Los Angeles Times - 02.11.2019

C4 LATIMES.COM/BUSINESS

U.S. stock indexes set
new record highs again Fri-
day after an encouraging
jobs report gave reassur-
ance that the nation’s econo-
my is still solid, despite the
pain that factories are feel-
ing from President Trump’s
trade war.
The Labor Department’s
report showed that employ-
ers added more jobs in Octo-
ber than economists ex-
pected, and hiring was
stronger in prior months
than previously thought.
The numbers were encour-
aging enough for investors
to overlook yet another re-
port showing U.S. manufac-
turing is weakening more
than expected.
The Standard & Poor’s
500 index rose 29.35 points,
or 1%, to 3,066.91, setting an
all-time high for the third
time this week. It capped a
fourth straight week of
gains, its longest winning
streak since March.
The Nasdaq composite
climbed 94.04 points, or 1.1%,
to 8,386.40, setting a new
record for the first time since
July. The Dow Jones indus-
trial average climbed 301.13,
or 1.1%, to 27,347.36. It’s
within 12 points of its record
high, set in July.
Together, Friday’s re-
ports solidified Wall Street’s
view that the economy is
nestled in a sweet spot. The
job market is strong enough
to encourage spending by
households, which has been
the economy’s driving force.
Traders hope that will make
up for the downturn in in-
vestment by businesses,
which have been holding off
on spending given all the un-
certainty about global trade.
Such a balance should in
turn keep the Federal Re-
serve holding interest rates
steady at their low levels,
economists said. Low inter-
est rates can goose econo-
mic activity. They also make
stocks more attractive as in-
vestments relative to bonds.
Treasury yields climbed
as optimism rose and tra-
ders pared back bets that
the Fed — which cut interest
rates this week for the third
time this year — will cut
rates again in the next few
months. The yield on the 10-
year Treasury climbed to

1.71% from 1.69%. The two-

year yield, which moves

more on expectations of Fed

actions, rose to 1.56% from

1.55%.

Earlier in the day, yields

were under pressure im-

mediately after the manu-

facturing report’s release,

which showed a third

straight month of contrac-

tion. The report echoed

weak data points on manu-

facturing from around the

world as factories feel the

brunt of the global trade war.

But even there, econo-

mists see some glimmers of

optimism, such as a rebound

in export orders, said Derek

Hamilton, global economist

at Ivy Investments. And af-

ter combining that with Fri-

day’s better-than-expected

jobs report, investors halved

their expectations for an-

other Fed rate cut this year,

down to a probability of 11%

from 22% a day earlier.

“Over the last decade,

we’ve had these mini-cycles

where manufacturing activ-

ity slows quite a bit, but the

consumer keeps the econo-

my going, and I think that’s

what’s going on right now,”

Hamilton said.

The wild card, as has

been the case since Trump

professed in early 2018 that

trade wars are good and easy

to win, is what happens in

U.S.-China trade talks. The

world’s largest economies

have agreed to at least a tem-

porary truce in what Trump

has dubbed “phase one” of a

trade deal. But uncertainty

reigns over what will come of

the talks.

“If we wake up tomorrow

morning and get a tweet

from President Trump that

the deal is off, we’re raising

tariffs, then all this is out the

window,” Hamilton said.

In the interim, compa-

nies have continued to re-

port profits that are weaker

than a year earlier but not as

bad as Wall Street expected.

So far, roughly 70% of the

companies in the S&P 500

have reported how much

they made in the July-

through-September quar-

ter; they’re on pace for an

earnings decline of 2.8%, ac-

cording to FactSet.

The slowing global econ-

omy is a big reason for the

drop. But the drop isn’t as

big as the 4% decline that

analysts were forecasting.

