As we approach the conclusion of this session, it is an incredibly busy time here in Madison. A slew of bills are generally offered during this time of the year by legislators across the state, and this session has proven no different. In the past several weeks I have introduced legislation designed to enforce child support obligations, limit state government from procuring goods or services from any company which does business in Iran, reforming our state’s W-2 system, asserting our Tenth Amendment rights on light bulb mandates, regulating predatory exterior contractors (or storm chasers) who have harmed our district, requiring financial literacy to be taught in our schools, and growing jobs with the establishment of a bail bonds system.

These bills will not all pass this session, but many will. More importantly, I am receiving bi-partisan support for many of these legislative pieces from not only members of our own caucus but also Democrats and Independents in the Assembly. Despite the clouds of partisanship that many in the media portray as the day-to-day reality in Madison, there is still business getting done for the benefit of our state and I am hopeful for more beneficial collaboration in the future. Common-ground is not always easy to find, but if we can all focus on the need to practice fiscal discipline while concurrently addressing the many issues that Wisconsinites of all political stripes face in the practical reality of day-to-day life our state will be a lot better off.

An Update on AB 450… Restoring our Economy

I am also pleased to let all of you know that AB 450 has been recently passed by the Assembly and signed into law by Governor Walker. Several e-updates ago I wrote about the merits of AB 450 and how it will decrease unemployment in Wisconsin. During these troubling economic times, it is important that we do all that we can to help alleviate the unemployment and underemployment in our state. We remain committed to increasing employment opportunities and to fostering a more positive job-growing business climate. Doing so will reduce our state’s financial unemployment obligations, increase our tax base, restore prosperity to the middle-class, and buoy morale in the midst of our national recession.

Specifically, this bill will allow Wisconsinites receiving unemployment benefits to take on part-time training jobs with employers looking for full-time employees down the road. What this bill seeks to do is to allow these hiring companies to see the skills of job-seekers while they establish relationships and acquire the training necessary for them to succeed during future full-time employment. Oftentimes I hear from employers who say that they do have jobs available despite the tough national economy. The problem seems to be in finding individuals who are qualified to fill these specialized jobs, and is further complicated when individuals who are out of work lack the resources to put themselves into academic programs which will provide this training.

I am confident that this bill will go a long way in solving both of these issues and in laying the groundwork for restoring our state’s economic vibrancy.

Last session Rep. Roys and Sen. Lassa teamed up and authored the BPA-Free Kids Act, which banned the toxic chemical bisphenol-A (BPA) from baby bottles and cups. The BPA-Free Kids Act passed with near-unanimous bipartisan support and banned the manufacture and sale in Wisconsin of children’s bottles and cups that contain BPA and required labeling.

Rep. Kelda Helen Roys issued the following statement:

“The passage of the BPA-Free Kids Act prioritized children’s health and safety over big chemical companies. The Baby Bedding Protection Act builds upon our work and further protects babies from toxic chemical exposure.

“Many bedding products contain harmful chemicals. Parents shopping for bedding have no easy way of knowing if bedding is safe. Parents deserve to know if they are buying products that could harm or negatively impact their baby’s development. We have a responsibility to protect the health and well-being of young children, who are more negatively impacted by chemical exposure than adults.”

Sen. Julie Lassa issued the following statement:

“These toxins are emitted by the bedding materials and can be inhaled and absorbed through the mouth and skin,” Sen. Lassa said. “PVC is a known carcinogen, and DEHP and PBDE cause internal organ damage and other diseases. These chemicals are already controlled in the United States, but consumers can’t be sure what chemicals may be in bedding produced in other countries. Parents need to be informed about these hazards so they can protect their children from these toxic chemicals.”

What the Baby Bedding Protection Act does

Requires conspicuously marked labeling on packaging of bedding products for children aged 3 and under if they contain any or all of the following chemicals

• PVC (polyvinyl chloride)
• DEHP [Bis(2-ethylhexyl) phthalate]
• PBDE (Polybrominated Diphenyl Ethers)

Penalties are the same as those that currently exist in state statutes for manufacturing or selling baby bottles and sippy cups that contain the BPA.

