2015/11/30

Are We Doomed?

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Monday, November 30, 2015 | Issue #2685
Where Were You When Richard Nixon...

image... put an end to the gold standard, and the petrodollar-era began? Think back... that was more than 40 years ago. But for the first time since Nixon's presidency, the dollar might experience another major shift. Click here to see exactly what's about to happen.


America's Crumbling Infrastructure (And the MLP Working to Fix It)

David Fessler, Energy and Infrastructure Strategist, The Oxford Club


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David Fessler Each year, the average American motorist spends an estimated $324 on car repairs. Many are caused by America's rough roads. Which is why the American Society of Civil Engineers (ASCE) calls them "pothole repairs."

If you live in a state where the ground freezes, spring potholes are just something you have to live with. But they're part of a much larger issue...

America's crumbling infrastructure.

Right now, the ASCE report card for America's infrastructure is a D+. Globally, that's 16th in overall quality.

Why is America's infrastructure in such bad shape? The answer is simple: We ignore it.

Water supply and wastewater pipes are generally buried underground. Those are easy to ignore. We don't notice the underside of bridges and what exposure to road salt does to the steel beams.

It's even easy to ignore potholes... until you hit one.

Funding America's road repairs really shouldn't be a problem. The U.S. has a national gasoline tax. Those tax dollars go into the federal Highway Trust Fund.

The problem is, every year, Congress has to pass an emergency bill to make the fund whole again.

And at the moment, no one can seem to agree on a long-term fix.

Look! These Insiders Are Collecting Massive Royalties...

Ralph Marlow collected a lump-sum payout of $71,120 on February 12, 2015... Kevin Stratford scored $83,556 on May 7, 2015... and Fredrick White took the mother lode with $155,237 on August 6, 2015.

Where is all this coming from? Shockingly, from a wealth stream organized by John D. Rockefeller over 100 years ago. Since then, it's increased payments every year we have on record. A total payout of $583,000,000 is coming within days, and even average Joes can receive a share. Here's how.

A Proposed Tax Increase

Back in July, Representative Tom Rice, R-S.C., introduced legislation that would hike the federal gas tax by $0.10 per gallon.

Drivers would receive a $133 income tax credit to offset the impact of higher pump prices. Unfortunately, Rice's bill simply trades a tax credit for the additional tax raised.

The legislation went nowhere.

A better approach might be to raise the gasoline tax by one or two cents per gallon each year. The average driver wouldn't notice the difference.

Instead, we now find ourselves in a situation where the $0.184 per gallon tax can't cover the expense of fixing America's crumbling bridges and roads.

It's not just roads and bridges, either. Our trains can't go fast without the risk of derailing. Meanwhile, Japan recently celebrated the 50th anniversary of the Shinkansen, its famed bullet train, which routinely hits speeds of up to 200 miles per hour.

The U.S. has nothing remotely close to the Shinkansen. Our "high speed" passenger train is Amtrak's route between Boston and Washington, D.C. It can reach only 150 miles per hour for short stretches in Massachusetts and Rhode Island.

Why? Because railroads laid out the route over a century ago. Back then, trains never even came close to today's speeds.

In addition, many of the other components on the route are genuine antiques. We're talking overhead wiring dating back to the early 1900s.

Money Is the Problem

Winston Churchill famously said, "You can always count on Americans to do the right thing... after they've tried everything else."

In the case of our infrastructure, "trying everything else" amounts to doing nothing until the last possible minute. It then becomes a crisis, which is what we are facing now.

For years, politicians have argued about how to come up with the estimated $1.2 trillion needed to fix our roads and bridges. But in the meantime, it's the average American who is paying the price.

A recent study by the Texas A&M Transportation Institute determined that the average driver spends 42 hours a year sitting on the highway, going nowhere. That's twice as much as it was back in 1982.

And the cost of all those idling vehicles is absolutely staggering: $160 billion a year. That's money from lost productivity... extra fuel burned... and additional vehicle wear and tear.

However, many states aren't waiting around for the federal government to fund highway projects. They are raising state gasoline taxes to pay for them.

Here where I live in Pennsylvania, drivers can expect to pay $0.25 more per gallon by early 2017. That will push Pennsylvania's gas tax to the highest in the country.

As a result, the state has finally approved a much-needed highway widening project in eastern Pennsylvania. The state is going to widen a 10-mile stretch of U.S. Route 22 from four lanes to six.

