Addison Wiggin – April 3, 2012
- Unused gift cards and other things you never thought the government could tax…
- An emerging economy set to double in two years…
- How “phytochemicals” will change your life for the better… with limited FDA meddling (gasp!)
- Why Apple’s dividend looks puny: The 5 cracks the “mountains of corporate cash” mystery…
- Gold tops a CNBC poll (seriously)… a hot commodity in the back seat of a Civic… Patrick Cox’s “unsafe” hobby… and more!
The state of New Jersey wants to tax the value of unused gift cards.
We’ll let that sink in for a bit.
[a bit]
“The state will soon begin requiring gift card sellers to obtain ZIP codes from buyers so it can claim the value of cards not redeemed after two years,” according to an Associated Press story sent in by an alert 5 reader.
If you have a two-year-old gift card sitting around, you can still use it as long as it’s not expired.
“But if the state has already laid claim to the money,” says the AP, “businesses might have to jump through administrative hoops to get reimbursement — and therefore might stop selling gift cards altogether to avoid the hassle.”
American Express’ gift card unit is already bailing from the Garden State.
For the moment, no other state is trying this. At least not until the scads of litigation that resulted from New Jersey’s gambit get sorted out in court.
Meanwhile, scores of businesses in New York City are suddenly learning they’re in arrears on three years’ worth of taxes they didn’t know applied to them.
The city has decided yoga studios must pay a sales tax covering businesses devoted to “weight control” or “health salons.” Audits are under way.
“Yoga classes have been around forever and not taxed,” protests Alison West of the lobbying group Yoga for New York. (In other news, yoga studios have a lobbying group in New York.)
“Last Monday afternoon,” reports The Wall Street Journal, “more than 70 yoga managers, studio owners and instructors sat down in the lotus position to discuss the tax issue — and other troubles — at Yoga Union, a studio in the Flatiron District. Ms. West said the atmosphere was ‘concerned, dynamic and productive.’”
Bummer. It’s going to be hard to meditate this bill away.
In Connecticut, what critics have dubbed the “Priceline tax” is working its way through the legislature.
“The proposed bill,” says State Rep. John Piscopo, “would impose a new tax on travel services by subjecting service fees charged by travel agents and other intermediaries for facilitating hotel bookings in Connecticut to the state’s hotel occupancy tax.” That includes outfits like Priceline, Orbitz and Travelocity.
That’ll be a killer for the sort of quaint mom and pop bed-and-breakfast places at the heart of New England tourism; they count on the online outfits to do the bulk of their marketing.
We chronicle these “new taxes and weird fees” to make this point: State and local governments are getting desperate for new sources of revenue. State revenue alone fell $50 billion in 2008-09, Federal Reserve figures show.
“According to experts, it will be years until states have recovered enough to restore services to pre-recession levels,” says U.S. News & World Report.
In the meantime, you and the local businesses you patronize are looking more and more like a milk cow to legions of bureaucrats. It pays to do everything you can to hang onto what’s yours.
The major U.S. stock indexes are surrendering some of yesterday’s gains, traders evidently unimpressed with Sarah Palin’s stint co-hosting the Today show. But for the moment, the Dow’s holding the line on 13,200.
A more-decisive movement could come before day’s end, when minutes from the Federal Reserve’s March meeting are released.
Or not.
Precious metals are drifting after yesterday’s gains. Gold has settled back to $1,674. Silver’s at $33.05.
In what we can only characterize as an embarrassment for CNBC, gold comes out on top in CNBC’s quarterly survey asking investors’ opinion of the “best investment.”
The Midas metal was the choice of a plurality, 37%. Real estate came in at 24%. Stocks, only 19%.
“Gold has taken over perceptions across the public as being a good investment,” says pollster Jay Campbell. “If not first, gold comes in as a very close second among investors.”