Toxic Chemicals and Their Effects

PVC

• Considered one of the most toxic and environmentally unfriendly plastics in use
• Made from vinyl chloride, which is a combination of petroleum (ethylene) and chlorine, and is a known human carcinogen
• Found in bedding products, it is usually combined with phthalates (see DEHP info below)

DEHP

• A type of phthalate used in the production of polyvinyl chloride (PVC) and used to make hard plastics, such as PVCs, flexible
• A probable carcinogen, according to the National Resources Defense Council.
• Like BPA, DEHP disrupts the endocrine system and is associated with reproductive harm
• Animal studies show that exposure to DEHP can damage the liver, kidneys, lungs and reproductive system
• Chemicals can leach out of the plastic so babies breathe them in and absorb them through their skin
• Products containing DEHP sold in Europe must be labeled with the “skull and crossbones” symbol and warning text reading “TOXIC”

PBDE

• A flame retardant used in plastics, foams, and fabrics, that is structurally related to PCBEs – which were banned in the 1970s
• Canada has banned two large groups of PBDEs
• US stopped production of this chemical in 2004, but it is still produced in other countries and used in products sold in the US
• EPA must be notified 90 days prior to manufacture or import, of any use of PBDEs in US products
• Concerns include bio-accumulation, limited biodegradability, and possible liver, thyroid, and neurodevelopmental toxicity

With all of the discussion in the media about Greece’s financial situation and the future of the European Union we thought we might take a look at the global economy and how it will impact the future of your investments.

According to the World Bank, global economic activity measured by the gross domestic product (GDP) of 193 countries in 2010 totaled $63 trillion dollars. The GDP of the United States in 2010 was $14.5 trillion dollars.  To put that in perspective, the next three largest economies were China at $5.8 trillion, Japan at $5.5 trillion and Germany at $3.3 trillion.

Based on these numbers, the United States accounts for approximately 25% of all global economic activity and the other 192 countries make up 75% of economic activity. As long as we are looking at statistics, according to CNN, if we rank global corporations by revenue then Wal-Mart would be the largest company in the world but 62 out of the top 100 corporations are domiciled outside of the United States.

This means non-US economies account for 75% of all global activity and 62% of the top 100 companies are foreign.  Yet, I would venture to say that most investors have less than 25% allocated to international investments. If that is the case in your investment portfolio, you might want to consider increasing your allocation to international investments.  It would be our position that a well-diversified portfolio, containing a proper allocation to international investments will provide you with better investment returns over time.

According to Morningstar.com, over the last 10 years, large capitalization foreign blend mutual funds averaged a 5.5% return compared to 3.8% return posted by the average large capitalization domestic blend mutual fund.  Remember that these are average numbers.  So if you are managing your own portfolio and you have done the right amount of homework that performance differential could have been even greater.

If we want to get more region specific, according to Morningstar, Asian funds with a ten year track record posted a 12% annualized gain over that period of time.  A substantial improvement over  the returns provided by domestic large cap mutual funds.

Investing internationally is not without risk.  International investments have higher volatility characteristics than large capitalization domestic stock funds. As such, investors you must be willing to deal with higher volatility in order to achieve higher long-term returns.

Bottom line for investors is that we live in a dynamic, complex global economy.  There are investment opportunities all over the world and if the emerging economies of China, India and Brazil continue to move forward, the investment opportunities will also continue to grow.

Remember to tune in Friday, February 24th on WFHR at 10:30am  when we will be presenting our monthly radio show ”Investment Insights from Buena Vista.” Also please go to our website to stay up on our latest thoughts, buenavistainv.com

Buena Vista Investment Management
241 Third Street South l Wisconsin Rapids, WI 54494
Phone: 715 422-0700

“I’ve had the opportunity to work with Attorney General Van Hollen on legislation protecting children from sexual abuse and holding perpetrators accountable for their crimes,” said Sen. Lassa. “I know that this is an area that he cares about deeply, which is why I hope he will proactively reach out to victims and law enforcement agencies, especially since these cases involve multiple local jurisdictions.”

A letter signed by the legislators urged Van Hollen “to take immediate action to investigate these allegations of child sexual abuse and to work with other law enforcement agencies to bring those individuals who sexually abused children to justice.”

“We know that, left unchecked, child sexual predators will reoffend,” the legislators wrote. “Research on pedophilia indicates that the average perpetrator will have between 80 to 100 victims over the course of a lifetime. This raises the real likelihood that many of these offenders are still in a position to abuse children. The concealment of these offenses may already have facilitated hundreds of additional crimes against young people. It is vital to immediately determine whether any of these documented crimes are still prosecutable under the statute of limitations, and in any case to identify all known perpetrators so they can be prevented from damaging any more young lives.”

