Tax Planning Tool Shows Impact on Retirement Plans

MassMutual on Tuesday launched a tool for advisors working with small business owners to help show their clients the way tax changes that take effect this year will impact their retirement plans.

The program, Solutions for Taxing Times, includes a run-down of 2013 taxes and their effect on various income levels and suggested talking points to help simplify conversations with clients. A calculator is also available to estimate potential tax savings and account balance at retirement.

The program also helps advisors identify which of their small-business clients are most likely to need help.

“Tax-advantaged retirement plans can be structured to show small businesses how to contribute a larger percentage of eligible compensation, thus reducing their tax impact while helping them to save more for retirement,” Thomas Foster, national retirement spokesperson for MassMutual’s Retirement Services Division, said in a statement.

“Our driving principle is to allow Americans to retire on their own terms,” Foster (right) told ThinkAdvisor on Thursday. “We approach that by engaging employers and educating employees.”

Foster said MassMutual surveyed advisors across channels to find out what issues are affecting their ability to grow. The survey found taxes, health care and participants’ retirement readiness are the major challenges advisors face.

Foster said advisors wanted guidance on tax planning issues in a “simplified, focused manner. We spend a lot of time on theory, but not a lot on practicality,” he said.

To address advisors’ concerns, Foster said, “we identified certain new taxes and isolated them by adjusted gross income.”

MassMutual then created a “cumulative peak” to show how those taxes would affect various income levels.

Some of those taxes include a 2% increase on Social Security taxes; a 0.9% surtax on Medicare and earned income for people with an adjusted gross income higher than $200,000; changes to allowable personal exemptions and itemized deductions at the $250,000-$300,000 level; and higher capital gains rate for the $400,000-$450,000 level.

MassMutual’s program includes graphs to show the increase, Foster said, then provides an example of how an individual would be affected in 2013 compared to what they paid in 2012.

“It gives them a way to engage with their CPA,” Foster said.

In addition to the online tools, which can be accessed at MassMutual’s website, other tools like postcards are also available. “We found one delivery system isn’t a good way to reach people,” Foster said. “Any tools we offer can be accessed multiple ways.”

AT&T Adds Back-Up for Windows Phone8 - Analyst Blog

The second-largest U.S. carrier, AT&T Inc. (T), has extended its mobile content storage facility for smartphones running on Microsoft Corporation's (MSFT) Windows Phone8 OS (operating System).

Termed as AT&T Locker, the storage facility is based on the cloud and offers 5GB of back-up space for mobile content. The new application comes with an easy upload feature, which allows AT&T customers to upload images, videos, documents and music files automatically from the Windows Phone to AT&T Locker.

The photos and documents are transferred via AT&T wireless network or Wi-Fi and are stored on the cloud-based facility, in a secured location. Customers can also share their images on social media like Facebook and Twitter directly from AT&T Locker.

The application is already available for AT&T customers using Apple Inc.'s (AAPL) iPhone or Google Inc.'s (GOOG) Android-based smartphones. AT&T Locker is available for free to Windows Phone8 customers, with an option to buy additional space for high data users.

Presently, AT&T's website does not show the Locker option for Windows' customers. AT&T customers can download the storage application from the Windows phone app store. Navigating the application is also quite easy. Apart from having dedicated pages for images, music and files, users can access the 'More' page to set up their own social media sites.

Arch rival, Verizon wireless, has already introduced cloud-based data storage and restoring facility for its Android and iOS customers, with the former having an additional ability to save call logs and messages. However, Verizon offers only 500 MB free storage and charges for additional space.

Such apps will satiate the demand for high data storage capacity of the U.S. customers, who use their smartphones to share and store photos and videos extensively. Additionally, AT&T Locker will be beneficial for customers who are not satisfied with the 7GB of free stor! age provided by SkyDrive.

Currently, AT&T carries a Zacks Rank #3 (Hold).

The Role Of Luck And Skill In Investing

Michael Mauboussin is head of Global Financial Strategies at Credit Suisse and the author of several books, including The Success Equation: Untangling Skill and Luck in Business, Sports and Investing (Harvard Business Review Press, 2012). He and I spoke about the role skill and luck play in investing.

