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Update on the latest business

November 28, 2018

FINANCIAL MARKETS

Stocks surge

NEW YORK (AP) — Stock indexes are surging as investors welcome remarks by Federal Reserve Chairman Jerome Powell. Powell hinted that the Fed might be willing to raise interest rates at a slower pace next year, a potential relief for investors worried about slowing economic growth.

Software maker Salesforce is leading a rally in technology companies. Health care stocks are also higher.

Luxury retailer Tiffany plunged 12 percent after saying tourists from China pulled back on spending in its latest quarter.

FEDERAL RESERVE-POWELL

Powell: US economy and banks seem sturdy but face some risks

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell cast a bright picture of the U.S. economy Wednesday and appeared to suggest that the Fed might consider a pause in its interest rate hikes next year to assess the impact of its credit tightening.

Powell’s comments ignited a rally on Wall Street.

Referring to the Fed’s gradual increases in its benchmark rate, Powell said, “there is no preset policy path.” Rather, he said, the Fed will assess the most recent economic and financial data in deciding whether or how fast to keep raising rates.

The Fed has raised its benchmark short-term rate, now in a range of 2 percent to 2.25 percent, three times this year and is expected to do so again next month. But the likely pace of rate increases next year remains a subject of speculation.

Speaking to the Economic Club of New York, the Fed chairman also said that while some corporate debt loads have reached riskier levels, “we do not see dangerous excesses in the stock market.”

ECONOMY-GDP

US economy grew at brisk 3.5 pct. annual rate last quarter

WASHINGTON (AP) — The U.S. economy expanded at a solid 3.5 percent annual rate in the July-September quarter, led by lower but still strong consumer spending and more business investment than previously estimated.

The Commerce Department’s figure for gross domestic product, the broadest measure of the nation’s output of goods and services, was the same as its first estimate last month. Greater corporate investment offset downward revisions in spending by state and local governments and consumers.

The third quarter figure follows a robust expansion of 4.2 percent in the April-June quarter. Six months of healthy growth have put the U.S. economy on track to expand in 2018 at its fastest pace in 13 years. Still, economists forecast that growth will slow in the fourth quarter and decelerate further next year.

NEW HOME SALES

US new-home sales plunged 8.9 percent in October

WASHINGTON (AP) — Sales of new U.S. homes plummeted 8.9 percent in October, as the number of newly built, unsold homes sitting on the market climbed to its highest level since 2009.

The Commerce Department says that new homes sold at a seasonally adjusted annual rate of 544,000 last month. New-home sales have declined in four of the past five months. Over the past 12 months, sales of new homes have dropped 12 percent as higher mortgage rates have caused would-be buyers to back away.

The decline has left homebuilders with 336,000 homes available to buy, the highest level since January 2009 when the real estate market was still sorting through the wreckage of the last decade’s housing bubble.

The median sales price has tumbled 3.1 percent from a year ago, to $309,700.

TAX FRAUD

Businessman gets prison for federal tax evasion of $4.8M

HARTFORD, Conn. (AP) — A Connecticut businessman who prosecutors say led the IRS on a “wild goose chase” by avoiding paying more than $4.8 million in federal income taxes has been sentenced.

Federal prosecutors say 58-year-old David Adams was sentenced to 7 ½ years in prison Tuesday in U.S. District Court in Hartford.

The Old Saybrook man pleaded guilty last year to multiple offenses including tax evasion and making and subscribing a false tax return.

Prosecutors say Adams engaged the IRS in the decades-long chase to avoid paying taxes as far back as the 1980s.

Officials say Adams hid $4.7 million in profits after selling his stake in an online floral business in 2011. Prosecutors say Adams lied to IRS officers and filed fraudulent returns.

Adams has been ordered to pay back taxes including interest and penalties.

SISTERS-HEALTH CARE FRAUD CHARGES

Sisters charged in Medicaid fraud scheme

PITTSBURGH (AP) — Two sisters who ran multiple home health care companies in Pittsburgh have been indicted by a federal grand jury for their alleged role in a multi-million dollar health care fraud scheme.

Court documents unsealed Tuesday show Arlinda Moriarty and Danyelle Dickens were charged in the scheme, along with 10 of their employees or former employees.

Prosecutors say the sisters’ companies received more than $87 million in Medicaid payments between January 2011 and April 2017 for services that were never performed. They cited other alleged fraudulent acts including creating fake employees, falsifying documents and submitting claims for consumers who were in jail or dead.

Moriarty and Dickens were previously the subjects of a lawsuit over false Medicaid billings. It’s not known if they’ve retained attorneys.

