Are We Preparing For the Next Economic Turn, Or Are We On Information Overload?

Is there such a thing as being over-prepared? Do you actively search for market news?  Before the Internet, a novice such as me relied specifically on my father-in-law’s expertise.

With the World Wide Web, access to information is infinite and at our fingertips.

Twitter has received its fair share of popular news time lately. On Twitter, start with following The_Real_Fly, IBC Financial News, and iBankCoin.  Add Option Addict, Ragin’Cajan, Raul3, as well as bloggers from the Peanut Gallery.  Check out their list of following and followers for ideas and links to market news.  Some recent pages I have started to follow are Jeff Macke, StockTwits, Seeking Alpha, Minyanville, Moody’s Investors Svc, Dow Jones, and Market Watch.

At census.gov, one can find information data on housing, population, income, economic indicators, and information on business and industry. Careful, it is a time warp!  It’s easy to lose four hours going from one link to another reading and absorbing data.

Moody’s Corporation web page has a news and events link. You can follow up to the minute Moody’s rating action on world Governments as well as Companies.  Moody’s also offers a list of upcoming events related to the market and political/economic groups.

Market Watch is a good source of stock market, financial, and business news.

If you’re not on overload yet, check out the U.S. Bureau of Economic Analysis (BEA).

The tab on the left titled News has links to the U.S. Economy at a Glance: Perspective from the BEA Accounts. (BEA produces some of the most closely watched economic statistics that influence decisions of government officials, business people, and individuals. These statistics provide a comprehensive, up-to-date picture of the U.S. economy. The data on this page are drawn from featured BEA economic accounts.)

Next is Current Releases followed by News Release Archive.

Located within the information for media section, you can find the latest news releases.

For example: International Trade in Goods and Service.

• Total March exports of $176.6 billion and imports of $217.1 billion resulted in a goods and services deficit of $40.4 billion.
• March 2016: -$40.4 billion
• February 2016: -$47.0 billion

Open the tab Congressional Quick Data and you will find the following statistics:

• GDP statistics for U.S., State, Metropolitan areas, Fixed Assets
• Personal Income statistics for U.S., State, County, Metropolitan areas
• International Trade in Goods & Services statistics
• Travel and Tourism statistics

Yes, these are your tax dollars at work. There is a wealth of information on this site.

The stock trade application I use is consistently adding new features on current news that I can employ for my watch list. If you are using a trade application, take full advantage of their news.

As my son, Brian pointed out; when he was in school, researching a subject involved a trip to the library. One of our prize possessions at home was a set of encyclopedias.  Now my grandchildren are given an iPad in the 3^rd grade to help with their reports and research.  Times change and we learn to adapt.  But in our home, you will still find a set of encyclopedias and books to read.

Happy hunting.

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When I think of aging and healthcare, the movie Soylent Green comes to mind. The 1973 movie starred Charlton Heston and Edward G Robinson.  It was Mr. Robinson’s final film.  The movie takes place in 2022, with 40 million people in New York City.  The population is suffering from pollution, overpopulation, depleted resources, poverty, dying oceans, and year-round humidity due to the greenhouse effect.  Much of the population survives on processed food rations, including “soylent green”.

Considering 2022 is not very far off, within this article are some fine stocks and ETFs to consider for your long term healthcare portfolio.

Back in January 2015, Mr. Malcolm Berko replied to a reader’s question about investing $30,000 for their grandchild’s future. The reader was looking for stocks that that the grandchild could keep forever and not have to watch but would do better than the DOW if all the DIV were reinvested.  Along with Amgen Inc. (AMGN $157.24) and Biomet which had just been acquired by Zimmer Holdings (ZBT $117.38), he recommended the following for long term investments:

Becton, Dickinson and Co. (BDX $167.64)

Baxter International (BAX $45.50)

C.R. Bard (BCR $220.96)

Bio-Rad Laboratories (BIO $124.72)

Varian Medical Systems (VAR $82.26)

Medtronic (MDT $81.23)

The Cooper Companies (COO $156.06)

Cardinal Health (CAH $78.47)

The United States population census count April 1, 2010 was 308,745,538. The percentage of persons 65 years and over was 13.0.  Estimates for May 11, 2016 population is 323,529,724.  The estimate for persons 65 years and over on July 1, 2014 was 14.5.  (United States Census Bureau)

• Per capita national health expenditures: $9,523 (2014)
• Total national health expenditures: $3.0 trillion (2014)
• Total national health expenditures as a percent of Gross Domestic Product: 17.5% (2014) (Center for Disease Control and Prevention)

The Affordable Care Act (grossly misnamed in my opinion), Medicare, and Medicaid, all opened the door for increased Federal Government spending in addition to household spending for healthcare. By the year 2020, it is conceivable that we will be spending over $7.0 trillion for healthcare.

