Category Archives: Demographics
The nonfarm payroll number is a statistic report issued by the U.S. Bureau of Labor Statistics, which accounts for approximately 80% of the workers who produce the entire gross domestic product of the United States. The nonfarm payroll number is reported on the first Friday of each month and is mainly used to help government policy makers and economists determine the current state of the economy, as well as predict future levels of economic activity.
Low Nonfarm Payroll Number for March 2013
On April 5, 2013, as reported by the U.S. Bureau of Labor Statistics, the nonfarm payroll employment edged up in March (+88,000), and the unemployment rate was little changed at 7.6%. The market was disappointed with the nonfarm payroll number. However, Alan Krueger, chairman of White House Council of Economic Advisors, said that 500,000 people leaving the job hunt was happening because of demographic shifts:
The labor force participation rate peaked in 2000 because of demographics. We are getting older as a nation. Its an issue we face.
The U.S. is indeed facing the problem of demographic shifts. Investors should be aware that the percentage of the population age 65 and older is expected to increase from 15% in 2015 to 19% in 2025 for the United States. The aging trend will continue and will only start to stabilize in 2040, as noted in my last article titled “Aging Population And Growing Demand For Low-PEG Stocks.”
The world is aging, and the life expectancy is increasing. The number of older persons has tripled over the last 50 years and it will more than triple again over the next 50 years. More older people and longer life expectancy will lead to more demand for retirement savings. According to the article written by Stephen Miller, CEBS, the average 401(k) balance in plans administered in the U.S. by Fidelity Investments reached a record high of $77,300 at the end of 2012, up from $69,100 one year earlier-an increase of 12 percent. About two-thirds of the 2012 increase was attributable to market action, and one-third was due to participant contributions. Fidelity Investments is one of the largest plan service providers.
Another study conducted by research firm, LIMRA, indicated that Generation X workers (born 1965-1980) have contributed to their current employer’s defined contribution plan for nine years, accumulating nearly $70,000 (January, 2013). On the other hand, Generation Y workers (born 1980-2000) have contributed to their current employer’s defined contribution plan for four years, accumulating slightly less than $26,000. According to Cecilia Shiner, senior analyst, LIMRA Retirement Research, while there are a lot of attentions on the Baby Boomers (78 million), nearly 116 million Americans (aged 20-47) need help on how to plan and save for retirement. As quoted from Cecilia Shiner:
Most Gen X and Y Americans will have to rely solely on their savings to fund their retirement, yet few are taking full advantage of the retirement savings vehicles available to them.
The study further suggests that if financial literacy could be improved for these consumers, the likelihood of participating in their employers’ plans may rise.
Accessibility to potable water had been improved compared to 30 years ago; however, long term trends for water scarcity are not too optimistic. According to Food and Agriculture Organization (FAO), “Water use has been growing at more than the rate twice of population increase in the last century. By 2025, 1.8 Billion people will be living in countries or regions with absolute water scarcity, and two-thirds of the world population could be under stress conditions.” Population growth and economic development are putting unprecedented pressure on renewable, but finite water resources.
Understand Water Scarcity
The term, “water scarcity”, needs to be understood as a relative concept, which is fundamentally dynamic. Water scarcity is defined in relation to needs and livelihoods where climate, geography and, increasingly, technological interventions determine the distribution of water around the world.
Vivus, Inc.: Second Rejection And Upcoming Earnings, Patience Required For Investors [Seeking Alpha]
VIVUS, Inc. (VVUS) is a biopharmaceutical company, engaged in the development and commercialization of therapeutic products for large underserved markets, including obesity and related morbidities, such as sleep apnea and diabetes, and men’s sexual health. VVUS dropped 1.90% and closed at $12.88 on February 21, 2013. VVUS had been trading in the range of $9.86-$31.21 in the past 52 weeks. VVUS has a beta of 1.20. VVUS had a call option volume of 10,687 (vs. the average call volume of 2,113) with a daily call option ratio of 2.31.
On February 21, 2013, VVUS’ obesity drug, approved in July in the U.S., failed for a second time to win approval from European regulators because of its potential side effects, as reported by Bloomberg. CHMP indicated that VIVUS, Inc. must conduct a cardiovascular trial to show the drug, which would be called Qsiva in Europe, is safe before it could be approved. Qsiva was approved by the U.S. FDA in July, 2012 and is sold under the trade name Qsymia in the United States. The pivotal Phase III clinical trial program included over 4,500 subjects studied up to two years, establishing Qsymia as a safe and effective treatment for obesity. FDA also approved another diet pill, Belviq, sold by Arena Pharmaceuticals Inc. (ARNA) in the same year. Another diet drug, Contrave, developed by Orexigen Therapeutics Inc. (OREX) also faced the same problem as FDA would not approve the pill without a lengthy, expensive study to prove that it does not increase the risk of heart attacks and strokes, as reported by Reuters.
