WASHINGTON, Sept 27 (Reuters) – A bipartisan group of U.S. lawmakers on Tuesday called on President Joe Biden to issue an executive order to boost oversight of investments by U.S. companies and individuals in China and other countries.
The lawmakersincluding House Speaker Nancy Pelosi, Senate Majority Leader Chuck Schumer and Republican Senator John Cornyn urged Biden to issue an order to “safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries.”
Congress has been considering legislation that would give the U.S. government sweeping new powers to block billions in U.S. outbound investments into China. The proposal was removed from bipartisan legislation to subsidize U.S. semiconductor chips manufacturing and research in a bill approved in August.
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The lawmakers, including Democrats Bill Pascrell, House Appropriations chair Rosa DeLauro, Senator Bob Casey and Republicans Brian Fitzpatrick and Victoria Spartz, said in a letter to Biden that as negotiations continue, “our national security cannot afford to wait.” Theyurged the president “to safeguard our national security and supply chain resiliency on outbound investments to foreign adversaries.”
The White House and Chinese Embassy did not immediately comment.
White House national security official Peter Harrell earlier this month said that the Biden administration has not yet made a final decision on a potential outbound investment mechanism regulating U.S. investments in China.
Harrell stressed that any measure targeting such investments should be narrowly tailored to address gaps in existing U.S. authorities and specific national security risks.
“When we cede our manufacturing power and technological know-how to foreign adversaries, we are hurting our economy, our global competitiveness, American workers, industry and national security. Government action on this front is long overdue to address the scope and magnitude of these serious risks we face as a country,” the lawmakers wrote.
The Senate Banking Committee on Thursday will hold a hearing on outbound investment that will feature testimony from Cornyn, Casey and several former government officials among them Information Technology Industry Council Executive Vice President Robert Strayer.
The proposed legislation is intended to give the government greater visibility into U.S. investments. It would be mandatory to notify the government of investments that may fall under the new regulations, and the United States could use existing authorities to stop investments, or mitigate risk. If no action is taken, the investment can move forward.
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Reporting by David Shepardson; Editing by Chizu Nomiyama, Mark Porter and David Gregorio
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WASHINGTON, Sept 27 (Reuters) – New orders for U.S.-manufactured capital goods increased more than expected in August, suggesting that businesses remained keen to invest in equipment despite higher interest rates, which could keep the economy on a moderate growth path.
Some of the largest gain in orders in seven months reported by the Commerce Department on Tuesday, however, reflected higher prices. The data suggested that business spending on equipment probably rebounded in the third quarter, further dispelling fears that the economy was in recession.
That was reinforced by a survey showing consumer confidence rising for a second straight month in September, supported by a resilient labor market, which continues to churn out jobs at a brisk clip and generate strong wage gains, as well as falling gasoline prices. More consumers planned to buy big-ticket items like motor vehicles and household appliances over the next six months, which should help to underpin consumer spending.
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“It is hard to know whether companies are ordering up more widgets to produce the goods and provide the services for a stronger economy in the future or whether the jump in spending reflects the higher prices from inflation that remains out of control,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The economy may be more resilient than we think.”
Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, surged 1.3% last month. That was the biggest gain since January. Data for July was revised higher to show these so-called core capital goods orders gaining 0.7% instead of 0.3% as previously reported. The data is not adjusted for inflation.
Economists polled by Reuters had forecast core capital goods orders rising 0.2%. There were increases in orders for machinery, primary metals, computers and electronic products as well as electrical equipment, appliances and components. But orders for fabricated metal products fell.
Core capital goods shipments rose 0.3% after climbing 0.6% in July. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement.
Business spending on equipment contracted by the most in two years in the second quarter. That together with a sharp slowdown in the pace of inventory accumulation resulted in GDP contracting at a 0.6% annualized rate last quarter after declining at a 1.6% pace in the January-March period.
But the economy was not in recession in the first half, with the income side of the growth ledger showing moderate expansion. Goldman Sachs is forecasting GDP rebounding at a 1.2% rate in the third quarter.
