A Lifelong of Pain and Suffering: Many Boston Victims Face Lifetime of Medical Bills

More than $30 million has been graciously donated to victims of the Boston Marathon Bombing, yet it may not be nearly enough to cover the lifelong medical bills for many of those impacted by the tragedy.

The state of Massachusetts, where many of the 260 or so victims reside, mandates residents to have health insurance. However, even those with coverage could face extensive out-of-pocket costs. “This problem will unfortunately be with many of the victims for the remainder of their lives,” said Praveen Subramani, who started a crowd funding campaign for his friend’s parents, Eric and Ann Whalley. Eric suffered severe brain trauma and extensive nerve damage to his foot, while Ann must undergo skin grafting and a bone graft to heal her serious injuries.

The average cost for a day of treatment in a U.S. hospital is $4,287, and those with serious injuries often encounter exorbitant bills. Patients with traumatic brain injuries encounter average per-day costs of $8,000 for acute care and $2,225 for inpatient services.

Treatment costs for the most severely injured victims of the marathon bombing could total hundreds of thousands of dollars, according to numerous professionals with the Health Economics Program at Northwestern’s Feinberg School of Medicine.

Aside from rehabilitation and hospital costs, a large percentage of those injured will lose out on months of income while they heal. Some of these individuals may also require mental health services to treat anxiety and post-traumatic stress disorders. Moreover, for the more than a dozen victims who lost limbs, their injuries will require a lifetime of costs that mount up rather quickly.

Surgical amputations can cost as much as $40,000 while a single prosthetic limb can cost from $5,000 to more than $50,000, depending on the level of technology. Over a lifetime, medical costs for an amputee can exceed $500,000, and additionally, some victims may pay for modifications to their care and home, which can run an individual tens of thousands of dollars more.

Twenty states in the U.S., including Massachusetts, have passed fair insurance laws for amputees; these laws require a certain level of medical coverage for prosthetic care, and in some of these states, insurance typically covers nearly 80 percent of the costs.

In the 30 states across the nation without laws, coverage can be far worse, with some prosthetic coverage caps falling as low as $2,000 per year. Citing the gaps in coverage, the American Orthotic and Prosthetic Association announced that it would establish a coalition to help victims who have inadequate coverage to satisfy their initial costs.

Source: whitehouse.gov

Sign of things to come: Jobless Claims Dip to 5-Year Low

After rising as high as 670,000 during the financial crisis, weekly jobless claims are currently at around half of that level. First-time claims for unemployment insurance dropped to their lowest mark in five years last week, providing positive signs that fewer layoffs are taking place in the strengthening economy.

According to the United States Department of Labor, approximately 324,000 people filed initial claims last week. This report was better than expected on nearly all accounts; many economists and Wall Street analysts were anticipating an increase in claims.

The report issued by the United States Department of Labor revealed that unemployment claims had declined by nearly 19,000 from the previous week, marking the lowest figure since January of 2008.

The weekly numbers can be dicey as many economists prefer to evaluate a four-week moving average to level out the inherent volatility—a figure that also declined according to the United States Department of Labor.

Claims figures are regarded as a legitimate gauge of layoff numbers and provide the first look at how the domestic job market fared in a given month. During the height of the financial crisis in 2009, claims had surged as high as 670,000 a week.

Lay-offs have now restored to pre-recession levels; these figures are consistent with the normal churnings of the job market. That said, hiring of new employees remains sluggish.

A separate report released this week, showed that businesses were reluctant to hire new workers throughout the month of April. Domestic employers added nearly 120,000 workers, marking the weakest month for hiring since last September.

The Labor Department’s jobs report is scheduled to release tomorrow morning. The United States economy added an average of 160,000 jobs each month over the last year, and April is expected to fall in line with this modest pace of hiring. The majority of economists are expecting the report to show that the economy added roughly 140,000 in April, marking an increase of nearly 90,000 jobs from March. Economists are also expecting the unemployment rate to remain at roughly 7.6 percent.

Source: whtiehouse.gov

Underground Profits: The Lucrative World of Cigarette Smuggling

Cigarette smuggling is a hot new business as taxes rise in some states but remain marginal in others. Yes, the act of purchasing cigarettes in one state, then selling them in another is illegal; however, a truckload of cigarettes purchased down South can earn a smuggler upwards of $1,940,000 if they are sold in New York. And these lofty margins are what attract criminals into the underground world of cigarette smuggling.

In 2011, roughly 65 percent of all cigarettes sold in New York were smuggled from another state, according to a free-market report think tank. This figure is up from roughly 36 percent in 2006.

