USA TODAY - L awrence J ournal -W orld MONDAY, MARCH 14, 2016
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CHINESE INSURER BUYS LUXURY U.S. HOTELS Blackstone Group sold Strategic Hotels & Resorts in a $6.5 billion sale to China’s Anbang Insurance Group. The private equity firm only completed its $3.93 billion transaction of Strategic Hotels in December. The Strategic Hotels portfolio includes several well-known hotels, among them the famed Hotel Del Coronado near San Diego, the Fairmont Scottsdale in Arizona, the Westin St. Francis in San Francisco, as well as RitzCarlton, Four Seasons and other luxury brands in various locations. Such properties would appear to match Anbang’s appetite for prestigious hotels; last year the Beijing firm bought New York’s Waldorf Astoria for $1.95 billion. GOOGLE FUNDS EXPANSION OF OUTREACH PROGRAM Google is funding the expansion of a program from non-profit CODE2040 to help create opportunities for African-American and Latino entrepreneurs outside of Silicon Valley. Starting this year, minority entrepreneurs in seven cities from Austin to Nashville will get a $40,000 yearly stipend and free office space to build their start-ups while they build bridges to technology for minorities in those communities. CODE2040 is trying to help close the racial gap in the tech industry. FRIDAY MARKETS INDEX
Dow Jones industrials Dow for the week Nasdaq composite S&P 500 T-bond, 30-year yield T-note, 10-year yield Gold, oz. Comex Oil, light sweet crude Euro (dollars per euro) Yen per dollar
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17,213.31 x 218.18 1.2% x 206.54 4748.47 x 86.31 2022.19 x 32.62 2.75% x 0.05 1.98% x 0.05 $1250.90 y 21.90 $38.50 x 0.66 $1.1157 y 0.0039 113.70 x 0.59
SOURCES USA TODAY RESEARCH, MARKETWATCH.COM
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Golden years at new home
3 in 5
want to spend their retirement in another city or state. Source Bankrate survey of 1,001 adults JAE YANG AND JANET LOEHRKE, USA TODAY
RICK JERVIS, USA TODAY
Participants mingle at “Casa Mexico” in downtown Austin. Casa Mexico showcased Mexican rock bands, booths promoting foreign innovations, foreign dignitaries and the International Accelerator pitch competition.
FOREIGN START-UPS TRY TO PITCH THEIR WAY INTO USA Contest helps firms break into market
SXSW (SOUTH BY SOUTHWEST)
Rick Jervis @MrRJervis USA TODAY
Jet-lagged and nervous, Eirini Malliaraki, 25, stood in front of a panel of judges and fielded a barrage of questions about revenue streams, patents, employee targets and product development. It was worth it. Malliaraki was participating in a “Fast-Pitch Competition” for foreign entrepreneurs on the first day of South by Southwest Interactive here. The event was organized by International Accelerator, an Austin-based fund and mentorship program that helps foreign-born start-ups break into the U.S. market. If selected, the London-based start-up she co-founded, Filisia, will get a shot at relocating to the U.S. “It’s a big market and easier to get funding,” Malliaraki said. “We’d like to come to the States at some point.” Foreign-born entrepreneurs and start-ups are playing a growing role at SXSW and in the U.S. tech industry. Around 20% of the nearly 34,000 badge-holders that participate in SXSW Interactive are foreigners,. They are from countries such as Norway, Brazil, Japan, Canada and Mexico, said Peter AUSTIN
LARRY W. SMITH, EUROPEAN PRESSPHOTO AGENCY
A woman touches the SXSW Bud Light active wall inside the Austin Convention Center on Saturday.