The economy is hanging on despite the aggressive monetary policy tightening by the Federal Reserve to fight inflation.
The U.S. central bank last week raised its policy interest rate by 75 basis points, its third straight increase of that size. It signaled more large increases to come this year.
Stocks on Wall Streets were trading lower after a brutal beating over the last six sessions. The dollar was steady against a basket of currencies. Longer-dated U.S. Treasury prices fell.
TIGHT LABOR MARKET
A second report from the Conference Board on Tuesday showed its consumer confidence index rose to 108.0 this month from 103.6 in August, beating economists’ expectations for a reading of 104.5. Households’ worries about inflation eased, largely reflecting lower gasoline prices.
Consumers’ 12-month inflation expectations slipped to 6.8%, the lowest since January, from 7.0% in August.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, rose to 38 from a reading of 36 in August. This measure correlates to the unemployment rate from the Labor Department and points to a still-tight jobs market.
“The labor market differential suggests that joblessness fell in September, contrary to the Fed’s goal of creating slack in the labor market to bring down wage growth,” said Bernard Yaros, an economist at Moody’s Analytics in West Chester, Pennsylvania.
There were increases in the share of consumers planning to buy motor vehicles and appliances such as refrigerators, washing machines and vacuum cleaners over the next six months. But consumers were less inclined to buy a house as soaring mortgage rates and still-high home prices eroded affordability.
While a third report from the Commerce Department showed new home sales surged 28.8% to a seasonally adjusted annual rate of 685,000 units in August, that was likely due to builders offering incentives to clear inventory.
With the 30-year fixed mortgage rate now at levels last seen during the Great Recession, the rebound in new home sales is likely temporary.
There was, however, some good news for prospective buyers, who have been priced out of the market.
A fourth report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 15.8% year-on-year in July, slowing from an 18.1% advance in June. On a monthly basis, prices fell 0.3% in July, the first drop since late 2018.
The cooling house price inflation was corroborated by a fifth report from the Federal Housing Finance Agency showing home prices increased 13.9% in the 12 months through July after rising 16.3% in June. Prices fell 0.6% on a monthly basis.
An outright house price collapse, however, is unlikely as housing remains in short supply.
“Rapid home price deceleration was anticipated given the Fed’s actions and will bring home price growth closer in line with income growth,” said Selma Hepp, deputy chief economist at CoreLogic. “Returning to a long-term average of 4% to 5% annual price growth is closer than initially anticipated, potentially by early 2023.”
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Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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STEPHENVILLE, Newfoundland, Sept 24 (Reuters) – Powerful storm Fiona ripped into eastern Canada on Saturday with hurricane-force winds, forcing evacuations, knocking down trees and powerlines, and reducing many homes on the coast to “just a pile of rubble in the ocean.”
The U.S. National Hurricane Center (NHC) said the center of the storm, downgraded to Post-Tropical Cyclone Fiona, was now in the Gulf of St. Lawrence and losing some steam. The NHC canceled hurricane and tropical storm warnings for the region.
Port aux Basques, on the southwest tip of Newfoundland with a population of 4,067, bore the brunt of the storm’s rage.
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The mayor was forced to declare a state of emergency and evacuated parts of the town that suffered flooding and road washouts.
Several homes and an apartment building were dragged out to sea, Rene Roy, editor-in-chief of Wreckhouse Weekly in Port aux Basques, told the Canadian Broadcasting Corp.
“This is hands down the most terrifying thing I’ve ever seen in my life,” Roy said, describing many homes as “just a pile of rubble in the ocean right now.”
“There is an apartment building that’s literally gone. There are entire streets that are gone,” he added. Police are investigating whether a woman had been swept to sea, CBC reported.
“We’ve gone through a very difficult morning,” Button said in a Facebook video, adding that the evacuations had been completed. “We’ll get through this. I promise you we will get through it.”
Prime Minister Justin Trudeau met on Saturday morning with members of a government emergency response team, and later told reporters that the armed forces would be deployed to help with the clean up.
