Business Right Now

Thomas Marvin Main
February 12, 2018
Tuesday, February 13th
February 12, 2018
Business Right Now

 

Update on the latest in business:
FINANCIAL MARKETS

Asian markets mostly higher after Wall Street gains

BEIJING (AP) – Asian markets rose today after Wall Street gained following a turbulent week.

A late rally reversed steep losses Friday and lifted the Dow Jones industrial average more than 300 points. The Dow gained 1.4 percent to 24,190.90. The Standard & Poor’s 500 rose 1.5 percent to 2,619.55. The Nasdaq composite added 1.4 percent, to 6,874.49. For the week, the three indexes finished down more than 5 percent. They’re also now all in the red for the year.

Legislators agreed on a $400 billion budget measure after conflicts over immigration and other issues led to the second temporary government shutdown in three weeks. The measure approved Friday increases military spending and provides $89 billion for disaster relief.

Taiwan reports quarterly economic growth on Tuesday. Wednesday brings economic growth from Japan and U.S. inflation and retail sales. The United States reports factory output Thursday.

Benchmark U.S. crude gained rose to just under $60 per barrel.

The dollar declined against the yen and the euro.

 

TAX LAW-LOBBYING

Money spent on lobbying skyrocketed during tax overhaul

WASHINGTON (AP) – Some eye-popping figures came out as money spent on lobbying by corporations, trade associations and special interest groups spiked during the final three months of 2017 as they battled for the biggest breaks possible in the most dramatic tax overhaul in more than 30 years.

The National Association of Realtors tallied $22.2 million between Oct. 1 and Dec. 31, according to newly filed disclosure reports. That’s double what the organization spent in the third quarter on lobbying activities. The Business Roundtable spent $17.3 million in the fourth quarter, nearly quadruple the amount over the three previous months, and the U.S. Chamber of Commerce reported spending $16.8 million, a $3.7 million increase.

President Donald Trump swept into the White House promising to “drain the swamp” in Washington, but lobbyists continue to wield considerable influence and they plied their trade with vigor as Congress crafted the $1.5 trillion tax-cut package that Trump signed into law in late December.

The tax overhaul was hustled through Congress in less than two months and mostly written in private. Public Citizen, a nonprofit watchdog group, said in a Jan. 30 report that more than 4,600 lobbyists were engaged specifically on the tax rewrite while several thousand more sought to influence tax policy in addition to other legislative matters. That worked out to 13 lobbyists for every member of Congress.

 

ICELAND-BITCOIN MINING

Energy riches fuel bitcoin craze for speculation-shy Iceland

KEFLAVIK, Iceland (AP) – Iceland is expected to use more energy “mining” bitcoins and other virtual currencies this year than it uses to power its homes.

With massive amounts of electricity needed to run the computers that create bitcoins, large virtual currency companies have established a base in the North Atlantic island nation blessed with an abundance of renewable energy.

The new industry’s relatively sudden growth prompted lawmaker Smari McCarthy of Iceland’s Pirate Party to suggest taxing the profits of bitcoin mines. The initiative is likely to be well received by Icelanders, who are skeptical of speculative financial ventures after the country’s catastrophic 2008 banking crash.

The energy demand has developed because of the soaring cost of producing and collecting virtual currencies. Computers are used to make the complex calculations that verify a running ledger of all the transactions in virtual currencies around the world.

In return, the miners claim a fraction of a coin not yet in circulation. In the case of bitcoin, a total of 21 million can be mined, leaving about 4.2 million left to create. As more bitcoin enter circulation, more powerful computers are needed to keep up with the calculations – and that means more energy.

The serene coastal town of Keflavik on Iceland’s desolate southern peninsula has over the past months boomed as an international hub for mining bitcoins and other virtual currencies.

 

SEATTLE GROWING PAINS

NIMBY vs. YIMBY: Housing battle brews in booming Seattle

SEATTLE (AP) – Seattle’s booming tech industry has brought a massive influx of new residents with big wallets to the city. But an ensuing housing crunch has led to skyrocketing rents and home prices that have strained middle- and working-class families and deepened the city’s crisis of homelessness.

