Newsletter: California Inc.: The state mulls creation of a pot-industry bank
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m Business columnist David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week.
The trend continues: Steady if unspectacular economic growth. On Friday, the Labor Department reported that U.S. employers added 209,000 net new jobs in July. Average hourly earnings increased by 9 cents to $26.36, while the unemployment rate ticked down slightly to 4.3%, matching a 16-year-low first reached in May. And the beat goes on.
LOOKING AHEAD
Fox financials: Rupert Murdoch’s 21st Century Fox reports its quarterly earnings Wednesday. The announcement comes at a time when suspense is building in Britain over whether Fox will be able to pull off its long-held dream of owning a jewel of European broadcasting, the satellite television service Sky. At issue is whether the Murdoch family would have too much influence over the flow of news and information in Britain.
Banking on weed: Could a state-owned bank be the solution to California’s cannabis banking problem? State leaders, marijuana industry officials and others will hear more about that idea Thursday in West Los Angeles at talks on bringing California marijuana companies into the financial mainstream. The meeting of the Cannabis Banking Working Group will begin at 9:30 a.m. at the Sheraton Gateway Hotel.
Snap’s stock: Snap Inc., Los Angeles’ largest and best-known tech company, will reveal its second-quarter earnings Thursday amid concern over the firm’s falling stock price. After Snap went public in March, share prices rose above $29 a share. But in July, the stock price fell 22% and dropped below $13 a share last week. Analysts who follow Snap have said some of the decline is due to employees and early stakeholders selling some shares.
Movie debuts: On Friday, film fans get a slate of new choices. One debut is “Annabelle: Creation,” New Line Cinema’s horror movie sequel to 2014’s “Annabelle.” Meanwhile, Woody Harrelson and Naomi Watts star in the film adaptation of Jeannette Walls’ best-selling memoir “The Glass Castle,” the story of a young woman trying to break away from dysfunctional parents. And there’s “Good Time,” Josh and Benny Safdie’s look at a desperate New York man’s attempt to spring his brother from jail.
Blast off: Hawthorne-based SpaceX is set to launch supplies for NASA to the International Space Station on Sunday. The launch is scheduled for 9:57 a.m. PST at Kennedy Space Center. SpaceX’s Falcon 9 rocket will send a Dragon capsule filled with nearly 6,000 pounds of equipment, crew supplies, and more than 250 science and research investigations. The rocket’s reusable first stage will attempt a controlled landing at Cape Canaveral Air Force Station.
THE AGENDA
Monday’s Business section zeroes in on Republican efforts to roll back the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In the aftermath of the 2008 financial crisis, a consensus quickly developed in Washington: no more bank bailouts. But nearly nine years since the crisis, there’s no agreement on how to accomplish that goal. Republicans and Democrats continue to wrestle over the proper amount of regulation needed for Wall Street.
STORY LINES
Here are some of the other stories that ran in the Times Business section in recent days that we’re continuing to follow:
Unwanted insurance: New York’s state insurance regulator is investigating the recent revelation that Wells Fargo forced auto insurance policies on borrowers who didn’t need them — a matter that’s also drawing attention from Democrats on Capitol Hill. The San Francisco bank acknowledged it charged 570,000 auto-loan borrowers for the unnecessary insurance. The New York State Department of Financial Services has subpoenaed the bank’s records over those policies.
Health insurance: Amid uncertainty over the future of the Affordable Care Act, California officials announced that monthly premiums for health plans sold on the state’s Obamacare exchange will rise by an average of 12.5% next year. Covered California, the state insurance marketplace, provides coverage to about 1.5 million people, the majority of whom receive subsidies that lower their premiums under the Affordable Care Act.
Immigration crackdown: Federal immigration agents have shown up twice at California labor dispute proceedings to apprehend undocumented workers, in what state officials believe may be cases of employer retaliation. The Labor Commissioner’s Office, the state’s labor enforcement arm, said that since November U.S. Immigration and Customs Enforcement agents showed up at locations in Van Nuys and Santa Ana looking for workers who had brought claims against their employers.
Tesla’s latest loss: As Tesla begins ramping up production of its crucial Model 3 sedan, the company reported a second-quarter net loss of $401.4 million. The loss, which comes to $2.04 a share, was better than analysts had expected but still 37% higher than what the company reported in the same quarter last year. Tesla recorded revenue of $2.79 billion in the second quarter, up 34% from a year earlier.
Home loans: Mortgage lenders are making it easier to buy a house, reducing down payment requirements, easing rigid debt-to-income standards and allowing for more consideration of borrowers with student loans. Lenders are moving to relax some standards partly because they fear losing business as home prices and mortgage rates rise. But some worry that changes could put the industry on a slippery slope that could eventually lead to another bubble.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Staying put: A surprising number of Americans are stuck in places that hold little opportunity for economic advancement, reports the Wall Street Journal. Mobility of the U.S. population has reached its lowest level since the government started monitoring it at the end of World War II. “This drop in mobility is not only keeping rural residents from climbing a ladder to better livelihoods, it is choking off the labor supply for employers in areas where jobs are plentiful.”
E-money: Bloomberg describes how two brothers from rural Ireland brought the financial infrastructure of the Internet into the modern age. Patrick and John Collison, founders of Stripe Inc., created software that businesses can plug into their websites and instantly connect with banking systems. The hit software has attracted competitors. “Countless start-ups, big banks, and companies such as Google Inc. and Apple Inc. are trying to grab what pennies they can with their own systems.”
Diesel power: While many European countries are trying to phase out diesel over air pollution and health concerns, Germany is pushing to keep it, reports the New York Times. The country’s auto industry has invested heavily in diesel, which allows luxury cars to get better fuel economy. “As others have increased investment in electric cars and pushed tougher rules threatening diesel, though, German auto executives and political leaders ... appeared determined to rescue the technology.”
Growing concern: Few Americans have heard of the Chinese company known as HNA Group. But the influence of HNA is widespread and growing, reports Fortune. “To the business world at large, the presence of those three letters is another sign — if any is needed — that a little-known Chinese conglomerate with provincial roots has, in just a few years, transformed into a powerful global player with tentacles stretching across the planet.”
SPARE CHANGE
It’s always inspiring to see people who are really good at their jobs. The world of baseball gave us two such examples last week. One was this ballgirl working for the San Diego Padres. The other was this magnificent catch by Austin Jackson of the Cleveland Indians. As one of the announcers says, “My goodness.”
For the latest money news, go to www.latimes.com/business. Mad props to Scott J. Wilson for helping put this thing together.
Until next time, I’ll see you in the Business section.