Interest rates

T-bill: 1 year 1.52 -0.07 -0.85 -1.15

T-note: 5 year 1.54 -0.08 -0.75 -1.50

T-note: 10 years 1.72 -0.08 -0.79 -1.49

T-bond: 30 years 2.21 -0.08 -0.71 -1.25

Weekly 6 month 1 year

Treasuries Yield change change change

Major stock indexes

Dow industrials 27,347.36 +301.13 +1.11 +17.23

S&P 500 3,066.91 +29.35 +0.97 +22.34

Nasdaq composite 8,386.40 +94.04 +1.13 +26.39

S&P 400 1,983.50 +28.13 +1.44 +19.27

Russell 2000 1,589.33 +26.88 +1.72 +17.85

EuroStoxx 50 3,284.15 +16.93 +0.52 +18.99

Nikkei (Japan) 22,850.77 -76.27 -0.33 +14.17

Hang Seng (Hong Kong) 27,100.76 +194.04 +0.72 +4.97

Daily Daily % YTD %

Index Close change change change

6 Month CD 0.87 0.92 0.91 0.86

1 Year CD 1.22 1.26 1.28 1.47

2 Year CD 1.20 1.25 1.22 1.57

30 Year Fixed 3.75 3.77 3.71 4.09

15 Year Fixed 3.16 3.17 3.12 3.50

30 Year Jumbo 4.30 4.31 4.20 4.39

Week 6 months 1 year

Bank & mortgage rates Rate ago ago ago

Commodities

Oil: Barrel Dec 19

Gold Ounce Nov 19

Silver Ounce Nov 19

Delivery Close Weekly 1 year

Commodity: Unit date in $ change change

56.20 -0.46 -6.94

1,508.00 +8.50 +277.10

18.00 +0.14 +3.30

Associated Press (Bank and mortgage rate figures from Bankrate.com)

Online updates

For current market coverage plus stock prices and

company data, go to latimes.com/business

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MJJA SO N

Friday:27,347.36

Up 301.13

Dow: six months

MARKET ROUNDUP

Stocks hit new

highs, buoyed

by jobs report

associated press

complex.

GPI Cos., meanwhile, has

renamed the former Macy’s

building West End and will

substantially alter the mid-

century-style structure in a

$180-million redevelopment.

While owners of shutter-

ed shopping malls in many

parts of the country have

struggled to find new uses

for them, the failure of the

Westside Pavilion offered an

opportunity to create new

office space in one of the

tightest office markets in the

West, said Drew Planting,

co-founder of GPI. Few large

blocks of space are available

on the Westside, and rents

there are among the highest

in Los Angeles County.

Indoor malls can be good

candidates for conversion to

“creative” offices in part be-

cause they typically have

large floor spaces, ample

parking and high ceilings

that many design-conscious

tenants find desirable.

The Westside Pavilion

had a parking structure for

approximately 1,500 cars,

but it is obsolete and hard to

navigate, Planting said. The

old structure will be demol-

ished in phases and replaced

with a 1,000-car garage that

will serve both West End and

a portion of Google’s space

in the redeveloped mall,

which Hudson Pacific has

renamed One Westside. The

mall developer and GPI have

agreed to share parking in

the new garage.

Work already underway

will turn West End into a

230,000-square-foot office

complex set for completion

in the first quarter of 2021.

The three-story building will

be cut from a rectangle into

an “H” shape in order to in-

troduce more natural light

and create corner spaces for

ground-floor restaurants,

bars and stores.

The design by archi-

tecture firm HLW calls for

floor-to-ceiling glass win-

dows wrapping the exterior

facades, a three-level central

courtyard, private balconies

and indoor and outdoor

gathering spaces. The intent

is to create the kind of flex-

ible work environment “in

such high demand by to-

day’s leading creative and fi-

nancial companies,” said Se-

jal Sonani, design principal

at HLW.

Planting said he hopes

surviving design elements

from the 1960s — such as

concrete slab ceilings that

look like giant waffles,

mansard roof and exterior

arches resembling hockey

sticks — will help give West

End a funk factor that can’t

be found in generic office

buildings.

