Payroll shocker: The U.S. economy had been expected to add at least 100,000 jobs in August, maybe even more. Instead, employers cut 4,000 workers from payrolls, the first monthly decline in four years. This would almost guarantee that the Federal Reserve will lower interest rates in a little over a week, but all of a sudden the stakes are a lot higher. "The recession risk has certainly increased," Zach Pandl, an economist at Lehman Brothers, told Bloomberg this morning. But wait, there's more: Revisions subtracted 81,000 workers from payroll figures previously reported for June and July. Housing troubles and the credit crunch would appear to be the obvious culprits, but it's worth noting that manufacturers led the drop in payrolls last month (the most since July 2003).
Stocks take dip: Bad day. The Dow is down more than 200 points after about 90 minutes of trading. The irony is that the job news is sort of what investors had wanted, if for no other reason that it pushes the Fed to lower interest rates in 10 days. (AP)
IndyMac may post loss: The Pasadena-based home lender described its revised forecast as "rough." In a regulatory filing, the company said it’s focusing on "safety and soundness first and foremost" and plans to keep "prudently rebuilding our mortgage franchise which has been damaged as a result of the illiquidity in the secondary markets." The third-quarter results could range anywhere from break even to a loss of $36.8 million. (Bloomberg)
Riordan, Burkle squabble: Wowser, the former mayor sued the L.A. billionaire on Thursday over a nickel-and-dime business deal, but hours later Burkle decided to settle the long-running dispute. The juicy Daily News story has Riordan accusing Burkle of being motivated by money and ego (really?) and accusing him in the lawsuit of breach of fiduciary duty, fraud, deceit, and violation of state business and professional codes. Riordan had sought damages in excess of $5 million, as well as punitive damages (the money would have gone to charity). Burkle, who had been a vacation buddy of Riordan's, was apparently shaken up by the lawsuit and told the DN last night that he would buy out Riordan's interest in a high tech firm.
In a letter to Riordan sent Thursday night, Burkle said he had only accepted the investment out of friendship. "I was shocked and surprised when I received a call from a reporter saying that you had sued me ... It has always been my principle that partners go into an investment together and get out together. Having said that, and because I know you've had a rough year with many challenges, I am willing to take you up on the offer you made ... that we buy your partnership interest." Riordan, a philanthropist who started The Riordan Foundation in 1981 and who had planned to donate any money from the lawsuit to charity, said he was happy the dispute was resolved so quickly.
In 1999, Riordan agreed to put $5 million into one of Burkle's partnerships, Yucaipa AEC Associates Inc., which purchased an equity stake in Florida-based Alliance Entertainment Corp., a firm involved in high-tech media distribution. Key to his investment was assurance by a top Burkle aide that Riordan's stake in Alliance would be a "liquid investment," and that there would be a "window of liquidity" within three to five years - either when Alliance was sold or there was a market for the stock, the lawsuit says. In 2005, Alliance merged and became publicly traded Source Interlink Companies Inc., with the partnership holding a controlling interest. At that point, Riordan's partnership interest represented about $7 million in company shares, and he began considering liquidating in part because some of his original investment had been diluted in a failed side venture.
Congress eyes Mattel: Separate probes in the Senate and House are looking into the toy giant's procedures for alerting federal regulators about hazardous toys - in particular the Consumer Product Safety Commission. Hearings are scheduled next week that could make things even more uncomfortable for the El Segundo-based company. The three big recalls this summer have opened up a wider issue: at what point should Mattel report potential problems to the feds? The company has twice been penalized for not passing reports of safety defects to the government in a timely manner. (WSJ)
Gas prices inching up: The Auto Club's latest survey just confirms what the Energy Department reported a few days ago. The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $2.765, which is 3.2 cents higher than last week, 22 cents below last month, and 30 cents under last year. What's really interesting is that most Socal cities are near or below the national prices for gasoline - and that almost never happens.
Norman Hsu arrested: The fugitive fundraiser who skipped a court date this week was taken into custody by the FBI at a hospital in Grand Junction, Colo. He'll be returned to California in connection with the fraud case that led to his disappearance 15 years ago. Only last week he had turned himself in to the authorities in San Mateo County and posted $2 million bond. From the NYT:
The authorities now believe Mr. Hsu was traveling on an Amtrak train from Emeryville, Calif., near Oakland, to Denver. He was on the train in the Grand Junction area when he became ill, said an official at St. Mary’s Hospital, where he was taken into custody. Amtrak personnel called an ambulance when the train stopped in Grand Junction, and Mr. Hsu was transported to the hospital, where he remains in federal custody, in fair condition, said Pete Smarr, a nursing supervisor, reading from a statement released by the hospital.
Airport delays: Pilots and LAX air traffic controllers will be on their own in avoiding any catastrophe on the unsafe northern runways. No action is expected until 2009, when experimental runway status lights are installed. The lights, already in use at airports in San Diego and Dallas, warn pilots when it's safe to take off or cross a runway. Oh, and there will be a bunch of environmental impact reports that will take about two years to complete. "It seems like a long way off from now, but everything is actually moving along quickly," Jim Ritchie, deputy executive director of long-range planning for Los Angeles World Airports, told the Daily Breeze (I'd hate to know what the pace would be like if they were just slacking off).
A series of public meetings kicked off earlier this week to collect community input on how to best modernize LA/Ontario International Airport, which is about 40miles east of downtown Los Angeles and serves some 7 million passengers annually. Plans set for release in fall 2008 call for dramatically expanding the San Bernardino County airport to serve 30 million passengers annually by 2025 by building three more terminals across the northern end of the property. Tentative plans call for extending the Metro Gold Line to Ontario and building a high-speed rail line between the airport and Anaheim, according to Ontario Mayor Paul Leon. "We want Ontario to be the official airport for Disneyland while also helping the rest of Southern California meet its transportation needs," Leon said. "Ontario is prepared to move into the next generation, growing with the coming population."
Paris Hilton moves up: What housing crisis? The ditzy hotel heiress closed on a nearly 7,500-square-foot mansion in Mulholland Estates, a guard-gated community. Price: $5.9 million (asking price was $6.25 million). The home has five bedrooms, 5½ bathrooms and a fitness room that Hilton plans to convert into a shoe closet. She's selling her 3,000-square-foot place in the Hollywood Hills for $4.2 million. (WSJ)