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.
Whither Wall Street? Is it over? That’s the question Wall Street traders are asking today after a weekend recovering from one of the more turbulent weeks in modern trading history. Worries about the Chinese economy caused the Dow Jones industrial average to plunge more than 1,000 points a week ago before ending the day with a nearly 600-point loss. Then came a day of modest recovery that ended with another big loss, followed by major gains over the next two sessions. The week ended with the Dow declining 12 points -- a decidedly undramatic finish to a too-exciting week.
Auto sales: Automakers report U.S. vehicle sales for August on Tuesday. Industry consultants J.D. Power and LMC Automotive have predicted a decline of 3.9% from a year ago, to 1.52 million vehicles. They attributed the setback to “a quirk in the calendar" that pushes results of Labor Day weekend sales into September. While Labor Day is always in September, automakers normally count that weekend's sales in August results. The consultancies expect more than 17 million vehicles to be sold this year.
Refinery hearing: California air quality officials will hold a hearing Wednesday into whether Exxon Mobil should be allowed to increase refining operations at a Torrance facility damaged by a February explosion, causing L.A.-area gasoline prices to surge. Exxon wants to use an old pollution-control system to temporarily replace a damaged one and says it will take steps to mitigate the extra pollutants the old equipment is expected to release.
Jobs numbers: On Friday, all eyes will be on the latest jobs numbers from the Labor Department. They’re expected to show that U.S. employers added around 200,000 workers in August and that the jobless rate remained at a seven-year low of 5.3%. A strong labor market and wage growth would figure strongly into the Federal Reserve’s timing for a hike in interest rates. Recent stock-market bumpiness has cast doubt on a September increase, but solid labor numbers could change that.
Jedis rejoice: Is the Force with Walt Disney Co.? The media behemoth on Friday will unveil toys linked to its new “Star Wars” movie, which will hit screens and bring the world to a stop in December. Promotions include a series of product unwrappings on YouTube, coverage on the company’s “Good Morning America” show on ABC and midnight openings of stores such as Walmart, Toys “R” Us and Target. Early buzz says this “Star Wars” movie will make up for the sins of its three most recent predecessors.
Today's Business section tries to bring a little order to last week's market turmoil. Some sectors fared better than others, with the tech, energy and “consumer discretionary” sectors -- which includes automakers such as Ford Motor Co., home builders such as Lennar Corp. and retailers such as Amazon.com -- finishing the week with gains. But many of those stocks had been punished so badly earlier in the month that all 10 sectors joined the S&P 500 index in the red for the month to date. As one analyst put it, “The sectors that held up best, as Capt. Renault from ‘Casablanca’ said, were the usual suspects.”
Here are some of the other stories that ran in The Times Business section in recent days that we’re continuing to follow:
Labor ruling: A labor dispute at a Silicon Valley recycling center could dramatically change who corporate America counts as an employee. The National Labor Relations Board ruled that companies using workers hired by another business — such as staffing agencies, contractors or even fast-food franchises — are still on the hook for labor violations and could be required to bargain with unions representing those employees. The decision is a striking change from past labor laws, which doled out responsibility only to companies with direct control over hours, wages and working conditions for employees.
Aerospace turbulence: Boeing Co.'s planned layoffs in Southern California have revived concerns that the aerospace industry may suffer if Congress doesn't renew its support for the U.S. Export-Import Bank. The bank's charter from Congress expired at the end of July after House Republican leaders prevented a vote to extend it. The federal agency helps U.S. companies sell their goods overseas by providing loans and other assistance. The expiration of the bank's charter was one of the key reasons given by Boeing to explain the layoffs, expected to number in the hundreds.
Record crops: California's growers enjoyed near-record revenue for their crops last year, despite dropping their harvest by 640,000 acres. Agricultural employment soared to a record 417,000 jobs, largely because gains in the Central Coast, deserts and Sacramento River Valley overcame losses in the San Joaquin Valley, according to a report by the nonprofit Pacific Institute. The somewhat paradoxical near-record revenue and job growth at a time when harvested acreage dropped to a 15-year low can be explained by growers adopting more efficient use of water and converting to higher-value crops such as nuts, according to the study.
Netflix goes Hollywood: Netflix is loading up its truck and moving to Hollywood. The Los Gatos, Calif., company will move its SoCal operations from Beverly Hills to the center of action in Hollywood by 2017. The video streaming service signed a long-term lease at the 14-story Icon Building at Sunset Bronson Studios. The marquee high-rise office tower from Hudson Pacific Properties is under construction on the studio lot on Sunset Boulevard. Netflix is expected to occupy just over 200,000 square feet — the largest office lease signed in Hollywood in terms of square feet. It doubles Netflix's L.A.-area office space.
Vineyard purchase: E&J Gallo Winery has purchased Talbott Vineyards, extending its presence on the state's Central Coast and adding another premium estate brand to its portfolio. Details of the deal were not disclosed. It will include Robb Talbott's original winery and tasting room in Carmel Valley as well as the 525-acre Sleepy Hollow Vineyard he purchased in 1994, according to Gallo. Talbott said he was "confident that the future for Talbott Vineyards will be secured" by Gallo. The move comes on the heels of Gallo's purchase last month of Asti and the Souverain brand, and the March purchase of J Vineyards and Winery, both in Sonoma County.
What We’re Reading
And some recent stories from other publications that caught our eye:
Katrina aftermath: The website FiveThirtyEight.com explores the aftermath of Hurricane Katrina and how the storm affected New Orleans’ black middle class. “Black New Orleanians are less likely to be working than when the storm hit in 2005 and are more likely to be living in poverty,” it says. “Black household incomes, adjusted for inflation, have fallen. And the earnings gap between black and white residents has grown.”
Burning Man: The annual Burning Man festival presents itself as a socialist utopia, bringing thousands of people to an empty desert to create an alternative society. But the quarterly mag Jacobin says capitalists have embraced the event. One venture capitalist threw a $16,500-per-head networking party at the festival last year.
Bottled water: The Wall Street Journal takes a gulp of the bottled-water industry, which is doing just fine, thank you very much. Despite obvious drawbacks — the plastic and the extra cost for something essentially free out of the tap — U.S. bottled-water volume rose 7% last year. That puts it on track to outsell soda by 2017.
Fiorina remembered: USA Today tech writer Jon Swartz recalls his time covering Carly Fiorina’s tenure as CEO of Hewlett-Packard. Fiorina repeatedly has cited her business record as a cornerstone of her candidacy for the Republican presidential nomination. “Fiorina ran a company all right — into the ground,” Swartz writes.
Wi-Fi sticker shock: The New York Times examines the sticker shock many travelers experience when they connect to in-flight Wi-Fi. Prices for a trip from Los Angeles to New York, say, can run as high as $40, compared with just $18 a few years ago. “We’re starting to have millions of users, so it’s getting more and more congested,” one provider said.
For the latest money news, go to www.latimes.com/business. Until next time, I'll see you in the Business section.