Hazards of having an ex-wife as credit card joint owner

Dear Liz: My boyfriend is deployed. I have his power of attorney, and during his deployment I have paid off all of his credit card debt. The accounts now need to be closed because they are ones that were acquired with his former wife. I know you say that it will hurt his credit to close accounts, but I'd rather close them because they're tied to his ex.

Answer: If the former wife is a joint account holder on the cards, they should have been closed and the balances transferred to other credit cards in his name only before the divorce was final. The credit score dings from closing accounts and opening new ones pale compared with the potential damage a vengeful, or neglectful, former spouse could do with those cards. She could have run up big balances or tried to wrest control of the accounts and then failed to pay them, ruining his credit scores.

If your boyfriend has several other open credit cards, you could simply close these. If he doesn't, you might talk to the credit card companies about closing these cards and simultaneously opening new ones in his name only. This might be tricky to do while he's deployed, however, even with a power of attorney. Another option is to simply open a new card for him online before closing the others.

Rising rate for homeowner insurance

Dear Liz: My homeowners insurance just went up 25%. I've made no claims and made no changes. I want to get quotes from other providers, but I'm afraid I'm going to get some type of "teaser" rate. I tried changing companies a few years ago and the rate was good, but when it came time for the renewal, they doubled the price! Again, I made no changes nor had any claims. So, now I want to change, but I'm afraid of falling into the same trap. Any suggestions?

Answer: You can't assume you're locking in a low rate for life when you buy homeowners insurance. Companies that want to expand their market share may lower their prices awhile to lure customers away from their competitors, then raise premiums when their claims costs go up or they simply want to cut their risk.

The company's reputation for customer service should be at least as important a factor as price in your decision-making. Check the complaint surveys that many state insurance departments maintain on their websites to see which companies have the best (and worst) reputations.

One way to reduce your homeowner premium is to increase your deductible. Raising the amount you pay out of pocket from $250 to $1,000 can lower your premiums 25%. You should be paying small damages out of pocket anyway, since filing small claims can cause your rates to rise.

You also should shop around every few years, even if a company doesn't dramatically raise your rates, to make sure you're getting a decent deal. But again, chasing the lowest-cost insurance could be only a short-term win — an insurer that charges slightly more could be the more stable, and consumer-friendly, choice.

Remodel a home before selling?

Dear Liz: It has been almost one year since my domestic partner passed away, and our home of 43 years is fully paid for. I am ready to sell. The house is structurally in good shape but needs upgrades and a backyard redo. I have heard that painting both inside and out is a plus, but I'm concerned that any other improvements, such as flooring, would be my taste and not the buyer's. Is it a wise idea to indicate that any major improvements be deducted from escrow funds?

Answer: You're smart not to take on any major remodeling just before you sell, since few home improvements come anywhere close to paying for themselves. The fix-ups that typically do return more than they cost include painting, deep cleaning, trimming and freshening your landscaping, and de-cluttering. Consider storing half or more of your possessions. You'll have to pack them up anyway to move, and getting them out of the way now will make your house look bigger.

Talk to your real estate agent about the advisability of replacing your floors. If yours are quite worn, the investment may pay for itself. Otherwise, a cleaning may be enough. You don't have to offer to pay for the next owner's improvements. Just price the home appropriately to reflect the fact that it needs updates.

Questions may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the "Contact" form at asklizweston.com. Distributed by No More Red Inc.

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Tesla's electric Model S is a truly competitive premium sedan

The Tesla Model S may be a silent car, but other automakers will no doubt hear it coming.

In its first crack at a premium sedan, the Silicon Valley electric-car maker has matched or beaten the likes of the Audi A7 or Mercedes-Benz CLS — products of a century of German engineering. Similarly packaged as a sleek four-door coupe, the Model S delivers the performance and polish implied by its $89,770 price.

All that's missing is the roar of internal combustion.

Ask the folks at Tesla Motors Inc. how they pulled this off and they'll say Tesla isn't a car company. It's a tech company, headquartered in a hive of innovation that helped lure the sharp minds who conceptualized the car from an outsider's perspective.

Founded in 2003, Tesla produced its first car in 2008, the two-seat Roadster. It sold about 2,400 of them before halting production last year.

The Model S represents Phase 2 of the Palo Alto company's outsized ambitions. Unlike the Roadster, which was built on the chassis of a Lotus sports car, Tesla built the Model S from scratch. It's a showpiece of the start-up's design prowess, targeting a demanding and well-heeled niche of customers.

The third and crucial phase — if the Model S can secure the company's survival a while longer — will be to create an affordable mass-market car. That's no small feat, given that the electric-car market, littered with past failures, accounts for just one-tenth of 1% of U.S. auto sales. (For all the accolades showered on Nissan's Leaf, the company has sold just 20,000 of the cars since 2010.)

The odds against Tesla will be easier to calculate soon, when the company details sales and earnings at a shareholder's meeting expected in late February. The most recent update came last fall, when Tesla cut its revenue forecast and scaled back 2012 Model S production plans from 5,000 to about half that number.

Just 253 of the sedans had been delivered at that point.

The lowered expectations raised concern that the company will need a new influx of cash this year. The cash that produced the Model S was gathered during the Roadster era. Tesla secured $465 million in U.S. Department of Energy loans and went public on the Nasdaq Stock Market. It also started collecting Model S deposits and sold minority stakes in the company to Toyota and Daimler, the parent of Mercedes-Benz.

Now it's up to the Model S to bring in more cash.

Nearly a week spent in the car's high-tech cockpit suggests that Tesla has a legitimate shot at making automotive history with truly competitive electric cars.

If Tesla is a technology company, the evidence starts with the car's innovative infotainment system. The 17-inch touch screen controls nearly everything — including navigation, stereo, climate control and driving settings. As clear and touch-sensitive as an Apple iPad, the huge screen can easily accommodate multiple functions at once.

You can view the Google Maps-based navigation on one half of the screen while fiddling with radio controls on the other. Or swap the two. Or close one of them and bring up a new function — say, the phone or the Internet browser. Or just expand one function to cover the whole screen.

Contrast that to a car company making technology: Ford has produced its Sync system about as long as Tesla has made cars, and yet Sync remains eons behind in sophistication and ease of use.

But the most impressive technology resides in the guts of the Model S. The car overflows with torque, that delicious byproduct of electric propulsion. Despite a portly curb weight — a comparable Audi A7 weighs about 400 pounds less — the S clears zero to 60 mph in a mere 5.6 seconds.

Our test car, rated at 362 horsepower and 325 pound-feet of torque, uses an 85-kilowatt-hour battery to power the rear wheels through an electric motor. The battery comes in the premium version of the Model S — the only one currently produced, with a base price of $81,820, including delivery, before any state or federal tax incentives. Additional options on our test car included the tech package, an upgraded sound system and air suspension.

Tesla has promised two less expensive versions of the car with smaller batteries, meaning decreased power and range.

Power in the premium Model S comes from roughly 1,000 pounds of lithium-ion cells — all integrated into the car's floor pan, an innovative setup giving the Model S a low center of gravity and a stiff chassis. The underside of the battery pack forms the underside of the car.