“There is a big gap be-

tween what is cool and what

is a commodity in the rent

that can be charged,” Plant-

ing said.

The former department

store was built by May Co. in

1964 at Pico Boulevard and

Overland Avenue to be one

of its larger full-line stores.

The Westside Pavilion incor-

porated the older May Co.

store when it was built in the

mid-1980s, replacing a strip

mall called Westland Shop-

ping Center.

May Co. was acquired by

Macy’s in 2005 when it

bought Federated Depart-

ment Stores, May Co.’s par-

ent company.

GPI bought the building

and garage on six acres from

Macy’s for $50 million in 2017.

Hudson Pacific and its

partner Macerich also own a

six-acre portion of the for-

mer Westside Pavilion but

control more future office

space. Mountain View-

based Google has agreed to

occupy 584,000 square feet

by 2022 in space designed by

architecture firm Gensler.

The two developments at

the old mall will be comple-

mentary, said Lee Wagman,

a managing partner at GPI.

“It’s helpful that Google

is next door with a well-de-

signed project,” Wagman

said. “Hudson and Gensler

will do a great job.” The 12-

screen Landmark Theatres

complex will remain in the

reconfigured complex, as

will the Westside Tavern

restaurant and other shops

mostly on the ground floor

along Pico and Westwood

boulevards.

The Westside Pavilion

was once one of the city’s

premier shopping venues

and a cultural touchstone

for generations of Ange-

lenos, appearing in movies,

television shows and music

videos.

It played roles in the 1995

film “Clueless” and the video

for musician Tom Petty’s

1989 hit “Free Fallin’.”

In recent years the mall,

now mostly empty, fell be-

hind flashier competitors

such as the Grove and the re-

furbished Westfield Century

City malls. The rise of online

shopping also took a toll,

and anchor department

stores Macy’s and Nord-

strom departed.

Its future as an office

complex is brighter, said real

estate broker Carl

Muhlstein of JLL, who rep-

resents West End for GPI.

Demand for Westside offices

has held steady since the

last recession and big media

companies including

Google, Amazon and Apple

have grabbed big blocks of

space with a level of aggres-

sion not seen in the previous

real estate cycle.

Those companies and

other big media players in-

cluding Netflix have been ty-

ing up new Los Angeles of-

fice space before it is fin-

ished and before they actu-

ally need it, Muhlstein said.

“The demand now is from

the larger-size tenants be-

cause they are not only ex-

panding but doing forward

commitments,” he said. In-

terest in occupying West

End has come from media,

tech, esports and financial

services firms.

THE FORMER Macy’s building is being reimagined as an office space designed to attract creative and finan-

cial companies. The 230,000-square-foot West End office complex is set for completion in early 2021.

HLW

Westside offices in demand

[Westside, from C1]

game, director of reproduc-

tive justice and gender

equity at the ACLU of

Northern California.

“Both Adventist Health

and St. Joseph Health are

very disappointed in the

outcome of this decision,”

Adventist Health said in a

statement. “At this time, our

organizations will need to

take a step back and deter-

mine implications of this

decision.”

The spread of religious

restrictions on healthcare

has increasingly become an

issue as Catholic hospitals

enter into affiliations with

nonsectarian institutions or

others that don’t share their

doctrinal rules. Catholic

hospitals now account for

roughly 1 in 6 U.S. hospital

beds.

Earlier this year, those

concerns torpedoed a pro-

posed affiliation between

Dignity Health, a Catholic

chain, and UC San Fran-

cisco Medical Center. Many

professionals at UCSF, as

well as some UC regents,

objected to UCSF profes-

sionals and patients becom-

ing subject to Catholic

healthcare restrictions.

“Religious freedom is

important,” Burlingame

told me, “but it should not

be used to impose on other

people’s healthcare and

harm them.”