The world is aging, where the percentage of population 65 and older is expected to increase from 15% in 2015 to 19% in 2025, as quoted from my last article, “Aging Population And Growing Demand For Low-PEG Stocks”. Upon receiving feedback from Gedankonomist, an insightful Seeking Alpha reader, this article is focused on the increasing death number in the United States and will address the potential implication for investment in the death care industry.
Number of deaths, crude and age-adjusted death rates: United States 1935-2010
Source: CDC/NCHS, National Vital Statistics System, Mortality.
Notes: 2010 data are preliminary. Crude death rates on an annual basis are per 100,000 population; age-adjusted rates are per 100,000 U.S. standard population. Rates for 2001-2009 are revised and may differ from rates previously published.
The world is aging. The number of older persons has tripled over the last 50 years and it will more than triple again over the next 50 years, as quoted from my last article, “World Demographics: Embracing The Gracious Aging World.” With the updated data released by the U.S. Consensus Bureau in December 2012, the projections of the population by selected age groups will be reviewed. The potential implication for investment will also be analyzed in this article.
Projections of the Population by Selected Age Groups and Sex for the United States
Source: U.S. Census Bureau, Population Division (Released on December, 2012)
Communication improvement is an essential part of human society progression. With the latest cell phone technology, smartphones take care of all handheld computing and communications needs in a single, compacted device. With the success of iPhone from Apple Inc. (AAPL), which once passed Exxon Mobil Corporation (XOM) as the world’s most valuable company, smartphones are impacting today’s economy greatly.
This article will analyze the impact of age, income and ethnicity on smartphone decisions and thus help investors to better understand if each smartphone company is planning and executing the right strategy for its products. The data is obtained from Alexa.com, owned by a subsidiary company of Amazon.com, Inc. (AMZN). Alexa.com provides traffic data, global rankings and other information on 30 million websites with over 6 million visitors each month.
Apple.com from Apple Inc. in the United States, Blackberry.com from BlackBerry in Canada, formerly known as Research in Motion (RIMM), Nokia.com from Nokia Corporation (NOK) in Finland, Htc.com from HTC Corp in Taiwan, and Samsung.com from Samsung Group in South Korea (SSNLF.PK) are compared and analyzed for their traffic with the breakdown by age, income and ethnicity.
Stem-cell therapy is an intervention strategy that introduces new adult stem cells into damaged tissue in order to treat disease or injury. Many medical researchers have high hope that stem-cell treatments have the potential to change the face of human diseases and alleviate suffering. One major pharmaceutical manufacturer is increasing its bet in the stem-cell therapy for congestive heart failure, Teva Pharmaceutical Industries (TEVA). Stem-cell therapy may one day revolutionize the pharmaceutical and healthcare industry and it is still not too late to explore the investment opportunity in this developing field.
What are Stem-cells?
As reported by Rafael Castillo from Philippine Daily Inquirer, “Stem cells are actually amazing precursor cells present in the embryo of any species, and they have the remarkable potential to develop into many different cell types in the body during early life and growth.” A stem-cell is “a sort of internal repair system,” which divides and multiplies itself almost without limit to replenish other cells provided the person or animal is still alive. Each new stem cell produced by the division of the original stem cells has the potential either to remain a stem cell or become another type of cell with a more specialized function, such as a heart or nerve cell. Stem cells have the potential to literally replace old malfunctioning cells and make them like those of a young healthy person, as reported by Rafael Castillo.
Promising, but Still Long Way to Go
The stem-cell therapy sounds highly promising; however, there is still a large technical barrier to achieve its functionality without complications and a lot more tests and trials are required. As quoted from Sir Martin Evans, one of the pioneers of embryonic stem-cell and gene targeting research which earned him a Nobel Prize for medicine,
“The scenario of a cell-based therapy or medical intervention using cells is very sound, but there is still a long way to go before it’s a safe therapy. There’s also quite a lot of jumping the gun and early adoption going on, some of which is quite cynical.”
Progress, Top Benefits for Mankind
In the last few years, scientists, focusing their work on stem-cell therapy, have accomplished greater progress by switching from studying controversial embryonic stem cell benefits to adult stem cell therapy and therapies involving umbilical cord stem cell samples receive via cord blood banking process. As stated from the report from Health Articles 101,
“According to their findings, adult stem cell therapy treatments have less chances of being rejected by a patient, therefore increasing his recovery rates. When using patient’s own skin stem cells, there’s no need to administer immune suppressing drugs as in instances of using embryonic stem cell therapy, which could be debilitating for the patient in the long run. In addition, adult stem cells are easier and less controversial to obtain, making this stem cell therapy a very promising medical field of research for the future.”