In eager driving, the S doesn't feel exactly light, but it carries its weight well, with no excessive body roll in turns. Drivers can use the touch screen to select one of three different steering modes, although the most aggressive 'sport' setting proved a little too firm in most driving situations.

The brakes on the Model S are plenty strong, and fortunately are not the regenerative variety you'll find on most gas-electric hybrids, which have a mushy, grabby feel.

Mash the go-pedal, and the Tesla plants you in your seat and rushes forward with eerily little feedback, save for the faint whir of the motor behind you. The addicting experience is not unlike being flung out of a giant sling-shot.

The trouble is that repeated demonstrations of the car's prodigious power utterly destroy its range. Tesla says this model will go 300 miles on a single charge. The EPA puts that number at 265 miles. Over four days of testing the car, we managed only about 160 miles in heavy-footed driving.

All Model S's will charge through a 120V or 240V outlet. Tesla says the former needs roughly 46 hours to recharge fully, while the latter needs eight to 10 hours. Buyers can reduce these times by adding a second on-board charger for $1,500 and buying a high-power wall connector for $1,200.

Tesla is also installing 100 of what it calls supercharging stations in the U.S. and Canada by year's end, including six already operating in California. They're free for Tesla owners, who can add half a charge in about half an hour.

There will be a lot more of those owners soon, the company says. Tesla has more than 13,000 fully refundable deposits and expects to deliver 20,000 of the cars this year. The only other morsel of intel on the company's finances came from Tesla Chief Executive Elon Musk, of PayPal fame, who cryptically tweeted in early December that the company was "narrowly cash-flow positive last week."

Established automakers should be paying attention, but they shouldn't be surprised. In a blog post dated August 2006, Musk laid out his three-step vision for Tesla. Step 1: Build a sports car. Then use that money to build an affordable car. Then, finally, use that money to build an even more affordable car.

Steps 1 and 2 are done, with mixed results. The Model S is hardly affordable, nor does it guarantee safe passage to Step 3. But strip away the financial drama, and all that's left is the best electric car ever made.

david.undercoffler@latimes.com

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U.S. growth in fourth quarter likely stronger on export gains

The U.S. trade deficit narrowed sharply in December because exports rose while oil imports plummeted. The smaller trade gap means the economy almost surely grew in the October-December quarter — an improvement from the government's estimate last week that it shrank in the final months of 2012.

The trade deficit fell nearly 21 percent in December from November to $38.6 billion, the Commerce Department said Friday. That's the smallest in nearly three years.

Exports rose 2.1 percent to $186.4 billion. Exports of oil and other petroleum products rose to the highest level on record. Overseas shipments of agriculture goods and aircraft also increased.

Imports shrank 2.7 percent to $224.9 billion. Oil imports plunged to 223 billion barrels, the fewest since February 1997.

"All this is encouraging and … it now looks like exports will continue to strengthen as the year goes on," said Paul Ashworth, an economist at Capital Economics. A survey of U.S. manufacturers, released last week, showed that export orders grew in January for the second straight month.

A narrower trade gap boosts growth because it means U.S. companies earned more from overseas sales while consumers and businesses spent less on foreign products.

Fewer exports were one of the reasons the government's first estimate of economic growth in the October-December quarter showed a contraction at an annual rate of 0.1 percent. The December trade deficit figures were not available when the government reported its estimate last week.

Jim O'Sullivan, chief U.S. economist at High Frequency Economics, estimates the improved trade picture will add 0.7 percentage point to economic growth in the October-December quarter. That would show growth at an annual rate of 0.6 percent.

The government will issue its second estimate for fourth-quarter growth on Feb. 28. Sluggish restocking by companies and deep cuts in defense spending are expected to keep growth at the end of last year weak.

The trade deficit also narrowed for all of last year, shrinking 3.5 percent to $540.4 billion.

Many economists believe that trade will give the economy a small lift in 2013. That forecast is based on an assumption that the European debt crisis will stabilize, helping boost U.S. exports to that region, and economic growth in Asia will continue to rebound.

The politically sensitive trade deficit with China rose to $315.1 billion last year, the largest on record with any country. That could add to pressure on the Obama administration and Congress to take a harder line on China's trade practices. Some U.S. manufacturers contend that China keeps the value of its currency artificially low to make its exports to the U.S. cheaper.

"The record trade deficit with China will not disappear on its own," said Scott Paul, president of the Alliance for American Manufacturing. "Congress and the Administration must take on currency manipulation … as well as China's persistent cheating on its trade obligations."

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White House, defense industry officials meet to discuss cuts

By W.J. Hennigan

February 7, 2013, 7:56 a.m.

With automatic federal spending cuts set to hit the defense industry on March 1, senior White House officials met with chief executives from contractors to discuss the potential impact.

White House spokesman Jay Carney made the disclosure Wednesday after President Obama urged Congress to find other ways to postpone the $85 billion in cuts.

Under a law approved last year, federal funds of all kinds would be held back, or "sequestered," until there is budget agreement, at which time the funds may be reinstated. The buzzword used by contractors for the cutbacks is "sequestration."

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"The focus of their conversation was the potential devastating impact of the sequester going into effect," Carney said.

PHOTOS: A new breed of drones

The meeting with Obama's top economic advisors included executives from Northrop Grumman Corp., BAE Systems, Pratt & Whitney and ship-maker Huntington Ingalls Industries Inc.

Budget cuts unrelated to the sequester have already stung the Southland.

In November, Northrop, maker of the B-2 bomber and Global Hawk spy drone, revealed plans to eliminate about 200 positions in Woodland Hills and Salt Lake City. In September, the company confirmed that it has accepted buyouts from about 590 employees in its aerospace division. Most of them were at sprawling complexes in Redondo Beach, El Segundo and Palmdale.

That same month, Boeing Co. said it was trimming its executive workforce 30% from 2010 levels. It also revealed plans to sell office buildings in Seal Beach and demolish one in Huntington Beach. It has already sold property in Anaheim.

And there is a trickle-down effect: Northrop, for example, has about 20,000 small businesses that supply parts to its hardware.

In a worst-case scenario, the Aerospace Industries Assn., an Arlington, Va., trade group, estimated that 1 million jobs of all kinds would be lost nationwide, including 126,000 in California.

“It’s a reminder that what happens here and the decisions made, or the failure to act, all of this has an effect on people around the country; it’s not just a parlor game here in Washington,” Carney said.  “These are real-world decisions that significantly affect our economy and the American people.”

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City in Virginia passes anti-drone resolution

Boeing sues Russian, Ukrainian partners for $355 million

British troops use mini-drones to find targets on the battlefield

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Ex-Treasury Secretary Geithner's new job: fellow at N.Y. think tank

WASHINGTON -- It didn't take long for former Treasury Secretary Timothy F. Geithner to land a new job, and it's not on Wall Street -- though it's in the same area code.

The Council on Foreign Relations, a nonpartisan think tank based in New York, said Wednesday that Geithner would become its newest senior fellow later this month. He stepped down as Treasury secretary on Jan. 25.