The allegations of unreported cases and perpetrators were made on February 9 by attorney Jeffrey Anderson, who represents hundreds of victims who have filed suit against the archdiocese, during a hearing before U.S. Bankruptcy Judge Susan V. Kelley.

In addition to the unreported assaults themselves, the legislators also wrote Van Hollen, “[W]e ask that your investigation into these allegations of child sexual abuse also include anyone who participated in the concealment of these violent sexual crimes against children. There can be no leniency for those who, if these allegations are proven to be true, allowed innocent children to be sexually abused and victimized.”

“The sheer numbers of assaults and perpetrators make this a serious public safety crisis,” Sen. Lassa said. “As the state’s chief law enforcement officer, the Attorney General must act quickly to bring criminals to justice and prevent more children from being abused.”

She urged anyone who has been abused, or knows of abuse, to report the incidents to local law enforcement officials.

Sen. Lassa has introduced the Child Victims Act, which would eliminate the civil statute of limitations on child sexual abuse.

The following are excerpts of the letter:

The revelations reported in the Milwaukee Journal Sentinel on Friday, February 10, indicating that sealed documents filed in the Archdiocese of Milwaukee bankruptcy case document at least 8,000 instances of child sexual abuse and 100 alleged offenders who have not been previously identified by the archdiocese are nothing short of a public safety crisis. We are writing to urge your office to take immediate action to investigate these allegations of child sexual abuse and to work with other law enforcement agencies to bring those individuals who sexually abused children to justice…

The concealment of these offenses may already have facilitated hundreds of additional crimes against young people. It is vital to immediately determine whether any of these documented crimes are still prosecutable under the statute of limitations, and in any case to identify all known perpetrators so they can be prevented from damaging any more young lives…

A scan of the signed letter will be made available to news media at approximately 2:30 p.m. today, Monday, February 20. Please contact Senator Lassa’s office for interview requests or more information.

The bill is named for Caylee Anthony, whose mother, Casey Anthony, was found not guilty in Caylee’s death, despite the fact that she failed to report the child’s disappearance for over a month. The legislation would make it a Class I felony for a parent, stepparent, guardian or legal custodian to fail to report the suspicious or accidental death of a child. The bill would also provide a series of misdemeanor and felony penalties for failing to report the disappearance of a child within 48 hours, depending on whether bodily harm or death results.

Although current Wisconsin law does require reporting certain deaths, failure to do so is not a felony. Nor is there currently a penalty to fail to report a disappearance within a particular timeframe.

This bill also makes it a felony for an unauthorized person to move the corpse of a child, or to hide or bury a corpse with the intent to collect state benefits such as medical assistance and food stamps.

“This important bill is the result of an extensive bipartisan collaborative effort. It reinforces in statute the importance of promptly reporting a child missing,” said Rep. Kerkman. “I’m pleased that the bill passed unanimously today in committee and look forward to discussing it on the floor of the Assembly.”

“The Caylee Anthony case demonstrates that prosecutors need better means to pursue justice for children when their deaths are concealed by the adults who are supposed to protect them,” Sen. Lassa said. “This bill will send a clear signal that all parents and guardians have a responsibility to report the death or disappearance of a child promptly, and if they don’t they may find themselves in the criminal justice system.”

Caylee’s Law now goes to the full Assembly for approval.

“Unemployment among newly-returned veterans is at 13.1%, and even higher for vets under age 24,” Lassa said. “For disabled veterans, unemployment is around 50%. We need to do better for those who volunteer to go into harm’s way to serve our country. Obtaining a professional license can be a major obstacle to getting a job or starting a business. This bill will help remove that obstacle for veterans, and make Wisconsin an even more veteran-friendly state.”

Senate Bill 357 will allow veterans to be able to use their military training and experience to apply for state-issued professional licenses to become emergency medical technicians, nurse aides, electricians and similar professions. The bill requires that veterans demonstrate that the training they received in the military is substantially equivalent to the requirements for obtaining the license. “A veteran who’s trained and experienced at saving lives under combat conditions, for example, should have that experience count toward being an EMT in civilian life,” Lassa said.

“These measures will demonstrate our commitment to addressing the unemployment crisis among returning veterans at a time at which many more veterans will be returning from conflicts overseas,” Lassa said. “Given the sacrifices they’ve made for us, it’s the least we can do to help them reintegrate into civilian life.”