Top benefits of adult stem cell therapy for mankind cover the areas of:
- Diabetes treatment
- Stem cell hair growth
- Spinal cord injuries
- Treating senile dementia and Alzheimer’s
- Growing limbs
- Arthritis stem-cell therapy
- Autism stem-cell therapy
- Heart disease stem cell therapy
Aging Population and Stem-cell Therapy
The world is not only aging and the aging populations are also living longer. As the share of the aging population increases, the demand for social security and healthcare will increase. Stem-cell therapy offers the possibility to cure the incurables or complicated, tough diseases and enhance the living quality for the human race with increasing longevity.
On December 11, Jeremy Levin, CEO of Teva Pharmaceutical Industries, affirmed on a small item on the company agenda: Teva is going ahead with a large, late-stage trial of Revascor, an experimental cell therapy for congestive heart failure. Revascor is not owned by TEVA but by a partner, small Austrian biotech Mesoblast.
As stated from Mesoblast’s website, congestive heart failure, CHF,
“is a chronic condition characterized by an enlarged heart and insufficient blood flow to the extremities of the body. The condition develops over time and can be caused by many factors that put an excess demand on the heart muscle, including high blood pressure, incompetent valves, infections of the heart muscle or valves, or congenital heart problems. More than 6 million people in the United States suffer from heart failure with an additional 670,000 new cases diagnosed each year. This is the number one cause of mortality and hospitalization in the Western world.”
“Mesoblast’s target market is CHF patients in NYHA class II to IV with an ejection fraction of less than 35%. The estimated market size in the United States alone is currently 2.5 million patients (41% of 6.2 million pre-existing sufferers) and 201,000 newly diagnosed (30% of 670,000) each year.
Mesoblast has developed the adult stem cell-based heart product Revascor® to treat moderate to severe congestive heart failure. In a Phase 2 trial using Revascor®, interim results showed sustained improvement in heart muscle function at six months following implantation with the proprietary stem cells compared with progressive loss in heart function seen in controls. Improvements in these endpoints are used as surrogates to predict reduced mortality and hospitalization due to heart failure.”
For investors, investing in stem-cell therapy alone may be still too risky. TEVA, however, offers a strong play in the healthcare sector with the potential to gain from success of stem-cell therapy in the field of congestive heart failure.
Teva Pharmaceutical Industries
TEVA is the world’s largest generic pharmaceutical manufacturer with operations in 60 countries. TEVA develops, produces and markets generic drugs in all treatment categories. TEVA’s global low-cost operations, expansion to emerging markets, strong generic manufacturing capabilities, and drug pipeline should enable the company to grow profitably and continuously in the long term while benefiting nicely with the aging baby boomer trend.
TEVA currently has an enterprise value of $45.16B and a market cap of $32.0B. TEVA has a Trailing P/E of 15.40 and a Forward P/E of 7.44 with a PEG ratio of 0.87. TEVA generates ROE of 9.28% with 23.07% operating margin and 10.36% profit margin, ttm. TEVA has a total cash of $1.43B with an operating cash flow of $4.42B and a levered free cash flow of $3.65B. TEVA has a book value of $26.42. TEVA is currently trading at $37.79 and offers 2.72% dividend yield. A recent update on TEVA can also be read here.
Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.
BP Plc (BP) is an integrated oil and gas company with operations across six continents. BP operates in two business segments: Exploration and Production, and Refining and Marketing. BP’s upstream operation (including TNK-BP) produced 3.5 million barrels of oil equivalent per day during 2011. The downstream operation includes refining, chemicals, lubricants, and service stations. BP’s $38 billion divestiture program due to the Gulf of Mexico oil spill had $26.5 billion (69.74%) completed as of June 30. While BP did not perform for BP investors for 2012, where the share price is still down $1.02 as of December 24, 2012 at $41.72 compared to the closing on December 30, 2011 of $42.74 ($1.98 dividend distributed), BP is expected to generate higher revenue with a stronger EPS for 2013.
On December 24, 2012, BP inked a sale agreement with Kuwait Foreign Petroleum Exploration Company, KUFPEC, relating to its 34.3% stake in the Yacheng gas field in the South China Sea, for $308 million cash. This sales decision is part of a broader program to focus on high value assets with long-term growth potential. BP expects the deal to close in the second half of 2013.