This illegal activity is not just taking place in New York; the Mackinac Center for Public Policy estimates that more than 15 states have smuggling rates that exceed 20 percent. Factor in counterfeit cigarettes from overseas, and the Bureau of Alcohol, Tobacco, Firearms and Explosives estimates lost government revenue at over $5 billion per year.

Many involved in the legal sale of cigarettes blame rising state taxes for the exorbitant increase in illegal smuggling; these individuals estimate that things will get worse if President Obama’s proposed 94 cent per-pack cigarette tax increase goes through.

The New York-Virginia corridor is the most popular arena for illegal cigarette smuggling as the considerable difference in taxes and the states’ relative close proximity make it an attractive route for smugglers. In the state of Virginia, state taxes are 30 cents per pack while in New York, they are a whopping $5.85—the highest rate in the United States.

While the Virginia-New York corridor gets the majority of the attention, professionals tracking the situation claim that trafficking rings can run from any of the low-cost states to the high ones. North Carolina to Michigan and Virginia to California are also popular routes for smuggling.

The quantity of smuggled and/or counterfeit cigarettes arriving from overseas, particularly from China, is also increasing. These knockoffs are particularly bothersome to the American tobacco companies, and could pose a significant risk to consumers. “You have no idea what’s in a counterfeit cigarette,” says a spokesman for Altria, which produces Marlboro and other cigarettes. Rabbit feces, rat droppings and dirt have all been observed in counterfeit cigarettes, says Sutton, who notes that manufacturing typically takes place in old factories, in caves or underground.

Public health officials believe there is no reason to oppose Obama’s tax proposal.

Higher cigarette taxes encourage Americans to quit smoking; smoking rates decreased by more than 10 percent after the 62-cent-a-pack federal tax increase in 2009. Moreover, smoking costs society a large amount of money—nearly $200 billion a year in lost productivity and medical costs, according to the U.S. Centers for Disease Control. The dollar amount is peanuts; however, compared to the nearly 500,000 lives lost each year to cigarette smoke.

Source: AP

Rocky Mountain Plunge: SEC Charges Denver Businessman with Insider Trading

The United States Securities and Exchange Commission today charged a wealthy Denver businessman with insider trading based on proprietary information he procured from the CEO of an oil company that was about to secure a prominent investment.

An investigation by the SEC found that Scott Reiman procured inside information regarding Delta Petroleum before the company’s announcement that it had received a $684 million investment from private investment company Tricinda. Following the announcement of the investment, Delta Petroleum stock jumped almost 20 percent and Reiman reaped substantial profits.

To settle the charges, Reiman agreed to pay roughly $900,000 and accept a barring from the securities industry and from services as a director or officer of a public company for at least five years. In addition to the charges filed against Reiman, the SEC also filed charges against Reiman’s source, then CEO Roger Parker, and a trader, Michael Van Gilder.

“Reiman illegally took advantage of confidential information that he procured through his friendship with Parker and traded the company’s stock for significant and illegal profits,” said Daniel Hawke, Chief of the Securities and Exchange Commission’s Market Abuse Unit.

According to the complaint filed by the SEC, Reiman is founder and manager of the Denver investment firm Hexagon. Reiman received numerous tips from Parker regarding Tracinda’s investment in Delta Petroleum. On several occasions during the winter of 2007, Reiman purchased Delta stock or risky option contracts after speaking with Parker, including once within a few minutes after ending a phone conversation with Parker.

The SEC charged Reiman with violations of the Securities Exchange Act of 1934; Reiman neither denied or admitted the charges filed against him. Instead, Reiman agreed to pay disgorgement of roughly $400,000 plus interest of nearly $94,000 and a penalty of $400,000. The charges also prohibit Reiman from serving as a director or officer of any public company for at least five years and from acting in any role within the securities industry. Reiman is awarded the right to apply for reentry into the industry after five years.

Source: Sec.gov

Inflation is Extremely Low Right Now: Is it Time to Worry?

Prices of common goods are not going up very much, but should we celebrate?

The answer to this inquiry is: not exactly. Inflation that is too low could be a terrible sign for the United States economy, and some officials within the United States Federal Reserve are starting to get concerned.

Talking with reporters on Wednesday, St. Louis Fed President Mr. James Bullard looked to the Fed’s favored measure of inflation—amount of personal consumption expenditures, minus energy and food—which has recently revealed that prices rose up 1.3 percent over one year ago.

“This figure is pretty low,” Bullard said at a Levy Economics Institute meeting. “I am getting concerned about this figure, and I think that provides the F.O.M.C with room to work-out its monetary policy.”

