BuSINESSW E D N E S DAY , N OV E M B E R 6 , 2 019 :: L AT I M E S . C O M / B U S I N E S S

C

27,492.63 3,074.62 3.65 8,434.68 1.48 $1,480.80 27.2030.52DOW S&P 500 NASDAQ GOLD $57.23 0.69OIL $1.1065 .0062EURO 1.86% 0.08U.S. T-NOTE (10-yr.) ▼ ▲ ▲ ▼ ▲▲ ▼

Retirementexperts havedebated foryears over theconsequencesof America’sshift fromtraditionalpensions to401(k)s andother so-called definedcontribution plans.

Among the issues athand: Do the new-styleplans leave too many work-ers behind? Do they saddleemployees with too muchrisk? Do they increase econ-omic inequality?

It’s fascinating, then, tosee that two experts whocommonly come at thesequestions from oppositesides of the political dividehave collaborated on animportant new analysis ofhow 401(k) plans have beenworking — and reachedagreement that the planshaven’t been working wellenough to help workers savefor retirement. They findthat for various reasons,balances in defined contrib-ution plans at retirementage are falling significantlyshort of what they could andshould be. Some of theblame falls on the systemitself, some on bad choicesmade by workers. More onthat in a moment.

The study, published bythe Center for RetirementResearch at Boston College,is titled, “Why are 401(k)/IRA Balances SubstantiallyBelow Potential?” Its au-thors are Andrew G. Biggsof the pro-business Ameri-can Enterprise Instituteand Alicia H. Munnell, thecenter’s director. They wereassisted by the center’sAnqi Chen.

One doesn’t normallyfind Munnell and Biggs onthe same page. Munnell,who was a Treasury officialand economic advisor to theWhite House under Presi-dent Clinton, has beensounding the alarm aboutthe coming retirementcrisis, in which Americansface their longer post-careerlifespans without adequatefinancial resources.

Biggs’ theme has beenthat the retirement crisis is“phony,” in that retiringAmericans have a lot moreto spend than is commonlyacknowledged. He has alsobeen an advocate of SocialSecurity privatization,which Munnell opposed,and a critic of plans to in-crease and expand theprogram’s benefits.

It might have been in-structive to listen in as

ANDREW G. BIGGS

has advocated privatiza-tion of Social Security.

Mark Wilson Getty Images

Why401(k)sdon’t dothe jobMICHAEL HILTZIK

[See Hiltzik, C5]

Less antitrustenforcement

The U.S. has broughtfewer antitrust casesunder Trump thanunder any otherpresident in years. C2

Agency reviewsUber fatality The robocar thatstruck a woman in2018 wasn’t designedto react to jaywalkers,the NTSB says. C3

Market Roundup .. C4

The founders of the Mon-tage luxury hotel chain in-tend to crack the high-endresidential market in WestHollywood with the compa-ny’s hipper Pendry brandcondominiums under con-struction on the famed Sun-set Strip.

The Pendry ResidencesWest Hollywood, which justhit the market, are part of amore than $500-million com-plex being built on the for-mer site of the House ofBlues on Sunset Boulevardthat will include a splashyPendry hotel intended topamper a showbiz clientele.

Pendry’s expansion is

just one of several large-scale real estate devel-opments in recent years thatare transforming the Stripinto an even more upscaleenclave than before with theaddition of hundreds of pric-ey new hotel rooms, apart-ments, restaurants andclubs.

The evolution of thePendry site is emblematic ofthe change, having enteredpublic awareness as thehome of actor John Barry-more, then becoming apopular restaurant locationfor decades before givingway to the House of Bluesnightclub in the 1990s. Theclub known to passersby forits tin shack facade closed in2015 to make way for thePendry project.

Montage’s goal is to cre-ate a buzzing, Strip-worthyhotel facing the boulevardwith 40 relatively secludedresidences in separate build-

Montage Hotels rolls out luxury residences

THE PENDRY Residences West Hollywood, pictured in an artist’s rendering,are being built on the former site of the House of Blues on Sunset Boulevard.

Hayes Davidson

Laguna Beach firmhopes Sunset Stripcondos will tap intoa growing appetite.