In April 2015, Mr. Berko recommended the following seven funds:

The Health Care Select Sector SPDR Fund (XLV $70.55)

The IShares U. S. Healthcare Providers ETF (IHF $125.89)

The Vanguard Health Care ETF (VHT $128.05)

The SPDR S&P Health Care Services ETF (XHS $57.44)

The IShares U.S. Healthcare ETF (IYH $146.04)

The IShares U.S. Pharmaceuticals ETF (IHE $138.25)

The IShares U.S. Medical Devices ETF (IHI $130.00) (This one is my favorite.)

The major segments of medical supplies and products are cardiovascular, orthopedics, wound care, in vitro diagnostics, diagnostic imaging, and surgical equipment.

The composite value for Medical Instruments and Supplies sector as of May 10, 2016 is $407.86.

Industry fundamentals for Medical Instruments and Supplies as of May 9, 2016: The market cap is 573.48B with a P/E of 23.89.  Return on Equity (ttm) 6.02% and total Debt/Equity (ttm) 32.18

The Health Care Sector as a whole in the S&P, was up today May 10 +0.82% with a market cap of $4.34 and 1 year change of -3.93%.

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One thing I know for sure, whenever I decide to invest in a stock, that stock is sure to go down. My experience with TREE lately has been a love/hate relationship.  I did purchase additional shares on Tuesday to bring my cost basis to 85.13.  I’m not one to throw good money after bad choices.  Call me pigheaded.  I could have sold at 92.39 a couple days after the first purchase, but I was confident TREE would have a good earnings report and my expectations are a 10% return.  As you can see, I’m still learning.  TREE did beat expectations.  Earnings, adjusted for stock option expenses and to account for discontinued operations, came to 76 cents per share.  Estimate was 66 cents per share.  TREE posted revenue of 94.7M; the expected revenue was 87M.  For the current quarter ending in July, TREE.com said it expects revenue in the range of 95M to 97M.

My idea of finding a good stock investment is like buying a home. I look for a good foundation first.  Does it have cracks in the wall?  Is there water damage?  Can I afford to invest money in it?  For a stock, does it have a decent balance sheet and income statement?  How about those revenue and earnings report, are they a strong company with a product that is in demand by consumers?  If I’m looking for a long term investment, I also look at the dividends.

This search led me to AT&T Inc.

Owning T, AT&T, is like owning a piece of apple pie. The company goes all the way back to The Bell Telephone Company that was established in 1879 by Alexander Graham Bell himself.  AT&T stands for American Telephone and Telegraph Company, which was established by Mr. Bell in 1885.  After the two companies’ combined, it became the primary phone company in the United States.  I remember when the United States anti-trust regulators decided T was a monopoly and split the company in 1982.  AT&T Corporation was then purchased by one of its Baby Bells, the former Southwestern Bell, in 2005; and the combined company became known at AT&T Inc.

In 2013, T initiated hiring 10,000 veterans in a five year period. They met that goal in 2015.  On May 5, 2016, T announced its new goal; hire 10,000 more veterans by the year 2020.

T’s growth this year was helped by its purchase of DIRECTTV operations which it acquired in July 2015. March 31, 2016 revenue grew to 40.5B with net income of 47.13B.  The DIV yield is 4.94% with YTD returns of 16.21%.

T was up 0.62% today, but as I stated earlier, look out, I own stock in this company.

I know Dr. Fly is offering a free trial in Exodus. Take advantage of the free offer.  You will be amazed at the information provided!  I love the ease with which to research companies.  One of my favorite qualities is the Community Notes.  Folks with much more experience and savvy than I post information on companies in real time.