President Obama has nominated White House Chief of Staff Jacob J. Lew to replace him.

Geithner has followed this route before. He was a senior fellow at the Council on Foreign Relations in 2001 after his first stint at the Treasury Department and before he started a job at the International Monetary Fund. After the IMF, Geithner served as president of the Federal Reserve Bank of New York from 2003 until he became Treasury secretary in 2009.

"Both at Treasury and at the New York Federal Reserve, Tim was a tireless, creative, and responsible custodian of the public trust," said Richard N. Haass, president of the Council of Foreign Relations.

"His coming to CFR only strengthens our capacity to produce thoughtful analysis of issues at the intersection of economic, political, and strategic developments," Haas said.

Because of Geithner's long history dealing with the financial industry and his role in the banking bailouts, some speculated he might take a job on Wall Street.

Geithner bristled when people assumed he had worked for the industry, which he had not, and he recently told New York magazine it was "extremely unlikely" he would take a position on Wall Street. He also dismissed another rumored landing spot -- as a successor to Federal Reserve Chairman Ben S. Bernanke, whose term ends in early 2014.

Geithner said the bailouts were about saving the economy, not the big banks.

“If you want to protect the economy from a failing financial system, you have to get the system functionally working, and that requires you to do things that look like you are helping the people who helped cause the crisis,” Geithner said in the interview. “People describe this as the rescue of the financial system. That’s not really right; it was the rescue of the economy from the failing financial system.”

ALSO:

Jacob J. Lew, White House chief of staff, to get Treasury nod

Geithner's stature and influence at the White House increase

As he departs, Geithner says 'not a chance' he'll be next Fed chair

 

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Stocks make a U-turn and rise on housing, Europe

The stock market jumped Tuesday following a surge in U.S. home prices and new signs of strength in Europe's economy.

The Dow Jones industrial average was up 104 points at 13,983 after the first hour of trading. The Standard & Poor's 500 was up 11 at 1,507. The Nasdaq composite was up 16 to 3,147.

The rise follows two days of whiplash. On Friday, the Dow gained 149 points, rising above 14,000 for the first time since 2007. On Monday, it fell 129 points, its worst sell-off of the year so far.

Tuesday's gain was driven by new data showing that U.S. home prices rose in December at the fastest pace in more than six years. CoreLogic, a real estate data provider, reported that home prices rose 8.3 percent.

In Europe, a measure of manufacturing and service businesses rose to a 10-month high January.

While the numbers suggest that the overall economy is still contracting, there is also evidence that a recovery may be taking root.

The market has risen more or less steadily in the new year. Lance Roberts, chief economist at Streettalk Advisors in Houston, Texas, said that's related more to the Federal Reserve's commitment to keep money cheap than to companies' performance. If earnings are beating estimates, he said, it's largely because expectations were so low.

“If you lower the hurdles enough, companies can get over them,” Roberts said.

The fact that small, individual investors are starting to return to stocks, as they have in recent weeks, is another sign that the market is due for a correction, Roberts and other analysts have said.

McGraw-Hill Cos., parent of the Standard & Poor's ratings agency, fell more than 4 percent, down $2.40 to $47.90, after the federal government sued S&P. The government said that S&P knowingly misled investors about the quality of the mortgage-backed securities it was rating. That followed a 14 percent decline at McGraw-Hill on Monday, after reports about the lawsuit first leaked.

Yum Brands, parent of KFC, Pizza Hut and Taco Bell, fell nearly 6 percent, down $3.66 to $60.28. The company warned late Monday that 2013 profits could decline as it continues to reel from a controversy over its chicken suppliers in China.

Dell, the struggling computer giant, rose 12 cents to $13.39 after the company announced a $24.4 billion buyout deal led by founder Michael Dell that will take the company private at $13.65 a share.

Cereal maker Kellogg was up nearly 2 percent, jumping $1.05 to $59.15, after reporting fourth-quarter results. It reported a fourth-quarter loss on a pension-related charge, but its underlying earnings rose, helped partly by its recent purchase of Pringles chips.

Zynga, the maker of online games like FarmVille, jumped more than 7percent, up 20 cents to $2.76. The company will report quarterly earnings this afternoon.

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Senate Republicans vow to block consumer bureau chief's nomination

WASHINGTON -- Nearly all Senate Republicans have pledged to block the confirmation of Richard Cordray to head the Consumer Financial Protection Bureau, adding to the uncertainty about the agency's leadership after a recent court ruling threatening his recess appointment to the position.

"Far too much power is vested in the sole CFPB director without any meaningful checks and balances," the senators wrote to President Obama on Friday.

The letter was signed by Minority Leader Mitch McConnell (R-Ky.) and 42 of his GOP colleagues -- enough to filibuster a vote on Cordray's nomination.

Obama last month renominated Cordray, who has been serving as director since the recess appointment in early 2012.

The senators demanded changes to the bureau's structure before they would allow a vote on Cordray or any nominee to be its director.

They want the single director position to be replaced by a bipartisan board similar to those that run most other government agencies. The senators also want the bureau's funding to be part of the congressional appropriations process instead of flowing directly from the Federal Reserve.

And they want to make it easier for other banking regulators to block actions by the consumer bureau.

The demands are the same as those made by Senate Republicans in 2011 when Obama was looking to appoint the first director of the bureau, which was the centerpiece of the 2010 overhaul of financial regulations.

Because of Republican opposition, Obama used a recess appointment to install Cordray in January 2012. On the same day, Obama also made three recess appointments to the National Labor Relations Board.

The Senate was holding short, pro forma sessions during its holiday break. Obama argued that the Senate was effectively recessed, allowing him to temporarily fill vacancies. Cordray's recess appointment expires at the end of this year.

Last month, a federal appeals court ruled that Obama's NLRB appointments violated the Constitution because the Senate had not formally adjourned. The lawsuit challenging the appointments did not mention Cordray, but it is widely believed to affect his appointment.

The Obama administration is almost certain to appeal the decision to the Supreme Court.

Sen. Jerry Moran (R-Kan.), has introduced legislation to enact the changes to the bureau's structure that he and his colleagues want.

"Allowing a single unelected official to define their own jurisdiction and regulate vast segments of our economy without accountability or restraint is irresponsible regardless of political party," Moran said.

There are likely enough votes in the Democratic-controlled Senate to confirm Cordray's nomination, which only requires a majority. But there is enough Republican opposition to prevent a vote. It takes 60 senators to overcome a filibuster.

"The American people need Richard to keep standing up for them," Obama said in renominating Cordray on Jan. 24. "And there's absolutely no excuse for the Senate to wait any longer to confirm him."

Senate Banking Committee Chairman Tim Johnson (D-S.D.) said Republicans were playing politics with an important appointment.

"For more than a year, Director Cordray has been leading the Consumer Financial Protection Bureau, and under his leadership the CFPB has been widely praised for its thoughtful and balanced rule-makings and enforcement actions," Johnson said in a statement.

