THE FOCUSED MIND

One of the main drivers of the growing gambling movement has been the states’ desire to increase revenues. Now that so many states are getting involved however, gamblers have numerous options, which is lowering the pool of players for any individual casino or state, limiting revenue opportunities.

New Jersey, once the premier gambling destination on the east coast, was surpassed in gambling revenues by Pennsylvania in 2012.  Atlantic City’s newest casino, Revel, just declared bankruptcy.

Three casinos have opened in Ohio since 2009, with another set to open next month in Cincinnati.  Michigan now has 22 casinos run by autonomous Indian tribes. Meanwhile, tax revenue from neighboring Indiana’s 13 betting sites has declined every year since 2009.

States, and casinos, are beginning to respond.  The Borgata Hotel Casino in Atlantic City will be the first U.S. establishment to allow guest-room gambling on slots and poker via a television and remote control.   New Jersey, which recently approved gambling on handheld devices, is considering legalizing Internet gambling and wants to legalize sports betting in the state.

In Indiana, a bill by a state Senator would allow casinos to keep a greater percentage of revenue and allow state gambling riverboats to move inland.

While states continue to sanction and build more casinos, how long will operators see opportunity in building them?

We expect that states will attempt to move more aggressively toward online gambling to expand their pool of potential players.   With competition for gamblers growing throughout the country, we  also expect other states’ casinos to join New Jersey in ramping up technology capabilities in an attempt to gain a competitive advantage.

The big question is, will the Borgata deliver free drinks to the room?

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A new study of 500,000 kids and teens in 51 countries discovered that eating a fast-food meal three or more times per week increases the likelihood of developing asthma by 30 percent for six- and seven-year-olds and 40 percent for thirteen- and fourteen-year-olds. Also, members of the study’s group that ate fast foods were more likely to develop allergies, such as hay fever and eczema. Meanwhile, in the first three years after smoking was banned in England in 2007, the number of children admitted to the hospital for severe asthma attacks fell by 6,802 cases.   Guardian

We are slowly but steadily increasing our understanding that many of the maladies being suffered by children (and adults) are of our own making. In these kinds of areas, will knowledge be sufficient to change behavior?  Will public officials or regulators get involved?

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In 2012, the 500 member in-house recruiting staff at General Electric filled most of GE’s 25,000 openings, helped by LinkedIn and BranchOut.  About 10 percent of the positions filled were executive and senior professional positions formerly filled by executive recruiting companies such as Heidrick & Struggles, Korn/Ferry and Spencer Stuart.  The GE team completed most searches in about 73 days, compared with the average 170 days it takes outside firms.  (BusinessWeek)

This practice of taking executive recruiting in-house has produced substantial cost savings at GE, as well as Coke, Pfizer, Microsoft and Nike.  This new way of operating is one example of what we have termed Rampaging Efficiencies at U.S. companies.  But while it has produced savings in the tens-to-hundreds of millions of dollars at these corporations, it has resulted in substantial revenue declines at the talent-search companies.  No wonder the search giants are now acquiring leadership consulting companies in an effort to broaden revenue streams.  What happens when the corporate in-house recruiters also branch into in-house leadership consulting?

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Water is obviously a vital resource.  Is it too vital for markets to handle its pricing?

In Texas, Allan Ritter, a Republican and chairman of the House Natural Resources Committee, proposed bills that would withdraw $2 billion from the state’s Rainy Day Fund to establish a water infrastructure bank that would lend money for projects dedicated to the state’s 50-year water plan. His proposals received support from Republican leaders, the Sierra Club’s Texas chapter and the Texas Association of Business. (read the article)

 
Texas Republicans’ inclination is to reduce government involvement when markets can be involved, but, in this instance, previously opposing forces are cooperating to deal with what are perceived to be structural challenges. Water is essential to commerce, agriculture, energy and consumers. Current Texas politicians perceive water as too important of a commodity to be left to the markets to allocate and price.

How long will this perspective about water last?  Will other states follow?

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In an August inFocus on the housing market, we wrote about some ways in which the buying public have re-prioritized what they value while also dealing with different financial realities.

The following are some recent facts and events that begin to illustrate the new reality of housing- that the majority of new construction will be multi-family, smaller and in cities.

New American Lifestyles

• There are two million  more adults ages 18-34 living under their parents roof last year than four years ago.
• 80 percent of units now have one bedroom. In the past, 60 percent had two bedrooms
• New units are as small as 500 square feet in Houston, even smaller in San Francisco and New York City.
• Married couples with children make up under one in four households today
• Between 2010 and 2011, 86.5 percent of small metro areas saw an increase in the number of people living in the city.
• Cities in the smallest metro areas (150,000-250,000 people) saw the largest increase in people within their boundaries.
• Cities in small metro areas grew in population by 0.89 percent outpacing suburb growth by 0.67 percent.
• Small metro cities are seeing more growth then big cities. 55 percent of cities in small metro areas grew at a faster rate than their suburban counterparts between 2010 and 2011. 51 percent of cities in large metro areas added population at a greater rate than their suburbs.
• The nation added more than 2 million households in the 12 months that ended March 31 about triple the average for the previous four years. Most of the gains came from baby boomers. – divorce?
• The number of people ages 25-29 who moved across state lines reached its highest level in 13 years

Multifamily housing

• Multifamily construction is two-thirds of the way back to prerecession peak.
• New apartment complexes are going up at fastest rate since July 2008
• In Houston, from January to September, construction permits for multifamily housing increased by more than 70 percent over the year earlier.