“We’re seeing reports of significant damage in the region, and recovery is going to be a big effort,” Trudeau said. “We will be there to support every step of the way.”
Trudeau had delayed his planned Saturday departure for Japan to attend the funeral of former Prime Minister Shinzo Abe, but said he now would no longer make the trip. Instead he said he would visit the storm-damaged region as soon as possible.
Federal assistance has already been approved for Nova Scotia, Trudeau said, and more requests are expected.
Fiona, which nearly a week ago battered Puerto Rico and other parts of the Caribbean, killed at least eight and knocked out power for virtually all of Puerto Rico’s 3.3 million people during a sweltering heat wave.
Fiona made landfall between Canso and Guysborough, Nova Scotia, where the Canadian Hurricane Centre said it recorded what may have been the lowest barometric pressure of any storm to hit land in the country’s history.
Ian Hubbard, meteorologist for the Canadian Hurricane Centre, told Reuters it appears Fiona lived up to expectations that it would be a “historical” storm.
“It did look like it had the potential to break the all-time record in Canada, and it looks like it did,” he said. “We’re still not out of this yet.”
Storms are not uncommon in the region and typically cross over rapidly, but Fiona is expected to impact a very large area.
While scientists have not yet determined whether climate change influenced Fiona’s strength or behavior, there is strong evidence that these devastating storms are getting worse.
HUNDREDS OF THOUSANDS WITHOUT POWER
Some 69% of customers, or 360,720 were without power in Nova Scotia, and 95%, or more than 82,000, had lost power on Prince Edward Island, utility companies said. Police across the region reported multiple road closures. The region was also experiencing spotty mobile phone service.
Mobile and Wifi provider Rogers Communications Inc (RCIb.TO) said it was aware of outages caused by Fiona, and that crews would work to restore service “as quickly as possible.”
PEI produces more than a fifth of Canada’s potatoes and the island’s potato farms, which are in harvest season, were likely to be impacted by the storm, Hubbard said.
“This morning we all woke up to some very scary scenes, roads washed down, uprooted trees, mail boxes where they are not supposed to be,” Darlene Compton, deputy premier of PEI, told reporters, saying it had been a “nerve wracking” night.
In Halifax, 11 boats sank at the Shearwater Yacht Club and four were grounded, said Elaine Keene, who has a boat at the club that escaped damage.
Quebec Premier Francois Legault said no injuries or fatalities had been reported so far, and officials from both PEI and Nova Scotia said the same.
The storm weakened somewhat as it traveled north. By 5 pm in Halifax (2100 GMT), it was over the Gulf of St. Lawrence about 80 miles (130 km) northwest of Port aux Basques, carrying maximum sustained winds of 70 miles per hour (110 kph), the NHC said.
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Reporting Eric Martyn in Halifax and John Morris in Stephenville; Additional reporting by Ivelisse Rivera in San Juan, Puerto Rico, Ismail Shakil and Steve Scherer in Ottawa, and Denny Thomas in Toronto; Writing by Steve Scherer; Editing by Bill Berkrot, Diane Craft and Daniel Wallis
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Business owner claims Galleria is changing his brand
FOX 26 Reporter Sherman Desselle spoke exclusively with the owner of Agenda about the situation.
HOUSTON – Ken Haggerty says he’s told often by officials at the Galleria that his Agenda store is one of the top-selling vendors in the mall – which made not being offered a better opportunity for growth frustrating for him.
Haggerty tells FOX 26 that managers at the Galleria are dramatically changing his brand and he feels singled out.
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Agenda, an upscale urban street wear store, can only sell clothing in their shop, per a new leasing agreement with the mall.
“The leasing manager says it was out of his hands,” says Haggerty. “This time, I’m thinking ok, I have to move again. That’s fine…but when you tell me I can’t sell shoes anymore, what do you expect me to do? I want to stay for as long as possible.”
A document obtained by FOX 26 shows the new two-year leasing agreement between Agenda and the Galleria, which states Agenda’s space can be used “for the non-exclusive retail sale of American and European urban street fashion, clothing ONLY, with related accessories. No shoe wear, sneakers, or related of any kind whatsoever.”