"The market needs certainty, and blocking Richard Cordray's nomination is a disservice to consumers and industry alike," Johnson said.

ALSO:

Court rules Obama's recess picks are illegal

Mary Jo White won't be intimidated as SEC chief, Obama says

Obama bypassing Senate to appoint Richard Cordray consumer chief

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Love, money and the online dating industry

At the heart of the new book "Love in the Time of Algorithms" is a philosophical question: does the billion-dollar dating industry, whose currency is the perpetual promise of new relationships, signal the death of commitment?

It is the question posed to Sam Yagan, chief executive of free dating website OkCupid, by the book's author, Dan Slater. "That's really a point about market liquidity," replies Yagan, a graduate of Harvard University and Stanford Business School, and a self-confessed "math guy" who says he knows nothing about dating.

Justin Parfitt, a British dating entrepreneur, answers the question more bluntly. The industry is thinking: Let's keep this customer coming back to the site as often as we can, he said, "and let's not worry about whether he's successful. There's this massive tension between what would actually work for you, the user, and what works for us, the shareholders. It's amazing, when you think about it. In what other industry is a happy customer bad for business?"

These responses represent the dissonance between the romantic ideal of love held by many customers and the approach of the entrepreneurial nerds who set up the match­making sites. The disparity is well drawn in this lively book by Slater, a former legal affairs reporter for the Wall Street Journal, who had racked up quite a few of his own cyber dates by age 31, following the demise of a long-term relationship.

A book on the dating industry would be soulless without tales of the customers — the cyber daters. Published by Current, "Love in the Time of Algorithms: What Technology Does to Meeting and Mating" is strewn with stories of blossoming romances, bed-hoppers and borderline sociopaths.

There is Carrie, a single mom in New York, who clicks the box for "full figured," saying that while she is bigger than Kim Kardashian, she is not as big as "big and beautiful." (In the search for love, these things matter.) After several false starts with men who find the "kid thing" a sticking point, Carrie meets her match in a Puerto Rican computer technician who's an atheist.

There is also Jacob in Oregon, who knows he can afford to take things slow with the pharmacist because he can always have sex with another online date. Or, as he likes to think of it: "There's always a pepperoni pizza in the trunk."

The writer delves into his own personal history — his parents met in the 1960s through a pioneering computer dating service. His father's comments, that "these days they're all over the Internet. I think they're mostly for desperate people, though," indicate the stigma that has dogged the industry.

Slater's account of the history of the cyber dating industry — from huge clunky old computers to modern complex computer algorithms — is well detailed. And he brings out the fierce rivalry between free and paid-for sites and the new possibilities for finding a date across the street using smartphones and innovative "freemium" sites.

The stated aim of this book is how online dating is "remaking the landscape of modern relationships," which is an ambitious goal for 240 pages. The sweep is huge: Nigerian scammers preying on the lonely; paunchy middle-aged men trafficking poor young South American and Russian women; math geeks competing for a share of the love market; and adult babies seeking matronly diaper-changers.

The author also brandishes so many ideas — a bit of behavioral economics here, a bit of biological determinism there — that it is hard to focus when so much is competing for the reader's attention. It is a dizzying attempt to demonstrate the author's mastery of the zeitgeist.

In the final chapter, Slater writes that he has tried to avoid "passing judgment on all the many behaviors, new and old, facilitated by the date-o-sphere". Yet this well-reported romp through the digital love marketplace would have benefited from a slightly more domineering author.

Emma Jacobs is a columnist for the Financial Times of London, in which this review first appeared.

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California farmers eager for immigration reform

At Chandler Farms, just outside of Selma in the San Joaquin Valley, about three dozen workers are needed each season to pick acres of delicate peaches, plums, nectarines and citrus.

In recent years, however, owners Carol and Bill Chandler have struggled to find laborers as immigration from Mexico has slowed to a near standstill.

"When the crops are ripe, we need a reliable labor force," she said. "That's what we're worried about going forward."

The Chandlers are among the state's farmers who welcomed a move this week by Congress to make immigration reform a legislative priority this year.

But the promised changes may not be enough to solve their chronic labor problems, which have been exacerbated by deportations, a stronger Mexican economy and, in good times, the lure of construction jobs.

On Monday, a group of Republican and Democratic senators unveiled a blueprint that aims to grant legal status to an estimated 11 million illegal immigrants in the country.

President Obama also joined the fray Tuesday, urging Congress to move legislation along quickly this year.

Immigration reform has been a rallying cry among farm groups in California and around the country for years.

According to data from the U.S. Department of Agriculture, roughly half of all hired crop farmworkers are in the country illegally. Of all workers, 7 of 10 are from Mexico, a country that has provided a steady supply of farm laborers to California since the middle of the last century.

With immigration reform back on the table this year, California farm groups are fiercely lobbying to make sure proposed legislation includes provisions for their workers.

There have been false starts in the past, including efforts by former President George W. Bush, who sought to create a guest worker program and overhaul immigration laws during his administration.

But the latest push to tackle the highly politicized issue is "one of the best signs we've seen in a long time," said Ken Barbic, senior director of government affairs for Western Growers in Irvine, a trade group that represents farmers in California and Arizona.

If Congress passes legislation, "the folks who are currently working here with false documents, it takes them out of the shadows," Barbic said.

Barbic added that immigration reform would remove legal liabilities for employers who hire illegal immigrants.

Diego Olagaray, 51, who grows 750 acres of wine grapes in Lodi, just north of Stockton, said that granting legal status to the state's agricultural workers ensures that both farm hands and employers would be able to breathe a little easier.

"Some of these workers go back to Mexico on a regular basis," Olagaray said. When they travel, "they're fearful of something happening to them. With amnesty, it'll make them feel more comfortable. They'll also feel that they're part of society.… And it will make it easier for employers as well."

Olagaray said that if immigration isn't resolved soon, labor shortages will become more pronounced. Last spring, he said he had trouble filling his usual crew to work on his vineyard, and other growers saw ripe crops languish in the fields.

Still, any policy effort may do little to solve the labor shortage for California farmers, said Edward Taylor, a professor of agriculture and resource economics at UC Davis.

Such shortages predate the recession. During boom times, contractors persuaded many workers in the fields to work in construction jobs, according to farmers and Taylor, who recently co-wrote a study that examined the decline in the number of farmworkers from Mexico.

A key finding in Taylor's study was that more immigrants were staying home to work on Mexico's farms. They were taking advantage of a strengthening Mexican economy and a growing middle class that ramped up agricultural production.

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GM, Ford, Chrysler post double-digit gains in January auto sales

Auto sales showed surprising strength in January with all three of the domestic manufacturers — General Motors, Ford and Chrysler — reporting double-digit gains.

“Automakers are kicking off the year strong, staying true to disciplined incentive spending as many curtailed their spending in January as the current lineup of products speak for themselves,” said Kristen Andersson, an analyst for auto price information company TrueCar.com.

General Motors Co., the nation’s biggest automaker, said its January U.S. sales rose by a strong 15.9% to 194,699 vehicles compared with the same month a year earlier.