By Roger Vincent

[See Montage, C4]

On a September vacation to cele-brate their wedding anniversary,Marci and Eric Rose landed inGreece on an American Airlinesflight and were notified by the air-line’s smartphone app that their bag-gage was waiting for them at the bag-gage carousel.

The app was wrong.The luggage made the first leg of

the trip, from Los Angeles Interna-tional Airport to Chicago’s O’HareInternational Airport, but had notbeen loaded into the plane to Greece,despite what the app said. Themishap forced the Simi Valley coupleto buy clothes and toiletries until thebags were found and sent to Athens— soaking wet — 2 1⁄2 days later.

“It was beyond frustrating,” saidMarci Rose, a business manager. “Icried. I didn’t have any clothes towear. There was nothing we coulddo.”

The nation’s largest airlines haveinvested millions of dollars in tech-nology over the last eight years togive passengers the ability to tracktheir bags in hopes of addressing thebiggest headache of flying: losing lug-gage. More than three-quarters ofairlines worldwide plan to offer theirpassengers that tracking power by2020.

But the Roses’ mishap — and so-cial media complaining — shows thatluggage tracking technology is farfrom 100% accurate.

The weak link? People.“When it involves humans, you

will always get errors,” said PeterDrummond, portfolio director for

AIRLINES have invested millions in technology so passengers can track baggage with their cellphones.Irfan Khan Los Angeles Times

Luggage tracking appsstill have a ways to go The tech remains unreliable — when humans are involved

THREE-QUARTERS of airlines plan to offer passengers real-timebaggage tracking information by sometime next year.

Wally Skalij Los Angeles Times

By Hugo Martin

[See Luggage, C3]

China is setting its pricefor signing an interim tradedeal with the United States:Drop the tariffs.

The question is whetherPresident Trump will pay it.

With talks underway overa narrow agreement todefuse the escalating tradewar, Beijing has asked theTrump administration toeliminate some of the dutiesthe president has imposed.China also made clear thatnew tariffs are a nonstarter.

For Trump, the self-pro-claimed “Tariff Man,” thechallenge is how — orwhether — to walk back du-ties that have formed a cen-tral plank of his effort to re-make U.S.-China trade.

With the U.S. presi-dential election only a yearaway, the two sides are try-ing to hammer out a rela-tively narrow “Phase One”deal that Trump and hisChinese counterpart, Xi Jin-ping, planned to sign at anow-canceled Asia-Pacificsummit in Chile next week.In the quest for a new loca-tion, China is seeking a roll-back of tariffs before Xiagrees to take the politicallyrisky step of heading to theU.S. to sign a deal.

People familiar with thedeliberations say Beijinghas asked the Trump ad-ministration to pledge notonly to withdraw threats ofnew tariffs but also to elimi-nate duties on about $110 bil-lion in goods imposed inSeptember. Negotiators arealso discussing lowering the25% duty on about $250 bil-lion that Trump imposedlast year, the people said. Onthe U.S. side, people say it’snot clear whether Trump,who will have the final say,will be willing to cut any du-ties.

From the Chinese per-spective, the argument isthat if Beijing is going to re-move one big point of lever-age and resume purchases ofAmerican farm goods andmake new commitments tocrack down on intellectualproperty theft — the key el-ements of the interim deal —then it wants to see equiva-lent moves to remove tariffsby the U.S. rather than the

DEAL

HINGES

ON U.S.

LIFTING

TARIFFS

China seeks a rollbackof existing duties, notjust a halt on newones. Will Trump giveup a favorite weapon?

By Jenny Leonard

[See Tariffs, C4]

C4 WEDNESDAY, NOVEMBER 6, 2019 S LATIMES.COM/BUSINESS

Rate Criteria: Rates effective as of 11/04/19 and may change without notice. RateSeeker, LLC. does not guarantee the accuracy of the information appearing aboveor the availability of rates in this table. Banks, Thrifts and credit unions pay to advertise in this guide. NA means rates are not available or not offered at the time rateswere surveyed. All institutions are FDIC or NCUA insured. Yields represent annual percentage yield (APY) paid by participating institutions. Rates may change afterthe account is opened. Fees may reduce the earnings on the account. A penalty may be imposed for early withdrawal. To appear in this table, call 773-320-8492.