Their high-end sneakers make up about 60% of annual sales. Haggerty says there are usually lines out of their door for certain release dates.
He also has not heard of any other vendor that sells shoes being offered this same type of alternative to continue as tenants.
“In 2018, I was recruited by the Galleria to come there for more diversity,” says Haggerty. “I’m always on time with my rent. I turn my sales in like I’m supposed to. I don’t have any problems.”
Haggerty says he was told by the leasing manager this was due to a new, exclusivity deal between the Galleria and A Sneaker City – a national buy/sell/trade shoe vendor now open in the Galleria next to the Ice Skating Rink area.
Haggerty also has to move Agenda to a different location in the Galleria – with a third of the 6,000 square feet his current space has, and less foot traffic.
While relocation in the mall isn’t unusual – his realtor says many urban street wear vendors are being pushed to the same area.
“In business, you always want an opportunity,” says Tia Manteca, his realtor with Jerry Fullerton Realty. “He has done his due diligence, he’s done the work, he has the success to earn that conversation.”
In April, Haggerty offered to pay more than double the rent, $19,500 a month, just to keep the same operations. He tells FOX 26 that the Galleria did not budge on that initial offer.
Exclusivity deals are usually done with large brands according to Manteca. But in this case, it’s a burden for a top-selling local store, like Agenda, which she says is the epitome of an American success story.
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This all comes as Haggerty was preparing to scale his business with a second location on the 3300 block of Kirby Drive. Instead of focusing on sales in November, he’ll be moving two locations, with a lot of uncertainties.
“I was there during COVID when people were not paying rent, and we just kept on going, kept on paying,” says Haggerty. “Getting customers to change what they’re used to doing is going to be hard.”
FOX 26 reached out to The Galleria/Simon Property Group for a comment. While they chose not to comment on the talks of an exclusivity deal with A Sneaker City, they did release this statement:
“The tenant has been in the center for four years, and six months ago he negotiated and signed a new temporary lease agreement agreeing to relocate and in return received a significant reduction in rent. We are operating under the terms of that mutually agreed to and signed contract and expect the tenant to do so as well. Any insinuation that we acted in a discriminatory manner is baseless and totally unfounded. That is not how we operate, and we flatly reject the assertion.”
They say that they were denied the units because of their race.
In the suit, James Ra-Amari, his wife, Misty Ra-Amari, and Misty’s sister, Rosemary Afful, say that the realtor, Josie Lin, “immediately” “showed reluctance to interact” with them when the trio expressed interest in buying three condos at Grand West Condos, located in Katy, Texas, just west of Houston.
According to the suit, Lin told the Ra-Amaris that they wouldn’t be able to secure a Fannie Mae mortgage loan for the unit, due to the “owner-occupancy ratio of the condominiums.”
In the court documents, the plaintiffs say that they never expressed a desire for Fannie Mae financing.
“I’ve been in real estate for over 15 years, and I’ve never experienced anything like that,” Misty Ra-Amari told CNN.
Lin and Grand West Condos declined CNN’s requests for comment.
The lawsuit
The Ra-Amaris and Afful filed a federal discrimination lawsuit on Friday against Lin; Lin’s company, UMRE; Grand West Condominiums; Grand West Residential Condominium Association, Inc.; United Property Management; and RE/MAX and EXP Reality, two real estate brokerages.
In the suit, the plaintiffs allege that a Grand West Condos information packet marketed the complex as a “new option for Chinese and Asian communities.”
According to the suit, Lin told the plaintiffs that “all the current owners were personal friends and knew each other.”
The plaintiffs say that they have $2 million in economic damages and additional compensatory, special and punitive damages for extreme mental anguish and emotional distress.
Included in court documents obtained by CNN is an undated flyer advertising an open house at the condominium complex, and on which Lin is listed as a RE/MAX United agent.
RE/MAX told CNN in a statement that Lin hasn’t had any affiliation with the company since December 2021 and that she “had no affiliation with the RE/MAX brand in any way at the time of this alleged occurrence.”
