Los Angeles Times - 09.11.2019

C4 LATIMES.COM/BUSINESS

The stock market capped
another week of healthy
gains Friday, but it ended on
more of a befuddled note as
confusion about the U.S.-
China trade war hung over
the market.
Stocks wobbled between
small gains and losses
through the day amid con-
flicting signals about the
progress being made by U.S.
and Chinese negotiators.
President Trump said he
has not agreed to roll back
any tariffs, just a day after a
Chinese official said the two
sides had agreed to do just
that if talks progress.
Stocks and bond yields
dipped immediately after
Trump told reporters at the
White House, “I haven’t
agreed to anything.” But af-
ter flip-flopping through the
day, the S&P 500 turned
higher in the last hour of
trading and closed at a
record 3,093.08, up 7.90, or
0.3%.
It’s the fifth straight week
of gains for the index, which
matches its longest winning
streak in the last two years.
The Dow Jones industrial
average edged up 6.44
points, or less than 0.1%, to
27,681.24, and the Nasdaq
composite gained 40.80, or
0.5%, to 8,475.31.
“The general tone of the
market will continue to be
very cautiously optimistic,”
said JJ Kinahan, chief mar-
ket strategist at TD Ameri-
trade.
Even with the conflicting
signals on the trade war, mo-
mentum has seemed to be in
the direction of a stopgap
deal.
Wall Street hopes only
that it will keep the trade
war from worsening: Anoth-
er round of tariffs on Chinese
goods is scheduled to begin
next month. Investors aren’t
expecting a grand bargain
anytime soon that solves all
the problems between the
world’s two largest econo-
mies.
Economic reports have
been encouraging recently
and show the job market re-
mains strong. Interest rates
are low after three cuts by
the Federal Reserve, and
corporate profits haven’t
been as bad as Wall Street
feared.
Rising confidence can be

found not only in record-

high stock prices but also in

a sharp rise for Treasury

yields.

When investors feel less

need for safety, they sell gov-

ernment bonds. And when

Treasury prices fall, their

yields rise. The 10-year

Treasury yield climbed to

1.94% from 1.92% late Thurs-

day and from a low of 1.50%

just last month.

Not only are yields on the

rise, so is the gap between

short- and long-term Treas-

urys. That’s seen as a vote of

confidence in the economy

by the bond market, and it

means a closely followed

warning bell about recession

has turned silent.

The 10-year Treasury

yield dropped below the two-

year yield in late August and

early September. It’s a rela-

tively rare thing, and it has

often correctly predicted re-

cessions in the past, though

it doesn’t have a perfect

record.

Since the summer,

though, increased optimism

in the economy and the odds

of a U.S.-China trade deal

have flipped the yield curve

back to normal.

The gap between the two-

and 10-year Treasurys is

back at its healthiest level

since July.

Walt Disney jumped 3.8%

for one of the biggest gains in

the S&P 500 after it reported

stronger profit for the latest

quarter than Wall Street ex-

pected, thanks in part to its

“Toy Story 4“ and “The Lion

King” movies.

The company also said it

received a positive response

from a test of its planned

streaming service, Disney+.

On the losing end was

Gap, which sank 7.6% for the

largest loss in the S&P 500

after the retailer slashed its

profit forecast for the year. It

also announced the resigna-

tion of Chief Executive Art

Peck.

Benchmark crude oil

rose 9 cents to settle at $57.24

a barrel. Brent crude oil, the

international standard, rose

22 cents to $62.51 a barrel.

Gold rose $2.90 to

$1,461.30 per ounce and silver

rose 19 cents to $16.78 per

ounce.

The dollar fell to 109.15

Japanese yen from 109.31 yen

on Thursday. The euro

weakened to $1.1024 from

$1.10 4 8.

Interest rates

T-bill: 1 year 1.56 +0.04 -0.81 -1.16

T-note: 5 year 1.74 +0.20 -0.54 -1.30

T-note: 10 years 1.93 +0.21 -0.52 -1.26

T-bond: 30 years 2.42 +0.21 -0.47 -1.00

Weekly 6 month 1 year

Treasuries Yield change change change

Major stock indexes

Dow industrials 27,681.24 +6.44 +0.02 +18.66

S&P 500 3,093.08 +7.90 +0.26 +23.39

Nasdaq composite 8,475.31 +40.80 +0.48 +27.73

S&P 400 1,998.39 +5.75 +0.29 +20.16

Russell 2000 1,598.86 +4.87 +0.31 +18.56

EuroStoxx 50 3,337.29 -2.47 -0.07 +20.91

Nikkei (Japan) 23,391.87 +61.55 +0.26 +16.87

Hang Seng (Hong Kong) 27,651.14 -196.09 -0.70 +7.10

Daily Daily % YTD %

Index Close change change change

6 Month CD 0.79 0.87 0.90 0.86

1 Year CD 1.15 1.22 1.26 1.44

2 Year CD 1.19 1.20 1.22 1.54

30 Year Fixed 3.81 3.75 3.80 4.05

15 Year Fixed 3.24 3.16 3.19 3.47

30 Year Jumbo 4.39 4.30 4.40 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

57.24 +1.04 -2.95

1,461.30 -46.70 +254.90

16.78 -1.22 +2.68

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:27,681.24

Up 6.44

Dow: six months

MARKET ROUNDUP

S&P 500 posts

its 5th straight

week of gains

associated press

on our extensive portfolio of

owned and leased real es-

tate,” the company said. It

listed the Kenmore and

DieHard brands among its

assets.