If you’ve owned your home for many years, chances are goodyou have equity built up that you can use for another purpose.But since taking on debt should always be a carefully weigheddecision, it’s important to ask yourself speciic questions be-fore you tap in.

The most important starting point is to ask whether what youplan to spend the equity on is something that adds value. Mak-ing a major home improvement or retiring higher-cost debt canresult in net inancial gains. A major expense like long-termcare may also be more economical to pay with home equityfunds than with retirement savings.

But spending the funds on a vacation or a highly discretionarypurchase that loses value may leave you paying years of inter-est on something with no monetary value in the end.

Second, is home equity just a short-term ix for a bigger prob-

lem that needs a more permanent solution? If you plan to usehome equity to pay off other debt, what are you doing to avoidlanding yourself in this kind of expensive debt situation in thefuture?

Third, have you calculated exactly what budget commitmentyou’ll need to pay this debt off? This involves deciding howmany years you’ll stretch it out, how much you’ll tap, what theresulting payment will be, and whether you can reliably it thisinto your budget for the duration of repayment.

Lastly, is this your best option? You may determine that spend-ing less and instead using savings will ultimately bear moreinancial fruit than taking out home equity. Or you may indthat borrowing through a different avenue will have strongeradvantages. In any case, be sure you go in with a sharpenedpencil and a realistic plan so that you maximize positive gainsand minimize risks.

4 questions to ask before tapping home equity

Int Chking Money 3 mo 6 mo 12 mo 18 mo 24 mo 36 mo 60 mo

Acct Mkt Acct CD CD CD CD CD CD CD

Institution Min Min Min Min Min Min Min Min Min Phone / Website

LA TimesDeposit & Loan Guide

Savings Update

ADVERTISEMENT

Community

Commerce Bank

NA NA 0.60 1.11 1.62 1.67 1.72 1.82 1.92

NA NA 10,000 10,000 10,000 10,000 10,000 10,000 10,000 909-450-2050

1.50% APY Savings Account - $50 Minimum to open - Member FDIC www.ccombank.com

NA 1.20 0.75 1.00 2.10 2.10 2.20 2.25 2.30

NA 0 2,000 2,000 2,000 2,000 2,000 2,000 2,000 800-869-3813Synchrony Bank Great Rates + Safety = Peace of Mind. Member FDIC. www.synchronybank.com

Tustin Community Bank

0.05 0.40 0.65 0.80 1.82 1.31 1.46 1.46 1.92

100 50,000 2,500 2,500 2,500 2,500 2,500 2,500 2,500 714-730-5662www.tustincmtybank.com

It’s the market that con-tinues mostly upward, eventhough there’s still plenty toworry about.

The Dow Jones indus-trial average and the Nasdaqclosed at record highs yetagain Tuesday, and the S&P500 closed barely below theall-time high it reached aday earlier.

The gains in recent weekshave been driven by com-pany earnings that haven’tbeen nearly as terrible asWall Street was expecting,interest rate cuts, hopes fora trade truce and a steadilygrowing economy. In all, theS&P 500 is up 22.7% so farthis year, putting it on pacefor its best year since 2013.

The upbeat mood marksa pivot from the summer,when worries about trade,Britain’s messy exit from theEuropean Union and theslowing global economyloomed over the market.

Wall Street got throughthe bulk of third-quarterearnings season last week,and the results were muchbetter than what investorshad been anticipating.

As of Friday, 71% of themembers of the S&P 500 in-dex have reported their re-sults, and 76% of them havebeen better than forecast,according to FactSet. Also,61% have reported higherthan expected sales, whichis important in the wake ofconcerns about an economicslowdown and the U.S.-China trade war.

This doesn’t mean earn-ings have been stellar. Ex-pectations were low thisquarter, and on a whole,profits in the S&P 500 aredown 2.7% from a year ago,according to FactSet. Butsince companies are beatinginvestors’ mediocre expec-tations, it’s provided themarket with a base on whichto rally.

The U.S. economy has re-peatedly defied fears of a re-cession, which had resur-faced in late summer andearly fall as trade tensionsescalated. Reports on jobs,growth and consumer confi-dence in the last couple ofweeks have pointed to an

economy that is overcomingglobal threats and expand-ing for a record-long 11thstraight year.