Another huge advantage is the Grid. Here you will find on one page, stock information related to the biggest gainers and losers, new highs and lows, short squeezes, momentum, stocks consolidating and about to break out, stocks flagged at overbought or oversold, stocks that are close to $100 price that could roll bigger, IPO gainers and losers, as well as free cash flow model portfolios flagged for the day.

Also, you will find you can create and save your own baskets for your watch lists as well as create your own screens with what you think is important in researching companies. To help in your search, Exodus offers searches by Industry Sectors and covers over 4300 stocks and over 680 ETFs.

Once you open Exodus up, you will not want to walk away.

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The ADP National employment report represents 400,000 U.S. business clients and approximately 23M U.S. employees working in all private industrial sectors. The recent numbers saw private payrolls rising only 156,000 in April, the lowest economic cycle since 142,000 in February 2014.

We are also seeing a slowing in the nation’s output. Despite an increase in hours worked, productivity fell at an annualized 1.0 % rate in the first quarter for the 4^th decline in the last six months.

Output was only 0.4 % higher in the quarter despite an increase of 1.5 % rise in hours worked. Weak output increased unit labor costs 4.1 % for the quarter.

These troubling numbers reflect the declines in spending on capital goods.

One small bright spot was the U.S. service sector saw stronger growth in April. The index of nonmanufacturing economic activity rose to 55.7 in April from 54.5 in March.  This covers everything from restaurant meals to dry cleaning.  One thing I’ve noticed, the restaurants are always full on the weekends.  A reading above 50 indicates that activity is expanding, while a reading below 50 points to contraction.

Are we truly turning into a service industry verses manufacturing? Our GDP grew only 0.5 % in the first quarter.

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Bank of Alaska was founded in 1916 by Andrew Stevenson in Skagway, Alaska. In 1978, Bank of Alaska was operating 34 branches in 19 communities. In 1982, it was reorganized as a wholly owned subsidiary of bank holding company National Bancorp of Alaska.  In December 1999, National Bancorp of Alaska agreed to a $907 million buyout by Wells Fargo & Co. It had more than $3 billion in assets and 53 National Bank of Alaska branches in 29 Alaskan communities, with an additional branch in Seattle, Washington.

Wells Fargo & Co. WFC equity trades at 50.59 and has a market cap of 255.8B, EPS 4.07, P/E 12.3 and DIV yield of 3.04%. It did beat earnings on 4-14-16 by 1.02% coming in at 0.99. DIV Ex-date of 5-4-16 payable 0.38 QRTR on 6-1-16.

Oxxford Clothes was founded in 1916 by Jacob and Louis Weinberg and is headquartered in Chicago. Think classic.  In 2001, Forbes magazine rated Oxxford the best American suit.  It was boasted that Clark Gable, Cary Grant, Walt Disney and Joe DiMaggio were among its customers. Even though this is a private company, it’s hard to pass up the history.

Beane Brothers was a brokerage firm in New Orleans founded by Alpheus Crosby Beane and his brothers Frank Jr. and William. The firm traded primarily in cotton with offices in Columbus, Georgia, and New Orleans.  Beane Brothers was dissolved in 1915 and in 1916, Alpheus entered into a brokerage firm with Fenner, Gatling & Beane.

The firm expanded quickly focusing on trading commodities, notably futures contracts for grain and cotton. Following the death of Alpheus Beane in 1937, Charles Fenner and Alpheus’ son began discussions with Merrill Lynch about a merger.  The merger was completed in 1941 creating Merrill Lynch, Pierce, Fenner & Beane.

Alpheus Beane’s son would later leave the firm after working there for more than 25 years to start his own firm which was later acquired by Reynolds & Co.

Merrill Lynch & Co. traded on the NYSE under the ticker MER up until the financial crisis of 2008, when it agreed to be acquired by Bank of America.  The acquisition was completed in 2009 and Merrill Lynch & Co., Inc. was merged into Bank of America Corporation in October 2013.  Certain Bank of America subsidiaries continue to carry the Merrill Lynch name, including the broker-dealer Merrill Lynch, Pierce, Fenner & Smith.

Bank of America Corp BAC equity trades at 14.77 with a market cap of 152.3B, EPS (ttm) 1.21 and P/E 12.0.