The Federal Reserve typically aims to keep inflation around 2 percent per year; inflation at this level is deemed healthy as it coincides with legitimate economic growth, a growing labor market and gradually rising wage rates.

“the history of our economy has shown that our markets perform best with slightly higher levels of inflations such as 2.5 or 3 percent,” said Bernard Baumohl, the chief global economist for the Economic Outlook Group. “Dormant or low inflation translates into a stagnant economy.”

There are a few key reasons as to why low inflation is a bad economic indicator. First, when companies do not have any leeway to raise price, they are more apt to cut costs, which would mean a reduction in their workforce or a cutback in hiring. Second, if inflation remains low, consumers are not as motivated to spend. Third, when inflation is low or dormant, it does not offer a considerable buffer against deflation if an economic event takes place. And lastly, low inflation often comes along with lower revenue growth and wages.

The Federal Reserve has kept its short-term interest rate close to zero since 2008. When this rate was not enough to boost the economy, it launched several bond-buying sprees in an attempt to lower long-term interest rates. The Fed is now operating its third round of asset purchases, buying over $85 billion in mortgage-backed securities and Treasuries each month. This program remains highly controversial, and many are speculating about when the Fed will start to ease its bond purchasing habits.

From Rogue Trader to Locked Up

The United States Securities and Exchange Commission charged a former employee at a Connecticut brokerage firm with scheming to profit from placing unauthorized orders to purchase Apple stock. When the ploy backfired, it ultimately caused the firm to cease operations.

David Miller, an institutional sales trader, has agreed to a partial settlement of the SEC’s charges. Moreover, Mr. Miller pleaded guilty in a parallel criminal case.

The United States Securities and Exchange Commission alleged that Miller misrepresented to Rochdale Securities that a customer had agreed to the Apple order and assumed the risk of loss on the resulting trades. The customer order was to buy 1,625 shares of Apple, but Miller instead entered a number of orders totaling 1.625 million shares at a cost of nearly $1 billion. Miller was hoping to share in the customer’s profit if the trade proved to be profitable, and if the stock price dropped he would claim that he made an error on the size of the order. The shares of Apple would up decreasing after a poor earnings announcement later that day, and Rochdale was forced to halt operations in the wake of covering the losses suffered from the illicit trades.

“Miller’s scheme was brazen, deliberate, and ultimately poorly-conceived,” said Daniel Hawke, the Chief of the SEC Enforcement Division’s Market Abuse Unit. “This is an alert and a wake-up call to the brokerage industry that unchecked conduct of even a single person in a position of trust can pose a tremendous risk on a firm and potentially to the broader markets.”

The complaint filed by the United States Securities Commission charged Miller with violations of Section 17 and 3 of the Securities Act of 1933 and Section 10 of the Securities Exchange Act of 1934 and Rule 10b-5. To settle these charges, Miller will be prohibited in SEC administrative proceedings from working in the securities industry or participating in any dealings or offerings of penny stocks. In the partial in-court settlement, Miller agreed to be enjoined from future violations of antifraud provisions of the U.S. federal securities laws. Moreover, a financial penalty will be assessed at a later date by the court system upon the SEC’s motion.

Source; United States Securities and Exchange Commission www.sec.gov

Social Media Shutdown: Wall Street Cracks Down on Facebook Posts and Tweets

Several states in the U.S. have banned companies from monitoring employees’ social media accounts; however, FINRA wants to introduce an exception for financial firms.

Despite a dozen or so laws that prevent the practice, a Wall Street regulator is seeking for wiggle room to keep close tabs on stockbrokers’ social network entries.

The Financial Industry Regulation Authority, which is a self-regulator for brokerage firms, says investors must be protected; if brokers are chatting about stocks on Twitter and Facebook, FINRA is responsible for ensuring that they comply with Wall Street policies.

These policies involve everything from requiring brokers to disclose conflicts of interests, to guaranteeing they are not recommending a stock in company forums and trashing the company via other mediums. In order to keep firms and stockbrokers in line with said policies, both the Unites States Securities and Exchange Commission and FINRA require broker-dealers to keep a detailed record of all “business communications.”

If brokers are using social media for these types of communications, FINRA claims that firms are required to access said social media accounts. At the beginning of this year, FINRA sent letters to 10 states whose laws banned such monitoring; states instituted these types of legislation after a number of instances where people were terminated because of ill-advised Facebook or twitter posts.

“Banning access to social media accounts conflicts with a firm’s responsibilities to comply with federal requirements and threatens investor protection,” said FINRA in a letter released earlier this year.