CNN has reached out to United Property Management and EXP Realty for comment. They’re among the defendants because the plaintiffs claim that Lin was acting as an agent for them when the incident occurred.
The Ra-Amaris say that their interest in purchasing units at Grand West Condos hasn’t waned.
“We’re still interested in purchasing in that community because there’s growth there,” James Ra-Amari told CNN. “I’m not going to allow anyone to distract my wife and me from accomplishing the goals that we’ve set in place.”
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WASHINGTON, Sept 21 (Reuters) – U.S. existing home sales dropped for the seventh straight month in August as affordability deteriorated further amid surging mortgage rates and stubbornly high house prices, though the pace of decline moderated from prior months.
The Federal Reserve’s aggressive monetary policy tightening, marked by oversized interest rate increases, has significantly weakened the housing market. In contrast, other sectors of the economy, like the labor market, have shown incredible resilience despite the Fed’s attempts to cool demand.
“High prices and Fed rate hikes will likely remain constraints for sales going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York.
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Existing home sales slipped 0.4% to a seasonally adjusted annual rate of 4.80 million units last month, the National Association of Realtors said on Wednesday. Discounting the plunge during the spring of 2020 when the economy was reeling from the first wave of COVID-19, this was the lowest sales level since November 2015.
Sales rose in the Northeast and West, but were unchanged in the densely populated South. They fell in the Midwest, which is generally considered a more affordable housing region.
Economists polled by Reuters had forecast sales decreasing to a rate of 4.70 million units. The smaller-than-expected decline was likely the result of contracts signed in July, when mortgage rates retreated after sharp increases. While the NAR hoped that sales would stabilize around current levels, that is unlikely as mortgage rates are likely to push higher.
The Fed is expected to raise its policy rate by 75 basis points later on Wednesday for the third time in as many policy meetings. Since March, the U.S. central bank has lifted that rate from near zero to its current range of 2.25% to 2.50%.
The 30-year fixed mortgage rate averaged 6.02% last week, from 5.89% in the prior week, breaking above 6% for the first time since November 2008, according to data from mortgage finance agency Freddie Mac.
Though house price growth has slowed as demand weakened, tight supply is keeping prices elevated. The median existing house price increased 7.7% from a year earlier to $389,500 in August. House prices typically slow in July and August. They surged to a record high of $413,800 in June.
There were 1.28 million previously owned homes on the market, unchanged from a year ago.
At August’s sales pace, it would take 3.2 months to exhaust the current inventory of existing homes, up from 2.6 months a year ago. A five-to-seven-month supply is viewed as a healthy balance between supply and demand. The improvement is mostly because sales are weakening.
Properties typically remained on the market for 16 days, up from 14 days in July, but down from 17 days last August. Before the pandemic 30 days on the market was the norm. Eighty-one percent of homes sold were on the market for less than a month.
First-time buyers accounted for 29% of purchases, unchanged from July and a year ago. All-cash sales made up 24% of transactions, up from 22% from a year ago. Prior to 2020, cash sales accounted for only 20% of transactions.
The NAR attributed the higher cash sales share to people needing loans to buy a home dropping out of the market.
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Reporting by Lucia Mutikani; Editing by Andrea Ricci
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Partnerships aim to connect new refugees with employers
The war in Ukraine and the takeover of Afghanistan by the Taliban have sparked two new refugee crises, sending dozens of families to new homes in Minnesota. Now, two local organizations are teaming up to make the transition more welcoming.
(FOX 9) – The war in Ukraine and the takeover of Afghanistan by the Taliban have sparked two new refugee crises, sending dozens of families to new homes in Minnesota.
Now, two local organizations are teaming up to make the transition more welcoming.
In recent months, Minnesota-based humanitarian relief organization Alight has been helping refugee families get settled in the North Star State, even opening a free market in the metro stocked with everything from toiletries to toys. Those items are essentials, but pieces of the puzzle may still be missing.
“Having a job is such a key important part of people being able to create a life here,” said Alight’s Steph Koehne. “Those big things in life that are really the difference between feeling lost and feeling like you are part of the community and are flourishing.”