Single family housing

• Single fam construction is one-third back to peak
• Houston permits for single family increased 25 percent from Jan to Sept.

Economy and General Housing

• Net worth increase by $1.7 trillion in Q3
• Households got $301 billion bump in value of real estate assets
• Case-Schiller 20 home index has risen month over month for 6 months with four consecutive monthly year over year gains.
• Jobless rate of those ages 25-34 dropped from 9 percent at start of the year to 7.9 in November

• There have been 559,000 home seizures in 2012. The Fed Reserve Bank of NY had estimated as many as 1.8 million properties would be taken back this year.   Foreclosures are at a five year low.
• Foreclosures and short sales made up 24 percent of October sales. The same level as September but down 28 percent from a year earlier.
• There were 2.14 million existing homes for sale in October, down 1.4 percent from September. That translates to a 5.4 month supply at the current sales rate, the lowest level since February 2006.
• The number of residential properties for sale in the U.S. shrank to the lowest level in a decade. Prices have appreciated in the fastest pace since 2005.
• Median price of an existing home sold in October jumped 11 percent from a year earlier, steepest annual increase since November 2005.
• Almost a quarter of all US homeowners with a mortgage are underwater
• Fed reserve is buying $40 billion in mortgages every month which is keeping rates low.

General home building

• Pace of home building rose to its highest level in more than four years in October. U.S. builders increased their spending on construction projects in October by the largest amount in 5 months. Level of spending is still considered low.
• Builder confidence in the housing market rose for the 8th straight month in December to its highest point in more than six years. Sentiment reading of 47, means more builders have a negative outlook than a positive one

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Doctors at Children’s Hospital of Philadelphia reported this week that they had cured a 6-year-old girl of recurrent leukemia that chemotherapy had failed to treat. The doctors altered a strain of the human immunodeficiency virus (HIV), so that instead of giving the girl AIDS, it would reprogram her immune system DNA to fight leukemia on its own. The procedure cost $20,000 – far less than the cost of a bone marrow transplant. (New York Times)

In eFocus 702 earlier this year, we noted how researchers are increasingly using viruses as “vectors” to reprogram patients’ DNA to cure hard-to-treat diseases, and we noted that in many such treatments, patients’ own immune systems are being prodded to treat the disease, rather than using powerful drugs. As 6-year-old girls start being saved in experimental versions of such treatment, we wonder if an era of increased medical efficiency and effectiveness is at hand.

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According to a recent study, the ski and snow sports industries in 38 states have lost 27,000 jobs and as much as $1 billion in revenue over the past decade, because of reduced snowfall and shorter winters. The first 11 months of 2012 were the warmest to start any year in the contiguous 48 U.S. state since records started in 1895.

http://www.sfgate.com/science/article/Warmer-winters-chill-ski-industry-4101277.php

We have written about the ways in which climate change and extreme weather impact food, water, energy and infrastructure, but there will be many other areas of impact as well, in this case labor markets and potentially winter-sports equipment and ski resorts.

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Peru has the largest mass of tropical glaciers in the world, mostly part of the Cordillera Blanca. Studies have indicated that the glacier mass has shrunk 20-30 percent since 1970 and is currently decreasing by 3 percent per year and the decline is accelerating.

Most importantly, the Santa River which receives water from the glaciers, has passed its “peak water,” after which the amount of discharge from the glaciers drops off sharply.

The back story for the Peruvian experience is that agriculture was built up in recent years taking advantage of the glacial flow – just as the flow started to diminish.

This sets up a conflict for various users of the water, which is likely to be duplicated in many parts of the world so affected. The military has identified this conflict as central to future military conflict. At the very least, more efficient water-use will be a necessity for many years.

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Starting December 12, the U.S. Postal Service will begin a test of same day delivery service for online shoppers residing in San Francisco – with additional plans to expand this program next year into Boston, New York and Chicago.

Could such an offering eventually become the moneymaker the Postal Service needs to replace the fall off in first class mail over the past several years?

If anything, such an offering, should it eventually be broadly offered in many cities, would be another enabler of the changing nature of retail, toward smaller stores and online shopping and fast delivery. Americans have increasingly found such convenience desirable, especially when compared to gassing up the car and zigzagging among various big-box stores and malls.

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What does the educational backgrounds of Politburo members say about China’s priorities?

Until now, China’s rulers have been technocrats, specializing in the controlled build up and development of the country, primarily through large state-run companies and massive public-works projects.

But coming out of the most recent “election,” of the all-important seven-member Standing Committee of the Politburo, six men studied the social sciences and humanities in their post-secondary education, as compared to previous Standing Committees which were dominated by engineers and scientists.  For instance, Li Kequiang, who will replace “Grandpa” Wen Jiabao as Premier, has a Ph.D. in economics, and a masters and bachelors degrees in law.

Seemingly, the new leadership’s training prepares them more to deal with some of the major underlying social issues the country faces, including addressing inequality and delivering on the public’s desires for reforms that root out corruption and potentially give the public a greater say in how the country is run.

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