Reynolds & Co. was founded in 1931 in New York by Richard S. Reynolds Jr., a tobacco heir. Reynolds was incorporated in 1971 as Reynolds Securities in advance of an IPO.  In 1976, Reynolds implemented REYCOM, the most sophisticated high-speed wire system in the industry.  As the firm expanded it acquired international offices in Switzerland.  In 1977 Reynolds acquired Baker Weeks & Co., whose strength was securities research.   In 1978, Reynolds Securities merged with Dean Witter which can be found as Dean Witter Reynolds. Dean Witter Reynolds merged with Morgan Stanley in 1997.

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According to the College Board, the average cost of tuition and fees for the 2015–2016 school years was $32,405 at private colleges, $9,410 for state residents at public colleges, and $23,893 for out-of-state residents attending public universities.

Two of the most popular ways to save for college are the 529 plans and Coverdell education savings accounts.

529 plans let you save money for the college expenses of a named beneficiary, such as a child or grandchild. There are two types of 529 plans-college savings plans and pre-paid tuition plans.  A college savings plan lets you save money in an individual investment account.  A prepaid tuition plan allows you to prepay the cost of college at today’s prices for use in the future.  However, with a prepaid tuition plan, you do not get to choose a portfolio and you have little say so in how your money is invested.  The prepaid tuition plan is generally invested in a trust fund managed by professional money managers.

For Coverdell ESA you can customize your portfolio and choose your own investments.

Contribution Limits

At the federal level, there is no deduction for contributions made to a 529 plan or a Coverdell ESA (some states offer a state income tax deduction for using a 529 plan). Many 529 plans have a lifetime contribution in excess of $300,000 per beneficiary. Whereas the annual contribution limit for a Coverdell ESA is $2000 per beneficiary until age 18.  You cannot make any contributions to a Coverdell ESA after the beneficiary reaches age 18.  The exception is if the beneficiary is a child who has special needs.  One other note, the Coverdell ESA does not work as well for grandparents and other relatives.  If you contribute the max $2000 in one year and a relative opens an ESA for the same beneficiary and contributes $1000, the annual contribution has been breached.  The beneficiary will owe a 6 percent tax on the $1000 excess.

Another drawback of the ESA is the ability to contribute if you earn over a certain amount for the year. As a single tax filer, your annual modified adjusted gross income (MAGI) must be less than $95,000 to make a full contribution; yet you can make a partial contribution if your income is $95,000 to $110,000.  For joint filers your annual MAGI must be less than $190,000 to make a full contribution; yet if your income is $190,000 to $220,000, you may make a partial contribution.  With a 529 plan, no income limits apply.

Federal Gift Tax

It is important to note that your contribution is considered a completed gift to the account beneficiary, so it qualifies for the annual federal gift tax exclusion. Because the annual maximum contribution allowed for an ESA is $2000, you won’t trigger the gift tax rules if this is your only gift to the beneficiary for the year.  The 529 plans offer a special gifting feature.  You can make a lump-sum contribution of up to $70,000 and elect to spread the gift evenly over five years, avoiding the federal gift tax, provided no other gifts are made to the same beneficiary during the five-year period.  A married couple can gift up to $140,000.

Qualified Expenses

Qualified expenses for the beneficiary to use under the 529 plans are tuition, fees, books, computers and related equipment, supplies, special needs; room and board for minimum half time students.

The Coverdell ESA designates the same qualified expenses as the 529 plans in addition to certain elementary and secondary school expenses.

Federal Financial Aid and Scholarships

Federal financial aid treatment for both the Coverdell ESA and 529 college savings plans are identical. Each is counted as asset of the parent if the owner is the parent or the dependent student.  Also, withdrawals that are used to pay for the beneficiary’s qualified education expenses are not classified as either parent or student income.

If the beneficiary receives scholarships, make sure you keep up with the value of these. As the owner of the Coverdell ESA and/or 529 plans, you will be allowed to withdraw that amount and refund yourself without penalty or taxes on the amount withdrawn.

Non Qualifying Withdrawals and Penalties

If you make withdrawals from a Coverdell ESA or a 529 plan that are not used for the beneficiaries qualified education expenses you will pay income tax on the earnings portion of the withdrawal.  For 529 plans, the person who receives the nonqualified withdrawal pays the tax, (typically the account owner) while for Coverdell ESA’s the beneficiary generally pays the tax.  Secondly, you will pay a 10 percent federal penalty on the earnings portion.  Depending on the state you live in, you may also owe an additional state penalty on the earnings portion.