Charles Rotblut: A big theme in your recent book is the distinction between skill and luck. Could you explain what the difference between the two is?

Michael Mauboussin: One of the ways I like to think about this is as a continuum of activities from pure luck and no skill on one end to pure skill and no luck on the other end. Obviously, most things reside somewhere between the extremes, and where an activity sits can be very important. But before we get going, it is important to define the terms.

I'm going to define skill right out of the dictionary: The ability to apply one's knowledge readily in execution or performance. You know how to do something, and when you're asked to do it, you can do it effectively.

Luck is much more difficult to define. It actually spills into moral philosophy pretty quickly. I'm going to say that luck exists when three conditions are in place. Number one, it operates on an individual or an organizational basis, such as you or your team or company. Second, it could be good or bad. By that, I don't mean to suggest that it is symmetrical, as in it could be equally good or bad. But rather there is a plus sign or a minus sign. The third thing is that it is reasonable to expect that a different outcome could have occurred. If those three things apply, then you're in a situation where luck exists.

Not surprisingly, when you look out into the world, whether it's business, investing or your favorite sports team, both skill and luck are contributing. The real question is, in what proportion?

CR: Do you think investors confuse the two when looking at their own performance, in that they think they are skillful when they have actually gotten lucky?

MM: There is actually a very interesting test to determine if there is any skill in an activity, and that is to ask if you can lose on purpose. If you can lose on purpose, then there is some sort of skill. Investing is very interesting because it is difficult to build a portfolio that does a lot better than the benchmark. But it is also actually very hard, given the parameters, to build a portfolio that does a lot worse than the benchmark. What that tells you is that investing is pretty far over to the luck side of the continuum. That is the first important thing.

The second thing is that luck is a very difficult thing for us to deal with psychologically. The main reason has to do with a part of your brain in the left hemisphere. If you give it any effect, it will immediately and effortlessly come up with a cause. That part of your brain knows nothing about luck. It only knows about causality. So it attaches skill to positive outcomes and it attaches lack of skill or maybe bad luck to poor or negative outcomes. So there is this kind of disconnect between what happens in the real world and how our mind interprets those events.

And to your question, we tend to associate good outcomes with good skill alone and that's often simply not the case. And bad outcomes are not necessarily associated with bad skill either. It's a very tricky relationship to understand clearly.

CR: If someone is following a set process of picking stocks or bonds and it doesn't do well, is this a case where the investor should look at how the strategy has performed in the past and if it has worked well, just attribute the poor performance to luck turning against them?

MM: For sure. Part of what I talk about in the latter part of the book is how to improve one's skill. What I argue is that when you're on the skill side of the continuum, your output and your skill are very closely related to one another.

If I want to know if you're a good violin player or a good tennis player, I can listen to you or watch you play and I can tell quite quickly. When you move over to the luck side, it becomes process-oriented and probabilistic. For example, there is a standard strategy for blackjack. You may play your cards properly and lose the hand, which is just bad luck, or you may play your cards foolishly and win the hand. So the connection between the quality of your skill and the outcome is broken. There, you really have to focus on process.

How do I know if my process is any good? Number one, has it worked in the past and is it economically sound? Number two, I think of good processes as having three essential elements. Element one is analytical: having an ability to find situations in which you believe something the world doesn't believe and in which you have a good foundation for such a belief.

The second is behavioral: we are all subject to behavioral mistakes and cognitive biases. Are you aware of those things and are you taking steps to manage or mitigate them? The third, which is less true for individuals and truer for organizations, is what I call institutional. This element relates to the constraints in your personal or professional life that don't allow you to do the best thing possible in terms of your process. If you have a good analytical process, are aware of behavioral issues and organizational issues are not a problem, then you typically can develop a pretty effective process. If you've done that and you get a bad outcome in the short term, you pick yourself up, dust yourself off and you go back at it the next day because over time the process will lead to success.

CR: What about for investors who haven't really thought about whether their strategies have worked in the past? How do they go about seeing if their strategies make sense?