“The year is off to a very good start for General Motors,” said Kurt McNeil, the company's vice president of U.S. sales operations.  “There’s a sense of optimism among our dealers that only comes when you pair a growing economy with great new products.”

Ford Motor Co. said its January sales jumped 22% to 166,501 vehicles, its best January since 2006.

“Ford is off to a strong start this year, with Fusion and Escape delivering January sales records and F-Series [pickup trucks] seeing a particularly strong reception this early in the year,” said Ken Czubay, Ford vice president of U.S. marketing, sales and service.

Chrysler Group had its best January in five years. Its sales rose 16% to 117,731 vehicles compared with the same month a year earlier.

Volkswagen had its best January since 1974.  Its U.S. sales rose almost 7% to 29,018 vehicles.

“While the economic conditions continue to be somewhat uncertain, we expect Volkswagen to achieve continued growth and to outpace the industry this year,” said Jonathan Browning, chief executive of Volkswagen Group of America.

Consumers are displaying a "certain degree of resilience" in the face of continued economic uncertainty, he said. 

Toyota Motor Sales U.S.A said its monthly sales rose 26.6% to 157,725 vehicles.

"The sales pace we saw in the fourth quarter of last year rolled into January, exceeding our expectations for the industry," said Bill Fay, Toyota Division group vice president and general manager.

Automakers sold about 1.1 million vehicles in January, a 15% gain from a year earlier, but down more than 22% from December 2012, according to estimates by TrueCar.com.

The numbers were especially good given that January, with its cold weather and lack of specials, tends to be one of the slower months for auto sales.

In addition, many shoppers had purchased new cars in December to take advantage of year-end clearance events that were no longer available in January, said Alec Gutierrez, an analyst for Kelley Blue Book. 

Gutierrez said he expects sales to remain strong in the coming months, in part because of the wide availability of newly designed models.  During the last two model years, nearly every vehicle in the mid-size car, compact car, subcompact car and small crossover segments were significantly redesigned, he said. 

Consumers “have a plethora of vehicles to choose from that offer the latest technological advancements and fuel economy approaching 40 mpg,” said Gutierrez. 

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Follow me on Twitter (@LATimesJerry), Facebook and Google+.

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Freddie Mac: Mortgage rates jump; 30-year up from 3.42% to 3.53%

The typical interest rate for a 30-year fixed-rate mortgage shot above 3.5% early this week for the first time in more than four months, according to the widely watched Freddie Mac survey.

Freddie Mac's weekly tally, released Thursday morning, showed lenders were offering the loan to solid borrowers at an average 3.53%, up from 3.42% last week. It was the first time since the week of Sept. 13 that the 30-year mortgage rate topped 3.5%.

The typical rate on a 15-year fixed loan, a type popular with people refinancing their mortgages, jumped to 2.81% from 2.71% a week earlier, Freddie said.

Borrowers would have paid 0.7% of the loan amount in lender fees and discount points to obtain the rates, according to the McLean, Va., home finance giant.

Higher rates are to be expected as the economy gradually strengthens, helped by the improving housing market, Freddie Mac said.

Data cited by Freddie Mac’s chief economist, Frank Nothaft, included:

-- New home sales of 367,000 in 2012, the most in three years and the first annual increase in seven years.

-- A trade industry gauge of pending home sales in 2012 that averaged its highest reading since 2006.

-- A 5.5% increase in the Case-Shiller composite index of home prices in 20 cities for the 12 months ending in November, the largest annual growth since August 2006.

Freddie Mac's weekly report, the longest-running survey of mortgage rates, began tracking the 30-year home loan in 1970. It asks lenders to report rates and fees they are offering to borrowers with solid credit on loans for up to 80% of the home's value.

The record low for the survey, recorded the week of Nov. 21, was 3.31% for the 30-year mortgage.

Industry professionals say people who shop around often find somewhat better rates, and it's possible to lower the rate by paying additional discount points -- prepaid interest -- to the lender upfront. Third-party charges generally paid by borrowers, such as for appraisals and title insurance, are not included.

US 30 Year Mortgage Rate data by YCharts

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Stocks open mixed on GDP numbers

Stocks opened mixed Wednesday as encouraging earnings reports helped to offset disappointing news that showed the U.S. economy unexpectedly contracted in the fourth quarter.

The Dow Jones industrial average fell 4 points to 13,949 as of 9:58 a.m. EST. The Standard & Poor's 500 rose 1 point to 1,509. The Nasdaq composite gained 9 points to 3,162.

The U.S. economy shrank from October through December for the first time since the recession ended, hurt by the biggest cut in defense spending in 40 years, fewer exports and sluggish growth in company stockpiles. The Commerce Department said Wednesday that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That's a sharp slowdown from the 3.1 percent growth rate in the July-September quarter.

Amazon jumped $14.25 to $274.40 after the world's biggest online retailer showed improving profit margins when it posted fourth-quarter earnings late Tuesday. Boeing gained 30 cents to $73.95 after it reported earnings that beat analysts' expectations, as rising profits from commercial jets offset a smaller profit from defense work.    

QUIZ: How much do you know about the stock market?

The Dow Jones average has surged since the start of the year climbing close to 14,000 and to within touching distance of its record level. Investors bought stocks after lawmakers reached a deal to avoid the “fiscal cliff” and on optimism the U.S. housing market is recovering and the jobs market is slowly healing.

Investors will parse the Federal Reserve's statement later Wednesday following the conclusion of the central bank's first two-day meeting this year.

Economists are expecting the Fed to affirm that it intends to keep short-term rates near zero until joblessness dips below 6.5 percent from the current 7.8 percent. The statement is scheduled to be released at 2:15 p.m. EST.

Among other stocks making big moves Wednesday;

— Chesapeake surged $1.33 to $20.35 after the company said late Tuesday that its embattled CEO Aubrey McClendon will leave the company this spring.

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As Dow flirts with 14,000, are stocks cheap?

NEW YORK -- Stocks may be near record highs, but they are not terribly expensive, at least by one measure.

Last week the broad Standard & Poor's 500 index closed above 1,500 for the first time in five years. This week the Dow Jones industrial average has been flirting with 14,000, a level it hasn't seen since October 2007.

In early trading Tuesday, the Dow added 22 points, or 0.2%, to 13,905.

Stocks are a bit pricey relative to their earnings, but are nowhere near the overheated levels they've seen before, said Robert Shiller, a famed Yale University economist who identified the stock market and housing bubbles of the last decade.

Shiller, who may be best known for a widely reported index tracking U.S. house prices bearing his name, also created an index to track whether stocks were cheap or overpriced.

His CAPE index -- which stands for cyclically adjusted price-to-earnings ratio -- factors in 10 years' worth of earnings. He has collected data stretching back to 1871.

As of Jan. 16, the broad Standard & Poor's 500 index had a CAPE of 22.24 -- higher than the average over the last half-century of 19.52.

“It is somewhat high,” Shiller said, but "not shockingly high.”

His index's reading is only half of its reading of 44.2 in December 1999, amid the tech bubble that later burst.

