Dow tops 8000: Who knows what the rest of the session will bring, but in early trading the index is up 260 points. Bank stocks took off after the Financial Accounting Standards Board relaxed rules forcing banks to value their assets at current prices. That's the so-called mark to market rule - and it's a very big deal. (AP)
Jobless claims keep rising: Another reminder that high levels of unemployment will be with us well after the economic turnaround begins. The number of people filing new jobless claims jumped unexpectedly last week, while those continuing to receive benefits hit a 10th straight record-high. From AP:
As a proportion of the work force, the number of people on the jobless benefit rolls is the highest since May 1983. The four-week moving average of jobless claims, which smooths out weekly volatility, rose to 656,750, the highest since October 1982, when the economy was emerging from a steep recession. Employers are eliminating jobs and taking other cost-cutting measures to deal with sharp reductions in consumer and business spending. The current recession, now in its 17th month, is the longest since World War II.
KPMG blamed for subprimes: Liquidators of New Century Financial claim that the world's third-biggest accounting firm allowed the failed OC-based subprime lender to understate the size of its bad loan problem - and even "silenced" KPMG experts who raised red flags. It has sued KPMG for $1 billion. From the FT:
Steven Thomas of Thomas, Alexander and Forrester, lawyer for the liquidating trust, told the Financial Times: "If the financial statements were accurate and its reserves correct, New Century could not have got the loans to expand as it did." The complaint claims KPMG brushed aside questions raised by its own experts for fear of upsetting its client.
Stars getting squeezed: "First-dollar gross" deals, where the biggest Hollywood names would be paid a percentage of box office revenues up front, are fast disappearing as the studios tighten up. From the WSJ:
For two new projects, Viacom Inc.'s Paramount Pictures has done away with such deals, even though it has landed top talent. In "Dinner for Schmucks," with Steve Carell, and "Morning Glory," starring Harrison Ford, the actors accepted "back-end" deals, in which they get a portion of the gross, but only after the studio and its financing partners have recouped their costs. The studio also cut a back-end deal with "Dinner" director Jay Roach. "The days...where the star gets whatever he wants and gets paid through the roof -- those days are over, for everybody," says Eric Gold, a producer and manager who represents top talent including Jim Carrey and Ellen DeGeneres.
"Project Runway" to Lifetime: Bravo had made a big legal stink over the show's producers wanting to change channels, but the various sides have settled and the reality series will make its bow on Lifetime this summer. From Variety:
The delay in getting "Runway" on Lifetime's lineup has had a big impact on the cabler's programming plans during the past year, as it banked on its high-priced acquisition as a highly rated launching pad for other skeins. Overall viewership for Lifetime was down 12% in the first quarter year on year. Lifetime can now count on some extra bounce to its sked in the coming months with the arrival of "Runway," its spinoff series "The Models of the Runway," the bow of the third season of original drama "Army Wives" and the debut of dramedy "Drop Dead Diva."
JetBlue down on Long Beach: The low-cost carrier may cease operations at the small municipal airport where it began its West Coast expansion. The carrier is not happy with the pace of improvements at the facility. JetBlue is about to launch service out of LAX. LAT picks up on post from Crankyflier.com. Here's what JetBlue Dave Barger told the aviation blog:
We would like to be able to use our E-190s in those commuter slots. That's the perfect use of those slots, because these aircraft are very quiet. But the best example is that it took us 30 months to build a brand new terminal at JFK but we're still stuck in temporary trailers in Long Beach. I don't think communities always realize what an economic tool an airport is. You can't take commercial air service for granted.
Good news for florists: A 12,700-square-foot cold-storage unit has been built at LAX that will allow flowers from South America to be flown directly to Los Angeles. Hard to believe, but up to now they had been flown to Miami and trucked out West. (LAT)
Investment firm eyes Vegas: L.A.-based Colony Capital, which focuses on real estate deals and is run by billionaire Tom Barrack, has been looking at the troubled City Center project, the WSJ is reporting. The $8.6 billion development, owned by MGM Mirage and Dubai World, has been on the verge of bankruptcy.
The gambling company's lenders recently agreed to a waiver on MGM Mirage's loan covenants, giving the company until May 15 to resolve its cash flow and debt issues. MGM Mirage's $200 million payment to City Center was just a temporary fix, giving MGM Mirage and Dubai World a few weeks to negotiate a permanent funding solution. Another payment to City Center is due April 13. MGM Mirage would need permission from its lenders if it tries to cover future payments for construction on City Center.