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Newsletter: California Inc.: Will the stock market’s roller coaster ride continue?

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From late 2016 through the end of last month, a key measure of stock market volatility — the VIX, also known as the “fear gauge” — edged lower. That’s changed.
(Getty Images)

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.

Markets are closed Monday for Presidents Day. We’ll see after that if volatility remains stocks’ defining characteristic. Happily, after two weeks of big losses, the market had its best showing last week since 2013.

LOOKING AHEAD

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Fed minutes: On Wednesday, Federal Reserve monetary policy makers release the minutes of their Jan. 30-31 meeting. The gathering preceded recent market turmoil but could help clarify to investors whether the Fed will nudge up its key interest rate again in March.

One to watch: Walmart, the nation’s largest private employer, reports its fourth-quarter results on Tuesday. They should indicate how the giant retailer fared during the crucial holiday season and highlight the company’s aggressive attempts to carve into Amazon.com’s lead in online shopping.

Jobless claims: Weekly unemployment claims will be released Thursday. Last week, it was reported that the number of Americans filing for jobless benefits rebounded from a nearly 45-year low but remained below a level indicating a tight labor market.

Popcorn time: The biggest movie opening this week is Paramount’s “Annihilation,” which bows Friday. It’s a cerebral sci-fi drama starring Natalie Portman and directed by Alex Garland, who hit it out of the park with the stylish “Ex-Machina,” one of the best robot films in years.

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THE AGENDA

Stocks boom, bust and boom again. But what if they weren’t so volatile? For more than a year, that’s how things looked. From late 2016 through the end of last month, the S&P 500 climbed more than 30%, while a key measure of stock market volatility — the VIX, also known as the “fear gauge” — edged lower. The abrupt reversal of the last few weeks has focused investors’ attention on why things finally snapped and whether baroque, derivative bets on the fear gauge may have contributed to the recent tumult.

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:

Social media 101: If Russian trolls wanted to disrupt a presidential election, they would tailor social media posts, buy targeted ads and monitor their messaging — in short, follow textbook usage of American tech platforms. That’s one of the key takeaways from special counsel Robert S. Mueller’s indictment against Russian nationals and companies that allegedly sought to aid Donald Trump last year.

Welcome to L.A.: Prominent Silicon Valley venture capitalist Peter Thiel is moving permanently to his home in Hollywood. An outspoken conservative, Thiel has long tried to nudge America’s tech industry rightward, with little success. He’s gained few friends in the largely progressive-minded valley with his backing of President Trump.

Netflix hit: The streaming media giant landed a multiyear deal with prolific TV producer Ryan Murphy, the man behind such 20th Century Fox Television hits as “Feud,” “American Horror Story” and “Glee.” The deal — pegged at as much as $300 million — is the latest evidence of just how powerful the Redwood City company has become at luring Hollywood’s top talent away from established competitors.

Insurance probe: California’s health insurance regulators will investigate how Aetna makes coverage decisions after a news report that one of the Hartford, Conn., company’s medical directors testified in a deposition that he didn’t examine patients’ records before deciding whether to deny or approve care. Rather, he said, he was trained to rely on information provided by nurses who reviewed the records.

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Rate cap: After failing last year, state lawmakers are again trying to cap the interest rate that lenders can charge on large personal loans. A bill introduced by Assemblyman Ash Kalra (D-San Jose) would limit interest rates at roughly 20% for loans between $2,500 and $10,000. In 2016, California residents borrowed $1.1 billion in loans of that size from finance companies such as Orange County’s LoanMe, which charge triple-digit interest rates.

WHAT WE’RE READING

And some recent stories from other publications that caught our eye:

Failing grade: The Wall Street Journal reports on how some smart investment managers from Harvard and elsewhere focused their strategy on a calm stock market. “A decade of low bond yields pushed some of the most stability-minded investors to dabble in risky investments that depended on markets being orderly. Now, those bets are looking problematic.”

Missed opportunity: Many California workers are missing out on the earned income tax credit, and that just leaves money on the table for struggling families, says the Orange County Register. “In California, where 2.9 million beneficiaries collected $6.8 billion in federal EITC payments last year, one of four eligible workers fails to claim the credit.”

Gone grain: The New York Times embarks on a journey in search of hill rice, also known as upland red bearded rice, a long-lost grain of particular interest to African Americans. “This was the rice of their ancestors, sustaining slaves and, later, generations of Southern cooks both black and white.”

Bitter harvest: The New Yorker examines President Trump’s proposal that food stamps be replaced with something called an “America’s Harvest box,” containing U.S.-processed food. The idea “reduces food assistance to a humiliation ritual: recipients would take whatever they are given, in whatever condition they are given it, and would be expected to feel gratitude.”

Chain reaction: Bike sharing sounds like a good idea. But, says Wired, “what started as healthy competition between two powerful, well-funded Chinese companies and a handful of scrappy American upstarts has intensified into a trash-talking land grab involving electric scooters, electric bikes and plenty of Silicon Valley-style ambition.”

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SPARE CHANGE

The Atlantic tackles a particularly knotty question: What color is a tennis ball? Don’t laugh, smarty pants. The answer isn’t “green” or “yellow.” As one researcher puts it: “They are an odd color, designed to be odd so that they are especially visible on the court. But because they are odd, we haven’t resolved how to label them.”

For the latest money news, go to www.latimes.com/business. Mad props to Laurence Darmiento and Scott J. Wilson for helping put this thing together.

Until next time, I’ll see you in the Business section.


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