An ETF for muni bond exposure

Given the great and increasing difficulty of finding good income alternatives these days, we find no surprise in the fact that lately, investors have been flocking to the iShares S&P National AMT-Free Municipal Bond Fund (MUB).

No small wonder. This ETF's current yield is 2.7 percent as it's designed to deliver the price and yield of the U.S. municipal bond sector according to the S&P National AMT-Free Municipal Bond index.

Plus, because it invests in munis, which means that interest on these bonds is exempt from U.S. federal taxes, the effective yield is indeed much higher.

Moreover, as is evident from the index name, the fund is avoiding municipal bonds that carry coupons taxable by the Alternative Minimum Tax — for example, "private activity bonds" that corporations issue to fund public projects like airport terminals, hospitals or industrial parks. Therefore, the effective yield in the end is higher still.

To sum it up, the ETF invests in investment-grade state and local government bonds exempt from U.S. federal income taxes. While investors can still be subject to state income taxes, their exposure to the Federal and AMT tax is minimal by design.

One caveat: its holdings tend to have slightly longer durations than your typical, shorter-maturity municipal bond funds, making this ETF more sensitive to interest rate fluctuations.

But be careful here: as demand continues to move higher, the yield on munis has entered a pronounced downtrend. This derives from both the investors' need for income and their growing appetite for risk.

Normally, this would indicate that investment risk of these issues has declined (in the fixed income world investors generally get compensated by extra yield for taking extra risk).

However, the enormous demand for yield, especially tax-advantaged one, has consequently skewed the risk/return profile of these munis: they now compensate investors as if the risks of holding these bonds have declined, when in fact they have risen.

One risk is that the still-weak economy casts doubts on the future ability of some states to meet some of their obligations.

While not as low a risk as its current yield indicates, the ETF remains attractive for its effective yield. Plus, the MUB portfolio invests in higher-quality bonds: 86 percent of its total assets are rated A or better.

The fund's portfolio is spread across many states and sectors. At present, its top states are California, New York, Texas, New Jersey and Massachusetts, with the first two dominating as about 41 percent of the fund is invested there.

The fund's current average bond maturity is about 6 years; it now holds nearly 36 percent of its portfolio in issues maturing in five to ten years, 14 percent in paper coming due in 10 to 15 years, and nearly 8 percent in bonds maturing in 15 to 20 years.

Little more than 7 percent of the portfolio matures in less than one year, and nearly 28 percent matures in one to five years. Somewhat overpriced, MUB still looks interesting as its after-tax yield, especially for higher-income earners, remains relatively high.

Shhh! Quieter GM H.D. pickups get 38-hp boost

How about 38 extra horsepower for free? That's what General Motors is getting from the gasoline V-8 engine in its new-generation, 2015 heavy-duty pickups.

GM says it has boosted the published rating of the 6-liter gasoline V-8 in its Chevrolet Silverado 3500 and GMC Sierra 3500 -- the so-called one-tons -- heavy-duty pickups to 360 horsepower. That's up from the 322 hp it announced when it unveiled the trucks in Texas Sept. 26.

The same engine in the Silverado and Sierra 2500 models -- aka three-quarter ton -- is rated 360 hp.

Researching why the two engines had different ratings in substantially similar trucks, in response to a an inquiry from USA TODAY, GM found that the trucks could pass government noise regulations while the engines were running faster, allowing it to use the higher rating for the 3500 models, according to GM powertrain spokesman Tom Read.

The heaviest-duty pickups -- the 3500 series -- fall into a category that has required them to meet the same "pass by" noise regulations that apply to even heavier-duty trucks, the cab-chassis rigs that are the basis for ambulances, tow trucks and other commercial models.

To keep the noise down, an automaker sometimes must keep the engine running slower during the pass-by testing. It only can advertise the horsepower the engine makes at that reduced speed, even though the engine might make much more power when revved faster.

The noise rules haven't applied to the 2500 series vehicles because they are in a different category. Now, Read says, the 3500s are quiet enough running under hard throttle to pass the noise restriction.

"No longer do we need to 'de-rate' the full-size pickups, as we have done for over 20 years, because new technology and design make them quiet enough at full power to pass the noise test," Read explained.

