275  7TH Ave  7th floor New York , NY 10001                                                                                                                dcullinanecpa@yahoo.com

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​Never in the history of the NFL have its ratings been so scrutinized. There’s an almost breathless feel to the way fans, team owners, advertisers and, of course, President Donald Trump now await the release of the figures.

That they were essentially mixed in the season’s third week is irrelevant. The obsession with the numbers, amped up by Trump’s condemnation of protests during the National Anthem, is a big headache for the National Football League and its hyper-protective commissioner, Roger Goodell.

For years, it was able to exert strong control over its own narrative. The league and its powerful media partners continuously burnished the brand as a mass-market symbol of American vitality, strength and exceptionalism.

The current commotion has, in totality, the opposite effect, reducing the NFL to the role of a sick patient looking for a proper diagnosis, a scofflaw institution deserving public shaming by the commander in chief. The reversal -- from heroic savior of Sundays to something in need of saving -- is proving difficult to shake off.

“The best thing for the NFL would be to divorce itself from politics and focus on making the game safer, more entertaining and appealing to everybody. But the environment they are in is so polarizing,” says Allen Adamson, head of BrandSimple Consulting. An NFL spokesperson declined to comment.

The ratings decline, which started during the 2016 season, isn’t an immediate problem for the league thanks to its long-term contracts with broadcasters.

Dissecting Statistics

The one with ESPN runs through 2021 and Fox, CBS and NBC are locked in through 2022. Any loss of audience between now and then is only a problem for the networks -- though it all could eventually catch up to the NFL, the country’s most profitable sports league.
In the meantime, seemingly everywhere you look on social media, some armchair ratings sleuth is dissecting the statistics and offering up a hypothesis about what’s gone awry with professional football. Obviously, it’s the pathetic quarterback play. Or, clearly, concern about players’ long-term health. Or the horrible refs, or the recent hurricanes, or the cannibalism of the live-game experience thanks to social-media highlights and the launch of the NFL RedZone. Or, somehow, millennials.

But the theory gaining the most attention right now is the silent protests during the anthem. It’s an argument Trump has been pounding. During a campaign-style rally on Sept. 22, he declared the ratings were “down massively, massively,” and pinned the blame, in part, on players protesting police brutality by taking the knee, as it’s called.

“Wouldn’t you love to see one of these NFL owners, when somebody disrespects our flag, to say, ‘Get that son of a bitch off the field right now,’” the president said. “Out! He’s fired.” He also suggested that rules designed to improve player safety were chasing away viewers. “They’re ruining the game!”

Culture Wars

Those comments touched off a weekend of heightened drama, featuring widespread sideline protests by players, coaches and owners, nationwide Twitter feuds and numerous statements by owners defending free speech. By the time Monday morning rolled around, the news media awaited Nielsen’s reports with a giddiness usually reserved for Apple product launches and federal job reports.

In the end, the ratings were a mixed bag. Over the weekend, CBS saw a boost versus 2016 and NBC and Fox experienced declines; ESPN’s ratings for the Dallas Cowboys’ victory over the Arizona Cardinals on Monday night rose 63 percent, helping lift league-wide viewership out of an early-season slump.

None of which did anything to staunch overheated reactions. “Fans are disgusted with the NFL, not only for politicizing the game they love but that league policies reveal a left-wing anti-American streak,” Breitbart reported in a story under the headline, “NFL Backlash: Sunday Night Football Hit With Season-Low Ratings.”

Trump renewed his barbs Thursday, telling the “Fox & Friends” show that “the NFL cannot disrespect our country.” The president said he’s spoken to NFL owners, who are trapped “in a box.”

“I think they’re afraid of their players if you want to know the truth,” he said.

The league and its 32 teams made $1.25 billion from corporate partners and advertisers last year, according to ESP Properties. For decades, big companies paid vast amounts of money to bask in the associative glow of the NFL’s perceived dynamism, passion and vigor. Now they’re paying vast amounts of money to bask in the fiery hell-broth of the culture wars.


Over the weekend, fans who agree with Trump shared lists of advertisers on social media networks while calling for boycotts along with hashtags like #PunchThemInTheWallet.

Richard Levick, a crisis communications expert, says the NFL deftly navigated the weekend’s challenges but expects no shortage of hazards ahead. “They showed a high level of unity and independence, respecting those who participated in the protests and those who didn’t,” says Levick. “In this era of hyper politicization -- which is being driven by the White House into everything from the Boy Scouts to the NFL -- there is no safe middle of the road.”