Supporters of the social-monitoring bans claim that the government is going down a slippery slope; these individuals opine that if your employer can check your Twitter or Facebook posts to make sure that you are abiding by the rules, what is to stop them from looking through your photos for incriminating evidence.

Regulators understand the impact social media can have on an investor’s decision; however, figuring out how to manage social-media posts has the SEC and FINRA playing an ugly game of catch-up.

Source: SEC.Gov

Stocks Bounce Back After Fake Tweet

After briefly plummeting thanks to a fake tweet sent by the Associated Press saying there were explosions at the White House, stocks bounced back to end the day on a positive note.

The Associated Press said its Twitter Account was hacked, and stocks quickly rebounded. Meanwhile, positive readings on the housing market and strong earnings announcements by several companies overshadowed the disappointing news regarding the pace of global growth.

The S&P 500, the Dow Jones Industrial Average, and the NASDAQ all closed roughly 1 percent higher.

Shares of the heavily shorted Netflix surged nearly 25 percent today, after the streaming video service reported robust subscriber gains on Monday.

Travelers Companies helped boost the DOW as shares climbed more than 2 percent after the insurer reported a substantial increase in profits. Moreover, shares of Coach surged over 10 percent after the retailer posted better-than-expected sales and earnings.

Airline companies were also making waves this week due to concerns regarding flight delays at airports resulting from the government’s forced sequester. That said, Delta Air Lines and US Airways shares rose nearly 5 percent after both companies reported stronger than expected first-quarter profits.

After the bell, Apple reported earnings that surpassed expectations, increased its quarterly dividend by 15 percent and boosted its stock repurchase program. Shares of Apple initially increased approximately 5 percent in after-hours trading, but the gains lost momentum and turned during the evening hours.

AT&T also reported earnings in the afternoon; the telecommunication giant’s earnings were in line with estimates, but revenues failed to meet forecasts. As a result, shares of AT&T fell in after-hours trading.

Earnings have been a primary focus this week as investors seek to grasp any good news they can; however, this does not mean economics concerns have disappeared. Markets are coming off the worst week of 2013 last week primarily due to tepid economic data. Many analysts expect the economy to show several more signs of slowing this spring as budget cuts and higher taxes impact consumer spending.

Investors; however, were greeted with a strong housing market news as the Census Bureau reported a rise in new home sales of 1.5 percent in March to a yearly rate of 417,000. This news boosted shares of a number of home builders, including Toll Brothers, the Pulter Group and Lennar Corp.

Time to Start Worrying: Apple’s Profit Slips 18 Percent

Apple’s older, cheaper devices have long been popular with consumers; however, those discounts have pinched the company’s historically strong profits.

Apple’s profit dipped 18 percent last quarter, and its gross profit margin declined by nearly 10 percent. Although the tech giant’s earnings failed to meet Wall Street’s expectations, its margins came in far below their forecasts.

Shares of Apple initially jumped 5 percent in after-hours trading, but the gains lost momentum and turned flat later in the evening.

Squeezed profits have long been a troubling trend for the tech giant as many customers are opting to purchase older iPhones and the cheaper iPad mini—devices that are less profitable to Apple.

Without a legitimate, market-impacting new device, investors fear that the trend sill persists. Apple’s stock has dropped by nearly 25 percent so far in 2013, a phenomenon that CEO Tim Cook considers “very frustrating to everyone involved.”

Apple addressed disgruntled investors today by increasing its cash hoard to $144.7 billion, and announcing that it plans to hands some of this cash back to shareholders by increasing the quarterly dividend to $3.05 per share. This announcement came after activist shareholder David Einhorn pressured the tech giant to stop hoarding its cash and provide increased value to shareholders.

What’s more, Apple increased its stock buyback plan to $60 billion from $10 billion; the company claims it is the largest stock buyback in Apple’s history and that the tech giant will issue debt to finalize it.

All of this information serves as a welcome distraction from less than exemplary product news. Issues with the company’s supply chain have plagued the latest shipments of iPhones, an ongoing issue that Apple mentioned on its conference call with investors.

Despite the lousy news, Apple still managed to sell over 37 million iPhones last quarter, compared to 35.1 million in the same quarter last year. While this is a large amount of smart phones, Apple typically doubles its smart phone sales over the year.

For the present quarter, Apple expects sales of approximately $34.5 billion, which would fall well below analysts’ median estimates of $38.2 billion. Apple expects its margins to continue declining to roughly between 36 and 37 percent.

Source: SEC.GOV

Stocks Bounce Back