As a result, "we are revising our information for the 2015 model year" 3500-series pickups, he said.

The heavy-duty versions of GM's new-generation full-size pickups go o! n sale first quarter of next year as 2015 models. The standard-duty models -- designated 1500 and sometimes called half-ton models -- have been on sale since the summer as 2014 models.

The 2500 and 3500 account for about 25% of all Chevrolet Silverado and GMC Sierra sales. Within that, the 2500 models are 75% to 80% of the mix. The 3500 models are the balance.

Usually powered by diesel engines, heavy-duty pickups have a broad array of buyers. They range from those who need simple work trucks with more capability than standard-duty pickups, to people who tow horse or race-car trailers all over the U.S. They want something powerful enough to shrug off nine or 10 tons hitched behind, even on hills, and they buy leather-lined, tech-infused interiors to keep them comfortable while doing it .

Boosting ratings due to a regulations issues is rare, perhaps unique. On the other hand, automakers over the past few decades have had to cut power ratings as new rounds of testing were conducted to verify compliance with tightening government fuel-economy and emissions regulations.

And several times lately automakers have had to cut their advertised fuel-economy ratings after the government discovered they were too high.

Is Western Digital Among the Best Stocks to Buy Now?

Solid-state disk drives may be the future, but they haven't taken over just yet. This week, Western Digital (NASDAQ: WDC  ) introduced a 1.5 terabyte portable magnetic drive for laptops and a variety of other formats, a move that could make it one of the best stocks to buy now.

While Apple and even Seagate Technology have increased their bets on SSD, Western Digital is poised to profit from PC makers hesistant to introduce too many premium-priced laptops into the market.

Think specifically of Dell (NASDAQ: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) , both of which offer SSD machines but whose customers are more price sensitive, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video. Having access to Western Digital's higher-capacity drives should allow them to cater to budget-savvy customers that are still hungry for high performance, Tim says.

Do you agree? Please watch the video to get Tim's full take, and then let us know whether you believe Western Digital is one of the best stocks to buy now.

This stock computes
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out more in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

MAKO Surgical Notches Another Legal Victory

MAKO Surgical's (NASDAQ: MAKO  ) legal wins just keep stacking up.

Just last month, the company not only settled a trade secrets lawsuit on its own terms with competitor Blue Belt Technologies, but also resolved a patent infringement complaint it brought against U.K.-based Stanmore Implants for uncanny similarities between its own RIO System and Stanmore's Sculptor RGA.

Curiously enough, the resolution of the latter complaint ended with MAKO acquiring Stanmore's robotics technology for less than $1 million. Meanwhile, Stanmore agreed to withdraw itself from the surgical robotics market completely.

Then again, these cases were offensive moves by MAKO designed to make sure their competition would play fair. Even so, I'm sure most shareholders would agree that it would be a lot less stressful if the company hadn't needed to get involved in these legal matters in the first place.

As I noted earlier this month, however, management was also facing a courtroom challenge from other shareholders who alleged they were misled by last year's over-inflated RIO System sales projections. Of course, anyone who kept track of MAKO in 2012 remembers what happened after they missed their own lofty expectations:

MAKO Total Return Price data by YCharts

"Forward-looking statements"
Last week, however, according to a report from the South Florida Business Journal, the courts reminded shareholders the importance of owning their investing decisions.

More specifically, a Southern Florida District Court judge dismissed one of the aforementioned class action lawsuits after pointing out MAKO's "2012 sales projections were accompanied by meaningful language that cautioned investors that these 'forward-looking statements' may not be on target."

Going further, the judge elaborated by writing:

The warnings in the defendants' press releases and the referenced SEC filings warned investors of precisely what happened here: that projected system sales and procedures might be lower than projected due to the economic downturn, variable sales and a reluctance on the part of orthopedic surgeons to adopt the new technology.

What's more, the judge also ruled that comments made by management during investor conference calls were also protected as "forward-looking statements," and there exists no evidence at the time they were aware they wouldn't be able to meet their goals.