Last week, the govern-ment estimated employersadded 128,000 jobs in Octo-ber. It was a modest gain,but the figure was depressedby the temporary loss ofabout 50,000 striking GMworkers and the subtractionof 20,000 short-term censusjobs. Excluding those drags,the job gain would have beenmuch higher.

Overall, the data sug-gested that most employershave looked past risks froma global slowdown and theU.S.-China trade war,threats that had causedmuch concern just a coupleof months earlier. Over time,increased hiring tends tofuel consumer spending,which, in turn, could help liftcorporate earnings andshare prices.

The government alsosaid last week that the na-tion’s gross domestic prod-uct expanded at a 1.9% an-nual rate in the July-Sep-tember quarter. That figurewas roughly in line with theaverage annual growththroughout the expansionthat began in 2009, suggesti-ng the economy remains re-silient.

And on Tuesday, an in-dex that measures growth inthe economy’s vast servicesector rose in October toshow solid expansion afterhaving touched a three-yearlow in September.

In Tuesday’s trading, theDow climbed 30.52 points, or0.1%, to 27,492.63, the S&P500 fell 3.65 points, or 0.1%, to3,074.62 and the Nasdaqcomposite rose 1.48 points,or less than 0.1%, to 8,434.68.

The price of U.S. crude oilrose 69 cents to settle at$57.23 a barrel. Brent crude,the international standard,rose 83 cents to $62.96 a bar-rel. Wholesale gasoline rose 1cent to $1.67 per gallon.

Gold fell $27.20 to$1,480.80 per ounce, silver fell49 cents to $17.52 per ounceand copper fell 3 cents to$2.70 per pound.

The dollar rose to 109.24Japanese yen from 108.64 yenon Tuesday. The euro weak-ened to $1.1065 from $1.1127.

MARKET ROUNDUP

Dow, Nasdaq hitnew highs againassociated press

Index

Dow industrials

S&P 500

Nasdaq composite

S&P 400

Russell 2000

EuroStoxx 50

Nikkei (Japan)

Hang Seng (Hong Kong)

CloseDaily

change Daily % YTD %

27,492.63 +30.52 +0.11 +17.86

3,074.62 -3.65 -0.12 +22.65

8,434.68 +1.48 +0.02 +27.12

1,999.33 +4.23 +0.21 +20.22

1,599.61 +2.21 +0.14 +18.62

3,321.65 +6.29 +0.19 +20.35

23,251.99 +401.22 +1.76 +16.17

27,683.40 +136.10 +0.49 +7.22

Major stock indexes

change change

Associated Press

ings behind it stretchingsouth to Fountain Avenue,where residents will havetheir own entrance. Thecomplex is set to open nextsummer.

People who live at thePendry can dine and play atthe hotel, which will have a200-seat music venue, or re-treat to their own smallneighborhood where someunits will have sprawlinglandscaped terraces, privateswimming pools and out-door kitchens, Montage Ho-tels & Resorts founder AlanJ. Fuerstman said.

“It’s like having a Holly-wood Hills-style home righton Sunset,” he said. LagunaBeach-based Montage Ho-tels is banking on the type ofreception its Montage resi-dences got in Beverly Hills,where there is a waiting listfor resales of the 20 unitscompleted in 2008.

The last two propertiessold there commandednearly $4,000 a square foot, atop-level price for Los Ange-les-area condos, said TinaNecrason, who is in charge ofMontage’s residential arm.“We know there is demand.”

At the Pendry, prices willstart at $3 million, or about$1,000 a square foot, for a2,900-square-foot unit. Thebiggest residences hit 6,000square feet and have 3,400-square-foot terraces, but thedevelopers declined to re-veal their prices.

The growth of hotel-con-nected residences is an in-ternational phenomenon,according to a report lastmonth by London real es-tate services company Sav-ills. A record number of ho-tel-branded complexes haveopened so far this year, deliv-ering more than 9,000 unitsin 21 countries, with even

more expected in 2020.“Globally mobile, brand-

conscious, wealthy individu-als are attracted by qualitydesign, security and the levelof service branded resi-dences offer,” Savills said.

