Newsletter: California Inc.: Is it safe to reopen Aliso Canyon gas storage field?
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.
Traders get back to business Monday after a week in which the Dow Jones industrial average topped 20,000 for the first time ever — an impressive, albeit purely psychological, milestone. However, we also learned that the economy stumbled in the fourth quarter, expanding at a disappointing 1.9% annual pace and making last year the weakest for growth since 2011.
LOOKING AHEAD
Bank under scrutiny: Irvine’s Banc of California will report its fourth-quarter and year-end earnings Monday, just one week after the bank forced out its chairman and chief exec, Steven Sugarman, and disclosed that it is under investigation by the Securities and Exchange Commission. Bank leaders, including its new chairman and interim CEO, will likely face questions from analysts about corporate governance issues and insider transactions.
Interest rates: Federal Reserve policymakers will meet Tuesday and Wednesday and, in the end, are expected to hold their key short-term interest rate steady. The central bank raised its benchmark interest rate last month for only the second time since 2008, and board members are projecting three small rate hikes for this year. This week, the clock starts ticking on Janet Yellen’s final year as chair of the Federal Reserve’s Board of Governors. Her term ends Feb. 3, 2018.
Tech financials: Apple, Facebook and Amazon all release their earnings this week. Apple, which makes its announcement Tuesday, has just sued mobile chip maker Qualcomm Inc. for $1 billion in a dispute over patents. Facebook, releasing earnings Wednesday, last week hired former Google exec Hugo Barra to give a boost to its virtual reality projects. Amazon, which reports on Thursday, said recently that it plans to hire 100,000 full-time workers over the next 18 months.
Aliso Canyon: Public hearings on reopening the Aliso Canyon natural gas storage field will be held Wednesday and Thursday in Woodland Hills. Aliso Canyon has been shut down since it experienced the worst methane leak in U.S. history in fall 2015. State regulators last week announced that Aliso Canyon is safe to reopen at a third of its original size. The meeting will be from 5:30 to 9 p.m. on both days at the Hilton Woodland Hills.
Employment data: On Friday, the Labor Department releases the January jobs report. Analysts expect continued steady growth of about 155,000 net new jobs, with the unemployment rate holding steady at 4.7%. If the forecast is right, it will be the 76th straight month of job creation and the longest stretch since record-keeping began in 1939. At the state level, California employers capped off a solid year of job growth in 2016 by adding a net 3,700 jobs in December.
THE AGENDA
On Monday, the Business section assesses the role President Trump has played in the wave of announcements by companies — ranging from Wal-Mart Stores Inc. to South Korea’s Hyundai Motor Co. — to add or keep jobs in the United States. Trump has made jobs the centerpiece of his agenda, but some economists doubt the president’s Tweeting and hectoring has had a genuine impact. “These things happen in both directions all the time, new factory, closed factory, jobs move out and jobs move back,” said David Neumark, a professor of economics at UC Irvine. “This is pure PR. They are making these announcements to keep him off their back.”
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:
Border brouhaha: President Trump threw trade experts for a loop by endorsing — or seeming to endorse — a 20% tax on imports, at least partially to help pay for the border wall with Mexico that he has promised to build. A spokesman later said the idea was one of only several options the White House is considering for a new “border adjustment tax” that would create a new set of economic winners and losers.
Obamacare conundrum: As Republicans scramble for a strategy to repeal and replace the healthcare law, they are reckoning with a fundamental question the party has never settled — whether to foot the multitrillion-dollar bill to allow millions of Americans to retain the coverage they obtained under Obamacare.
Weed whacker: Ajit Pai, who President Trump selected to head the Federal Communications Commission, is a free-market advocate who has been sharply critical of new regulations adopted by Democrats in recent years. He wants to take a certain garden tool to net neutrality rules, designed to ensure the free flow of online data by barring Internet service providers from favoring or discriminating against legal content flowing through their networks.
L.A. story: Three years ago, two Lionsgate executives met in a coffee shop with an aspiring filmmaker who was pitching his movie musical about a jazz pianist and an aspiring actress, a modern homage to the song-and-dance films of Fred Astaire and Ginger Rogers. The studio took a huge gamble backing the project — one that has paid off handsomely. “La La Land” is widely considered the front-runner in the race for this year’s best-picture Oscar.
A jolting prospect: On the one hand, the market share for electric cars is minuscule. On the other, big automakers are aggressively pushing their electric cars. What gives? Stricter government mandates on fuel economy are fast approaching. To meet them, automakers are going to have to sell electric vehicles, even if they lose money doing it.
WHAT WE’RE READING
And some recent stories and content from other publications that caught our eye:
Ethics watch: A new hotel in Vancouver, Canada, is an early ethical test of Donald Trump’s decision not to sever ties with his businesses while president, reports the Washington Post. The Trump International Hotel & Tower Vancouver was cited in a lawsuit by ethics experts who contended that benefits granted to Trump-branded businesses could violate a constitutional ban on foreign government payments to American presidents.
Tech dreams: Fortune looks at the skyrocketing growth of Huawei, the Chinese firm that is aiming to surpass Apple and Samsung and become the world’s biggest maker of cellphones. Huawei, Fortune says, has unmatched technical breadth. “It builds the telecom networks that transmit signals, the chipsets inside smartphones that interact with the networks and the handsets themselves.”
End of days: Some of America’s richest people are preparing for the apocalypse, says the New Yorker. Survivalism, once the territory of fringe woodsmen and oddball doomsayers, has expanded to include technology executives, venture capitalists and hedge-fund managers. “In private Facebook groups, wealthy survivalists swap tips on gas masks, bunkers, and locations safe from the effects of climate change.”
Room temperature: The secrets of the “humble hotel wall thermostat” are revealed by the Wall Street Journal. The hotel guest may have little or no control over the room temperature since many of today’s thermostats are actually controlled by the hotel. But some guests are fighting back. “Clever, clammy travelers have started resisting, scouring thermostat manuals to uncover secret overrides of the override.”
Cold comfort: Want to sail in style to Antarctica? Bloomberg give us a close-up look at the M/Y Legend, the world’s first luxury cruise liner built to venture into the planet’s icy corners. The ship features a mini-submarine, snow scooters, and a helicopter — for starters. “On board, there’s a Balinese spa, a giant heated outdoor Jacuzzi with a built-in rain curtain, a gym with a view, a panoramic salon with a piano, and a mini-cinema for cozy evenings after long days in the cold.”
SPARE CHANGE
Many Angelenos were left scratching their heads last week after billionaire Elon Musk announced on Twitter that he soon plans to start digging a tunnel to alleviate the city’s chronic traffic congestion. He’s apparently serious, although it seems highly unlikely he’ll overcome the many obstacles to such an ambitious project. Nevertheless, this next song goes out to Elon and his dream of a better world.
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.