ESL can recoup some of

its investment in Sears

through the sale of proper-

ties it closes, but the hedge

fund may need some help,

according to Jim Sullivan, an

equity research analyst at

BTIG who follows the com-

mercial property industry.

“To develop these assets

and maximize the returns

you really need to be working

with one of the major estab-

lished retail real estate de-

velopers,” Sullivan said.

Lampert bought Kmart

out of Chapter 11 in 2003 and

merged it with Sears two

years later.

But the combination of

the two ailing retailers

lagged behind ascendant

merchants such as Walmart

Inc., Target Corp. and Ama-

zon.com Inc., and the com-

pany spiraled into a decline

that produced almost $11 bil-

lion in losses until it finally

filed for bankruptcy protec-

tion in October 2018.

Lampert’s vision for the

new company involves

smaller locations emphasiz-

ing appliances and other

home items. To that end, he

bought the remaining stake

in Sears Hometown and

Outlet Stores Inc. that he

didn’t already control,

bringing the unit spun off in

2012 back under his over-

sight.

The smaller Hometown

stores feature appliances

and lawn and garden mer-

chandise and are located in

areas not served by full-size

Sears stores.

Gabriella Santaniello,

founder of retail consulting

firm A Line Partners, said

that she’s not surprised by

the latest round of store clo-

sures from Sears, and that it

makes more sense for the

company to focus on the

Sears Hometown chain.

Sears has “lost so much

of their footprint and their

relevance with the American

consumer,” Santaniello said.

“It’s not that crazy of a strat-

egy for them to just focus on

[appliances],” she said, add-

ing that “in terms of apparel

and being a competitor in

that space, that ship has

sailed completely.”

After the latest round of

closings, Sears will be about

the size of a regional grocery

chain.

The department store

behemoth once blanketed

the U.S. and Canada with

more than 4,000 stores and

sold everything from ready-

to-assemble houses to

Christmas trees, billing itself

as “Where America Shops.”

Now, with only 182 stores,

Sears’ scale will be on par

with the likes of Weis Mar-

kets Inc., which owns gro-

cery stores in Pennsylvania

and New York, and quirky

specialty retailers like Crocs

Inc.

The sharp reduction of

store count exacerbates

doubts about whether the

company can compete —

not just with merchants like

Walmart and Target, but

also with the likes of Home

Depot Inc. and Lowe’s Cos.,

which have muscled into the

appliance space Sears used

to dominate.

“From a logistics per-

spective, supply chain, buy-

ing power, sourcing — all of

that — it’s going to be even

harder to maintain optimal

competitiveness, brand

competitiveness, but also

price competitiveness,” said

Michael Osborne, chief exe-

cutive and president at con-

sulting firm SmarterHQ.

To pull off a comeback,

“you’d really have to have a

store experience that was

unbelievable so that folks

wanted to seek out your

store, like a real showroom

and real high-end experi-

ence,” he said.

“They don’t have that ei-

ther. And they haven’t for

decades, really.”

Sears and Kmart still struggling

[Retail,from C1]

immigrants has scared away

local workers.

The rapid shift to con-

tracted seasonal guest

workers has created ten-

sions in fields between local

hires and the visa holders,

and produced an uptick in

fines and settlements over

allegations of wage abuse.

The U.S. Department of

Labor announced results

this week of long-term inves-

tigations that recovered

nearly half a million dollars

in lost wages from 10 con-

tractors and growers,

mostly in Central Coast

berry fields.

Those cases pale in com-

parison with a $2.2-million

settlement this summer cov-

ering thousands of workers

contracted to pick for Sa-

linas Valley industry leaders

Taylor Farms California and

Dole Fresh Vegetables. The

vast majority of the foreign

agricultural workers are

hired through contractors —

Fresh Harvest, head-

quartered in the Central Val-

ley, which recruited about

4,800 workers this year, is the

largest private contractor of

H-2A workers nationally, ac-

cording to the Labor De-

partment’s Office of Foreign

Labor Certification.

“Left and right we’re see-

ing these workers being

brought in and California

laws are being violated,” said

Cynthia Rice, director of liti-

gation, advocacy and train-

ing for California Rural Le-

gal Assistance, a nonprofit

that led the case involving

Salinas-based Foothill

Packing, which contracted

workers for Taylor and Dole.

“Federal laws are being vio-

lated, and local housing laws

are being violated.”

Growers say they are be-

ing stung by regulations

they find ambiguous and dif-

ficult to follow, including

how to account for travel

time during the workday,

which has been at the center

of recent enforcement and

lawsuits.

