FTC seeks to block Kate Spade, Michael Kors merger
(NEW YORK) — The Federal Trade Commission is asking a federal judge in New York to block the $8.5 billion merger of Tapestry, the company behind Coach, Kate Spade, and Capri, which controls Michael Kors.
In April, the FTC sued to block the sale, arguing that these brands dominate what’s known as the “accessible luxury” market and that if they combined, consumers would suffer by paying higher prices.
“This has to be the first time the focus of a federal court hearing turned to a $279 Kate Spade tote described as ‘colorful, joyful, feminine, green and white seen on Emily in Paris,” ABC News senior investigative reporter and correspondent Aaron Katersky said on Good Morning America Tuesday.
Tapestry argues the FTC is ignoring the reality of a marketplace, in which consumers have a lot of choices, suggesting it takes a mere stroll through Bloomingdale’s or Macy’s to see Gucci, Kors and Calvin Klein bags fighting for attention.
Michael Kors himself testified last month during a hearing, telling the judge there’s already plenty of competition for handbags, noting that he learned about one brand when he saw a photo of pop superstar Taylor Swift wearing an Aupen bag similar to those made by Kate Spade.
Kors also testified his handbags have “reached a point of brand fatigue” and a lawyer arguing in favor of the merger said it would revitalize the Michael Kors brand, so consumers have yet another choice. The goal, he said, is to sell more handbags to consumers.
The judge took these arguments under advisement and could rule at any time.
(NEW YORKI) — Lamborghini has sold adrenaline-inducing speed and spaceship-like designs for decades, to much success.
The brand’s executives are blunt, however, when it comes to their cramped cabins: “We’re not very famous for the interior.”
That’s about to change. The Italian marque’s latest sports car, the Temerario, was designed, it seems, with one type of customer in mind: lanky drivers.
“We increased the roominess in the car … tall people can sit comfortably,” Lamborghini CEO Stephan Winkelmann told ABC News.
The Temerario, a plug-in hybrid that debuted in August, lives up to previous models: 10,000-rpm redline; top speed of 210 mph; 907 horsepower produced from the all-new twin-turbo 4.0-liter V8 powertrain; and an 8-speed dual-clutch gearbox. Yet it’s the added comfort that executives were eager to discuss.
Winkelmann said his team put a lot of emphasis and attention on storage space and headroom in the Temerario, partly to appease owners in the United States, the brand’s No. 1 market. The Temerario is being billed as more of a “weekend car,” with enough real estate to squeeze luggage behind the two front seats — unheard for the brand.
The storied carmaker is in the process of electrifying its lineup. In addition to the Temerario, Lamborghini showed off the Urus SE in April. The company’s first hybrid, the beastly 1,001 hp Reveulto (three electric motors assist the naturally aspirated 6.5-liter V12 engine), has a nearly three-year wait list. The flagship supercar went on sale last year.
“This is the best lineup we have,” Winkelmann said.
The Lamborghini exec spoke to ABC News about the company’s electrification strategy, industry challenges and what could put the brakes on the company’s upward sales trajectory.
The interview below has been edited and condensed for clarity.
Q: What’s been the early reaction by customers and enthusiasts to the Temerario, Lamborghini’s new hybrid sports car and successor to the Huracan?
A: It’s been very positive. We will see in the next weeks, months what the order collection is like. And I will be surprised if it’s negative.
Q: You made a point to underscore how comfortable this car is inside versus previous models as well as the added room for luggage. Is the company responding to customer feedback?
A: Everybody now wants everything. They want design, they want speed, they want a luggage compartment, they want space in the interior. We worked over the years on finding a way to create space without jeopardizing the design and the height of the car.
People are getting taller, especially in North America. We have a lot of tall, male customers. We worked on the performance of the car, the design and roominess, the handling. In a supercar, performance is more important than comfort. And design is more important than the luggage compartment. But now you have to try to get at least best in class in this type of segment so you work on everything.
Q: Could the Temerario have been built with a V10 engine?
A: We wanted to create something that sets apart the V12. The choice of the V8 … was something unique in our world — it’s also a matter of C02 emissions. We all agreed this was the choice. There was no way to continue with the V10.
Q: What will you miss most about the Huracan?
A: I was part of the team when we started to develop the car. These are memories I will never forget. The “baby Lamborghini” was a very important car for us and we really exploited what was possible to do.