Los Angeles has trailedother international cities inbuilding hotel-connectedresidences, but others are inthe works besides Pendry.

The Four Seasons Pri-vate Residences complex isnearing completion across3rd Street from the FourSeasons Los Angeles at Bev-erly Hills.

In Century City, Fair-mont-branded units will beincluded in the renovatedFairmont Century Plaza Ho-tel set to open next year.

“There is a big gap inbranded living in L.A. com-pared to other markets,”said Warren Wachsberger,managing director of AecomCapital, a partner in the de-velopment of Montage’s$3.2-billion real estate port-folio. Beverly Hills real es-tate services company Com-bined Properties is also apartner in the Pendry proj-ect designed by EhrlichYanai Rhee Chaney Archi-tects.

Common amenities forresidents of branded condo-miniums include optionalhotel perks such as maid vis-its and room service. Food atthe Pendry will be providedby Los Angeles chef Wolf-gang Puck, who broke out onthe Sunset Strip with theopening of his Spago restau-rant there in 1982.

About 80% or more of thePendry buyers are expectedto be people who already livewithin a six-mile radius, per-haps with careers in musicor other entertainmentfields.

“People are recognizing

that the kids have moved outand I’ve got this huge homein the hills,” Wachsbergersaid. They may enjoy hotelservices and find a condomore convenient to leave be-hind when they travel.

The 149-room hotel willbe the third Pendry in agrowing chain intended toattract a young-thinking cli-entele by melding elementsof traditional luxury hotelswith elements of boutique“lifestyle” hotels that areunique to their neighbor-hoods.

In addition to the live en-tertainment venue, thePendry will have Puckrestaurants, a rooftop bar, ascreening room, a bowlingalley, a spa and a privatemembership club called theBritely for people in creativefields. Suites at the hotel willbe wired to accommodateHollywood press junkets,where media members in-terview stars of upcomingmovie and television re-leases.

The Sunset Strip area isseeing an influx of hotels in-cluding 1 Hotel West Holly-wood, Kimpton La Peer Ho-tel and West Hollywood Edi-tion, part of a Marriott Inter-national brand conceived bylifestyle hotelier IanSchrager that opened lastmonth. The new competi-tion will push up vacancyrates, hotel consultantBruce Baltin said, but over-all “the market is doing wellabsorbing it.”

Travelers in the fields of“entertainment, design andadvertising all tend to likeWest Hollywood as a mar-ket,” said Baltin of CBRE.“It’s upscale but very active.”

The average room rate inWest Hollywood is expectedto top $300 a night this year,up from less than $265 in

2014, according to CBRE.The billions of dollars’

worth of real estate devel-opment in recent years andin the pipeline is changingthe character of the streetlong associated with a rawmusic scene at such venuesas the Roxy Theatre andWhiskey a Go Go. Tower Re-cords, a longtime mecca forfans and artists, closed in2006. Velvet ropes and bottleservice in clubs havedamped the egalitarian vibethe Strip was known for overthe decades starting in the1960s.

Los Angeles historian Al-ison Martino, who grew upnear the Sunset Strip andtraveled it often with her fa-ther, singer Al Martino, saidshe is troubled by the scale ofrecent development, whichshe compared to Las Vegas,compounded by the shift inadvertising from paintedbillboards to bright digitaldisplays.

“Once they knock downthe smaller structures, noone is going to have any-where to walk except to an-other hotel,” she said.

But to developers such asMontage and other support-ers of growth, new proper-ties are enhancing the Sun-set Strip by bringing morepeople and activity.

A two-block residential,retail and hotel complex atSunset and La CienegaBoulevard that was com-pleted in 2017 was “a gamechanger,” Wachsberger said,that gave the Strip “a walka-bility that didn’t exist in thepast.”

Residents and visitorscan stroll the bright boule-vard or dip down a blocksouth into a comparativelyquiet residential neighbor-hood, he said. “You get thebest of both worlds.”

AN INSIDE look at the Pendry Residences, in an artist’s rendering. Prices will start at $3 million, or about$1,000 a square foot, for a 2,900-square-foot unit. The biggest units hit 6,000 square feet and have terraces.