And the appeal cuts across all income levels. It’s the favorite among 39% of people earning between $30,000-50,000 a year. And it’s tops among 42% of those who pull down $100,000 or more.
Meanwhile, 49% of the survey respondents believe now is either a “very bad” or “somewhat bad” time to invest in the stock market.
You can almost hear the cries in the CNBC executive suite: “People who buy gold almost never sell it! How can we make money unless our advertisers constantly churn people in and out of stocks! Our business model is at risk!”
Oh, well… their problem. Yours is figuring out the best ways to take advantage of gold’s next leg up. We have help for you right here.
A recent report from Moody’s gets to the bottom of a thorny question: Why do the largest companies insist on sitting on piles of cash, instead of returning that cash to shareholders?
“Nonfinancial companies were holding $1.24 trillion in cash at year-end,” says Jim Nelson, who took the bullet of reviewing this report on your behalf.
“57% of this cash, or roughly $700 billion, is held overseas. For a U.S. company, that usually means that the money is tax-free. The only catch: It can’t bring it back to the U.S. to buy stock or pay dividends without significant tax consequences.”
“Once you take out that money, the $540 billion or so that’s left isn’t all that impressive. You have to remember, a lot of that money is being held in order to participate in what will surely be an overactive merger-and-acquisition market this year.”
That makes Apple’s $10 billion dividend look mighty paltry. “More importantly,” says Jim, “we have to look at some of the other large cash holders. In the top five, we have Apple, Pfizer, Microsoft, Google and Cisco.”
Pfizer? They lost billions in patent expirations last year, with more coming this year. “The other four,” says Jim, “are all tech plays. As a sector, I think tech has a great future. And the companies able to turn the enormous demand for new technologies into cash flow will do great this year. But I’m not putting a dime into any of these plays.”
Where can you find respectable, reliable income? Jim named his five favorites for readers of Lifetime Income Report last week. He describes one of them in detail here.
“Life extension will create huge new markets,” says our Ray Blanco, fresh from the Personalized Life Extension Conference in San Francisco.
That’s where his partner on our biotech team, Patrick Cox, delivered the keynote address on Saturday.
“Patrick talked about everything from rejuvenating stem cell therapies to a promising new plant-based nutraceutical for ‘inflammaging.’ He also talked about a fruit-derived compound that promises to fulfill the life-extending promise resveratrol couldn’t.”
One of the big growth opportunities lies outside the realm of traditional drugs. “We’ve barely seen what is available in the plant kingdom,” says Ray. “The very same technologies used for designing drugs from scratch are also unlocking the potential of these existing phytochemicals.”
“As you know, new extraction technology is making enormous reserves of oil and natural gas newly available. When it comes to potential drug reserves in the dizzying variety of plants in the world, new biotechnology will be the equivalent of fracking or deep-ocean drilling.”
“One of the new medicines Patrick discussed was actually discovered after an expedition to collect rare plants growing on remote mountaintops. It is a plant sugar that reverses liver scarring and drops the defensive shields cancer cells use to protect themselves from the immune system.”
Breakthroughs like these can come to market much more quickly than traditional drugs… because the FDA regulations aren’t nearly as strict. To learn about the one that has Patrick the most excited — and which also excited the conference-goers in San Francisco — check this out.
“It’s the fastest-growing economy on the planet,” writes Chris Mayer, gleaning more conclusions from his extensive travels. “And it will probably remain so for at least another decade.”
The country Chris has been increasingly jazzed about is Mongolia.
And we pause here to note that when it comes to “paying taxes,” Mongolia ranks No. 57 on a list compiled by the World Bank. The United States comes out worse, at No. 72.
“Mongolia is rich in natural resources,” Chris goes on, explaining the real appeal. “It’s loaded with coal, gold, copper, iron ore and even rare earths. It has oil, molybdenum, tungsten, phosphates, tin, nickel, zinc and silver. As one friend of mine put it, ‘Every time someone sticks a shovel in the ground, they find something of value.’”