The variant I love the most is the Sterrato. I wanted to do the Sterrato almost 10 years ago. Then I was away for some years [from the company] and I came back at the end of 2020. And they still hadn’t done the car. So I said, “We will do it.” And I think we did the right choice because it’s unique, and I really like it. It’s a lifestyle car but it’s also really fun to drive.
Q: Is there really a two-year wait for the Revuelto?
A: Even more. Two-and-a-half years at least in the U.S.
Q: You recently debuted the Urus SE, a hybrid SUV. What has reaction been like to this model?
A: We presented it in Beijing [in April]. The car is not on the road yet. The order bank is incredible and we’re happy.
Q: The first six months of 2024 show record results in terms of deliveries, revenues and operating income. What are you expecting for the second half of the year?
A: Things are going the right way. We don’t know who is going to be the next president of the U.S. … but we think it can be another very good year for Lamborghini if it goes like the first six months.
Q: Do U.S. presidents impact Lamborghini sales?
A: So far no. Kamala Harris, though, is an unknown variable.
Q: Have the recent stock market gyrations and recession chatter impacted the company?
A: Nobody knows the future. We look at the order bank and residual values. We look at the showroom traffic, the hesitation of people who may cancel orders. We go down to each and every dealer to see how they’re doing.
Q: The Revuelto is not your traditional plug-in hybrid — the electric motor is really there to add horsepower and boost performance. Will we see a true hybrid from Lamborghini — one that posts better fuel economy and record stats?
A: The mileage of the Temerario and Revuelto is, for sure, not the highest, but you have mileage in purely electric mode. The Urus has a much higher mileage of electric — 60 kilometers, so around 40 miles.
Q: Everyone loved the Lanzador concept last year. Is that still coming in 2028? Or will it be sooner?
A: Not sooner.
Q: When will we see a fully electric Lamborghini, if ever?
A: We are planning for the end of this decade. We stick to our plans.
Q: Are you surprised that enthusiasts are clinging to their V12s and V10s?
A: No, because we forecasted this. We said it’s far too early for supercars to go fully electric. But for the daily useable cars, in my opinion, this is a good opportunity.
Q: What is the biggest obstacle facing all automakers now?
A: I would say electrification is the biggest challenge globally. The other is the software development … cars are more and more connected. These are the two major challenges for the industry. For other brands, challenges are the cost of developing [electric] cars and the pricing of these cars. Then it has to be a fair competition around the globe, which is sometimes not the case.
Q: I appreciate that there are still buttons in Lamborghinis. Will that change over time?
A: A touchscreen is nice, but we also want to have the haptic [feel] and click of the buttons. Voice control will increase in cars, but to me, buttons are more luxurious than a touchscreen. We believe in buttons.
(NEW YORK) — A new bill that would allow some undocumented immigrants to receive loans to buy homes is sparking debate as it passes through the California Legislature.
Assembly Bill 1840 would make it clear that a person who applies for a loan under the California Dream for All Program cannot be disqualified solely because of their immigration status. It passed the state Senate with a 25-14 vote.
The program is run by California Housing Finance Agency, which generates revenue “through mortgage loans, not taxpayer dollars,” according to the agency’s website.
Their program provides a shared appreciation loan — which typically means that first-time homebuyers do not pay interest. Instead, they only have to pay back the original loan amount, plus 20% of any home value appreciation. The loan covers 20% of the purchase price or up to $150,000 to cover a down payment or closing costs.
The loan must be paired with a 30-year fixed interest rate first mortgage from the California Housing Finance Agency and the recipient does not have to make payments on the share appreciation loan until the first mortgage is paid off.
In a general statement on the program’s mission, Gov. Gavin Newsom stated: “As part of the state’s comprehensive efforts to improve affordability, build generational wealth and unlock access to housing, Dream For All is paving the way home for thousands of Californians. This program is more than just financial assistance – it’s about providing a pathway for individuals to achieve their California dream.”
It is not clear if Newsom intends to sign the bill. A two-thirds vote in each chamber of the legislature would be needed to override a veto — which could be achieved with the votes in favor of the bill thus far.
If the new bill is passed or signed into law, undocumented borrowers would be able to apply for the housing loan. However, they would be required to have a valid Social Security number or Individual Taxpayer Identification Number in addition to meeting existing legal residency and documentation requirements.
This language would allow, for example, people who pay taxes but are not legal citizens, such as recipients of the Deferred Action for Childhood Arrivals policy, known as DACA, to apply for the loan.
Supporters say the bill is intended to allow all those who pay taxes in the state to be able to qualify for the assistance.