To keep construction humming and help people of all incomes stay, city officials have come up with what’s dubbed the “grand bargain”: Let developers build taller and denser in core areas across the city and require them to either include units that working-class people can afford, or pay for projects to be built elsewhere.

Backlash was swift from those worried increased heights and density will change the character of single-family neighborhoods that dominate this picturesque Northwest city.

But equally vocal groups have formed to back the city’s mandatory housing affordability plan, which aims to create 6,200 new affordable units over 20 years for those making 60 percent of area median income.

More growth and housing choices mean teachers, firefighters and other laborers can remain in Seattle alongside wealthy tech workers, supporters say.

The city subsidizes housing for the poorest, and the market is expanding for top-income brackets. But little has been done for those in the middle who already spend too much of their wages on rent.

Seattle’s median home price has skyrocketed to $757,000 – the highest ever.

 

TRUMP-PRESCRIPTION DRUGS

Trump’s big promises on drug costs followed by modest steps

WASHINGTON (AP) – President Donald Trump makes big promises to reduce prescription drug costs, but his administration is gravitating to relatively modest steps such as letting Medicare patients share in manufacturer rebates.

Those ideas would represent tangible change and they have a realistic chance of being enacted. But it’s not like calling for Medicare to negotiate drug prices.

Skeptics say the overall approach is underwhelming, and Trump risks being seen as an ally of the powerful pharmaceutical industry, not its disrupter.

The White House Council of Economic Advisers has released a 30-page strategy for reducing drug costs, and it calls current policies “neither wise nor just.” The plan, outlined before Trump releases his new budget proposal Monday, focuses mainly on Medicare and Medicaid changes, along with ideas for speeding drug approvals and fostering competition.

Polls show the high cost of drugs is a top concern of Americans, regardless of political leanings. In his State of the Union speech, Trump seemed to foreshadow major change, saying “fixing the injustice of high drug prices” is a top priority this year.

 

CONGRESS-IMMIGRATION

Trump support vital as Congress tackles immigration issue

WASHINGTON (AP) – The Senate begins a rare, open-ended debate on immigration and the fate of the “Dreamer” immigrants on Monday, and Republican senators say they’ll introduce President Donald Trump’s plan. Though his proposal has no chance of passage, Trump may be the most influential voice in the conversation.

If the aim is to pass a legislative solution, Trump will be a crucial and, at times, complicating player. His day-to-day turnabouts on the issues have confounded Democrats and Republicans and led some to urge the White House to minimize his role in the debate for fear he’ll say something that undermines the effort.

Yet his ultimate support will be vital if Congress is to overcome election-year pressures against compromise. No Senate deal is likely to see the light of day in the more conservative House without the president’s blessing and promise to sell compromise to his hard-line base.

Trump, thus far, has balked on that front.

Senate Majority Leader Mitch McConnell, R-Ky., scheduled an initial procedural vote for Monday evening to commence debate. It is expected to succeed easily, and then the Senate will sort through proposals, perhaps for weeks.

Democrats and some Republicans say they want to help the “Dreamers,” young immigrants who have lived in the U.S. illegally since they were children and have only temporarily been protected from deportation by an Obama-era program. Trump has said he wants to aid them and has even proposed a path to citizenship for 1.8 million, but in exchange wants $25 billion for his proposed U.S.-Mexico border wall plus significant curbs to legal immigration.

 

TRUMP-INFRASTRUCTURE

Trump to unveil $1.5 trillion infrastructure plan

WASHINGTON (AP) – President Donald Trump on Monday will unveil his long-awaited infrastructure plan.

It is a $1.5 billion proposal that fulfills a number of campaign goals but relies heavily on state and local governments to produce much of the funding.

The administration’s plan is centered on using $200 billion in federal money to leverage local and state tax dollars to fix America’s infrastructure.

Trump has repeatedly blamed the “crumbling” state of the nation’s roads and highways for preventing the American economy from reaching its full potential.

Many in Washington believe that Trump should have begun his term a year ago with an infrastructure push, one that could have garnered bipartisan support. Early reaction to the proposal has been divided.