Hayes Davidson

Rolling out luxury residences [Montage, from C1]

simple lifting of the threat offuture duties.

That was the case re-iterated by Chinese statemedia on Tuesday.

Tariffs, however, havebeen one of the primaryweapons in Trump’s arsenalto redirect manufacturingsupply chains out of China,slow the country’s rise as a

global economic power andpressure Communist Partyleaders into making morefundamental reforms totheir state-led industrialpolicy.

Some of Trump’s ownaides are worried about theeffect of the tariffs on theU.S. economy, however, asare many businesses.

Trade data out Tuesdayfor September showed tar-iffs have hit commerce be-tween the world’s two largesteconomies.

U.S. imports from Chinafell 4.9% from the priormonth to the lowest in morethan three years, while U.S.exports to China dropped10% to a five-month low, ac-cording to the CommerceDepartment data.

There are also politicalrisks for Trump in accedingto China’s tariff demands.By agreeing to lift the duties,Trump — who seems in-creasingly eager to sign adeal with Xi on his home turf— would make himself vul-nerable to domestic criticsfrom both major parties.Businesses have also begunto grumble about whetherthe Phase One agreementwould lead to any more, andabout the fact that itwouldn’t address many oftheir structural complaintsabout China.

The tariffs are also seenas an important enforce-ment tool both by people in-side the administration andeven some more traditionalpro-free-trade Republicanssuch as Iowa Sen. Charles E.Grassley, who has said anydeal is only worth the paperit’s written on if China actu-ally follows through on its

promises.U.S. Trade Representa-

tive Robert Lighthizer andother officials have consis-tently argued that the dutieson $250 billion of goods are away of enforcing that Chinalives up to its commitmentsand should be in place forthe long term.

China has also previouslydemanded that Trumpdoesn’t go forward withthreatened duties onroughly $160 billion in im-ports, scheduled for Dec. 15,that would hit consumer fa-vorites such as smartphonesand laptops.

Taoran Notes, a blog affil-iated with state-run Econo-mic Daily, on Saturdaywrote that canceling all tar-iffs is one of three mainconcerns that must be re-solved. “Removing all theadditional tariffs is a coreconcern that has notchanged and will neverchange; even if there is afirst-phase deal, this coreconcern should be re-flected.”

Meanwhile, China is re-viewing locations in the U.S.where Xi would be willing tomeet with Trump to sign thedeal, Bloomberg News re-ported Monday. Chinese of-ficials had initially hoped thesigning would be linked to aformal state visit, but they’reopen to having Xi travel tothe U.S. without one, thepeople said, adding that nofinal decision had beenmade.

Commerce SecretaryWilbur Ross told BloombergTelevision on Sunday thatthe two sides are on track tosign an agreement thismonth, but also didn’t rule

out that the timeline couldslip by a few weeks. Nationalsecurity advisor RobertO’Brien said he was “cau-tiously optimistic” on thedeal coming together.

“We’re relatively close toan agreement,” O’Brien toldreporters in Bangkok, Thai-land, on Monday.

The decision is now be-tween Alaska and Iowa forthe signing location, peoplebriefed on the plans said.

According to a person fa-miliar with the matter, Iowawas also on the short list ofpotential locations wherethe two countries could havesigned their trade deal in thespring.

But Lighthizer and na-tional security council offi-cials pushed back againstthe idea, fearing that a sign-ing in the farm state wouldput too much emphasis onthe agriculture purchasecommitments and less onthe structural issues thedeal would have addressed.

In a possible step aimedat making the deal more pal-atable to Trump, Chineseand American law enforce-ment officials on Thursdayplan to highlight joint effortsto crack down on fentanylsmuggling, addressing anopioid epidemic that Trumphas asked Xi to help alleviateas part of the trade talks.

“The event doesn’t mat-ter; only results in the U.S.and the fact that fentanylbasically can’t be made with-out China matter,” said Der-ek Scissors, China expert atthe American Enterprise In-stitute.

Leonard writes forBloomberg.

China demands Trump roll back tariffs

U.S. Trade Representative Robert Lighthizer meetswith Chinese Vice Premier Liu He in February.

Mark Schiefelbein Pool Photo

[Tariffs, from C1]