Despite a misunderstanding with PL, Mr Berko explains here the stock value of Medtronic. Read on to see the stock value of the world’s largest manufacturer of implantable medical devices – Medtronic.
BY MALCOLM BERKO
RELEASE: WEDNESDAY, NOVEMBER 15, 2017
Medtronic, Si or No?
Dear Mr. Berko:
I’m writing for a 46-year-old friend of mine who escaped Cuba and came to the U.S. in 1981. I told him to write to you, and he did so in Spanish (he doesn’t speak English) to ask what to do with the 319 shares of Medtronic PLC stock he inherited. Your response — “Write me in English and I’ll answer your question” — was insulting and racist. My friend has been here for 36 years and has worked every day. This is important to him, and your insensitive, bigoted response proves that you and your column are xenophobic and full of hate. You probably voted for Donald Trump. Disgusting racists like you make me sick. I’ll never read your column again. — PL, Miami
Wow! You really got your dandruff up. However, if your friend came here 36 years ago at age 10, why hasn’t he learned to communicate in English?
Several times a year, I get letters written in Spanish. But because I’m not fluent in Spanish, I always ask that they rewrite their letters in English. My response always begins with the adverb “Please,” and I say, “I need your question to be crystal clear so I can give you the best possible answer.” But you insist on jumping to confusion, which is so common among oversensitive, emotional rants like you. I’m tired of tolerating the intolerance that people like you have for our culture.
Among the most defining elements of a nation’s culture is its language. Our culture is defined by the language of Jefferson, Adams, Franklin and Madison — Americans who wrote the Declaration of Independence, the Constitution and the Bill of Rights. This language is dear to me, as it is to 300 million other Americans. And if you can demand that I respond to your friend in Spanish, why won’t you allow me the right to ask that your friend write to me in English? Your illogical response begins with your misguided sense of entitlement, which has taken a quantum leap into extremism. Is it possible that you’re the racist? Because I know nothing of your friend’s needs and objectives, I’ll assume that he’s a long-term investor.
Medtronic (MDT-$79) is a conservative, superfine long-term investment. MDT is the world’s largest manufacturer of implantable medical devices and generates revenues from over 120 countries. I’d tell your friend (if I spoke Spanish) to keep his shares.
MDT, formerly home-ported in Miami, moved its headquarters to Ireland for tax purposes several years ago. The company has a strong balance sheet, excellent cash flow and impressive net profit margins of 26 percent. Thirty-seven percent of revenues derive from its prestigious cardiac division, and 63 percent derive from its renowned restorative therapies group. Restorative therapies comprise spinal and neural modulation plus diabetes and surgical technologies. MDT has 1,100 global patents and 91,000 employees.
Management expects revenues to reach $31.2 billion this year, which would be a 9 percent increase over 2016. That would also be an impressive 500 percent increase from the $6 billion in sales MDT posted in 2001. And as revenues have continued to rise each year, earnings also have risen annually, from $1.18 a share in 2001 to potentially $5.92 this year. That would also be a 500 percent increase. Not to be left behind, the board has increased the dividend each year, from 22 cents a share in 2001 to $1.84; that’s a sevenfold increase. Today’s dividend yields 2.3 percent. Citigroup, Merrill Lynch, Value Line, Thomson Reuters, S&P Capital IQ, Vanguard, T. Rowe Price and BlackRock are bullish on MDT, which is certainly reflected by their combined ownership of over 500 million shares.
Tell your friend to contact the person whose name I’ve given you, who’s a stockbroker at one of the biggest firms in South Florida. I’ve known him for 31 years. He is Cuban, speaks Spanish and has been around the block a few times. He’s a good cookie. I trust him. And he shares my opinion about MDT. I don’t know much about his skills as a stock picker — he prefers to sell stocks researched by his firm — but they can communicate together without you as an interpreter.