When the beneficiary of a Coverdell ESA turns 30 years of age, the funds in the ESA must be distributed within 30 days. The earnings may be subject to tax and 10% penalty on the account earnings if the beneficiary does not have qualified education expenses in that year.  The funds in a 529 account can generally stay there as long as you like, though prepaid tuition plans may have restrictions on how long an account can remain open.

Changing Beneficiaries and Plans

Both the Coverdell ESA and 529 plans allow you to change beneficiaries to another member of the beneficiaries family member below age 30 without triggering tax or penalties.

You can open both a Coverdell ESA and a 529 account for the same beneficiary and contribute to both types of plans in the same year. If you open a Coverdell ESA and decide later that you would prefer to be in a 529 plan, you are permitted to transfer funds to the 529 plan as long as you keep the beneficiary the same.  You cannot go from a 529 plan to a Coverdell ESA.

In my opinion both plans are a fine way to save for college.

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2 hours 11 minutes ago – DJNF

By Anupreeta Das

“Berkshire Hathaway released preliminary first-quarter earnings as the firm’s annual shareholders meeting got under way in Omaha, Neb., on Saturday.

The firm, run by investor Warren Buffett, reported net income of $5.59 billion, up from $5.16 billion in the same period a year earlier.

Insurance underwriting profits declined to $1.132 billion in the quarter, compared with $1.355 billion in the prior-year quarter, because of a rise in natural disasters.

Berkshire’s massive railroad, utility and energy segment saw profits fall as well — to $1.225 billion, compared with $1.466 billion in the year prior.

First-quarter earnings at Berkshire’s BNSF Railway were down “significantly,” Mr. Buffett said at the annual meeting, adding that it is “almost certainly going to be down” for the remainder of the year. Lower shipments of coal and material used in shale-gas extraction had cut into the railroad’s results last year, and it has been expected to report lower earnings and revenue in 2016.

As a result, operating profit at Berkshire dropped in the quarter. The rise in net income was due to investment and derivative gains and losses, something that Mr. Buffett says are best to ignore.”

During the Berkshire Hathaway annual shareholder’s meeting, when talking about patterns in a company and in the market, Mr. Buffet stated he watched the Senate hearings on Valeant and that we should too.  Mr. Charlie Munger added “Valeant of course, was a sewer, and they deserved what they got.”

When asked if they had the chance what would they change if they could go back, Mr. Munger said “At 92, I still have a lot of ignorance to work on.”

These gentlemen are honorable and impressive with their knowledge.  People come from all over the world and stand in line from 3:00 a.m. in the morning so they may listen and be a part of the annual shareholder’s meeting when the doors open.

I personally am a big fan of Mr. Buffet.  He has given us many quotes to live by.  “Do not save what is left after spending, but spend what is left after saving.”  I definitely do not have his billions to invest, but I understand the concept of “Be fearful when others are greedy and greedy when others are fearful.”  In 2008 when the market crashed and Mr. Buffet seized the opportunity to invest $25b into blue chip companies, I thought he was a bit too bullish.  But six years later, he profited over $10b on that bullish move.

I’m not advocating one to take their life savings and lose the house by investing in a downturn, but if there is a company that you have been monitoring and waiting for an opportunity to get in; this might be your chance. Just be careful out there.

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Media Statement from St. Jude Children’s Research Hospital(R)

20 minutes ago – DJNF

MEMPHIS, Tenn., April 29, 2016 /PRNewswire-USNewswire/ — St. Jude Children’s Research Hospital(R) is not affiliated with St. Jude Medical in any way. Founded by the late entertainer Danny Thomas and located in Memphis, Tennessee, St. Jude Children’s Research Hospital is a nonprofit pediatric cancer research center. St. Jude Medical is a publicly traded company. There are many organizations that use St. Jude in their names, but there is only one St. Jude Children’s Research Hospital dedicated to finding cures for children fighting cancer and other life-threatening diseases.

St. Jude Children’s Research Hospital’s precept “Families never receive a bill from St. Jude for treatment, travel, housing or food — because all a family should worry about is helping their child live.”