United States companies are replacing aging equipment and even moving overseas production back from low-cost foreign markets. This is happening at the same time China’s growth is slowing and Europe is in a slump. This type of activity leads one to think America may be in a position to take a bigger role in the world’s economic recovery.

Carlisle Companies, a small conglomerate that makes insulation, tires and restaurant supplies, plans to open two new plants in the U.S. and bring tire production back to the U.S. from China.

Rising wages overseas, higher transportation costs and the shipping time of goods from China is what prompted Carlisle to move production to Tennessee from China. Additionally, strong domestic growth led to Carlisle opening new factories in Seattle and Kingston, NY.

After keeping investment in equipment and over-all costs way down for the past several years, many companies are expanding capacity to meet rising demand. United Rentals Inc., the world’s largest equipment rental company plans to raise its capital spending by about a third, to $1 billion, this year as more construction and industrial companies are likely to increase their demand for equipment like elevated forklifts and backhoe loaders. Cummins Inc., which makes engines for trucks and heavy equipment, is boosting its capital spending to more than double the rate of two years ago.

Companies have a lot of cash on their balance sheets currently, which is due in part to the fact that they have delayed purchases over the last couple years. Economists expect capital expenditures, or capex, to grow in excess of 10% this year. This is significant because capex and hiring go hand in hand. Additionally, if company CEO’s weren’t seeing increasing demand in the marketplace, they wouldn’t be so willing to commit dollars to capex.

Fortune Brands Home & Security Inc., whose products include Master locks and Moen faucets, recently increased spending plans for 2012 to $80 million, up about 17% from 2011. Chris Klein, the CEO, said, “ The economy isn’t off to the races yet, but it is definitely firming up.”

Although the recovery may be weaker than many would like, it appears we are starting to see signs of steady progress in capital spending and job growth.

Remember to tune in Friday, February 24th on WFHR at 10:30am  when we will be presenting our monthly radio show ”Investment Insights from Buena Vista.” Also please go to our website to stay up on our latest thoughts, buenavistainv.com

Buena Vista Investment Management
241 Third Street South l Wisconsin Rapids, WI 54494
Phone: 715 422-0700

Town of Bancroft
9:00 -10:00
Town of Buena Vista Town Hall
6684 County Road BB, Bancroft

Amherst
10:45-11:45
Morning Star Coffee and Bistro
102 South Main Street, Amherst

Junction City
12:45-1:45
Junction City Village Hall,
1001 Main Street, Junction City

Stevens Point
2:00-3:00
University Wisconsin Stevens Point
Brewhaus Coffee Shop, Dreyfus Center 1015 Reserve St

Plover
3:15-4:15
Plover Village Hall Board Room
2400 Post Rd, Plover

Lassa was one of the initial supporters of the requirement that the cost-benefit analyses be performed for projects of more than $25,000 that are considered for outside private consultants and contractors, and worked to strengthen state government contracting laws to ensure quality of work and savings of taxpayers’ money. Assembly Bill 522, which is scheduled for a public hearing in the Assembly tomorrow, would eliminate that requirement for DOT contracts.

“I think it’s strange that while the Governor is trumpeting his Fraud, Waste and Abuse Commission, this bill would actually make it easier to waste taxpayer dollars,” Lassa said. “State audits have shown that the runaway privatization of highway projects is costing taxpayers millions and has resulted in reduced quality in some instances. The only purpose of the cost-benefit analyses is to protect taxpayers. We need to make the process stronger, not eliminate it.”

Lassa pointed to a 2009 Legislative Audit Bureau study of Department of Transportation contractor use which showed that in nearly 60 percent of cost analyses, in-house staff could perform work less expensively than outside consultants. A 2008 open records request by Sen. Lassa’s office revealed that the DOT had the equivalent of 950-1000 full-time equivalent positions that are filled by consultants.

“In 2009 the State Engineering Association analyzed 362 state highway project worksheets and found that the estimated cost for using engineering contractors was $5 million higher than using in-house staff,” Lassa said. “As legislators we are stewards of taxpayers’ money. If the cost-benefit analysis requirement is eliminated, the legislature is giving the green light to waste and inefficiency. Taxpayers can’t afford that. We need to make sure that we are using every dime of taxpayer money as efficiently and effectively as possible, and that requires that we continue to look carefully at the way the state spends money on private contractors and consultants. Unless this legislation is meant to be a stimulus bill for private contractors at the expense of taxpayers, AB 522 is a wrongheaded effort that will result in massive waste on state highway projects, and it needs to be defeated.”