Becerra has also been

concerned with the tenden-

cy of hospital mergers to

drive up healthcare costs in

the affected markets. In a

lawsuit last year, he accused

the giant hospital chain

Sutter Health of price fixing

in the Northern California

markets it dominates. The

lawsuit was recently settled,

on terms that remain undis-

closed, just before trial was

scheduled to start in San

Francisco state court.

The four hospitals

owned by St. Joseph Health

— Queen of the Valley Medi-

cal Center in Napa, Santa

Rosa Memorial Hospital, St.

Joseph Hospital of Eureka

and Redwood Memorial

Hospital of Fortuna — are

all governed by the Ethical

and Religious Directives for

Catholic Health Care

Services.

Under state law, Becerra

has a say in the transfer of

any not-for-profit hospital

in the state. Earlier this

year, he tried to block the

sale of two hospitals owned

by bankrupt Verity Health

System to Santa Clara

County, where they are

located, unless sale condi-

tions imposed by his prede-

cessor, Kamala Harris,

remained in place. The

conditions included man-

dates for job preservation

and charity care. A federal

bankruptcy judge rejected

Becerra’s conditions and

approved the sale in April.

Verity had been a long-

struggling chain; before the

bankruptcy, the hospitals

and four other Verity facili-

ties had been managed by a

firm controlled by Dr. Pat-

rick Soon-Shiong, owner of

The Times, but the firm had

been unable to turn them

around.

The document, a prod-

uct of the U.S. Conference of

Catholic Bishops, bars

virtually all abortions, in

vitro fertilization, the distri-

bution of contraceptives,

assisted suicide and gender-

affirming care such as hor-

mone treatments and sur-

geries for transgender pa-

tients, among other treat-

ments.

The Adventist guidelines

are less restrictive, but the

church regards abortion for

birth control as “not morally

acceptable” and frowns on

LGBTQ relationships.

Church doctrine states that

it “strongly cautions trans-

gender people against sex

reassignment surgery and

against marriage, if they

have undergone such a

procedure.”

The ACLU, in its formal

comments on the proposed

merger, said that “if the

provision of healthcare is to

be guided by such state-

ments, it casts serious

doubt on an institution’s

ability to treat a transgen-

der patient without bias and

as a whole, integrated per-

son.” The Adventist hospi-

tals in the merger are lo-

cated in Ukiah, Willits, St.

Helena, Clear Lake and

Vallejo.

Although the two sys-

tems told Becerra that each

would retain its religious

character after the merger,

there was reason to ques-

tion whether the Adventist

hospitals would see Catho-

lic rules become their prac-

tices over time. The latest

edition of the Catholic direc-

tives, issued in 2018, warns

against affiliations in which

the Catholic institution or

its employees even “assist”

or “make referrals” for “im-

moral procedures” such as

abortions.

In 2013, physicians at

Hoag Memorial Hospital in

Newport Beach were barred

from performing abortions

after Hoag became affiliat-

ed with St. Joseph Health.

Hoag, a Presbyterian-affili-

ated institution, had never

placed restrictions on the

procedure before then.

The post-merger plans of

Adventist and St. Joseph

called for the closing of the

obstetrics and behavioral

health units at Adventist’s

St. Helena hospital and

replacing them with facili-

ties for emergency services,

cardiology, cardiac surgery,

oncology and orthopedics.

As Health Access Cali-

fornia observed in its com-

ments on the proposal,

obstetrics services would be

relocated to St. Joseph’s

Queen of the Valley hospital

in Napa, which is 20 miles

away and subject to the

Catholic restrictions on

reproductive care. Those

restrictions would prevent

sterilization services such

as tubal ligations from being

performed at the time of

delivery, when the pro-

cedure is safest and most

efficient.

“Some of those served at

Queen of the Valley would

be forced to travel even

further to receive perinatal/

obstetrical care which is

often time sensitive,”

Health Access noted.

Keep up to date with

Michael Hiltzik. Follow

@hiltzikm on Twitter, see

his Facebook page, or email

michael.hiltzik

@latimes.com.

State blocks hospital merger

[Hiltzik,from C1]