1. http://1.usa.gov/1oLJpOD – US Census Bureau
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://bit.ly/1nGvmdH – Intuit, Inc.
4. http://www.cnbc.com/id/101705887 – CNBC
Planning Tips
Tips for Saving Money on Gasoline this Summer
Whether you are planning a summer road trip this year or simply driving to the local pool on weekends, chances are you will feel the pinch of rising gas prices over the next few months. Below are some tips to help you save money on your gasoline expenditures, this summer or any time of the year.
Research where and when to fill up – Use a gas app such as GasBuddy for your smartphone, to locate the cheapest gas near you. Also, fill up your tank early on Wednesday or Thursday mornings, not over the weekend. Gas station owners typically increase gas prices on Thursday at 10 a.m. in anticipation of the weekend. So avoid filling up the tank between Friday and Sunday. Just do it earlier.
Be smart about keeping cool – Park in the shade. Gasoline evaporates right out of your fuel tank, and regardless of the season, it will do so quicker when you park in the sun. Parking in the shade also maintains a cooler temperature in your car, which means you won’t be using air conditioning as much. Use the air conditioner only when you absolutely need it. Air conditioning dramatically reduces fuel economy. Most air conditioners have an economy setting that allows the circulation of unchilled air. Many also have a maximum or recirculation setting that reduces the amount of hot outside air that must be chilled. Both settings can reduce the air conditioning load — and save gas. Also, remember that buying gas at the coolest times of the day also helps reduce gas evaporation.
Reduce wind resistance and weight for better gas mileage – Keep your windows closed when driving on a highway because having them open could reduce your gas mileage by as much as 10%. But you should open them in stop-and-go traffic and turn the A/C off, if you possibly can, for additional cost savings. Remove excess weight from the trunk. An extra 100 pounds in the trunk can reduce a typical car’s fuel economy by up to 2%. Avoid packing items on top of your car. A loaded roof rack or carrier creates wind resistance and can decrease fuel economy by 5%.
Use the right gasoline – Check your owner’s manual for the most effective octane level for your car. For most cars, the recommended gasoline is regular octane. In most cases, using a higher octane gas than the manufacturer recommends offers no benefit and costs you at the pump. Some cars do require premium fuel, so before you fill up, check your owner’s manual to find out if the higher-priced gas is required or just recommended.
Take advantage of reward programs – Buy discount gas gift cards or find coupons. You can also choose to be loyal to one gas company and get rewarded with its cash-back credit card reward program. Consider a credit card that offers cash back for gas purchases. Some offer 2-5% rebates, but it is wise to read the fine print. Fees, charges, interest rates, and benefits can vary among credit card issuers.
Sources:
1. http://onforb.es/1qDRcx3 – Forbes
2. http://1.usa.gov/1pKvkyc – Federal Trade Commission
3. http://www.cnbc.com/id/101717708 – CNBC
4. http://bit.ly/1hOEvZK – GasBuddy.com
5. http://bit.ly/1hqd7qh – Bankrate
6. http://bit.ly/1fFLlOI – Goodhousekeeping.com
7. http://bit.ly/1u6EmIw – Open Travel Info
