Conventional wisdom generally suggests that when costs rise, price increases follow. Most of the time, this may be accurate. However, investors should investigate carefully before jumping to a conclusion. Sometimes costs adjust to reflect prices rather than the other way around. An interesting case in point is the oil industry’s reaction to a major decrease … Continued
We have previously commented on the issue of lackluster U.S. economic growth. (See our blog from Jul-12) Among the possible causative factors, relatively modest gains for real wages has been highlighted by many economists. We have seen unemployment steadily decline to near record lows. At the same time, we have not seen much in the … Continued
Infrastructure is defined by the “American Heritage Dictionary” as the basic facilities, services, and installations needed for the functioning of a community or society, such as transportation and communications systems, water and power lines, and public institutions including schools, post office, and prisons. Historically, politicians have tended to give infrastructure spending short shrift while favoring social … Continued
It is probable that states and cities will soon be recording the full cost of health care promised to public employees once they retire. New Government Accounting Standards Board principles urge officials to record all health care liabilities on their balance sheets instead of pushing a portion of the debt to foot notes. Most states … Continued
The U.S. economy is generally believed to be substantially consumer driven. Accordingly, trends in consumer spending are closely watched by investors and economists. With an economy that is largely dependent on consumer spending, it is important to recognize that an individual consumer can spend only so much. Recently reported retail sales figures have been disappointing. … Continued
Healthcare remains a headline issue with a wide range of proposals. The discussion is highly politicized and generally tends to emphasize benefits while glossing over costs. Inevitably, there are comparisons with other national systems and recurring comments, from advocates and critics, without much clarity as to what actually comprises single-payer healthcare. Wikipedia defines single-payer healthcare … Continued
At any given moment, investors are faced with a multitude of uncertainties. For example, we see geo-political risks both here and abroad; the threat of war with North Korea and the senseless massacre in Las Vegas can shake anybody’s confidence in the market. Storms have destroyed cities in Texas, Florida, the Caribbean and Puerto Rico … Continued
The Zero Emission Vehicle (ZEV) program is a California state regulation that requires automakers to sell electric cars and trucks in California and 9 states on the east coast. The exact number of vehicles is linked to the automaker’s overall sales within the state. While the ZEV regulations include plug-in hybrids and hydrogen fuel cell … Continued
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of general consumption tax that is collected incrementally, based on the surplus value, added to the price on the work at each stage of production. Unlike sales taxes, which are added to the selling price at the … Continued
Does anyone really set out to make a bad movie? No, but many new movies, if not a majority, fail to gain consumer acceptance. The ability to successfully anticipate consumer acceptance is critical to corporate success and, therefore, to investors. Perhaps one of the better comments on this problem came from Steve Jobs, who is … Continued
Tax and other incentive programs, primarily state and local, aimed at attracting new corporate investment have been around for a long time. The primary motivation for states is usually related to jobs and for the corporation, lower costs. A recent, major, proposed transaction involves efforts to induce Foxconn (a key Apple supplier) to build a new … Continued
A recent article in The Wall Street Journal highlighted a debate between economists as to whether workers or investors bear the greater burden of U.S. corporate taxes. This is very interesting and manages to politicize corporate taxation. If workers bear the greatest burden, a reduction in the corporate tax might attract Democratic votes. On the … Continued
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