Market turns back: Just a few minutes ago, the Dow was down more than 140 points, much of it in response to the still-tight credit conditions. Then it came back and now itís off by 75. Unbelievable.
Drowning in debt: Roughly 16 percent of the 75.5 million U.S. homeowners owe more than their properties are worth, according to Moody's Economy.com. That's up from 6 percent in 2007. In the L.A. area, 40 percent of the households that bought homes in the last five years are underwater. Amazingly, that's nowhere near the worst metro area: Vegas is running 56 percent, San Diego 51.3 percent and Phoenix 40.1 percent. ďIt is very possible that there will ultimately be more homeowners under water in this period than any time in our history," says economist Mark Zandi. From the WSJ:
Having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.
Weak September retail sales: As has been the pattern, discounters like Wal-Mart and Costco did pretty well, while most of the other retailers floundered. None of this, of course, bodes well for the holiday shopping season (one analyst says it's likely to be a Christmas of movie tickets and board games). One telling indicator: Nordstromís same-store sales were down 9.6 percent. (WSJ, NYT)
Mall traffic down: These results probably vary a lot based on location but between Aug. 31 and Sept. 20 shopper traffic fell 9.2 percent a day compared with a year earlier. Between Sept. 21 and Sept. 29, as the gravity of the financial crisis was sinking in, mall traffic fell by an average of 10.5 percent. (NYT)
Shipping rates tumble: Another potential big deal for the local economy. The basic price of shipping a large container from Asia to California is running around $1,500, which is barely profitable for the shipping lines. That's despite an increase in August traffic at the Port of Los Angeles (Long Beach was down). September numbers are due out in a week or so. From the WSJ:
Freight-shipping prices are notoriously volatile, depending on weather, ever-changing capacity and shifting trade flows. But the recent slide is unprecedented, analysts and shipping-company executives say. Maersk, the world's No. 1 shipper with sales of $51.2 billion last year, waited until Thursday to cut container rates to their present low. Mr. Kolding, the Maersk CEO, told trade publication Lloyd's List that he hadn't seen the collapse coming. He promised "changes" later this month. That means running fewer vessels in a bid to run up prices, and maybe dropping an Asia-Europe route, a Maersk official said.
Back to court: The American Trucking Association is expected to ask the 9th U.S. Circuit Court of Appeals for a temporary injunction that would block portions of the Clean Truck Program at the ports of L.A. and Long Beach. The ATA claims that the ports are illegally imposing controls on the trucking industry. (Daily Breeze)
Studios move on: Hollywood is obviously not that concerned about a possible strike authorization vote by the Screen Actors Guild. Variety reports that the majors plan to start production on 40 features next year. That would mean the end of the de facto strike that has kept movie making at a relatively low level. Television production has been minimally impacted by the labor impasse.
Studio toppers are moving forward with a healthy level of anxiety. The recent credit crunch wonít impact the next batch of film starts, execs said, because that money has already been secured and budgeted. And thereís clear evidence that audiences will continue to come to theaters, even if the economy remains in the toilet by the time these films are released. Studios are more nervous about the financial exposure they face if SAG does go on strike. But the prospect of gaping holes in their distribution slates for 2010 and 2011 is a worse scenario for the majors, and so they are willing to risk the consequences of moving ahead despite the SAG uncertainty.
More heat for LAX: FAA officials are questioning whether the agency that manages the airport illegally provided more than $40 million in revenue L.A. Inc., the city's convention and visitors bureau. L.A. Inc. has received up to $6.8 million a year in airport funds for marketing and promotional campaigns - expenses that airport officials say were legitimate. From the LAT:
Under federal law, advertising, marketing and promotions designed to increase air travel at an airport are permissible as long as the efforts specifically relate to an airport's amenities, airlines and advantages for travelers. In addition, the expenditures cannot exceed what the FAA determines to be the "fair and reasonable" value of the services provided to an airport. General promotions of a region's tourist attractions, while likely to increase air travel, are not considered specific enough to comply with federal diversion laws.
Intrade update: McCain's stock is sinking. The online prediction market gives him a 26.5 percent chance of winning the election. Soon after the conventions, he was hovering around 50 percent.