Foolish final thoughts
Of course, management's seeming ignorance was one of the very reasons fellow Fool Brian Stoffel told us last December that MAKO wouldn't remain in his 2013 portfolio, but I personally remain encouraged that the company seems to have finally adjusted investors' expectations with reality -- especially on the heels of two consecutive decent quarters.

However, regardless of how effective any given company is at selling you on its prospects, remember these businesses are run by imperfect people who may not always be able to deliver on their promises. In the end, then, don't take those monotonous Safe Harbor Statements as a time to zone out until the real conversation begins. Instead use them as a reminder that your investing decisions -- both good and bad -- are your own responsibility.

Zero to hero?
Sitting near all-time lows, has MAKO Surgical's robotic surgery growth story rusted over? To help investors answer this question, Fool.com analyst and MAKO expert David Meier has authored a premium research report covering all of the must-know details on the company, including key areas to watch and risks looming in the future for the medical robotics company. Claim your copy by clicking here now.

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More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Solid economic news puts tapering back on the agenda

Friday's surprisingly robust jobs report has triggered fresh debate about dialing back the Federal Reserve's $85 billion-per-month quantitative easing program.

The report showed that the U.S. economy added 204,000 jobs in October, 70% above the consensus estimates of 120,000 new jobs. It also included upward revisions for the jobs reports from both August and September.

The positive data followed a Thursday report showing that the economy was growing at 2.8% clip, or about 40% above what analysts were forecasting.

Meanwhile, the unemployment rate on Friday was adjusted slightly higher to 7.3% from 7.2%, an increase that market analysts see as an anomaly related to the recent government shutdown.

“I think the Fed can take some confidence from these reports and really put tapering back on the table,” said Dan Heckman, fixed-income strategist at U.S. Bank Wealth Management.

“I wouldn't be surprised to see a taper announcement from the Fed this year and with tapering starting in January,” he added. “There are good reasons to go ahead with tapering now, and it is certainly going to be a topic that gets moved to the front burner and will be more on the minds of investors.”

(But Fed’s Lockhart says Fed can’t rule out QE tapering next month.)

As if on cue, the bond market took the jobs data and treated it as tapering announcement, driving the yield on both the 10-year and 30-year Treasury bonds up about 14 basis points in early trading. Meanwhile, stocks rallied, with the Dow Jones Industrial Average climbing 95 points, or about 0.6%, to 15,688.56 by afternoon. The S&P 500 index added nearly 1%.

“The market is saying we probably should have tapered in September, and that's why we're getting the sell-off in Treasuries now,” said Dan Toboja, vice president of fixed income at Ziegler Capital. “I think this latest data definitely puts tapering back on the table. Right now, the market is telling you it's ready for tapering and it's giving you an excuse to do it now.”

One of the major wrinkles with regard to tapering is the impact of the head fake that Fed Chairman Ben S. Bernanke threw the financial markets in September by not beginning to taper after implying in May that such a move would be imminent.

“This time around, I'm not sure you'll see the same kind of buildup you saw in September when the markets thought there would be some tapering,” said Cam Albright, director of asset allocation at Wilmington Trust Investment Ad! visors.

Mr. Albright, who believe there now is a 50% chance of a tapering announcement this year, said any Fed action will still be heavily data-dependent and will be driven especially by the next jobs report, which comes about 10 days before the December Fed meeting.

The other major wrinkle that could be stalling tapering activity is the fact that Mr. Bernanke is expected to pass the Fed chairmanship to Janet Yellen on Feb. 1.

That reality has sparked a new level of handicapping around the unprecedented five-year quantitative easing program, which has already swelled the Fed's balance sheet to beyond $3 trillion.

“If Bernanke were going to remain, tapering would certainly be back on the table now, but it all has to do with the transition of power at the Fed, and that's one of the reasons they didn't taper in September,” said Sean Clark, chief investment officer at Clark Capital Management Group.

“Janet Yellen's stamp will be to begin tapering at her will,” he added. “And there's a potential for her to make Bernanke look hawkish by comparison.”

And then there are those like Dan Veru, chief investment officer of Palisade Capital Management, who believes the Fed's motivation for tapering has gone well beyond the stated dual mandate of managing inflation and employment.

