Market muddle: While both economists and investors debate the prospects for bank companies - either the worst is over or you ain't seen nothing yet - Wall Street seems to be siding with the optimists. Stocks are up a bit this morning, though the explanation also involves the continued drop in oil prices (now approaching $127 a barrel) and some not-so-awful earnings reports. A CNBC headline on the rally in financial stocks: "Is This for Real - or Just a 'Fally.'"
Concern at Costco: Those mob scenes waiting for a shopping cart belie tough times ahead, especially once everybody has spent their stimulus checks. The discounter warns that fourth-quarter and fiscal-year profits will be well below analysts' current estimates. Specifically, gasoline profits will fall compared with last year, and merchandise profits will be lower because the company has needed to hold prices to help drive sales. (WSJ, AP)
More airline cuts: Both United and JetBlue announced reductions in service out of LAX and Ontario, beginning this fall. United will cut about 20 percent of its Socal schedule, including elimination of nonstop service to Frankfurt, Germany and Hong Kong. JetBlue will pull out of Ontario, where it offers daily nonstop service to JFK. All told, Ontario will lose more than a third of its flights in the fall. So much for that place being an LAX alternative. (LAT)
No more jalapenos: The supermarket chains are reversing themselves and pulling the peppers from store shelves. There was initial confusion about whether the peppers sold at Socal stores were the ones targeted in an FDA advisory. From the LAT:
Albertsons reviewed the original advisory from the FDA on Monday and concluded that since the source of the allegedly tainted peppers was a produce distributor in Texas that the grocery chain didn't use, there was no cause for concern. But later in the day, the chain saw that the FDA had updated its website and was now advising consumers to avoid raw jalapeno and serrano peppers and foods that contain them, such as fresh salsa and pico de gallo. At that point Albertsons decided it would be prudent to remove all raw jalapeno peppers from sale Tuesday, spokeswoman Stephanie Martin said.
Rich get richer: Think about this one the next time you have to fill up your gas tank: the average tax rate of the richest 1 percent of Americans in 2006 fell to its lowest level in at least 18 years (though the group's share of the tax burden has risen). Also, according to an IRS study, the share of income belonging to the top 1 percent was at the highest level since, er, 1929. From the WSJ:
Joel Slemrod, a tax economist at the University of Michigan's business school, said that some portion of the increase in income for the top 1% could stem from the increasing shift to entities such as partnerships, which means some income previously reported by businesses is now reported by individuals. Larger factors likely include changes in trade policy and other aspects of the increasingly global economy, he said.
Understating buying power: Annual incomes in Watts, Boyle Heights and seven other neighborhoods in South and East L.A. total $1.9 billion more than what the U.S. census has estimated, according to a study by the nonprofit organization Social Compact. That would run counter to the claims of big-name retailers that have generally steered clear of inner-city neighborhoods. Reinforcing those perceptions was the census data. From the LAT:
Social Compact figures the neighborhoods' average household income is $46,000 -- $9,000 more than the census estimate in 2000. All told, the neighborhoods have 438,000 residents by Social Compact's calculations, compared with 356,000 according to the census count. "People have historically broad-brushed South Los Angeles," said Michael Jones, president of the Crenshaw Chamber of Commerce. "We invite people to take a different look."
Fast food moratorium: An L.A. City Council committee approved a one-year ban on new fast-food eateries in South L.A. The moratorium covers a 32-square-mile area, including West Adams, Baldwin Village and Leimert Park. Not included are "fast-food casual" restaurants, such as Subway or Pastagina, that don't have heat lamps or drive-through windows. The ban is an effort to address diabetes, obesity and other health problems connected with fast-food restaurants. (LAT, LABJ)
Night moves are working: Over the last three years, more than 9 million truck trips have been scheduled for off hours instead of the busiest weekday traffic periods. That's considered a huge number and speaks to the success of the PierPass OffPeak program, according to a new study. The program encourages shippers to haul containers to and from the port complex in the evening and on weekends to reduce congestion on the Long Beach and Harbor freeways. From the Daily Breeze:
To pay for the program, shippers moving cargo from port terminals during the daytime are subjected to a $50 fee for 20-foot containers, while a $100 fee is charged for 40-foot containers. Cargo owners avoid the fee altogether by moving containers during off-peak periods. Los Angeles harbor Commissioner Joe Radisich has repeatedly questioned whether the program's container fee should be reduced or eliminated because shippers are paying an increasing number of tariffs for port programs.... The report also noted that importers and exporters operating out of the port complex don't completely trust the way fees are collected by PierPass. Some believe that more money is being collected than what is actually needed to cover costs.
Zell defends cuts: The Tribune CEO said it's not fair to hold him to his comment earlier this year that businesses cannot grow by cutting staff. "The reality is, what's my choice?" Zell asked during a conference call with Tribune reporters. "Do I try and create a business that can be viable and preserve two-thirds of the jobs? Or do I let all 100 percent of them go by the wayside because I'm not willing to confront the realities of the environment?" Zell also said he has had "intermittent conversations" with people interested in various Tribune properties, though he said Newsday is the only newspaper deal on the agenda for 2008. From the Hartford Courant:
"I would rather take our pain at once and get to where we need to be so that we can focus on the important work that's ahead of us in reinventing the American newspaper," [COO Randy] Michaels said. "We're not going to guarantee you there will never be another cut, or that no one will ever lose their job. But it is certainly our intention to get it all out of the way, right now, and move on with some focus and clarity."
405-to-101 bridge proposed: The plan calls for replacing that sharp, one lane turning ramp from the south 405 to the west 101 with a two-lane bridge over the Sepulveda Dam. One problem: There's no money to pay for it. (Daily News)
Entrepreneur sale stalled: The OC-based business monthly has received a $160-million offer from Austin Ventures and Castanea Partners, but owner Peter Shea is still looking for $200 million, according to the NY Post's Keith Kelly.