Thanks for writing for your friend.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2017 CREATORS.COM
Unemployment Rate Soars Despite States, Economy Reopening
The slow reopening of the economy has done little to boost the job market and stall the unemployment rate.
Another 2.4 million Americans filed initial jobless claims for the week ending May 16. This brings the total since late March to an incredible 38.6 million.
Continuing unemployment claims, those who file to receive ongoing benefits, added another 2.5 million through May 9. This brings the total to 25.1 million.
Observers were hoping that they would see the number of continuing claims to begin to decrease. This comes after last week’s report only showed an increase of 500,000 claims, the smallest increase since March.
With that figure jumping by 2.5 million, it dashed those hopes.
“It is looking like May is shaping up to be worse for the labor market than we had initially thought,” economists at Jefferies said in a recent note. “We noted in our response to the April employment data that we expected that we would see another drop in payrolls in May of about 1 million, followed by a strong rebound in June. However, the stubbornly high levels of both initial and continuing claims suggest that we are actually in store for another historic drop in payrolls in May.”
Hoping for a Drop
Diane Swonk, chief economist at Grant Thornton, was also hoping to see a decrease in continuing claims. However, she says we may see some improvement soon. It’s possible as companies use money from the Payroll Protection Program to bring back workers.
“I’d love to see a big drop in continuing claims because that would really be a sign of rehiring,” she said, but also cautions that May is shaping up to be a terrible month for workers, who may find that their temporary unemployment may not be so temporary. “This is the week of the survey. … It tells us May is going to be another bloody month, with a lot of downward revisions for an even worse month of April,” said Swonk. “May will be a much worse unemployment rate because people will be looking for jobs again and their layoffs weren’t as temporary as they had hoped.”
Very real concerns exist that the unemployment figures fare worse than the actually reported ones. These concerns come as states are still overwhelmed by the sheer number of claims and still haven’t processed the backlog.
It’s hard to imagine what the real unemployment rate would be if a backlog of initial filings does exist.
Chris Rupkey, chief financial economist at MUFG Union Bank, said if you add in the initial claims from last week’s report, “That would put the unemployment rate at about 25.4%”
Some states are seeing relatively little impact on employment due to the pandemic. Utah and South Dakota are seeing unemployment rates remain below 10%, while other states have been crippled by job losses.
Georgia and Kentucky have the highest unemployment rates in the country, where the jobless rates are approaching 40 percent. Other states seeing unemployment rates at or near 30 percent include Washington and Louisiana. Also included are Michigan, Rhode Island, Nevada and Pennsylvania, as per Deutsche Bank Research.
FOMC Minutes Reveal Uncertainty, Fear Over Second Wave of Outbreak
Minutes from the April meeting of the Federal Open Market Committee show that Fed officials are happy with their recent actions. The said actions aims to keep the economy afloat during the coronavirus pandemic. However, they are also deeply worried about the likelihood of further outbreaks. They also expressed concern about how the pandemic will harm lower-income families the most.
The April meeting concluded with the committee talking about the steps they took during the initial outbreak. They said those actions were were “essential in helping reduce downside risks to the economic outlook” of the country. They also decided to keep interest rates at their current level of 0% – 0.25%.
The committee said that the pandemic created both near and medium-term economic uncertainty. Also, “participants commented that, in addition to weighing heavily on economic activity in the near term, the economic effects of the pandemic created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term.”
The group expressed worry about the negative effects on unemployment and GDP growth of another outbreak of coronavirus cases later in the year. The minutes also say the group views this as a “substantial likelihood.”
“In this scenario, a second wave of the coronavirus outbreak, with another round of strict restrictions on social interactions and business operations, was assumed to begin around year-end, inducing a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year,” the summary said.
The minutes also mentioned that this “more pessimistic” outlook was just as likely as the baseline forecast for improvement.