 

GAS PRICES

Average US gas price jumps 7 cents to $2.65 for regular

CAMARILLO, Calif. (AP) – The average price of a gallon of regular-grade gasoline jumped 7 cents nationally over the past three weeks to $2.65.

Industry analyst Trilby Lundberg of the Lundberg Survey said Sunday that the increase is due to higher crude oil costs.

The current gas price is 34 cents above where it was a year ago.

Gas in San Francisco was the highest in the contiguous United States at an average of $3.42 a gallon. The lowest was in Tucson, Arizona, at $2.26 a gallon.

The U.S. average diesel price is $3.04, up 5 cents from three weeks ago.

 

TAKATA BANKRUPTCY

Takata settles with injured drivers to exit bankruptcy

NEW YORK (AP) – Takata Corp’s U.S. unit has reached a settlement with representatives of those injured by lethally defective air bags, paving the way for the company to exit Chapter 11 bankruptcy and move forward with a reorganization plan.

The agreement between the Japanese auto parts supplier, injured drivers and creditors, was outlined in documents filed on Saturday in a Delaware bankruptcy court. Two groups representing people suing over the air bags have dropped their opposition to the plan. Under the settlement, a trust fund will be established to resolve the lawsuits.

Takata was forced into bankruptcy amid lawsuits, multimillion-dollar fines and recall costs involving the air bags. Key to the restructuring plan is the planned sale of most of its assets to a Chinese-owned rival for $1.6 billion.

 

WELLS FARGO

Wells Fargo sends 38,000 erroneous letters in auto flub

NEW YORK (AP) – Wells Fargo has made missteps in its efforts to make amends to customers who were forced to buy unneeded auto insurance.

Bank spokeswoman Catherine Pulley says 38,000 customers received a letter they didn’t need and that contained no refund. She says the error was due to a coding mistake caught by the vendor responsible for the communications.

Pulley says the bank will work to make sure customers get the appropriate communication “including any refunds they’re eligible for.”

The mistake was first reported Sunday by the Wall Street Journal, which detailed a series of struggles in Wells Fargo’s attempts to make things right with customers affected by past sales and lending misconduct.

Pulley also confirmed that Wells Fargo mistakenly sent a check to one non-customer of the bank.

 

FILM-BOX OFFICE

‘Fifty Shades Freed’ commands $38.8 million to top charts

LOS ANGELES (AP) – “Fifty Shades Freed” has topped the North American box office in its first weekend in theaters.

Universal Pictures estimates Sunday that the final chapter in the Christian Grey and Anastasia Steele saga has earned $38.8 million, which is down significantly from the first film’s $85.2 million debut and the sequel’s $46.6 million opening.

The steamy romance outdid other new competitors like Sony’s CG and live-action update of “Peter Rabbit” and Clint Eastwood’s “The 15:17 to Paris.” “Peter Rabbit” hopped to second place with $25 million and “The 15:17 to Paris” pulled into third place with $12.6 million.

“Jumanji: Welcome to the Jungle” fell to fourth place with $9.8 million and “The Greatest Showman” took fifth with $6.4 million.

 

SEXUAL HARASSMENT-WEINSTEIN

Weinstein’s attorney: Lawsuit ‘without merit’

NEW YORK (AP) – A lawyer for disgraced Hollywood movie producer Harvey Weinstein says he believes a “fair investigation” by New York’s attorney general will show that many of the allegations against Weinstein are “without merit.”

State Attorney General Eric Schneiderman (SHNEYE’-dur-muhn) filed a lawsuit in Manhattan on Sunday against Weinstein and the Weinstein Co. following an investigation into allegations of sexual misconduct.

In court papers, Schneiderman says the Weinstein Co. “repeatedly broke New York law by failing to protect its employees from pervasive sexual harassment, intimidation and discrimination.”

Schneiderman also says that any sale of the company “must ensure that victims will be compensated” and that employees will be protected.

In a statement Sunday night, Weinstein’s attorney, Ben Brafman, says that while Weinstein “was not without fault, there certainly was no criminality.”