Stocks are also cheaper than the last time the Dow hit 14,000, according to Shiller's index.

In October 2007, the index was at 27.31. Back then, George W. Bush was president, the investment banks Bear Stearns and Lehman Bros. still existed and the economy hadn't yet fallen into recession.

Shiller said historically low interest rates, which are making other investments less fruitful, were probably  fueling the current rally. The Federal Reserve has been pumping money into the economy to lure investors into riskier assets like stocks.

“One would, just based on interest rates alone, want to have more in the stock market,” Shiller said.

Rising home prices, and better-than-expected corporate earnings may also be lifting spirits on Wall Street. Resolving the fiscal cliff -- and uncertainty over capital gains taxes -- likely also helped.

“There does seem to be some rekindling of investor sentiment,” Shiller said.

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First subject: Paying for college

Several websites can give loan and college cost information to parents. Above, Cal State Long Beach students head to classes as the spring semester gets underway. (Christina House, For The Times / January 28, 2013)

By Reid Kanaley

College acceptance letters are starting to arrive, and families now must figure out how to pay the tuition. Here are some sites that offer guidance to the world of financial aid:

•The Consumer Financial Protection Bureau. A relatively new federal agency, the bureau has a beta site on college finances. One of the bureau's goals is to make students' borrowing costs clearer. Near the top of the page is a college-prep timeline showing the steps from researching schools to repaying college debt. Along the way, one presumably gets an education.

•Federal student aid. The first step in requesting federal aid for school is to fill out the Federal Application for Student Aid. You have to do it only once a year, no matter how many colleges you apply to. And the earlier the better. As soon as you file the electronic form, you'll see what is likely to be a shocking ballpark number for the education expenses you're expected to pay out of pocket.

•U.S. News & World Report college roundup. The section on paying for an education is meant to explain some of the terminology and procedures that students and families will encounter. Take note of the "overlooked ways to pay for college," which include getting an early start on college savings accounts called 529 plans and digging around for otherwise-overlooked community sources of scholarship money.

•College Board. This group, which runs the SAT college-entrance examination system, also offers advice on financing your higher education. This page includes a link to the board's scholarship-search service. Many scholarships have obscure criteria, so how would you even find all the ones that might fit you? Fill out a questionnaire that can help match students to what the board says is $6 billion available in scholarships through 2,200 programs.

Kanaley writes for the Philadelphia Inquirer.

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Rules to simplifying life come up short

Los Angeles-area author Matthew E. May has hit upon an attractive theme in his recent book, "The Law of Subtraction: 6 Simple Rules for Winning in the Age of Excess Everything" published by McGraw-Hill.

Who does not yearn for a guide to simplifying, synthesizing and subtracting some of the clutter, overload and demands of the "Age of Excess Everything"?

He has also cleverly subtracted from his own workload by inviting others, mostly authors and consultants like him, to contribute about a third of the material for his six laws for doing more with less in the form of summaries of their views.

Mind you, it took fellow author Daniel Pink to point out the appeal of the subject. "Subtraction is your meme. It's out there; it's growing," he told May just before he took the stage at a corporate conference, urging him to "own" it. "Best. Advice. Ever," writes May.

This exchange is itself a little guide to what the book is like. Not only is it full of people talking in a slightly artificial, visionary way about common sense objectives, it is also filled with contradictions. "Subtraction is growing" is only the first.

The book does contain good examples of the less-is-more theme, some well-known, some less so. May's opener (illustrating Law No. 1: "What isn't there can often trump what is") is the FedEx logo, featuring an arrow created by the blank space between the E and X. Lindon Leader, its designer, explains how he "didn't overplay it, didn't mention it" when pitching the idea. (He makes up for that here.)

May, who lives in Westlake Village, also provides a brief history of how Lockheed Corp. put a team of design engineers in a circus tent next to a foul-smelling plastics factory to design a jet fighter: the secret Skunk Works became a byword for how to foster innovation. (Law No. 5: "Break is the important part of breakthrough.")

He cites J.K. Rowling, who was inspired for the idea for Harry Potter on a long, boring train journey, in support of Law No. 6. ("Doing something isn't always better than doing nothing.").

My favorite came from contributor Bob Harrison, a retired police chief, who introduced an "unplan" to withdraw officers directing traffic after a July 4 fireworks display and discovered everyone got home more quickly. (Law No. 2: "The simplest rules create the most effective experience.")

But I find every subtractive success story has an additive counterweight, some of which are explicit in May's examples.

It is true that "creativity thrives under intelligent constraints" (Law No. 4), but Michelangelo — ordered to work on a fresco for the Sistine Chapel, not a sculpture, his preferred medium — then "expanded the job's scope," covering the walls as well as the ceiling.

Steve Jobs was a great simplifier, who "handed control to us" as users of Apple devices. But he was also a control freak when it came to designing the same artifacts, supervising fine detail, adding features and forcing his team to work all hours, rather than giving them time for "purposeful daydreaming," as May advocates elsewhere in his book.

"The Artist," the silent, black-and-white film that provides May with the book's coda, was a worthy Oscar winner — but so was 2008's "Slumdog Millionaire," with its cast of thousands and Bollywood-style excess.

May does not avoid these contradictions, but he does not really address them, either. He prefers to list examples of his six laws rather than explore how employers or their staff could reconcile the daily conflict between constraints and freedom, perspiration and inspiration.

In the interests of "owning" his Zen-inspired meme, May subtracts these complexities. Instead he offers tips, such as his invitation to take "long, languid showers" — No. 8 on a list of ways to relax the mind. This point "needs no explanation," May writes, "which is good, because I could find no research on the subject."

For most people at most companies, where the pressure to add customers, revenue and value is intense, it is as difficult to "subtract" as it is for most grown-ups to follow the advice of one of the book's contributors and live out of a suitcase in a near-empty apartment.

It is a pity, given the need to simplify many business processes, that May adds so little to the sum of knowledge about how to do it.

Hill is the management editor of the Financial Times of London, in which this review first appeared.

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China's smog taints economy, health

BEIJING — When a thick quilt of smog enveloped swaths of China earlier this month, it set in motion a costly chain reaction for the world's No. 2 economy.

Authorities canceled flights across northern China and ordered some factories shut. Hospitals were flooded with hacking patients.

A fire in an empty furniture factory in eastern Zhejiang province went undetected for hours because the smoke was indistinguishable from the haze. In coastal Shandong province, most highways were closed for fear that low visibility would cause motorists to crash. And in Beijing, the local government urged residents to remain indoors and told construction sites to scale back activity.

Photos: Smog in China

"These are emergency measures that have the same economic impact as a strike or severe weather," said Louis Kuijs, a Hong Kong-based economist with the Royal Bank of Scotland and formerly of the World Bank. "They're very painful."

Residents in the capital have taken to mocking their famously filthy air and its attendant health hazards with the expression "Beijing cough." Meanwhile, Shanghai's Environmental Protection Bureau has introduced a cartoon mascot to communicate daily air quality on its website: a pig-tailed girl who bursts into tears when smog reaches hazardous levels.