The project was supposed to happen nearly 20 years ago.

Back then, the cost would have been $500 million. The state shelved the project,
"Winston Churchill famously said, 'You can always count on Americans to do the right thing... after they've tried everything else.'

"In the case of our infrastructure, 'trying everything else' amounts to doing nothing until the last possible minute. It then becomes a crisis, which is what we are facing now."
deeming it too expensive. Now, we are looking at a 10-year undertaking...

The cost? A whopping $2 billion - four times the original cost.

That's the problem with infrastructure. The longer you wait to fix, repair or improve it, the more it costs.

Are there any ways to invest in U.S. infrastructure as a pure play? Yes and no.

Right now, not a lot of money is available at the federal level for infrastructure spending. That may change after the end of next year when a new administration takes over in Washington.

But in the meantime, let's look at the Yorkville High Income Infrastructure MLP (NYSE: YMLI).

This is a relatively small market cap ($33.86 million) master limited partnership (MLP). However, it has a complete focus on U.S. infrastructure. The fund does sport a very nice dividend yield of 9.15%. But year to date, its units have fallen more than 38%.

Investing in this MLP now means you think infrastructure spending in 2016 is going to increase. I think it will eventually happen... but now might be a little early to buy Yorkville.

As an alternative, I personally like downstream energy MLPs like CVR Refining L.P. (NYSE: CVRR). After all, potholes or not, the American people still need to get where they're going... and they need oil and gas to do it.

CVR Refining is a small U.S. refiner that sports a fantastic dividend yield of 14.52%. In addition, its unit price has been on the rise.

Over the last three months, CVR's unit price has increased 20.73%. There are other downstream refiners like CVR. As I said, they are a good alternative to infrastructure funds... at least until we see Congress start to throw some real money at our crumbling infrastructure.

Let's hope they do it soon.

Good investing,

Dave

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Longtime readers know that Dave is a big fan of MLPs. Today, Investment U Plus readers are discovering one of his favorite plays - a partnership that yields more than 15%. To find out how you can get all the details, click here.

What You Need to Know About the NYSE's New Trading Rule


On February 26, the New York Stock Exchange will institute a rule that will affect the way you place buy and sell orders. Here's what you need to know. Read On...

Wind Power: A Huge Profit Opportunity for Investors


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X1 The Terrace - UK Property Investment

Dear Joel

 

I hope this e-mail finds you well.

 

I would like to follow up an enquiry you made with Knight Knox earlier this month for UK buy-to-let property investment.

 

Let me remind you about Knight Knox. We have brought to market 60 developments, 43 of which are completed and 10 under construction. Unlike most other investment companies, Knight Knox work in Joint Venture with 4 of the leading property developers in the North of England. Through being involved with each specific development from the moment the land is purchased, we are able to create an investment that maximises the profit achievable in that specific location. 

 

Two of our very experienced and trusted developers are detailed below:

X1 Developers

Fortis Developers

 

Is this the investment model you were looking for?

 

Please do let me know if you are still interested in Property Investments so that I can seek to assist you further. If you are no longer interested, please advise and I will happily close down your enquiry.

 

Thank you in advance for your response, and I look forward to hearing from you soon.

 

Kind regards

Steve

 

 

 

Stephen Bradshaw

Property Consultant

Knight Knox

Tel:

+44 (0)161 772 1370

Fax:

+44 (0)161 241 5360

Email:

sbradshaw@knightknox.com

Knight Knox - Market Leaders in Worldwide Property Investment

Watch our corporate video

Any opinion or advice contained in this
email is subject to our terms of business.

Knight Knox Limited is a company registered in England and Wales.

Registered number: 5236745. Registered address: Fifth Floor,

Quay West at MediaCityUK, Trafford Wharf Road, Manchester M17 1HH.

 

Nordstrom, Hollister get high marks for social media engagement

Facebook's big vision that ads will be better than no ads | Brands endure glitches to achieve authenticity on Periscope | "S-E-R-V-I-C-E" is the key to better content
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November 30, 2015
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Nordstrom, Hollister get high marks for social media engagement
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Andy Sernovitz is the New York Times best-selling author of "Word of Mouth Marketing: How Smart Companies Get People Talking" and the blog "Damn, I Wish I'd Thought of That!" He runs WordofMouth.org, where marketers and entrepreneurs learn to be great at word of mouth marketing, and SocialMedia.org, the community for social media leaders at the world's greatest brands.
 
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