“I don't want to make too much out of two discreet pieces of specific data, but 200,000 is not enough to force the Fed to start tapering,” he said, referring to the number of jobs added in October. “I think it's wrong to assume that the liquidity is going away, because this decision to taper is also subject to political winds and there's another big budget debate coming in January.”

With tapering essentially off the table, Mr. Veru thinks the stock market can gain add another 3% to 5% between now and the end of the year.

The backburner theory is also supported by Paul Schatz, president of Heritage Capital LLC.

“Before the jobs report we were hearing consen! sus estim! ates that tapering would possibly start in March, but it could be as far away as June, but now suddenly people are saying tapering is back on the table,” he said. “I just don't believe one jobs report changes the Fed's plan.”

Mr. Schatz, who sees the stock market gaining at least another 2.5% by January, doesn't believe the economy is even strong enough to absorb any reduction on the quantitative easing program.

“I don't believe the market or the economy can stand on its own two feet year, so as long as there's no inflation I think they should increase quantitative easing,” he said. “In our economy right now, banks, housing, and everything is predicated on historically low rates, and if rates begin to spike imagine what that does. The fed cannot afford that ah-ha moment.”

NVIDIA to Return $1 Billion to Investors This Year

Graphics specialist and mobile chip maker NVIDIA (NASDAQ: NVDA  ) intends to return $1 billion of capital to investors this fiscal year, the company announced today.

The return will be in the form of share repurchases as well as dividends, including $100 million in stock being repurchased in the current quarter.

The company launched its quarterly dividend program in November 2012, and has since returned $200 million to shareholders to date. That total includes $100 million in stock buybacks and $100 million in dividends so far. Most of the $1 billion will be through the company's repurchase program. The company's quarterly dividend is $0.075 per share, amounting to about $50 million a quarter.

CEO Jen-Hsun Huang expressed confidence in NVIDIA's cash-generating capabilities, saying its strategies are gaining traction.

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L.A.'s Sunset Strip Goes Corporate: Whisky a Gone Gone

Michael Tullberg/Getty Images Los Angeles County's fabled Sunset Strip -- home to numerous legendary nightclubs -- is going corporate. Goodbye, Rat Pack and Guns N' Roses; hello, Marriott International (MAR). Gangsters and Guitarists Through a quirk of urban planning, the Strip -- a 1.6-mile stretch of Sunset Boulevard -- was part of unincorporated land within Los Angeles city limits (these days, it belongs to the micro-city of West Hollywood). As such, it was overseen not by the L.A. Police Department, but by the more lax County Sheriff's department. Entrepreneurs took advantage of this, and in the early 20th century the Strip soon became the hottest entertainment destination in the L.A. area, home to clubs, bars and the occasional house of ill repute. In the 1940s and 1950s its nightclubs frequently hosted the top stars of the era. Many a band across the subsequent decades rose to prominence playing joints like The Roxy, Whisky A Go Go (still going strong at 50), and the Viper Room. Throughout the world, the Strip was nearly synonymous with nightlife. So much so that, according to some, its name was cribbed by the burgeoning city of Las Vegas to title the strategic section of its main thoroughfare. For many years now, the heart of Las Vegas Boulevard has been known simply as "The Strip." The City That Sometimes Sleeps The Strip is not the only game in town for visitors. Close by is the gay mecca of West Hollywood's "Boy's Town" neighborhood, while the tiny city's location in the kernel of L.A. makes it the perfect springboard for visiting Hollywood, L.A.'s beaches, and the neighboring Beverly Hills. Tourism is big business for West Hollywood. Twenty percent of the municipality's fiscal 2013 take came from the transient occupancy (i.e., lodging) taxes levied on those visitors. This brought in a cool $18 million that year -- 18 percent higher year over year, by the way -- making it WeHo's No. 2 revenue source. And there's more where that came from. Last year, West Hollywood hotels collectively had an occupancy rate of 82 percent, according to industry watcher STR. This is much higher than the 2013 national figure of 62 percent, as calculated by the American Hotel & Lodging Association -- indicating that there's plenty of room for growth. Here Come the Hoteliers So it's no surprise to learn that some big names in the sector are very interested in West Hollywood, and where better to build than its famous street? A host of hotel projects on the Strip are in various stages of development. Developer CIM Group has cleared a pair of parcels on either side of the intersection of busy La Cienega Boulevard and the Strip. One is to be home to the 286-room four-star James Los Angeles hotel, comprised of a pair of 10-story towers. The other parcel will be the site of residential buildings. Meanwhile, across the street from The Roxy, the sun will rise on an Edition Hotel, Marriott International's boutique brand. The company plans to construct an Edition boasting nearly 200 rooms, which should open in 2017. Marriott has partnered with industry veteran Ian Schrager on the Edition line. Schrager is a co-founder of Morgans Hotel Group (MHGC), and that company's flagship Southern California property is the Strip's Mondrian Hotel. The Last Encore? The wave of hotels threatens to obliterate the Strip's smaller businesses, which include some places that give the stretch its character and reputation. According to Bloomberg, a division of engineering company AECOM Technology (ACM) is aiming to build a complex on the eastern end of the Strip anchored by a 149-room hotel. At the moment, that land is occupied by the local iteration of Live Nation's (LYV) House of Blues concert hall chain. According to a spokesman for the club, it is finding a new location. The building itself will probably suffer the fate of the Strip's first theater, the nearly 50-year old Tiffany. That venue was razed by CIM Group last year to make way for its La Cienega project. That seems to be the trajectory of the neighborhood -- fun stuff out, lodgings in. Across the street from Whisky A Go Go lies the Hustler Store, the main retail outlet of the notorious porn empire. Like House of Blues, it's packing up and moving elsewhere. In the Bloomberg article, a West Hollywood Community Development Department official speculated on what the future of the building could be. It might, he mused, be torn down to be replaced by -- yep -- a new hotel project. More from Eric Volkman
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Americans still hesitant to spend more