“It’s unfortunate that

these things get cast as be-

ing more nefarious than they

are,” said Jim Houston, ad-

ministrator of the California

Farm Bureau Federation, a

nonprofit industry group.

“When an employer makes a

decision one way or another,

it’s not to rob the employee.”

No private company

hires more than 2% of the

quarter-million H-2A work-

ers nationwide, suggesting a

highly fragmented niche

with many players, accord-

ing to Labor Department

data.

That may be part of the

problem, said Guadalupe

Sandoval, managing direc-

tor of the California Farm

Labor Contractor Assn. “It’s

growing so fast in such a

short period of time that I

think there are a lot of peo-

ple jumping in who are not

very well-informed,” San-

doval said.

In the latest enforce-

ment, the Labor Depart-

ment charged about $85,000

in fines and recovered about

$422,000 in lost wages for 443

workers for time lost mainly

to transportation between

fields. Other violations in-

cluded failure to pay min-

imum wage, missing pay-

checks, unlawfully rejecting

U.S. workers, failing to pro-

vide safe housing, and failing

to meet safe transportation

requirements for workers.

The agency did not break

down the violations or fines

by employer.

Some of the violations

apply to local hires as well as

visa holders, including

whether laborers are paid

for time spent on company

buses and vans traveling be-

tween fields.

The H-2A program adds

another layer of rules. For-

eign agricultural laborers

must be provided transport

from the U.S.-Mexico border

to the area where they will

work, and are entitled to em-

ployer-paid local lodging for

the season as well as daily

meals (or access to cooking

facilities). Companies em-

ploying foreign guest work-

ers also must show they

made efforts to find and hire

local applicants.

The lodging requirement

has spurred contractors to

buy up lower-tier hotels and

urban apartments, adding

more strain to the affordable

housing gap in cities such as

Santa Maria, Salinas and

other agricultural centers.

Activists say the housing

crunch also has driven some

contractors to cut corners,

crowding more workers into

seasonal lodging than is per-

mitted, Rice said. “They get

a house certified for maybe

12 or 15 workers and they jam

in 20 or more,” Rice said.

Other workers are iso-

lated on or near rural farms

with little access to food out-

lets other than a roving

catering truck, and find

their meal vouchers don’t

cover the number of calories

needed for long shifts in the

summer heat, Rice added.

“The biggest issue is

workers feeling that if they

say anything, they’re going

to be sent back to Mexico,”

said Armando Elenes, secre-

tary-treasurer of the United

Farm Workers union, which

has pushed back on efforts

to ease regulation on H-2A

contracts. Some foreign visa

holders report being co-

erced to pick the same vol-

ume as local workers, with-

out earning the “piece rate”

premiums that local pickers

earn per carton, above the

minimum wage, Elenes said.

The use of visa-holding

laborers has affected the

power dynamic between

growers and workers at a

time when laborers could be

demanding higher wages

and better benefits, labor ex-

perts say. Locally hired

workers — who may or may

not have proper documents

— fear deportation or re-

placement with H-2A labor-

ers, whose wages are set by

the federal government. And

the visa holders fear they will

not be recruited next season

if they complain.

That makes it hard to

fight abuses, despite a sharp

increase in complaints regis-

tered at the field offices of

California Rural Legal As-

sistance.

The group has focused its

efforts on an issue shared by

both types of workers: pay-

ment for time taken up by

transportation.

California Rural Legal

Assistance has made the

case that employers provid-

ing company transport ex-

ert control over workers who

effectively have no other rea-

sonable way to move from

one field to another. That

makes their time on buses

part of the wage-earning

day, the group has charged.

Growers say their bus or

van rides are a voluntary op-

tion for workers who have

other means of travel, such

as car and van pools.

Foothill Packing, along

with Taylor and Dole, admit-

ted no wrongdoing in set-

tling the lawsuit brought by

the legal assistance group

on behalf of more than 3,900

workers over three picking

seasons. Representatives of

those companies could not

be reached for comment.

Another lawsuit centered

on payment for transporta-

tion time for strawberry

pickers in the Santa Maria

Valley is pending in U.S. Dis-

trict Court.

The Labor Department

has slowly increased its

scrutiny of the H-2A pro-

gram in California and

neighboring Arizona grow-

ing regions over the last five

years.

It won a rare injunction

against an Arizona grower in

2017 over unsanitary and

dangerous housing for H-2A

workers, and in 2016, it fined

a Salinas-area strawberry

grower $2.6 million and tem-

porarily banned him from

the H-2A program over alle-

gations that he demanded

kickbacks from guest work-

ers he recruited. It also won

$235,000 in back wages and

fines in 2016 from Foothill

Packing over allegations

that the company had fired

locally hired laborers and re-

placed them with guest

workers.

A LETTUCE WORKER in Salinas. Growers accused of wage abuse say they are being stung by regulations

they find ambiguous and difficult to follow, including how to account for travel time during the workday.

Gary CoronadoLos Angeles Times

Wage disputes cropping up

[Farmworkers, from C1]

‘Left and right

we’re seeing these

workers being

brought in and

California laws

are being

violated.’

— Cynthia Rice,

California Rural Legal

Assistance