Over the years, Trump has tweeted about ratings hundreds of times, often in the context of bashing one of his perceived antagonists. including CNN, Morning Joe, the Emmys, Megyn Kelly, Barack Obama, Bill Maher and Arnold Schwarzenegger. The NFL could be forgiven for wishing the president would shift his critique elsewhere. Kelly does have a new show.

But for the time being, Trump is keeping his eye on the NFL. On Tuesday morning, he was back on Twitter. “Ratings for NFL football are way down,” he wrote, “except before game starts, when people tune in to see whether or not our country will be disrespected!”

He returned to theme on Wednesday as he left the White House to deliver a speech on tax reform, telling reporters the NFL is in trouble. “Their business is going to hell.”

Week four starts tonight. The Chicago Bears play the Green Bay Packers. Ratings are due out Friday. Tweets to follow.



Zogenix Inc. (NASDAQ: ZGNX) saw its shares more than double early on Friday after the company reported positive top-line results from its most recent late-stage trial in the treatment of Dravet syndrome. Considering the stock has more than doubled, it’s obvious this Phase 3 trial was passed with flying colors.

The Phase 3 trial for the investigational drug, ZX008, met its primary objective of demonstrating that it is superior to placebo as adjunctive therapy in the treatment of Dravet syndrome in children and young adults based on change in the frequency of convulsive seizures between the six-week baseline observation period and the 14-week treatment period.

Patients taking ZX008 achieved a 63.9% reduction in mean monthly convulsive seizures compared to a placebo. The median reduction in monthly convulsive seizure frequency was 72.4% among ZX008 patients, compared to 17.4% in placebo patients.

Not only did Zogenix nail its primary endpoint, but ZX008 also demonstrated statistically significant improvements versus the placebo in all key secondary measures, including the proportion of patients with clinically meaningful reductions in seizure frequency and longest seizure-free interval. These included:

Patients taking ZX008 achieved a reduction in mean monthly convulsive seizures of 33.7% compared to placebo.
The proportion of patients who achieved ≥50% reductions in monthly convulsive seizures.
The median of the longest convulsive seizure-free interval.

Joseph Sullivan M.D., director of the Pediatric Epilepsy Center in UCSF Benioff Children’s Hospital San Francisco, and Principal Investigator of Study 1 in the United States, commented:

Dravet syndrome is a rare, but catastrophic form of epilepsy that can be devastating for patients and their families. These results are truly exciting and demonstrate, in a large multicenter controlled trial, the impressive efficacy of low-dose fenfluramine for patients with Dravet syndrome. If approved, ZX008 could play an important role in treating this devastating condition.

Shares of Zogenix closed Thursday down about 8% at $12.88, with a consensus analyst price target of $24.67 and a 52-week range of $7.50 to $16.50. Following the announcement the stock was up more than 150% at $32.25 in early trading indications Friday.



​Once a brand has been established as one of the world’s best, dislodging it becomes something akin to Sisyphean. Of the top 100 brands in this year’s ranking by Interbrand, there are only three new entrants: Netflix Inc. (NASDAQ: NFLX), Salesforce.com Inc. (NYSE: CRM) and Ferrari N.V. (NYSE: RACE).

Ferrari may be one of the most recognizable brands on the planet, and its brand value of $4.9 billion represents about 23% of the company’s market cap. That’s on a par with top-ranked Apple Inc. (NASDAQ: AAPL), which sports a brand value of $184 billion, also equal to 23% of the company’s market cap. Ferrari’s brand value puts it at number 88 on the Interbrand list.

Salesforce.com, with a market cap of $68.2 billion, has a brand value of $5.2 billion, or 7.6% of its market cap. The company ranked 84th in the Interbrand study.

Netflix’s brand value of $5.6 billion ranks 78th on the Interbrand list, the highest of the three new entrants. With a market cap of $80.9 billion, the company’s brand value accounts for 6.4% of its market cap. Although the proportion of brand value to market cap appears low, the Netflix brand punches well above its weight.

Among a group of broadcast networks and to competing subscription video on-demand offerings — Amazon.com Inc.’s (NASDAQ: AMZN) Prime video on-demand and Hulu — Netflix’s brand recognition (65%) was more than three times higher than Amazon’s (20%) and more than four times higher than Hulu’s (15%) among millennials ages 18 to 26 in a recent survey conducted by ad agency Anatomy.

The same survey revealed that Netflix’s brand recognition among that demographic was more than double ABC’s, CBS’s or NBC’s (31%) and more than 1.5 times higher than Fox’s (40%).

