Oil prices tumble: It's closing in on $121 a barrel, down $3 for the morning - and the lowest price since mid-May. The drop also coincided with a firmer U.S. dollar - and a boost in the Dow. If oil keeps dropping, it could mess up all kinds of pessimistic assumptions on the price of energy – and the overall economy. (CNBC)
Home prices fall: The L.A. area saw a 24.5 percent drop in May from a year earlier, according to the closely watched S&P/Case-Shiller home-price index. As in previous months, the fall wasn't quite as bad in L.A. as in Phoenix, Vegas and Miami, where prices have tumbled the most. (S&P release, AP)
Port deal: The shipping companies and the dockworkers union announced a tentative agreement on a new contract after a marathon weekend bargaining session. No details were being offered, and the deal still must be ratified by both sides. The old contract had expired at the end of June, and there was some concern about disruptive job actions by dockworkers over the last few weeks (perhaps serving as a reminder to the job actions in 2002 that led to a 10-day lockout). All this comes amid a slowdown in cargo traffic. (SF Chronicle)
Consumer safety reform: It’s being called the biggest overhaul of U.S. product-safety rules in a generation. Lawmakers are expected to pass the much-compromised bill that really got going last fall after Mattel’s much-publicized recalls involving lead paint and magnets. The El Segundo-based company has since stepped up its testing for chemicals and heavy metals, and the legislation includes a provision that allows manufacturers to do their own testing, rather than hand it off to a third party. From the WSJ:
There are unresolved questions about whether states will still be able to create their own testing protocols in some instances for toys. Monday's House-Senate version sidesteps the issue by not including language either way. Industry lobbyists say the lack of clear guidance on whether federal toy testing protocols will override state efforts sets the stage for court challenges on the matter later. Companies have already been dealing with a variety of product-safety laws enacted in at least 16 states in the absence of federal oversight and congressional action. The bill does give state attorneys general some new power to enforce CPSC regulations. Consumer groups voiced support for that decision.
Higher landing fees: The Board of Airport Commissioners approved a 15 percent bump for airlines in an effort to offset lost revenues from flight cutbacks. The airport commission also agreed to increase landing fees at Ontario, which is expected to lose more than a third of its flights by November. Landing fees are lower at Ontario than LAX, but airlines pay higher rental fees for terminals. From the Daily Breeze:
Airport officials may consider whether to boost landing fees even more later this year to cover the rising costs of LAX modernization projects, including the construction of new airline gates on the back of the Tom Bradley International Terminal, according to aviation consultant Jack Keady of Playa del Rey. "If the current expansion plans move ahead as planned, I would think landing fees would have to go up when you consider the millions of dollars they want to spend," Keady said. "They have to find a way to cover construction costs as their revenue continues to decline."
Mervyn's may file for bankruptcy: The California-based department store chain is days away from Chapter 11 protection, according to the WSJ. There may be no other alternative because factoring companies, which provide financing for apparel makers, have cut off funding. That's left Mervyn's with limited merchandise for the critical back-to-school season..
"Our experience is that a lot of manufacturers and wholesalers are being very tentative with these types of struggling retailers," said Lee Diercks, managing director at Clear Thinking Group LLC, a financial-advisory and restructuring firm. "They've gotten burned so many times this year." If Mervyn's is liquidated, it would deal another blow to mall owners, which have seen a wave of store closings in the past year. Vacancies at malls in 76 major U.S. markets rose to 6.3% in the second quarter, the highest level since early 2002, according to real-estate-research firm Reis Inc.
Shoe Pavilion files Chapter 11: The Sherman Oaks-based chain would close 43 of its 111 discount-shoe stores under a reorganization plan, and an additional 28 stores if rent reductions can't be worked out. Shoe Pavilion listed $61 million in assets and $25 million to $27 million in liabilities in its filing with U.S. Bankruptcy Court. (Daily News)
Parsons gets blamed: The Pasadena-based engineering and design firm was cited for failing to complete several projects in Iraq that included a half-built prison. From the LAT:
Parsons said security was a major problem at the site. It said that three contractors subsequently hired to finish the work "experienced similar disruptive violence" and that the U.S. abandoned the project in 2007 "because it was too dangerous." The audit confirmed that the site manager for one of Parsons' subcontractors was fatally shot in his office in August 2005. "Parsons argued that the U.S. government misrepresented that there would be a permissive, benign environment for Parsons to work," according to the report. "Parsons claimed that on an almost daily basis, its subcontractors faced security threats that either shut down work or curtailed performance."
Grand Avenue delay approved: A joint city-county board signed off on postponing the $3-billion project, but established financial penalties if the developer, Related Cos., doesn't break ground by February. The project's first phase would include a luxury hotel, shops and housing units. From the LAT:
Related is trying to find the funding to get the project off the ground. The California Public Employees' Retirement System pulled out of Grand Avenue last year, saying that it had too much investment in downtown. But a fund controlled by Dubai's royal family has invested $100 million. Grand Avenue was once scheduled to be completed in 2009. But that date was shifted to 2011. Now Related wants to push the opening to 2012.
Lacter on radio: This morning's business chat with KPCC's Steve Julian covers the recent bank failures and tighter lending standards. Also on kpcc.org and on podcast.