Your donation matters.

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I was looking for a bit of good news, and I found some in Bristol-Myers Squibb Co. BMY

4-28-2-16     “Bristol-Myers Squibb Co. (NYSE: BMY) released its first-quarter financial results before the markets opened on Thursday. The company said it had $0.74 in earnings per share (EPS) on $4.4 billion in revenue. That compares to consensus estimates from Thomson Reuters that called for $0.65 in EPS on revenue of $4.25 billion. In the same period of last year, it posted EPS of $0.71 and $4.04 billion in revenue.”

During this quarter, U.S. revenues increased 24% to $2.5 billion year over year. International revenues decreased 7%. When adjusted for foreign exchange impact, international revenues decreased 2%.”

Sales of Opdivo surged 40% to $704m in the quarter. Sales of Eliquis more than doubled to $664m, and its hepatitis C franchise increased by 62%.

Revenues increased by 9% YoY to $4.39b.

BMY increased its EPS to $2.50 to $2.60 from the previous range of $2.30 to $2.40

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What if you turned your faucet on and no water came out? Are you and your family prepared for such an emergency?  The FDA recommends a minimum emergency supply of one gallon of water per person per day for three days to be used for drinking, cooking, and personal hygiene.  I personally think three days is not adequate.  Think Flint.

The FDA considers bottled water to have an indefinite shelf life if it is produced in accordance with regulations and remains unopened. Expiration dates on bottles are voluntary, and may reflect concerns for taste and odor only, but are used mostly for stocking and distribution purposes.  Store bottled water at room temperature or cooler, out of direct sunlight and away from solvents and chemicals.  If stored in sunlight, algae may form and if stored near solvents, the water may absorb the chemicals smell.

(September 2013 Drinking Water Research Foundation) In the United States, the Environmental Protection Agency (EPA) develops and maintains drinking water regulations for 276,607,387 people served by 54,293 community water systems. The quality of drinking water is monitored and regulated by federal, state, and local agencies.

Researchers estimate that more than 500 boil alerts occurred in the U.S. in 2010. (Brigano F.A., Ph.D. and Burke T. A. When is the Next Boil Water Alert?) The Center for Disease Control and Prevention (CDC) reported that waterborne diseases, such as Cryptosporidiosis and Giardiasis, cost the U.S. healthcare system as much as $539 million a year in hospital expenses. (Centers for Disease Control and Prevention, Waterborne Diseases Could Cost over $500 Million Annually in U.S.) In 2006, EPA researchers reported an estimated 16.4 million cases of acute gastrointestinal illness per year are caused by tap water. ( Messner, M., Shaw, S., Regli, S., Rotert, K., & Soller, J. Journal of Water and Health)

I live in an area of extreme weather risks from tornados to severe snow storms. We have gone days without electricity.  It has become second nature to keep prepared for these emergencies by having a stock of bottled water and some non-perishable foods on hand.  And toilet paper, but that’s another story.

There are two ETF’s in the water sector that I have been monitoring. I like the returns on FIW (First Trust ISE Water ETF). YTD they are 18.51%.  It has an overbought signal at this time and is trading at 35.63.  Perhaps it will have a pullback, especially in today’s market. The other one I like is CGW (Guggenheim S&P Global Water ETF). YTD returns are 7.92. It also is flagging overbought.  This morning it is up 0.27% and trades at 29.30.

Truthfully, I’ve had AWK, WTR, MSEX, and SJW on my watch list. Each one of these companies has an issue or two that makes me hesitant to trade them today.

SJW Corp came in with its earnings report yesterday. SJW Net income was $3.4 million for the quarter ended March 31, 2016, compared to $4.7 million for the same period in 2015. Diluted earnings per share were $0.16 and $0.23 for the quarters ended March 31, 2016 and 2015, respectively.  The estimated earning was $0.21.  They are getting crushed this morning down -10.30%.  I still like this company. Not only do they offer water services, through its subsidiary, SJW Land Company, it owns undeveloped land in California and Tennessee; owns and operates commercial buildings in California, Arizona, and Tennessee; and holds a 70% limited partnership interest in 444 West Santa Clara Street, L.P., a real estate limited partnership that operates commercial building rentals.

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