Solid retail sales: But don't get your hopes up Ė Juneís better-than-expected numbers reflect short-term gains from those government stimulus checks. Discounters did the best, with Wal-Mart posting a 5.8 percent jump in same-store sales. Costco rose 5 percent, and Target, which has had a tougher time this year, had only a 0.4 percent gain. Department stores fared the worst - again. July is expected to be fairly strong, too, but things might get dicey after that. (NYT)
Americans driving less: There's no doubt that $4-plus-per-gallon prices are having an effect. For the first week of July, nationwide gasoline consumption fell 3.3 percent from last year. Meanwhile, supplies grew by almost one million barrels from the previous week. That means somewhat lower pump prices, but oil remains the crucial pivot point (prices edged higher this morning). From the WSJ:
This has made for one of the weakest summer driving seasons in years. A survey commissioned by Discover Financial Services found that 62% of respondents are changing their holiday plans because of the higher gas prices, while 15% canceled vacations. However, declining gasoline consumption in the U.S. has done little to deflate gasoline prices at the pump so far. The problem is that demand for other fuels, namely diesel, continues to be strong. This is helping to keep oil prices high.
Foreclosures piling up: The June numbers look a lot like the May numbers, with California having the most total filings for the 18th consecutive month (a 77 percent jump from a year earlier), and seven of the 10 metro areas with the highest rates. Stockton was first with one in every 72 households in a stage of foreclosure, followed by Merced and Modesto. Riverside-San Bernardino ranked fifth. (Bloomberg)
Murdoch is "very bearish": The News Corp. CEO expects "another 12 months of hard slogging" because of higher fuel and energy costs, though he said the entertainment industry is "doing just fine" so far. During a TV interview from the Allen & Co. conference in Sun Valley, Murdoch said that media stocks have been overly penalized; News Corp. has fallen 30 percent this year on concern about a slowdown in advertising. (Bloomberg)
Redstone spurns daughter: In the immortal words of Ralph Kramden, he's got a biiiiiiig mouth!!!! In a CNBC interview, Sumner says that Shari will not automatically take over the family's media empire (Viacom and CBS). "The boards should decide who succeeds me," he said. "Iím not worried about it ícause itís going to be another 20, 30 years.Ē A spokeswoman for Shari says her father's comments were "absolutely inaccurate." The discussion of who controls what can get complicated because the family's wealth is largely held through National Amusements (which controls the large stakes in CBS and Viacom). Redstone, 85, now owns 80 percent of National Amusements, while Shari, 54, owns 20 percent. (NYT)
James Hahn testifies: L.A.'s former mayor denies knowing whether former commissioner Leland Wong took bribes from Evergreen Group, a Taiwan shipping conglomerate. Wong has pleaded not guilty to 21 felony counts, including conflict of interest, perjury and embezzlement from an employer. Wong's attorneys say that the payments deposited to his Hong Kong bank account were consulting fees and that he had filed public documents about his consultant position with Evergreen. Hahn's testimony is expected to resume today. (Daily News, LAT)
Defending Countrywide deal: Bank of America CEO Ken Lewis told the LAT that the Calabasas mortgage giant has been painted with too broad a brush and that there are plenty of things Countrywide does right. "There's always another side to any story, and we're going to tell it," said Lewis, who was in town to address a Town Hall luncheon. "We don't think in every instance that Countrywide was the bad guy." He also said that Bank of America paid so little for the lender that it would quickly show a profit.
Allstate slashes rates: The state Insurance Commissioner is ordering the insurer to cut homeowners premiums by 28.5 percent (savings would be about $250 per customer). Allstate, which had been battling with state officials for several years about the size of the cuts, had proposed a 9.3 percent increase in homeowners insurance. The new rates will take effect July 28. From the LAT:
Poizner's order reducing Allstate's homeowner rates is the insurer's second setback in recent months with California regulators. In March, Poizner told Allstate to cut automobile insurance rates 15.9%, saving policyholders an average of $124 per car. Allstate fought the decision in Superior Court but later dropped its appeal. The push to lower Allstate's homeowner premiums began in mid-2006 when then-Insurance Commissioner John Garamendi ordered Allstate and several other companies to show that their rates were not excessive.
Waldorf on Bev Hills ballot: The City Council had voted 3-2 in favor of the plan to develop a Waldorf-Astoria hotel and condo complex, but residents and nearby business owners began circulating a petition to place the issue on the November ballot. The petition has now gotten the required number of signatures. Given the already congested location of the project - Wilshire and Santa Monica boulevards - this could be an interesting vote.