In its report on the top 100 brands, Interbrand notes:

Enabled by technology, branded experiences are more powerful than ever. Technology has brought brands further into people’s lives. But don’t mistake proximity for engagement. Simply displaying ads on smartphones and social media or getting a voice assistant to broadcast your message isn’t a substitute for a real relationship.

The brand-building success of Netflix stems from its ability to associate its brand with a TV show and a major contributing factor to that is the company’s social media presence. When Anatomy reviewed posts from the brands included in their survey, Netflix published the three most engaging posts. One of these, a 55-second promotion for its “Death Note” show ginned up nearly 740,000 engagements.

Netflix has managed to build what Interbrand calls a “real relationship” with consumers.

​Shares of Conn’s Inc. (NASDAQ: CONN) saw a handy gain on Friday after one analyst changed its tune on the electronics store. While most retailers have suffered through a tough year so far, Conn’s stands out with its stock more than doubling in this year alone. In fact the stock has practically tripled in the past six months.

Oppenheimer’s Brian Nagel and David Bellinger upgraded Conn’s to an Outperform rating from Perform, with a price target of $40, implying an upside of 56% from the most recent closing price of $25.65.

The brokerage firm also lifted its full year (January 2018) pro forma EPS forecast to $0.70 from $0.22, which compares with a current Wall Street estimate of $0.65. Next year’s earnings estimate was raised to $1.80 from $0.40, versus a consensus figure of $1.38. Oppenheimer is introducing an “intermediate-term” EPS power estimate of $3.00.

Average sales per store at Conn’s have declined to about $10 million from a 2014 peak of nearly $14 million. Conn’s is now “lapping” the impacts of tighter lending standards. As a result, Oppenheimer is optimistic that now subdued unit volumes afford the chain and its forthcoming retail initiatives “room to run.”

At the same time, Hurricane Harvey has the potential to weigh upon retail and credit trends at the Texas-centric Conn’s in the near term.

Oppenheimer detailed in its report:

The past several years proved tumultuous for Conn’s, as the company struggled to balance its credit and retail operations, amid a fluid macro backdrop. We have stayed very close to the Conn’s story. In our view, now under the direction of new CEO Norm Miller, and his freshly assembled team of senior leaders, the Conn’s credit business is on a much more solid footing, and supportive of a return to expansion in retail. The market appears to meaningfully underappreciate the nearer- and longer-term EPS power of a better functioning Conn’s business model. Conn’s ranks with Lumber Liquidators (LL) as one our favorite speculative, small-cap turnaround plays in the Hardlines sector.

Shares were last seen up 7% at $27.50, with a consensus analyst price target of $26.25 and a 52-week range of $7.75 to $28.35.

​The tax reform blueprint Republicans unveiled this week would upend U.S. housing policy if it becomes law.

Even though the plan maintains a special tax break for homeowners called the mortgage interest deduction, other provisions of the framework would basically make it useless for all but the richest homeowners.

“This proposal will take away any tax benefit for owning homes for the vast majority of people who own homes,” said Gregg Polsky, a tax expert at the University of Georgia.

Mortgage interest and property tax deductions cost the U.S. Treasury more than $100 billion a year in lost tax revenue, expenditures that are bigger in dollar terms than any other housing program. The federal government spends about $50 billion annually on housing assistance for people with low incomes, an amount that still leaves millions of people on waitlists for rental assistance. The mortgage interest deduction, meanwhile, overwhelmingly benefits homeowners with incomes above $100,000.[House Speaker Paul Ryan (Wis.) and other Republicans unveiled their tax reform plan this week. It could have a big effect on the mortgage interest deduction.]
House Speaker Paul Ryan (Wis.) and other Republicans unveiled their tax reform plan this week. It could have a big effect on the mortgage interest deduction.

The National Association of Realtors, a powerful real estate lobbying group, commissioned a study earlier this year finding the proposal would increase taxes on middle- and upper-class homeowners and reduce incentives for homeownership, thereby shrinking home values by about 10 percent.

“Plummeting home values are a poor housewarming gift for recent homebuyers and a tremendous blow to older Americans who depend on their home to provide a nest egg for retirement,” NAR President William Brown said in a press release this week.

Lower housing prices can be bad for homeowners but good for renters, roughly a third of whom deal with unaffordable rents, according to the Joint Center for Housing Studies at Harvard University. Most American households are owner-occupied, though ownership rates have declined from a high of 69 percent in 2004 to 63 percent today.