But economists say China's smog is no joke. As air pollution continues to obscure China's cities, the cost to the nation in lost productivity and health problems is soaring. The World Bank estimates sickness and early death sapped China of $100 billion in 2009, or just under 3% of gross domestic product. China is now home to seven of the 10 most-polluted cities in the world, according to a report by the Asian Development Bank and Beijing's Tsinghua University.

A study by Greenpeace and Peking University's School of Public Health put the cost of healthcare to treat pollution-related ailments in Beijing, Shanghai, Guangzhou and Xian at more than $1 billion last year.

Beijing resident Zhang Jian takes his 2-year-old son to a doctor regularly to treat the toddler's chronic sinus infection.

"It's definitely related to the pollution," said Zhang, 35, who wore a disposable mask at an overcrowded children's hospital recently. "My son snores and his nose is blocked constantly. It's a problem because he's too young to clear his nose like adults."

The doctor's visit and treatment cost Zhang about $320 — nearly a week's pay for the IT professional.

The Beijing government says it's considering a host of emergency measures to clear the air. Among them: limiting vehicle usage, spraying building sites to reduce dust and restricting outdoor barbecue grills.

Even China's next premier, Li Keqiang, weighed in recently on the issue. "This is a problem accumulated over a long period of time, and solving the problem will also require a long time. But we need to take action."

China's smog crisis is not unlike those experienced in London and Los Angeles in the 1950s. Public outcry ultimately led to cleaner air and tougher environmental regulations.

Environmental activists hope the same happens in China. The official response in recent weeks has raised optimism that authorities will begin addressing pollution more openly.

Until recently, state media was loathe to use the word "pollution," opting instead for the euphemism "fog."

But popular pressure is building, making it harder for policymakers to ignore the foul air in many of China's largest cities.

After the staggeringly bad bout of air pollution in the middle of this month, micro-bloggers took to posting pictures of themselves online wearing masks.

Some held handwritten signs that read, "I don't want to be a human vacuum cleaner."

The phrase became the top-trending topic on the Twitter-like Sina Weibo, attracting several million hits.

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Stocks gain, boosted by P&G, Starbucks earnings

Stocks opened higher on Wall Street after Procter & Gamble and Starbucks posted strong earnings reports.

The Dow Jones industrial average rose 37 points to 13,863 as of 10:15 a.m. EST. The Standard & Poor's 500 advanced five points to 1,499. The Nasdaq gained 16 points to 3,146.

Procter & Gamble, world's largest consumer products maker, gained $2.52 to $72.97 after reporting that its quarterly income more than doubled. P&G also raised its profit forecast for its full fiscal year. Starbucks rose $2.37 to $56.96 after reporting a 13 percent increase in profits.

The S&P 500 broke through 1,500 Thursday for the first time since December 2007, following a drop in claims for unemployment benefits that added to evidence that the labor market is healing. The index fell back but still ended the day fractionally higher and extended its streak of gains to seven days, the longest since October 2006.

The index has advanced 5.3 percent this month. It jumped at the start of the year when lawmakers reached a last-minute deal to avoid the “fiscal cliff.” Stocks built on those gains on optimism that the housing market is recovering and the labor market is healing. The Dow Jones is up 5.9 percent on the year.

Homebuilder stocks didn't react much to a government report that sales of new homes fell in December but posted the first annual gain since 2005. PulteGroup edged up 12 cents to $21.10 and KB Home rose 4 cents to $18.33.

The yield on the 10-year Treasury note, which moves inversely to its price, climbed 7 basis points to 1.93 percent.

Among other stocks making big moves.

— Green Mountain Coffee Roasters rose 91 cents to $44.69 after an analyst noted that sales of a competing coffee brewer introduced by Starbucks were getting off to a weak start.

— Halliburton gained $1.71 to $39.52 after posting a loss that was smaller than analysts had expected. The oilfield services company said fourth-quarter profits declined 26 percent to $669 million on increasing pricing pressure in the North American market and one-time charges from the Deepwater Horizon disaster. Wall Street had expected worse.

—Hasbro fell $1.56 to $36.90 after the toy maker said its fourth-quarter revenue failed to meet expectations because of poor demand over the holidays. The company plans to cut about 10 percent of its workforce and consolidate facilities to cut expenses.

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Apple shares tumble after relatively unimpressive earnings report

Apple Inc. may still make products customers love, but its latest earnings report appears to have broken investors' hearts.

For the third quarter in a row, Apple reported revenue and profit that were impressive by normal standards, but short of what analysts had expected. Investors reacted harshly, driving Apple's stock price down more than 10% in after-hours trading Wednesday.

If that trend holds when trading opens Thursday, Apple will have lost almost $50 billion in market value in the blink of an eye, and its stock will have given up almost all the extraordinary gains it had made in the last year. Investors' and fund managers' belief in one of the world's most widely held stocks will be severely tested in the coming days.

More fundamentally, despite upbeat talk by Apple Chief Executive Tim Cook, the performance is unlikely to quell growing worries that Apple's remarkable run of dominance might be over.

"Overall, compared to other companies, it's impressive. But for Apple's standards, it's not great," said Patrick Moorhead of Moor Insights & Strategy. "I do think this somewhat fuels the perception that Apple is slowing down a bit.... And it's driven by the fact that some of its competitors are catching up, and in some markets have already caught up."

Apple executives did their best during an hourlong conference call with analysts to project optimism and excitement about both the last quarter and the months ahead. They noted that the company had trouble meeting demand for both iPads and Macs, and could have sold many more had they been able to build enough.

They also pointed to a growing business in China and the expansion of iTunes, which is now available in 119 countries.

"Apple is in one of the most prolific periods of innovation in its history," Cook said. "We continue to believe our fundamentals, our remarkable people, our clear and focused strategy will serve us well in the coming months and years ahead."

Cook praised the record numbers posted by Apple. For the three months that ended in December, Apple said revenue increased 18% to a record $54.5 billion. Profit also set an all-time high but was up only slightly from the year-earlier quarter, rising to $13.08 billion, or $13.81 a share, from $13.06 billion, or $13.87.

Apple said it sold a record 47.8 million iPhones last quarter, up from 37 million iPhones in the same quarter of 2011. Despite that massive figure, some analysts had hoped to see stronger demand with sales exceeding 50 million.

"Meeting expectations is not enough for Apple," said Colin Gillis of BGC Financial. "So that's a little bit of a disappointment…. International sales were a little weaker than people expected. So we'll see how that shakes out."

Last quarter saw the introduction of the iPad mini, a 7.9-inch version of Apple's popular tablet computer. The Cupertino, Calif., company said it sold a total of 22.9 million iPads in the quarter, also a record, up from 15.4 million a year earlier. The company didn't break out iPad mini numbers from its total tablet sales, but Chief Financial Officer Peter Oppenheimer told analysts that the smaller version has been a hit and that the company experienced significant backlog getting the product to store shelves. The 22% lower average selling price for Apple's tablets suggests the mini has performed well but probably cannibalized some sales of its 9.7-inch version.