Alight is now partnering with the Minneapolis Regional Chamber on a new initiative called We Belong MSP that aims to connect local employers with immigrant and refugee talent.
President & CEO of the Minneapolis Regional Chamber Jonathan Weinhagen says they’ve heard from employers across the state struggling to fill open positions and those from the immigrant and refugee community could be the perfect fit.
“What we know about our new American immigrants, particularly from Ukraine and Afghanistan, is they are highly skilled, so we anticipate health care, med tech, manufacturing… plenty of opportunity across our state,” said Weinhagen.
We Belong MSP will provide employers with resources like access to community agencies and immigration experts to help make the workplace a more supportive environment.
The goal of the new program is to connect 100 families with work and community sponsors by December.
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WASHINGTON, Sept 20 (Reuters) – U.S. homebuilding unexpectedly increased in August as rising rents boosted the construction of multi-family housing to the highest level in more than 36 years, but soaring mortgage rates and high prices are undercutting the overall housing market.
The report from the Commerce Department on Tuesday showed permits for future homebuilding plunged to levels last seen during the first wave of the COVID-19 pandemic in the spring of 2020. Homebuilding is also being hobbled by supply chain bottlenecks, which are raising prices for materials.
The Federal Reserve’s aggressive monetary policy tightening has significantly weakened the housing market. In contrast, other sectors of the economy, like the labor market, have shown incredible resilience despite the Fed’s attempts to cool demand.
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“Housing construction activity is caught in the crossfire of two opposing forces,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. “However, construction activity is likely to remain solid for a while as builders work through the backlog even as optimism about new sales plummets.”
Housing starts rebounded 12.2% to a seasonally adjusted annual rate of 1.575 million units last month. Data for July was revised down to a rate of 1.404 million units from the previously reported 1.446 million units.
Economists polled by Reuters had forecast starts would come in at a rate of 1.445 million units. Housing starts dipped 0.1% on a year-on-year basis in August.
Starts for housing projects with five units or more soared 28.6% to a rate 621,000 units, the highest since April 1986.
Multi-family housing construction is being supported by strong demand for rental apartments, with rising borrowing costs pushing homeownership out of the reach of many Americans.
Single-family housing starts, which account for the biggest share of homebuilding, increased 3.4% to a rate of 935,000 units. Single-family homebuilding rose in the Midwest, the densely populated South and the West, but plunged in the Northeast.
MORTGAGE RATES SOARING
The U.S. central bank is expected to raise its policy rate by 75 basis points on Wednesday for the third time in as many policy meetings. Since March, the Fed has lifted that rate from near zero to its current range of 2.25% to 2.50%.
Mortgage rates have risen even higher. The 30-year fixed mortgage rate averaged 6.02% last week, from 5.89% in the prior week, breaking above 6% for the first time since November 2008, according to data from mortgage finance agency Freddie Mac.
Permits for future homebuilding tumbled 10.0% to a rate of 1.517 million units, the lowest level since June 2020. Single-family building permits dropped 3.5% to a rate of 899,000 units, the lowest level since June 2020. Permits for multi-family housing projects declined 18.5% to a rate of 571,000 units.
Residential fixed investment declined at its steepest pace in two years in the second quarter, contributing to the second straight quarterly drop in gross domestic product during that period.
Homebuilding is likely to remain on the back foot for the rest of the year. A survey on Monday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index fell for the ninth straight month in September.
The survey found almost a quarter of builders reported reducing home prices and more than half were offering incentives to bolster sales, including mortgage rate buydowns and free amenities. read more
An outright housing market collapse is, however, unlikely because of an acute shortage of single-family homes for sale.
Though house price inflation has started slowing, there are fewer homes being built because of financial constraints, suggesting the pace could be moderate. That could pose a conundrum for the Fed, which is seeking to bring down house prices by slowing demand for houses.
The number of houses approved for construction that are yet to be started fell 2.7% to 290,000 units. The single-family housing backlog decreased 3.4% to 143,000 units, but the completions rate for this segment increased 0.4%.