Baseline For Improvement
There was discussion amongst the members to provide more explicit assurances that rates wouldn’t move higher until a recovery was “firmly in place.” This is defined by the country meeting certain unemployment or inflation rates before the committee would consider raising interest rates. Another idea was announcing a specific date which would be the soonest that the FOMC would consider raising interest rates.
They call this type of forward guidance the Evans Rule. The Fed used this in 2012 when it openly broadcast that it would hold rates steady until unemployment rates started to fall. It also used this to broadcast that there were signs of rising inflation.
The notes also reveal that the committee is very concerned that while the 30+ million jobs lost since the outbreak began also hit all socioeconomic levels. The brunt of losses “would fall disproportionately on the most vulnerable and financially constrained households in the economy.”
Some are concerned that many small businesses, the backbone of our country, simply won’t survive in the “new normal” of social distancing. Meanwhile, other businesses are going to hold off on hiring or growing. Owners say this may last until the threat of a second outbreak passes.
The minutes state “a large number of small businesses may not be able to endure a shock that had long-lasting financial effects. Participants were further concerned that even after social-distancing requirements were eased, some business models may no longer be economically viable, which could occur, for example, if consumers voluntarily continued to avoid participating in particular forms of economic activity.”
Budget Group Sees GDP Plunging 38%, Rising Unemployment
The nonpartisan Congressional Budget Office released its latest projections for economic growth, unemployment, and the federal budget yesterday. Given these, it looks like we are in for some rough times ahead.
The group says the budget deficit could balloon by $2.1 trillion in fiscal 2020 and $600 billion in 2021. This increase may come primarily due to the stimulus packages the government has rolled out. The government released these checks in an effort to combat the coronavirus pandemic. The deficit increases equate to about 11% of nominal GDP in fiscal 2020 and 3% in 2021
The CBO expects the unemployment rate to trend higher in the coming months. This may get an average of 15.1% in the second quarter before peaking at 15.8% in the third quarter. They see the unemployment rate tapering down to 11.5% in the fourth quarter, which sounds encouraging. However, it’s still a double-digit unemployment rate.
They also warn that even as states reopen and businesses start to bring back workers, we shouldn’t expect businesses to go on an immediate hiring spree. According to the CBO, “persistence of social distancing will keep economic activity and labor market conditions suppressed for some time.”
The CBO’s projections for the second-quarter GDP is an astonishing 38% decline on an annualized basis. This, then, would be the single-largest GDP drop in our nation’s history. The CBO’s projections are consistent with what many on Wall Street are expecting. However, it’s still not as bad as the projection by the Atlanta Federal Reserve, which sees a 42% decline.
A quick GDP recovery should occur according to the CBO. This may happen with the GDP growing 21.5% in the third quarter and 10.4% in the fourth quarter.
On The Brighter Side
There is a silver lining to the report. The CBO sees a recovery in the second half of the year. This may come as the coronavirus pandemic subsides. Additionally, the report says the stimulus money that was spent was worth it. It mentions that it may help in keeping up the GDP and employment rates higher than they would have been otherwise.
“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease restrictions,” the CBO said before adding, “In CBO’s assessment, that legislation will partially mitigate the deterioration in economic conditions. In particular, greater federal spending and lower revenues will cause real GDP and employment to be higher over the next few years than they would be otherwise. The effects of the legislation on economic activity will be largest in the second and third quarters of 2020 and smaller thereafter, CBO projects.”
The massive caveat to the CBO’s report is that they acknowledge that everything has happened so quickly. Because of this, they are unsure of what could really happen next.
“For example, if the disease spreads less widely than CBO expects—because of testing and contact tracing, a vaccine, or for some other reason—the degree of social distancing could be lower and the economic recovery faster than what CBO currently projects. The opposite could also be the case,” the agency said. They also added that, “the extension, reversal, or reimplementation of different types of social distancing policies (such as stay-at-home orders, bans on large public gatherings, closures of specific kinds of businesses, and closures of schools) might have different effects on the economy.”
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