Newsletter: California Inc.: Stop the presses — another writers’ strike is looming
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.
Trading resumes Monday after investors saw the first economic report card of the Trump era. It wasn’t pretty. The economy grew at its slowest pace in two years. Total economic output — a.k.a. gross domestic product — increased at just a 0.7% annual rate from January through March as consumer spending posted its worst performance in more than seven years. The economy grew at a 2.1% annual rate in the fourth quarter of last year.
LOOKING AHEAD
Bullet train: The California High-Speed Rail Authority will hold a closed-session board meeting in San Francisco on Monday to consider appointing a new chief executive. The current chief, Jeff Morales, announced on April 21 that he will be leaving in June after a five-year tenure that saw mixed results in moving the $64-billion bullet train project forward. Construction on the first rail segment began in late 2015, but the project has fallen about seven years behind schedule.
Writers’ strike: On Monday, the contract of the Writers Guild of America expires. If a new deal is not reached, television and movie writers could go on strike as early as Tuesday. The guild, in negotiations with the Alliance of Motion Picture and Television Producers, is seeking pay increases, including bigger residuals for shows streamed on Netflix and Amazon, and increased employer contributions to its health plan, which has faced deficits in recent years.
Interest rates: Federal Reserve policymakers meet Tuesday and Wednesday to consider whether to raise interest rates again. At their last meeting in March, Fed officials agreed to increase a benchmark rate a quarter-point, the second boost in three months. The Fed has signaled that it expects to raise rates three times this year, and many private economists believe that the next rate increases might occur at the June and September meetings.
I am Groot: Hollywood loves to return to formulas that have worked before, as this week’s big release shows. The summer movie season gets its official launch Friday with the release of “Guardians of the Galaxy Vol. 2,” which is expected to open in the neighborhood of $150 million in the U.S. and Canada. The original, starring Chris Pratt as a cocky space outlaw, Vin Diesel as a giant tree and Bradley Cooper as a talking raccoon, was the surprise summer hit of 2014, with an opening of $94 million.
Bikers unite: The Quail Motorcycle Gathering, the West Coast’s premier annual motorcycle event, convenes Saturday in Carmel. Several hundred of the finest examples of American, European and Japanese craftsmanship will compete for prizes. The event was launched nine years ago by Gordon McCall, who wanted an upscale biker event to mimic the automotive-themed Quail Motorsports Gathering that accompanies the annual Pebble Beach Concours d’Elegance.
THE AGENDA
The sweeping tax overhaul plans from President Trump and House Republicans attempt to address an enduring mystery of the economic recovery: Why are U.S. businesses, flush with cash, so unwilling to spend it? Some say businesses are still running scared from the Great Recession and that slashing the corporate tax rate and making other changes in the tax code could spur businesses to spend more. But, aside from the difficult politics of enacting a major tax overhaul, the proposed changes still might not be enough to get hesitant businesses to open their wallets.
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:
Tax plan: Racing to convey a sense of momentum to President Trump’s sluggish legislative agenda, the White House unveiled a plan for what it called “one of the biggest tax cuts in American history,” just ahead of the administration’s symbolic first 100 days in office. The one-page outline, touted as an overhaul of the tax code, bears the hallmark of other early Trump proposals: a broad-brush overview of bold goals rather than a fully baked policy proposal.
Net neutrality: The nation’s top telecommunications regulator unveiled a plan to dismantle the tough net neutrality rules for online traffic that Democrats pushed through in 2015 over the objections of major Internet service providers. Net neutrality regulations are designed to ensure the unfettered flow of online content. They prohibit broadband providers from slowing Internet speeds for some content or otherwise discriminating against any legal online material.
Airline payout: United Airlines settled with Dr. David Dao over injuries he received when he was dragged off one of the carrier’s planes on April 9. Under the terms reached by the airline and Dao, the amount of the settlement will remain confidential, according to Dao’s attorneys. Separately, the airline announced policy changes to reduce overbooking and to offer as much as $10,000 to people who willingly give up their seats.
Dole IPO: Less than four years after its billionaire chairman, David H. Murdock, took Dole Food Co. private — and snookered investors in the process, a judge said — the company is once again planning to tap the public markets. The Westlake Village fruit and vegetable company, controlled by the 94-year-old Los Angeles-area resident since 1985, outlined its intentions for another initial public offering in a regulatory filing last week.
Unwell Wells: Wells Fargo shareholders got a chance to vent their frustration over the bank’s sham accounts scandal, and they delivered a stinging rebuke to the San Francisco financial giant’s board of directors. At the company’s annual meeting, shareholders reelected the bank’s board members — but with remarkably little support, denying the kind of near-unanimous approval that directors at large public companies are accustomed to.
WHAT WE’RE READING
And some recent stories from other publications that caught our eye:
Nutritional claim: A new book says a little known class of plant proteins known as lectins — found in many fruits and vegetables — could be the real bad guy in our diet. But the Atlantic wonders whether the claims of author Steven Gundry are just a way to sell books. “Book publishers are rarely held accountable for publishing invalid health information. Rather, there seems to be an incentive to publish the most outlandish claims that purport to upend everything the reader has ever heard.”
Security for sale: For those trying to stop immigrants from entering the country illegally, the recent Border Security Expo in San Antonio was the place to be, reports Bloomberg. Vendors vying to win deals with the U.S. Customs and Border Protection department used the expo to show off the latest in guns, all-terrain vehicles, facial recognition software and battery-operated drones.
Dark Web: Ross Ulbricht thought he could create an Internet site that would revolutionize the illicit drug business, reports Vanity Fair. “What if there were a Website, like Yelp, that rated buyers and sellers, so that exchanges would be fair and more transparent? There would be fewer fatal overdoses, he reasoned.” But soon his creation — Silk Road — became a site where people trafficked in hacking tools, illegal weapons and poisons.
Air ride-share: Uber Chief Executive Travis Kalanick says the company will start using flying cars by 2020. That’s just three years away, but Wired says it’s not an unrealistic timeline. Uber has deals with five companies building electric vertical-takeoff-and-landing aircraft. “Kalanick apparently wants to play the role of Elon Musk, who came up with the idea for hyperloop and is letting everyone else figure out how to make it work.”
SPARE CHANGE
Let’s face it: Flying cars have been a movie staple since the Paleolithic era. The first one I encountered, to my childhood delight, was this classic. More recently, we’ve gone airborne with Bruce Willis and Harry Potter. But it goes without saying that filmdom’s greatest flying car is this one.
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.