Moriarty has denied telling anyone to commit fraud.

CYBER EXTORTION SCHEME

2 Iranian hackers charged in US ransomware scheme

WASHINGTON (AP) — The Justice Department says two Iranian computer hackers have been charged in connection with multimillion-dollar cybercrime and extortion scheme that targeted U.S. government agencies and businesses.

Faramarz Shahi Savandi and Mohammad Mehdi Shah Mansouri were charged in an indictment unsealed Wednesday in New Jersey.

Prosecutors say the two men created ransomware that encrypted data on the computers of more than 200 victims. The government alleges the hackers specifically targeted public agencies.

The victims included the cities of Atlanta and Newark, New Jersey. Authorities say the hackers were able to make about $6 million.

Craig Carpenito, the U.S. attorney for New Jersey, says the scheme was a “dangerous escalation of cybercrime” because it targeted public institutions.

The two men remain fugitives and are believed to still be in Iran.

FACEBOOK-LOCAL NEWS

With an eye on past problems, Facebook expands local feature

NEW YORK (AP) — Facebook is cautiously expanding a feature that shows people local news and information, including missing-person alerts, road closures, crime reports and school announcements.

Called “Today In,” the service shows people information from their towns and cities from such sources as news outlets, government entities and community groups. Facebook launched the service in January with six cities and expanded that to 25, then more. On Wednesday, “Today In” is expanding to 400 cities in the U.S. — and a few others in Australia.

The move comes as Facebook tries to shake off its reputation as a hotbed for misinformation and elections-meddling and rather a place for communities and people to come together and stay informed.

Facebook hopes the feature’s slow rollout will prevent problems.

FORD-SUV PRODUCTION

Ford shuffling workers to increase production of big SUVs

DETROIT (AP) — Ford is shuffling workers at its factories so it can make more hot-selling full-size SUVs.

The company says the moves will increase production of Lincoln Navigators and Ford Expeditions.

Navigator sales are up 81 percent through October, while Expedition sales rose 3.9 percent.

Ford plans to add 500 jobs at the Kentucky Truck Plant in Louisville that makes the SUVs. It will add 500 at a factory in suburban Detroit that produces SUV and truck transmissions. Also, about 500 workers at the Louisville Assembly Plant who make the Ford Escape small SUV will be diverted to make big SUVs.

About 650 workers at a car factory near Detroit will move to the transmission plant or other openings.

Ford says the jobs will be filled internally and there won’t be layoffs.

STUDENT LOAN OFFICIAL-NEW ORGANIZATION

Former govt. student loan official opens new organization

NEW YORK (AP) — A former top government official who oversaw the $1.5 trillion student loan market is starting a new organization that he hopes will do a better job protecting student borrowers than his current government counterparts.

Seth Frotman was student loan ombudsman at the Consumer Financial Protection Bureau, until he resigned in protest in August. At the time of his resignation, he cited what he called a hostility from the White House toward protecting the nation’s student loan borrowers.

After taking a few months off, Frotman is announcing the creation of a new organization: the Student Borrower Protection Center. The SBPC will focus on nationwide student loan issues and coordinate private scrutiny of the Department of Education’s handling of the student loan market.

SPORTS BETTING

NBA in deal to provide official data to sport bet operators

NEW YORK (AP) — The National Basketball Association has reached a deal to provide official league data to licensed sports betting providers.

In a pact announced Wednesday morning, the NBA is partnering with Sportradar and Genius Sports to distribute NBA betting data to sports betting providers in the U.S.

Sports leagues that once vehemently fought against the prospect of sports betting are increasingly seeking to get in on it now that it’s legal.

On Tuesday, Major League Baseball partnered with MGM Resorts to become an official gambling partner in the U.S. and Japan. MGM Resorts previously reached similar deals with the NBA, WNBA and NHL.

FanDuel joined with the NHL and its New Jersey Devils franchise this month for sports betting and fantasy sports play.

WINE WAR

Oregon seeing red in its dispute with California winery

SALEM, Ore. (AP) — Pinot noir is one of the finickiest grapes, but with proper nurturing it produces an amazing wine. Officials in Oregon and at a U.S. government agency are similarly finicky, and have told a California winery to back off its claims it makes an Oregon pinot.

Copper Cane, a Napa Valley, California winery, sells more pinot noir made from Oregon grapes than anyone else, and often at a lower price.

That has some Oregon winemakers, who call the California version a less elevated product, seeing red.

Now, both the U.S. Alcohol and Tobacco Tax and Trade Bureau, or TTB, and Oregon’s liquor agency have ruled that Copper Cane’s labels have been improperly referencing official Oregon wine regions.

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