Result? “Mongolia’s economy basically doubled between 2006 and 2010. That’s four years. It will double again this year in about half the time,” thanks in large part to two huge mining projects coming online.
“It’s a small economy right now — $8 billion or so. Investment in the country will probably total $50 billion over the next five-seven years. Imagine a place crawling with thousands of mine workers. Think of all the amenities they’ll need. Housing. Food. Clothes. Financial services. The mind boggles.”
Chris has a long list of off-the-beaten-path opportunities compiled from his globe-trotting… and he’s eager to share them with you. That’s why we’ve arranged a free “online adventure tour” to coincide with the release of his new book, World Right Side Up. On Thursday, April 12, Chris will spell out a few of his favorite plays in this free webinar.
Did we mention it’s free? Sign up here.
We’ve chronicled metal thefts. We’ve noted how liquid Tide has become a contemporary currency. But we’ve not come across a case of modern-day cattle rustling… until now.
Sheriff’s deputies in Luna County, N.M., pulled over a Honda Civic last Friday. Inside, there was a driver, a passenger in the front seat, and two passengers in the back seat — one of them a 220-pound calf.
[Photo by John O’Neill]
The three men inside were charged with suspicion of larceny of livestock, conspiracy, lack of a bill of sale and exporting livestock. No word if the police called in a drone strike on them or not.
“Canadians are in the same boat as the U.S. when it comes to trying to get a good education for their children,” writes a reader, carrying on our schooling thread.
“Sixty years ago, all my school supplies were provided, from pencils to books. Now students are expected to provide their own supplies and often share books, as there are not enough for each student to have their own.”
“Meanwhile, the salaries of school trustees and other bureaucrats continue to rise while teachers’ salaries don’t keep up with inflation. At the same time, unions make it difficult to get rid of nonperforming teachers, because they have seniority!”
“The Maclean’s magazine (Canada’s answer to Time) March 19, 2012, cover asks ‘Why is it your job to teach your kid math?’ The article has a picture of Anna and Ross Stokke (both math professors), who find their daughters’ math homework indecipherable!”
“Somebody actually believed Gasland?” an incredulous reader writes after yesterday’s episode. “Probably the same person that thought Brokeback Mountain was ‘good’ or Leni Riefenstahl’s Triumph of the Will ‘was a great love story.’”
“I suggest your correspondent quit churning out emails and turn off his PC. He is wasting valuable energy.”
“It’s great to hear that Patrick Cox thinks he’s a kid again,” a reader writes after seeing the last couple episodes of The 5.
“But would someone at Agora please do his readers a huge favor and get him into some proper gear for his newfound ‘love’ sport? And please take his board away if he took it to the conference in San Francisco?”
The 5: “I know that riding around on an oversized skateboard, poling like a gondolier, may seem hazardous,” Patrick says, “but I consider it much safer than biking. The land paddle is a third point of balance, and you don’t need to spend a lot of time balancing on one leg while pushing with the other.”
“You don’t normally reach the speeds that cyclists do, either, though I routinely pass slow bikers. Downhilling can be fast as well, but if you’re forced to bail, you just jump and run. On a bike, you have to deal with the steel between your legs, which makes dismounting at speed hazardous.”
If you’re curious about what it is that helped him feel this young again, here’s the story.
Cheers,
Addison Wiggin
The 5 Min. Forecast
P.S. “The Roswell Police Department pulled him over constantly,” writes Jeffrey Tucker, “and issued as many tickets as possible for whatever reason, tangling him in more difficulties.”
“Police cars would wait in front of his house and follow him. And when he didn’t cough up enough money (he was nearly bankrupt after all this), they would book him and throw him in jail.”
Turns out there’s more — much more — to the story of Andrew Wordes, the Georgia man whose explosive act of suicide we noted last week in The 5. Jeffrey tells the story of “an American hero” over at Whiskey & Gunpowder.