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Update on the latest business

February 26, 2019

FINANCIAL-MARKETS

Stocks flat on conflicting reports on US economy

NEW YORK (AP) — Stocks shook off an early slump and were mixed in early afternoon trading as traders weighed conflicting reports on the U.S. economy.

The market got off to a weak start after the government reported that the number of homes being built last month plunged to the lowest level in more than two years.

Later in the morning a surprisingly upbeat reading on consumer confidence from the Conference Board helped wipe out those losses, leaving indexes mixed.

FEDERAL RESERVE-POWELL-CONGRESS

Fed’s Powell predicts solid but slower growth in 2019

WASHINGTON (AP) — Federal Reserve Chairman Jerome Powell says the U.S. economy should keep expanding at a solid, though somewhat slower pace this year. But he warns of growing risks, including a global slowdown, volatile financial markets and uncertainty about U.S. trade policy.

In delivering the Fed’s semiannual monetary report to Congress, Powell says the Fed will be “patient” in determining when to boost its benchmark policy rate in light of the various “crosscurrents and conflicting signals.” He says the Fed’s rate decisions will be “data dependent” as the economic outlook evolves.

The Fed in December indicated it could hike rates two times this year, after four rate hikes in 2018. But many private economists believe the Fed will keep rates unchanged until late this year and may not hike at all.

CONSUMER CONFIDENCE

US consumer confidence rebounds in February

WASHINGTON (AP) — American consumers were feeling more confident this month after a rally in the stock market and an end to partial shutdown of the federal government.

The Conference Board, a business research group, says its consumer confidence index rose to 131.4 from 121.7 in January.

The index measures consumers’ assessment of current economic conditions and their expectations for the next six months. Both rose in January. Consumers’ views of today’s economy were the sunniest since December 2000.

The Conference board index had dropped in January amid worries about a government shutdown that ended Jan. 25 and stock-market volatility, which reflected higher interest rates and worries about trade tensions with China. But stocks have rebounded since Christmas, and U.S. and Chinese trade negotiators have reported signs of progress toward ending a standoff.

HOME CONSTRUCTION

US housing starts plummeted 11.2 percent in December

WASHINGTON (AP) — The number of homes being built in December plunged to the lowest level in more than two years, a possible sign that developers are anticipating fewer new houses to be sold this year.

The Commerce Department said Tuesday that housing starts fell 11.2 percent in December from the previous month to a seasonally adjusted annual rate 1.08 million. This is the slowest pace of construction since September 2016.

Over the past 12 months, housing starts have tumbled 10.2 percent. December’s decline occurred for single-family houses and apartment buildings. Builders have pulled back as higher prices have caused home sales to slump, suggesting that affordability challenges have caused the pool of would-be buyers to dwindle.

Permits to build housing, an indicator of future activity, increased just 0.3 percent in December.

HOME PRICES

US home prices rise at slower pace for 9th straight month

WASHINGTON (AP) — US home price gains slowed for the ninth straight month in December, reflecting weaker sales and higher mortgage rates.

The S&P CoreLogic Case-Shiller 20-city home price index increased 4.2 percent from a year earlier, down from 4.6 percent in November, according to a report released Tuesday.

Home sales and price increases cooled considerably last year and have been a drag on the economy. Previous price gains have put many homes out of reach for would-be buyers, and a jump in mortgage rates last fall also held back sales, which plunged 8.5 percent last year.

Prices rose the fastest in Las Vegas, Phoenix and Atlanta. Seattle and Portland, which spent months as the hottest real estate markets nationwide, ranked 11th and 16th in price gains in December.

AT&T-TIME WARNER-ANTITRUST

US appeals court blesses AT&T’s $81B merger with Time Warner

WASHINGTON (AP) — A federal appeals court has blessed AT&T’s takeover of Time Warner, defeating the Trump administration by affirming that the $81 billion merger won’t harm consumers or competition in the booming pay TV market.

The ruling by the U.S. Court of Appeals in Washington came Tuesday in the high-stakes competition case, approving one of the biggest media marriages ever. It was already completed last spring soon after a federal trial judge approved it, as phone and pay TV giant AT&T absorbed Time Warner, the owner of CNN, HBO, the Warner Bros. movie studio, “Game of Thrones,” coveted sports programming and other “must-see” shows.

Many observers had expected the decision favorable to AT&T from the three-judge appeals court panel, which upheld the trial judge’s June ruling.

DRUG PRICES

Pharmaceutical CEOs deny they use tactics to block competition.

WASHINGTON (AP) — Seven top pharmaceutical executives testifying before Congress say they do not use a widely criticized tactic to stop generic drug makers from making cheaper versions.

Generic drug makers can only develop lower-cost drugs if they obtain samples of the original drugs. Some drug makers block would-be competitors from obtaining those samples. Several executives told the Senate Finance Committee that they support legislation to ban that practice.

But, executives say quick fixes to lower drug prices could jeopardize future medical breakthroughs and could sacrifice industry innovation.

Pharmaceutical companies often launch their drugs with high initial prices, that usually increase every year. Drug makers can generally charge as much as the market will bear because the U.S. government doesn’t regulate medicine prices.

President Donald Trump and Democrats have promised to bring prices down.

BREXIT

Lawmakers to vote on no-deal Brexit or delay

LONDON (AP) — British Prime Minister Theresa May has bowed to political pressure and says that if Parliament rejects her Brexit deal, lawmakers will then get to decide whether to leave the EU without an agreement or seek to delay the country’s departure from the bloc.

May says that if Parliament rejects her deal with the EU next month, lawmakers will then vote on whether to leave the bloc without an agreement. If that is defeated, as seems likely, they will vote on whether to ask the EU to postpone Britain’s departure.

Britain is due to leave the EU on March 29, but so far the government has not been able to win Parliament’s backing for its divorce deal with the bloc.

That leaves the U.K. facing a chaotic “no-deal” Brexit that could cause disruption for businesses and people in both Britain and the EU.

PEUGEOT-NORTH AMERICA

Peugeot hits the road again in the Americas

ATLANTA (AP) — The French maker of Peugeot automobiles plans to reintroduce the cars to North American markets.

PSA Group, which also makes Citroen, did not say when it expects the 200-year-old Peugeot brand to make it to American and Canadian showroom floors.

The company said Tuesday that the return of the Peugeot is part of a ten-year plan announced in 2016, which includes a car sharing service of more than 500 vehicles introduced in Washington, D.C., last year.

The market expansion continues a remarkable turnaround for PSA, which had to be bailed out in 2014.

In 2017, PSA bought General Motors’ Opel and Vauxhall brands for $2.33 billion, making it Europe’s No. 2 automaker after Volkswagen.

FORTNITE-DANCE LAWSUIT

Basketball players sue ‘Fortnite’ game makers over dance

GREENBELT, Md. (AP) — Two former University of Maryland men’s basketball players are suing the makers of “Fortnite,” claiming the video game’s creators misappropriated a dance they popularized online.

The federal lawsuit, filed Monday in Maryland, accuses North Carolina-based Epic Games Inc. of unfairly profiting from the “Running Man Challenge” dance that Jared Nickens and Jaylen Brantley performed in social media videos and on Ellen DeGeneres’ TV show in 2016.

The suit says the “Running Man” dance that “Fortnite” players can purchase for their characters is identical to the dance that Nickens and Brantley created.

Other artists, including Brooklyn-based rapper 2 Milly and “The Fresh Prince of Bel-Air” star Alfonso Ribeiro, also have sued Epic Games over other dances depicted in the game.

The company didn’t immediately respond Tuesday to an email seeking comment.