“Homeownership is one of the largest contributors to building wealth for low and middle-income families,” said Cynthia Gomez, a deputy director at The Coalition for Humane Immigrant Rights in an April hearing on the bill. “However, it’s also well understood that there are many barriers to access for homeownership, in particular for communities of color. California is solution-orientated, and we have implemented various policies that have made homeownership a reality for Californians.”
Critics argue that the money should not be geared toward people who are undocumented and that noncitizens should not be eligible for state programs.
“I just can’t get behind using our limited dollars for people who continue, who are in this country undocumented when we have very limited funds,” said state Rep. Joe Patterson during a hearing on the bill in April.
The Trump campaign told Politico that it believed the bill to be “fundamentally unfair but typical Democrat policy.”
The Senate Appropriations Committee said in a mid-August meeting that the cost pressures on the program, if it were to undergo an expansion, are “unknown,” but the California Housing Finance Agency (CalHFA) indicated “that any costs to update program regulations to prohibit application disqualification based on immigration status would be minor and absorbable,” according to filings in the legislature on the bill.
The debate comes as immigration has continuously ranked as a top issue for 2024 voters, according to Gallup.
California has the largest undocumented population in the country, with an estimated population of 1.85 million undocumented immigrants in 2021, according to the Pew Research Center.
At the same time, California is dealing with a housing crisis, with a growing homeless population and increasingly high costs for housing.
California mid-tier homes are twice as expensive as the typical U.S. home — selling at more than $700,000, according to California’s Legislative Analyst’s Office, and 28% of all homeless people in the U.S. live in California, the point-in-time report from the U.S. Department of Housing and Urban Development recorded.
(NEW YORK) — Consumer prices rose 2.9% in July compared to a year ago, cooling slightly from the previous month and extending a monthslong slowdown of price increases. The fresh inflation reading outperformed economists’ expectations, reaching its lowest level since 2021.
Inflation has slowed for five consecutive months, reversing a surge in prices that took hold at the outset of this year. Price increases have cooled significantly from a peak of more than 9%, but inflation remains a percentage point higher than the Fed’s target rate of 2%.
The latest inflation data will further ease pressure on consumers saddled by a yearslong bout of elevated price increases. Despite the ongoing slowdown, consumer prices remain roughly 20% higher than where they stood three years ago.
Prices for some household staples are rising slower than overall inflation. Food prices increased 2.2% in July compared to a year ago, while energy prices inched upward 1.1%, U.S. Bureau of Labor Statistics data showed.
Prices for rice, flour and fish fell in July compared to a year ago. Prices for eggs, however, soared 19% over that period, data showed.
The latest inflation data arrived within days of a dramatic bout of market turmoil triggered in part by heightened pessimism about the chances of a “soft landing,” in which the U.S. averts a recession while inflation returns to normal levels.
The unrest on Wall Street followed a weaker-than-expected jobs report that indicated the economy may be slowing down more quickly than previously known.
Since last year, the Federal Reserve has held interest rates at their highest level in more than two decades. High borrowing costs for everything from mortgages to credit card loans have helped slow the economy and lower inflation, but the policy risks tipping the U.S. into a recession.
The chances of an interest rate cut at the Fed’s next meeting in September are all but certain, according to the CME FedWatch Tool, a measure of market sentiment. Market observers are split roughly down the middle about whether the Fed will impose its typical cut of a quarter of a percentage point or opt for a larger half-point cut.
The Fed is guided by a dual mandate to keep inflation under control and maximize employment. In theory, low interest rates help stimulate economic activity and boost employment; high interest rates slow economic performance and ease inflation.
A monthslong stretch of good news for inflation alongside bad news for unemployment has prompted the Fed to give additional consideration to its goal of keeping Americans on the job, Fed Chair Jerome Powell said last month.
“For a long time, since inflation arrived, it’s been right to mainly focus on inflation. But now that inflation has come down and the labor market has indeed cooled off, we’re going to be looking at both mandates. They’re in much better balance,” Powell said at a meeting of The Economic Club of Washington, D.C.
“That means that if we were to see an unexpected weakening in the labor market, then that might also be a reason for reaction by us,” Powell added.
The weak jobs report released earlier this month appeared to align with that hypothetical situation described by Powell.
Speaking at a press conference in Washington, D.C., in late July, before the jobs report, Powell said the central bank may reduce interest rate cuts in September, depending on economic performance.
“We’ve made no decisions about future meetings and that includes the September meeting,” Powell said. “We’re getting closer to the point at which we’ll reduce our policy rate, but we’re not quite at that point yet.”