Newsletter: California Inc.: Is a player lockout up next for Major League Baseball?
Welcome to California Inc., the weekly newsletter of the L.A. Times Business Section.
I’m David Lazarus, and here’s a rundown of upcoming stories this week and the highlights of last week. The Dow Jones industrial average topped 19,000 for the first time last week as a long post-election rally continued to boost stocks, with investors betting on higher growth during the upcoming Trump administration. But trading volume has slowed, so this week will be a test of whether the market can maintain its momentum.
LOOKING AHEAD
Job action: Labor activists seeking a $15 minimum wage are planning protests at 20 airports, including Los Angeles International, and at McDonald’s restaurants in 340 cities on Tuesday. The event will include at least one work stoppage: About 500 baggage handlers, airplane cabin cleaners, janitors and wheelchair attendants at O’Hare International Airport in Chicago are planning to strike that day. The actions are being organized by the Fight for $15 campaign, which said it expects “tens of thousands” of people to participate in.
Entertainment business: “Hollywood Without Borders” is the theme of the fifth annual State of the Entertainment Industry Conference on Wednesday at Loews Hollywood Hotel. Amy Lemisch of the California Film Commission will provide an update on the California film tax-credits program, Zach Katz of BMG US will speak on challenges facing the music industry, and Ted Sarandos of Netflix will receive the 2016 Commitment to California Award. The event is the creation of the Hollywood Chamber of Commerce and the trade publication Variety.
Lyft suit: A federal judge will consider giving final approval Thursday to a $27-million settlement of a class-action lawsuit filed by Lyft drivers against the ride-hailing app company. The drivers contend they should be treated as employees, not contractors. U.S. District Court Judge Vince Chhabria gave preliminary approval to the deal in June. An estimated 100,000 drivers could be eligible for a portion of the settlement depending on how much they drove. Thursday’s court hearing will be held in San Francisco.
Lockout looms: Major League Baseball’s collective-bargaining agreement expires on Thursday and, with no new deal in sight, the sport could be on the verge of labor strife. Owners may lock out players if the two sides don’t reach a pact before Thursday’s deadline, Fox Sports reported last week. Baseball has had two decades of relative labor peace. The last work stoppage was the strike that canceled the 1994 World Series and extended into the next season. The current collective-bargaining agreement was reached after the 2011 season.
Employment outlook: On Friday, the Labor Department releases its latest report on U.S. jobs, a closely watched economic indicator. Analysts expect another solid month of growth, with the economy adding about 170,000 net new jobs and the unemployment rate holding steady at 4.9%. One issue that has been concerning policymakers: A drop in the number of men who are working. In all, about 7 million men ages 25 to 54 are neither employed nor “available for work,” putting them outside the labor force.
THE AGENDA
Mortgage rates have shot up. Bond yields have jumped to their highest levels in a year. And the dollar has surged against other major currencies to values unseen in more than a decade. Those developments have been fueled by expectations of stronger economic growth and higher inflation from Trump’s promises to cut taxes, reduce regulations and increase defense and infrastructure spending. Rising rates could provide some economic benefits, but economists warn they could slow home purchases and auto sales, boost the costs of U.S. goods abroad and make it more expensive for businesses and the government to borrow.
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:
Retail (r)evolution: There were fewer shoppers out in the early hours on Black Friday, with door-buster items in stock longer than last year. The fuller shelves reflected the evolving nature of American’s prime shopping day, as retailers pushed promotions to Thanksgiving Day and more shoppers opt to spend online. The bottom line: The once pivotal barometer of the holiday shopping season isn’t what is used to be.
Bank crackdown: The city of Los Angeles will ask banks that work with it to promise that they do not engage in sales practices that harm consumers, a move spurred by revelations of unauthorized accounts at Wells Fargo & Co. The motion, approved by the City Council, shows that the accounts scandal continues to dog Wells Fargo, which remains under investigation by a raft of state officials and federal agencies, including the Securities and Exchange Commission and Justice Department.
Big rig award: Wal-Mart intentionally failed to pay hundreds of truck drivers in California the minimum wage, a federal jury decided, awarding the drivers $54 million in damages and opening up the retail giant to penalties. The seven jurors returned the verdict in a lawsuit accusing the company of not properly paying drivers in accordance with California law for activities that included layovers and for inspecting and washing their trucks. Civil penalties will be determined by a judge.
Ratings comeback: There is no dancing in the end zone yet, but the NFL is seeing a post-election day bump in its TV ratings. The total Nielsen overnight ratings for NFL telecasts in Week 11 of the season were up 3% compared with last year, the first time in the 2016 season that viewing has increased. The most pronounced drops had been in the network prime-time games. Analysts have offered many explanations, including boring match-ups and cord cutting by consumers. Then there was the presidential election, which drew intense interest.
Bond blues: The market for tax-free municipal bonds, a favorite of many Californians seeking decent interest income, faces a rough road after Donald Trump’s White House victory. Bond prices have tumbled over the last two weeks, driving yields up and lowering the value of bonds held by investors. In part, the market fears that Trump and the GOP-controlled Congress will push tax reform measures that could make munis much less attractive to investors. A worst-case scenario, now revived, is that Congress could start taxing muni bond interest, though analysts doubt that will happen.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
IPO go slow: Quartz says this has been the worst year for initial public offerings since the Great Recession. “Only 49 companies headquartered in the U.S. had completed public offerings through the third quarter, raising a combined $7.2 billion.”
Texas tea: Bloomberg pays a visit to the Permian Basin in West Texas, where billions of barrels of oil may be waiting. It could be “the single largest U.S. unconventional crude accumulation ever assessed,” worth nearly $900 billion.
Daisy, Daisy: Fast Company notes that artificial intelligence is here, and we may have already lost control. “It’s not clear even from a technical perspective that every aspect of AI algorithms can be understood by humans,” says one expert.
Job security: Vanity Fair casts its eye on the banking industry and finds that things are looking up. No longer do bankers face the constant “fear of coming into work and shortly thereafter being laid off.”
Totally tubular: According to Wired, the reign of silicon in the tech industry may be coming to an end. Say hello to carbon nanotubes that could “be used to make chips that are six to 10 times faster than today’s silicon-based variety — and use far less electricity.”
SPARE CHANGE
Since Monday marks a return to work for many of us after a holiday break, here’s the deliriously loopy “Happy Working Song” from “Enchanted,” a cunningly sugarcoated subversion of the Disney princess genre.
For the latest money news, go to www.latimes.com/business. Until next time, I’ll see you in the Business section.
David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.
