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Midday report: marlboro maker moves into e-cigarettes – dailyfinance

Lindsay lohan and leonardo dicaprio love them but are electric cigarettes really as safe as they claim?
Cigarette makers are embracing a non tobacco alternative.

Altria Group (MO) makes the Marlboro brand and is the world’s largest cigarette manufacturer. But sales of tobacco products have been in decline for years, so Altria and others are looking at electronic cigarettes to make up for some of their lost tobacco sales.

Getty Images Altria said last week that it plans to roll out an e cigarette later this year, as it tries to catch up to rivals who already have them on the market.

Lorillard (LO) has a leading brand blu eCigs. And Reynolds American is looking to expand sales of its Vuse brand. British American Tobacco is working on what it calls a new “tobacco inhalation device” that is not an electronic cigarette.

The market so far is pretty small. According to The Wall Street Journal, sales totaled just $500 million dollars last year less than one percent of tobacco sales. But the market for e cigarettes is expected to double this year, and continue to grow.

And with tobacco sales declining, the industry needs a new source of revenue. Altria reported that cigarette sales in the U.S. tumbled 5.2 percent in the first quarter, and the industry wide drop has been even steeper.

So how do these e cigarettes work, and are they really any healthier than traditional tobacco rolled cigarettes?

An advertisement we found on several popular websites lists some of the benefits. It claims e cigarettes do not have any tar, tobacco or carbon monoxide. It also says there is no second hand smoke.

The FDA is expected to release its report on e cigs any day now. It doesn’t currently regulate them, but is likely to push for that oversight responsibility. So far, it’s said only that “further research” is needed into the potential health benefits and risks.

As we said, Altria is starting from behind, but analysts say it can use its size and strength to quickly catch up. Some say an acquisition is likely.

While e cigarettes hold the potential to offset some of the sales declines, there’s also the possibility that they could accelerate that trend, by cannibalizing existing sales. But some estimates, 20 percent of all smokers in the U.S. have tried e cigarettes.

For smokers there are other benefits to the alternative. There’s no second hand smoke, you won’t small like a cigarette, and you could save money. Each cartridge, which roughly equals a pack of cigarettes, costs about $2 considerably less than the real thing.

• Warning stat The price of college textbooks is up over 800 percent since 1978.

  What the experts say “The cost of college textbooks has been rising at almost twice the rate of general CPI inflation for at least the last 30 years,” according to Mark J. Perry, American Enterprise Institute. “As Glenn Reynolds reminds us, ‘a process that cannot go on forever, won’t,’ and the college textbook bubble is certainly one of those processes.”

  By Business Insider

  Textbooks

• Warning stat First tier cities Beijing and Guangzhou saw home prices rise 3.1 percent in February, the biggest jumps in the country. Meanwhile, entire towns will go up in China with no inhabitants. These are China’s notorious “ghost cities.”

  What the experts say “There are obvious bubbles in the property market, and it is possible it will get out of control and crack,” according to Wang Shi, chairman of China’s largest developer.

  By Business Insider

  Chinese Housing

• Warning stat The “crypto currency” now trades at $63 double what it was at the beginning of March.

  What the experts say “In hindsight, the people who bid the price of Bitcoins up to $30 in 2011 may not have been so crazy after all. It just took the broader market, including me, a couple of years to catch up with them,” according to Ars Technica’s Timothy B. Lee. PHOTO Steve Jurvetson,

  By Business Insider

  Bitcoin

• Warning stat Investors recently bid a record $3.16 for each dollar of the $2.011 trillion in bonds the U.S. government auctioned in 2012, Bloomberg says.

  What the experts say “Long term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities,” warns economist Martin Feldstein. “When interest rates rise, as they surely will, the bubbles will burst, the prices of those securities will fall, and anyone holding them will be hurt.”

  PHOTO Wikipedia

  By Business Insider

  U.S. Treasury Securities

• Warning stat Between December 2012 and February 20130 when Congress proposed a new assault weapons ban Colorado background checks soared 102 percent. Gun sales in Maryland between December and January totaled 68 percent of all the state’s gun sales in 2010.

  What the experts say “We wouldn’t see the demand increase if there weren’t a ban, so we’re getting a bubble that’s caused by that demand increase due to the ban,” according to Mac Clouse, Denver University finance professor.