NEW YORK (CNNMoney) Americans' incomes are rising, but they aren't spending their extra cash.

Personal income rose 0.4% in May, according to the Bureau of Economic Analysis. It may not sound like much, but it marked the fifth straight month in a row that incomes rose. Not only that, but incomes are rising faster than inflation -- an encouraging sign that people are gaining more buying power.

After accounting for both taxes and inflation, disposable income is up 1.9% from a year ago. This is an important development because consumer spending drives the bulk of the U.S. economy.

But here's the catch: Consumers haven't been going out and spending. Instead, they're choosing to sock that money away.

After accounting for mildly higher prices, consumer spending has actually fallen for two months in a row. In May, Americans cut back on eating out, going to the movies, and buying clothes. They spent less on necessities like groceries and utilities. Meanwhile, health care spending has fallen considerably since the beginning of the year, and has now been flat for two months in a row.

The few exceptions to these trends include spending on housing, gasoline and cars, which are rising.

"Consumers bought more homes and cars, saved a little more for a rainy day, and ...that was about it. Not much left for anything else," said Jennifer Lee, senior U.S. economist with BMO Capital Markets.

  Pritzker: minimum wage is insufficient

As of May, Americans were saving about 4.8% of their monthly income.

To put that number in perspective, consider two extremes: Befor! e the recession in 2005, when many Americans were overextending their finances, they were saving less than 3% of their income each month, on average. At the height of the crisis in 2009, they became more conservative, saving about 6% of their income. We're now in between those two levels.

Looking further back through history, the savings rate was at its highest level on record in the early 1970s, when it was in the 12% to 14% range.

What it means for the Fed: Prices are rising and the job market is improving, but the economy remains far from robust. Federal Reserve Chair Janet Yellen has made it clear that she's watching a variety of indicators, including wages, to determine when the Fed should start to pull back on its stimulus efforts.

In a press conference last week, she said that she expects to see wages rise faster than inflation this year, thereby increasing Americans' take-home pay. That, in turn, should boost consumer spending and the broader economy this year.

"My own expectation is that as the labor market begins to tighten, we will see wage growth pick up," she said.

But if that fails to happen and wages don't keep up with inflation, she would worry about consumer spending falling.

As of May, inflation is up 1.8% over last year, falling below the Fed's target for 2% inflation.