The Republican tax reform outline actually maintains the mortgage interest deduction, but other parts of the plan seriously undermine it.

“They really leave it in name only,” Polsky said.

Current policy allows tax filers to choose whether they would like to reduce their taxable income by deducting the value of various expenses ― which is known as “itemizing” ― or would rather take a so-called standard deduction. For a married couple the standard deduction takes away $12,600 of their taxable income. The vast majority of filers go with the standard deduction because their expenses that would be itemized don’t exceed $12,600.

The Republican plan would raise the family standard deduction to $24,000 while eliminating most itemized deductions, including ones for local taxes. Homeowners could still itemize their mortgage interest payments and charitable donations, but only about 5 percent would have itemized deductions that exceed the value of the $24,000 standard deduction, according to NAR.

The doubled standard deduction would not necessarily be a better deal for all middle-class families, however. The Republican plan also calls for eliminating the “personal exemption,” which allows taxpayers to deduct $4,050 per family member from their taxable income. Some families with multiple children would benefit less from the higher standard deduction than they currently do from being able to claim multiple personal exemptions.  

In other words, the Republican tax plan could hike taxes on some middle-class families, a possibility one presidential adviser has acknowledged. And some Republicans in Congress are already chafing at repealing the deduction for state and local taxes. It’s unlikely that the tax framework released this week can get through Congress without a lot of changes.

Liberal policy groups have advocated converting the mortgage interest deduction into a creditthat more narrowly targets homeowners with lower incomes. Diane Yentel, president of the National Low Income Housing Coalition, said the Republican plan would only make the mortgage interest deduction “even more regressive than it is today.”




​Fannie Mae and Freddie Mac may one day stop paying billions of dollars in dividends to the U.S. government. But not today.

The mortgage-finance giants paid a combined $5.1 billion to the U.S. Treasury on Friday, extending for another quarter the government’s controversial sweep of their profits. The latest payments bring the total turned over since 2008 to nearly $276 billion, according to their regulator, the Federal Housing Finance Agency.

There could be change in the offing, however. FHFA Director  Mel Watt said in a letter to lawmakers on Friday that he’s working with Treasury on alternatives for the two companies, whose capital buffers are being wound down under the terms of their taxpayer bailouts.

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“FHFA is exploring with the Department of the Treasury a number of options,” Watt wrote to six senators including Sherrod Brown of Ohio, the Banking Committee’s top Democrat.

Speculation that Fannie and Freddie might skip the payments rose in recent months after Watt told lawmakers that he was considering directing the companies to keep capital. Such a move would be in defiance of Treasury Secretary Steven Mnuchin and other Trump administration officials.

Capital Buffers

Fannie and Freddie currently send nearly all profits to the U.S. Treasury and have capital buffers of $600 million each. Those buffers are set to fall to zero next year. From that point, any loss at one of the companies would require them to draw on about $258 billion in bailout money remaining under the bailout agreements.

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Watt has expressed concern that a draw on those funds could lead to a disruption in the mortgage market. Mnuchin and some senators countered that the government’s line of credit is sufficient and the dividends should continue.

Brown and five other Democratic senators wrote letters to Watt and Mnuchin earlier this month, asking them to let Fannie and Freddie build capital. In his response Friday, Watt reiterated his concern about the dwindling buffers and said FHFA was “committed to working with Secretary Mnuchin to address the issue.”

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Some shareholders of the companies want Watt and the Trump administration to let Fannie and Freddie recapitalize completely and exit government control. For his part, Watt has said any capital buildup would be small and only to protect against minor losses.

Corporate Tax

While the housing market is still strong, another wrinkle might add to Watt’s concerns.

The just-released Republican plan for cutting in the federal corporate tax rate from 35 percent to 20 percent could lead to more than $15 billion in losses at Fannie and Freddie. That’s because the two companies have more than $46 billion in “deferred tax assets” that would lose value if rates are cut.

Fannie’s and Freddie’s tax assets would drop in value by $19.8 billion if the tax rate fell to 20 percent, according to BMO Capital Markets managing director Margaret Kerins. Based on the companies’ average quarterly earnings over the last couple years, that could mean a one-time taxpayer bailout of more than $15 billion, Kerins said.

Lawmakers could agree to exempt Fannie and Freddie from the tax cut. If they don’t, it would likely take more than one quarter’s worth of earnings to protect against a bailout.

Watt is scheduled to testify for the House Financial Services Committee on Tuesday.