The Fed sends a mixed message about interest rates, but Starbucks is clear about its stock split. An industry group reports foreclosures are at a nine-year low. Here are the top business stories of the day for March 19, 2015.
California Orders Insurer to Pay Up
Blue Shield of California, the third largest health insurer in the state, has had its tax-exempt status stripped by the state, which has ordered the non-profit to file state tax returns for the past two years. The news was revealed Wednesday, although the state made the decision in late 2014. The move could put the insurance company in the position of owing tens of millions of dollars annually to the state, although the insurance company is protesting the decision. The Los Angeles Times reported the decision, and noted the move by the California Franchise Tax Board was “highly unusual”. Blue Shield has been criticized “over its rate hikes, executive pay and $4.2 billion in financial reserves,’’ according to the newspaper. The state governing board has not explained its decision. The insurance company already pays federal taxes.
Fed Sends Mixed Message
There will be no interest rate hike in April, but the Federal Reserve has removed the word “patient; from its newest policy statement, which came Wednesday following the Fed’s Open Mark committee session. Fed Chair Janet Yellen said the language change did not indicate a June hike, either, but she also said such a decision could not be ruled out. The committee did state clearly that “an increase in the target range for the federal funds rate remains unlikely at the April meeting”. “Just because we removed the word ‘patient’ does not mean we will become impatient,’’ Yellen said. The statement said the committee is still waiting to see further improvement in the labor market and a gaining confidence that inflation will soon get back to its 2 percent objective rate.
Starbucks Splits Stock
During its annual shareholder meeting Wednesday, Starbucks announced a 2 for 2 stock split, tis first in almost a decade. Shareholders who hold the stock as of march 30 will get one additional share for each one they own, and the new shares will be payable April 8. This is the sixth stock split for Starbucks since October 2005.
FedEx Reports Profit
FedEx Corp. Wednesday reported higher than expected quarterly net profits but said its full-year earnings could be below expectations due to slow growth on the economic market. The company said fuel expenses fell 30 percent due to low oil prices but its international business is lagging by declining fuel surcharges and the strong dollar. Last month, United Parcel Service reported a disappointing profit due to peak season costs and a slower than expected holiday surge. FedEx said fiscal third-quarter net profit soared 53 percent to $580 million, or $2.01 per share.
OPEC Minister Blames the World
Kuwaiti oil minister Ali al-Omair said Thursday that the Organization of the Petroleum Exporting Countries (OPEC) had not choice about cutting oil production because it does not want to lose its place in the global oil market. The OPEC minister said the significant drop in the price of oil would affect his country’s revenues and its fiscal budget for the year, according to Reuters. “Within OPEC we don’t have any other choice than keeping the ceiling of production as it is because we don’t want to lose our share in the market,’’ al-Omair said. OPEC’s reluctance to cut its oil output, alone with the weak global demand and the growth of the United States shale oil production are the key reasons behind the price plunge.
Foreclosures at Nine-Year Low
RealtyTrac, a real estate industry observer, said foreclosure activity in the United States fell in February to its lowest rate in nearly nine years. The company said banks started the process on fewer homes and scheduled fewer auctions than in previous months. A total of almost 102,000 properties across the United States were at some stage of foreclosure in February, but that total is down 4.3 percent from January and 9.4 percent from the same time last year. “Given that August 2006 was the peak of the housing bubble, this eight-and-a-half year low in foreclosure activity is a significant milestone and a sign that nationwide foreclosure activity is on track to return to its historic norms this year,’’ said RealtyTrac vice president Daren Blomquist in a statement.