 

FILM-PETER RABBIT-ALLERGY BACKLASH

Peter Rabbit’ team apologizes for making light of allergies

LOS ANGELES (AP) – “Peter Rabbit” filmmakers and the studio behind it are apologizing for insensitively depicting a character’s allergy in the film that has prompted backlash online.

Sony Pictures says Sunday in a statement the film “should not have made light” of a character being allergic to blackberries “even in a cartoonish” way.

In “Peter Rabbit” which was released this weekend, the character of Mr. McGregor is allergic to blackberries. The rabbits fling the fruit at him in a scene and he is forced to use an EpiPen.

The charity group Kids with Food Allergies posted a warning about the scene on its Facebook page Friday prompting some on Twitter to start using the hashtag (hash)boycottpeterrabbit.

The studio and filmmakers say they regret not being more aware and sensitive to the issue.

 

PURDUE PHARMA-OPIOIDS

OxyContin maker will stop promoting opioids to doctors

NEW YORK (AP) – The maker of the powerful painkiller OxyContin said it will stop marketing opioid drugs to doctors, a surprise reversal following lawsuits that blamed the company for helping trigger the current drug abuse epidemic.

OxyContin has long been the world’s top-selling opioid painkiller. It generated billions in sales for privately-held Purdue.

The pill, a time-release version of oxycodone, was hailed as a breakthrough treatment for chronic pain when it was approved in late 1995. But some users quickly discovered they could get a heroin-like high by crushing the pills and snorting or injecting the entire dose at once.

Purdue’s promotions exaggerated the drug’s safety and risks of addiction, leading to lawsuits and federal investigations. But the drug continued to rack up blockbuster sales.

 

OKLAHOMA-WIND FIGHT

Oklahoma pulling up red carpet offered to wind industry

OKLAHOMA CITY (AP) – A battle is shaping up at Oklahoma’s Capitol over the burgeoning wind industry that is facing fierce opposition from some oil-and-gas leaders and critics who say the state has been too generous with incentives. Oklahoma rolled out the red carpet for the industry more than a decade ago with subsidies that now cost the state tens of millions of dollars each year.

Now those subsidies have all been ended, but there is still a push to impose a new production tax on wind energy and maybe even cap previously promised incentives.

Supporters of wind say the state is going back on its word and threatening an industry that has proven to be beneficial to the state, offering a new revenue stream for landowners and local school districts.

 

RUSSIA-NUCLEAR CRYPTO-CURRENCY

Russian nuke researchers arrested for illicit crypto-mining

MOSCOW (AP) – Two employees of Russia’s top nuclear research institute have been arrested for using the facility’s supercomputer for crypto-currency mining.

Russian news agencies cited the Russian Federal Nuclear Center as confirming the arrests on Friday. But the reports did not indicate whether the employees had made any money from the computer use. In mining, computers are used to solve mathematical problems to verify transactions and are rewarded in crypto-currency.

The center, in the closed-off city of Sarov, 400 kilometers (240 miles) east of Moscow, is a research and development facility for nuclear weapons.

The Interfax and state RIA-Novosti news agencies cited the center as saying that criminal charges apparently were filed against the employees, but the charges were not specified.

 

AMTRAK CRASH COSTS

Who’s at fault in Amtrak crash? Amtrak will pay regardless

WASHINGTON (AP) – How CSX railway crews routed an Amtrak train into a parked freight train in Cayce, South Carolina, remains under investigation. But even if CSX should bear sole responsibility for last weekend’s accident, Amtrak will likely pay legal claims with public money.

Amtrak pays for accidents it didn’t cause because of secretive agreements negotiated between the passenger rail company and the railroads on whose tracks the federally subsidized Amtrak travels.

Plaintiffs’ lawyers and former Amtrak officials tell The Associated Press that Amtrak generally bears the full cost of damages to its trains, passengers, employees and other crash victims. And that’s even in cases of negligence or misconduct by a freight rail company.

Some federal courts have long concluded that allowing railroads to escape liability for gross negligence is bad public policy.

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