  By Business Insider

  Guns and Ammo

• Warning stat American farmland prices continue to grow at a blazing hot double digit rate. An industry group recently forecast that values could surge 15 percent to 20 percent in 2013.

  What the experts say “It doesn’t have all the hallmarks of a bubble,” according to Robert Shiller. “One of them is most people have never heard of it. In my view of a bubble, it’s something that gets people excited. Well, some people are excited, but most people don’t even know about it.”

  By Business Insider

  U.S. Farmland

• Warning stat January home prices surged 23 percent in Phoenix and 17.5 percent in San Francisco, according to Case Shiller.

  What the experts say “The real question in my mind is, ‘Are we possibly off to the races again?'” asked economist Robert Shiller. “I think in cities like Phoenix and San Francisco, we might be seeing something pretty big developing. People there are very speculative minded.”

  By Business Insider

  Phoenix and San Francisco Housing Markets

• Warning stat Casino magnate Steve Wynn bought Picasso’s “La Reve” in 1997 for $48 million. In March, he reportedly sold it to hedge fund manager Steve Cohen for $155 million.

  What the experts say “Art is in an insane bubble with many classic pieces going from $35 to $50 million and up,” warned Dow Theorist Richard Russell.

  By Business Insider

  Art

• Warning stat Gold has gone from around $1,000 per ounce in 2009 to around $1,600 today.

  What the experts say George Soros called gold the “ultimate asset bubble” in 2010 when it was priced at $1,275. We’re obviously still above those levels.

  By Business Insider

  Commodities

• Warning stat Health care spending has grown 2.5 times faster than incomes over the past 30 years.

  What the experts say “The health care system in the U.S. reminds us somewhat ominously of the bubble in housing finance, a ‘public/private partnership,'” says Citi’s Steve Wieting. “Housing consumption still receives strong tax preferences, as does health insurance (reflecting underlying health care consumption). Most aptly, prior to quasi nationalization, housing GSEs earned private profits from public subsidies for housing, as do U.S. health care providers.”

  By Business Insider

  U.S. Health Care

• Warning stat Europe stabilized after ECB president Mario Draghi said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

  What the experts say “To us the key word about the post summer 2012 Euro Area asset boom is that most of it is a bubble, and one which will burst at a time of its own choosing, even though we concede that ample liquidity can often keep bubbles afloat for a long time,” warns Citi Chief Economist Willem Buiter.

  By Business Insider

  Europe

• Warning stat Prices are up 47 percent year over year, and are sitting at an 8.5 year high of $432 per 1,000 board fee.

  What the experts say “Signs of a housing bubble in the world’s most populous nation may force the Chinese government to take measures to ‘draw air’ out of the rising housing market and to clamp down on construction lending, which would likely put a significant dent in the demand for building materials such as Lumber and Copper,” according to Mike Zarembski, OptionsXpress.

  By Business Insider

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• Warning stat College tuition is up around 1,115 percent since 1978. What the experts say Jeff Gundlach notes that not only have wages not increased commensurate with tuition inflation, wages have actually been falling. “What have all these soaring tuition costs got you?” asked Gundlach rhetorically.
  

  By Business Insider

  U.S. College Tuition

• Warning stat Craft beer production surged 15 percent year over year in 2012.

  What the experts say Boston Beer Co. founder Jim Koch says most stores have reached their limit for carrying new breweries, and that too many breweries are making similar beers without adding anything to the market.

  By Business Insider

  Craft Beer

• Warning stat Canadian home prices mirrored the U.S. housing rally. However, Canadian prices never fell. A recent Canadian Housing Affordability study says the country’s home market is 10 percent overvalued.

  What the experts say “I worry that what is happening in Canada is kind of a slow motion version of what happened in the U.S,” said Robert Shiller.

  By Business Insider

  Canadian Housing

• Warning stat The S&P 500 recently closed at an all time high, up 135 percent from its March 2009 low.

  What the experts say “What we find is that Bernanke does not have nearly as great a track record on inflation as he thinks he has. Greenspan could not see that the housing market was an inflated bubble. Evidently Bernanke cannot see that the stock market is an inflated bubble.”

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  U.S. Stocks

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