Historic comparisons were challenging this year because the most recent quarter had only 13 weeks, compared with 14 weeks for the same quarter of 2011.

Like many retailers and consumer electronics companies, the quarter from October to December is typically Apple's largest because of the holiday shopping season. Last year, Apple managed to stun investors by beating its own revenue estimates by more than 25% and earnings forecast by nearly 50%. That sent the stock soaring.

But even as Apple extended its lead as the world's most valuable company, and set a record in August for most valuable company ever when not adjusted for inflation, doubts began to creep into the minds of analysts and investors.

Shares have plummeted 27% in the last four months. On Wednesday, shares rose $9.24, or 1.8%, to $514.01 during regular trading.

Apple reported strong earnings in both the third and fourth quarters last year, but the numbers missed analysts' consensus estimates. Gradually, analysts began lowering their forecasts for Apple's earnings for the current fiscal year. At the same time,

Apple experienced some uncharacteristic gaffes. The new Apple Maps app that replaced Google Maps on iOS 6 devices had reliability problems, prompting a rare apology by Apple. And the iPhone 5 that went on sale in September faced long shipping delays as Apple suppliers struggled to adapt to the new, longer screen size.

The dismissal of iOS chief Scott Forstall, a favorite of the late Apple co-founder Steve Jobs, raised eyebrows. But so did a new strategy for launching products: Whereas Apple updates to products used to be few and far between, the company has lately begun increasing the number of products as well as the introduction of new versions.

The first quarter saw one of the busiest product launch cycles in the company's history. The quarter was the first full quarter of sales for the iPhone 5, a new iPod Touch and nano, the fourth iPad, a new 13-inch Retina MacBook Pro, and, of course, the first iPad mini.

Observers have pointed to this accelerated pace as an indication that Apple is facing more competitive pressure from rivals such as Samsung Electronics Co., which is now the world's biggest seller of smartphones, with its Galaxy series of phones. The concern is that the faster upgrade cycle plus the smaller iPad mini will cut into Apple's historically high profit margins.

Such fears over lower profits have also been stoked by the debate over whether Apple plans to release a cheaper iPhone aimed at capturing market share in emerging economies and the concern that Apple has not been able to strike a deal with China's largest carrier.

Now that the first-quarter numbers have been released, analysts will be busy recalibrating their projections over the next couple of days. But the focus is also likely to shift to renewed speculation about new products that investors are hoping will drive another big run for the stock.

chris.obrien@latimes.com

andrea.chang@latimes.com

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Investors say U.S. fiscal woes pose biggest risk to global economy

WASHINGTON -- Investors around the world say the fiscal woes of the U.S. -- highlighted by the ongoing fight over the debt limit -- pose the biggest risk to the global economy this year, according to poll results released Wednesday.

More than a third of the respondents in the Bloomberg Global Poll -- 36% -- said the troubles in Washington addressing the huge U.S. budget deficit were their biggest concern. That topped the European debt crisis at 29% and the slowing of China's economy at 15%.

Although the poll found the divisive political atmosphere was chilling investment in the U.S., the nation still easily ranked first as the best place to invest this year.

The U.S. was chosen by 38% of the 921 randomly selected investors, who could chose one or two markets as providing the best opportunities, with China at 31% and the European Union at 22%.

The likely reason: A majority of investors -- 53% -- said the U.S. economy was improving, compared with 32% for China and 16% for the Eurozone.

Overall, 35% said the global economy was improving.

The White House and Congress avoided the potentially calamitous "fiscal cliff" with a deal enacted Jan. 2 to extend most of the George W. Bush-era tax cuts. But they put off decisions about large automatic government spending cuts until the end of February and now are wrestling over an increase in the nation's debt limit.

With a potential default looming if the $16.4-trillion limit is not raised in coming weeks, the House was set to vote Wednesday on a Republican plan to suspend the debt limit through mid May.

QUIZ: Test your knowledge about the debt limit

Despite the threat of another contentious battle over the debt limit, which would be a repeat of 2011's brinkmanship, 92% of global investors in the Bloomberg Poll said the U.S. was unlikely to default on its sovereign debt.

But a majority sided with the general Republican argument on the debt limit, with 56% saying Congress was right to require spending cuts equal to any increase in the debt ceiling.

Just 40% sided with the Obama administration view that the full faith and credit of the U.S. should be protected at any cost and the debt ceiling should be raised with no preconditions.

The repeated political battles in Washington have had an impact on investors: 8% said the confrontations were leading them to pull out of the U.S. market, with another 39% saying they are holding back some investments.

But 45% said the divisiveness was not affecting their investment decisions, and 35% said they've been investing more.

Investors were somewhat optimistic that Obama and Congress would be able to work together to address the U.S. financial problems.

A majority -- 56% -- expected a deal to make spending cuts in entitlement programs, but most of those investors predicted only modest reductions. And 65% of investors said they expected tax reform legislation to be enacted in 2013, though most of those also expected only modest changes.

Obama was viewed favorably by 55% of the investors in the poll, compared to a 31% figure for House Speaker John Boehner (R-Ohio).

Major central bankers received high marks for their actions to stabilize the world economy: 72% had a favorable rating for European Central Bank President Mario Draghi and 71% for Federal Reserve Chairman Ben S. Bernanke.

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Scrap the debt limit, some lawmakers and economists say

Japan's central bank pledges new stimulus to combat deflation

Even with record sales, Apple's earnings report may disappoint

Follow Jim Puzzanghera on Twitter and Google+.

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Superstorm Sandy takes a toll on fourth-quarter earnings

On a busy day for earnings reports, several major companies released results before the start of the trading day. Some were hit hard by Superstorm Sandy that struck the East Coast in the fourth quarter.

On the plus side, at least in comparison to analysts' forecasts, was chemical maker DuPont Co., whose profit for the last three months of the year was $111 million, or 12 cents a share, down from $373 million, or 40 cents a share, a year earlier. Analysts on average had forecast only 7 cents a share for the latest period.

Johnson & Johnson said higher sales boosted its fourth-quarter earnings to $2.57 billion, or 91 cents a share -- more than 10 times its year-earlier net income of $218 million, or 8 cents a share.

But the maker of consumer health products and drugs said it expected its 2013 earnings to come in at $5.35 to $5.45 a share, less than analysts had been projecting.

Verizon Communications posted a fourth-quarter loss of $4.23 billion, or $1.48 a share -- much worse than analysts had estimated. And it was a far worse than the wireless company's loss of $2.02 billion, or 71 cents a share, a year earlier.

Verizon blamed the widened loss in part on Superstorm Sandy and restructuring costs.

Insurance firm Travelers Cos. was also hurt by the storm. It reported a profit of $304 million, or 78 cents a share. That was down from $618 million, or $1.51 a share, a year earlier. Some analysts, however, thought the company would be hurt even more by Sandy.

Meanwhile, Delta Air Lines said its fourth quarter profit took a major hit from the storm. It had net income of $7 million for the quarter or 1 cent per share, way down from $425 million profit or 51 cents per share in the quarter a year ago.

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The Associated Press and Bloomberg were used in compiling this report. 

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