The inventory of single-family housing under construction fell 0.4% to a rate of 812,000 million units.
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Reporting by Lucia Mutikani; Editing by Paul Simao
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Fire crews responded to the building along East Alameda Avenue after “reports of smoke conditions” on Saturday, the agency said on Twitter, and officials were “searching for hazards” when the explosion occurred.
Two people were taken to a hospital with non-life-threatening injuries. A third victim was taken to another hospital, but Aurora Fire Rescue did not detail their condition.
The cause of the explosion is unknown.
“Heavy damage occurred as the result of an explosion to the west side of the structure,” Aurora fire officials said Saturday afternoon. Authorities found “structural damage” as a result, though officials were still working to determine the extent and severity of the damage.
In the meantime, between 300 and 400 residents will need to be relocated, per Aurora Fire Rescue, like Allyson Goodwin, who lived at the building with her fiance and their son. She told CNN affiliate KCNC she was walking her dog across the street when the blast occurred in the unit across from hers, ruining her family’s home and their belongings.
“I heard a really loud boom and I said, ‘Don’t look back, don’t look back just keep walking,'” Goodwin told the station. “Like, ‘You don’t want to see what just happened.’ “
In the short term, residents were moved to a local shelter with the help of the Red Cross, Aurora Fire Rescue said. “Long term accommodations will be coordinated through (the Red Cross) based on need.”
Community members have been asked to stay away from the building.
The logo of Ernst & Young is seen in Zurich, Switzerland November 13, 2020. REUTERS/Arnd Wiegmann/File Photo
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NEW YORK, Sept 9 (Reuters Breakingviews) – It’s easy to say a company should break up, but hard to make it happen. That couldn’t be more true of the plan to dismantle Ernst & Young, whose partners will vote over the coming months on splitting the firm’s consulting business from its audit arm. Strategically it’s appealing. Logistically and mathematically, it’s a number-cruncher’s nightmare.
EY is carving itself up because regulators in the United Kingdom and elsewhere want it to, but also because it makes sense. Accounting firms often can’t audit companies which are also consulting clients, so being two separate firms, most likely with the consultancy as a public company, would let EY squeeze more milk from the cow. Chief Executive Carmine Di Sibio reckons that could create $10 billion of revenue on top of the $45 billion a year the group makes now.
The devil really is in the detail, though. Unlike a listed company, where shareholders might vote once to approve a breakup, EY must hold local polls in around 75 countries. Some require a simple majority, others need two-thirds’ backing. Some locations give each partner one vote; others divvy up power according to how much capital a person owns. And in some places, partners with certain accounting qualifications get a separate vote.
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Valuation is no less troublesome. If the firm splits, audit partners would effectively trade their share in the consultancy for consultants’ share in the audit business. A slug of cash would go to audit partners to balance things out. But the valuation will rest on assumptions. Pricing a consultancy isn’t too hard: rival Accenture (ACN.F) trades at just under three times this year’s forecast revenue, according to Refinitiv. But none of the big U.S. accounting practices are publicly traded.
EY sold its original consultancy in 2000 to IT firm Capgemini (CAPP.PA) in return for stock. Partners then watched in agony as the buyer’s shares fell 95% in two years, and EY rebuilt its consultancy once the non-compete agreement lapsed. This time there’s no acquirer’s stock to worry about, but valuation still matters. The firm’s owners are also its employees, so a deal where one side does much better than the other is likely to lead to a disgruntled workforce. Auditors and consultants are trained to be critical of deals and valuations; selling them on this scheme will put EY through its paces.
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CONTEXT NEWS
Ernst & Young will ask partners to vote on whether it should separate its audit and consulting businesses, it said on Sept. 8. The ballot, which will take place on a country-by-country basis, will start later in 2022 and the firm expects to finalize the decision in early 2023.
The split would involve partners in each business retaining stakes in their respective sides and would most likely involve cash paid to audit partners to adjust for the different values of the two units.
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Editing by Antony Currie and Thomas Shum
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.