Lewis, SXSW’s manager of international engagement. Also, for the first time in SXSW’s 30-year history, the Mexican consulate general in Austin transformed the local Emma Barrientos Mexican American Cultural Center in downtown Austin into a celebration of foreign-born entrepreneurship. The concept, called “Casa Mexico,” showcased Mexican rock bands, booths promoting foreign innovations, foreign dignitaries and the International Accelerator pitch competition. SXSW organizers are so keen on recruiting foreigners to its yearly gathering that it employs five representatives around the world with the year-round task of recruiting more foreign techies
Where: Austin Purpose: Represents the intersection of film, music and tech. History: Launched as a music conference and festival in 1987. The film and multimedia (later called interactive) portion of the conference launched in 1994. Attendance: More than 34,000 Interactive participants, though Austin is expected to draw 250,000 people over 10 days. Companies “discovered” at SXSW: Twitter, Foursquare. Featured celebrities this year: President Obama, Michelle Obama, J.J. Abrams, NBA Commissioner Adam Silver, Kerry Washington, Anthony Bourdain
and companies, Lewis said. “They play a huge part,” Lewis said. “It is imperative for us to stay relevant and to reach out to international audiences.” Foreign-born entrepreneurs have left a deep mark in the U.S. tech industry. Some of the industry’s biggest names, including PayPal co-founder Elon Musk, and Google co-founder Sergey Brin, who came to the U.S. as a child, are foreign-born. In fact, one-fourth of all technology and engineering companies created between 2006 and
2010 were founded by foreignborn entrepreneurs, according to a report by the Kauffman Foundation. But relocating to the U.S. to launch a start-up is becoming an increasingly difficult endeavor, due to an immigration system that doesn’t recognize their value, said Jason Finkelman, an Austinbased national immigration attorney who helps IT foreigners come to the U.S. Foreign entrepreneurs often apply for an H-1B visa, which grants temporary residence to professionals. But the odds of obtaining those, which are dispersed via a lottery, are increasingly slim, he said. President Obama in recent years hinted of launching a “start-up visa” aimed at foreignborn entrepreneurs, but so far nothing has come out of it — and nothing will in the near future as immigration has become a hot topic this election year, Finkelman said. The issue of H-1B visas made it into recent recent presidential election debates. “We have an archaic immigration system here put into place decades ago that never took into consideration the tech boom,” he said. “As of now, there is literally no visa option for foreign-born entrepreneurs.” At the pitch competition at Casa Mexico, judges heard five-minute pitches from more than 60 start-ups from 10 countries. Five finalists will get a shot of joining International Accelerator’s stable of start-ups.
Oil, gas producers have winter of discontent Warm weather, low prices are not good news for everyone Bill Loveless
@bill_loveless Special for USA TODAY
U.S. consumers saved substantially on their heating bills this winter, as the country enjoyed its warmest winter ever. But with the first day of spring just a few days away, not everyone is rejoicing. “If you’re a consumer, it’s great. But if you’re the guy responsible for producing the stuff, it’s not. This is a rough time,” said Porter Bennett, a longtime analyst of U.S. energy markets. In fact, Bennett’s firm, Ponderosa Energy, just put out a report whose title sums up the situation confronting oil and gas producers: “Winter of Discontent.”
“It’s hard to make investment decisions right now because of a number of factors,” Bennett said in an interview. “Nobody knows what the bottom is.” Thanks to a strong El Niño, temperatures in the lower-48 states averaged 36.8 degrees from December through February, 4.6 degrees above the 20th-century average, according to the National Oceanic and Atmospheric Administration. That meant much less need for gas to heat homes and businesses at a time when the U.S. is pumping gas at record levels, storing it at five-year-highs, and selling it at the lowest prices in 18 years. The U.S. set a new record for gas production in 2015, with an average of 71.8 billion cubic feet per day, according to Ponderosa Energy. The Denver-based firm expects that average daily output to inch up to 72.3 billion cubic feet in 2016 before tapering off to 71.4 billion cubic feet in 2017. Why so much gas, when there’s so little need for it? To a large extent, thousands of wells drilled in gas-rich shale re-
gions in Pennsylvania, Ohio, Oklahoma and West Virginia in recent years are still going strong, despite the fall-off in prices. Moreover, many producers are benefiting from hedges they made for 2016 that enable them to sell gas at prices much higher than current spot prices. Earlier this month, the spot price for U.S. gas fell to $1.57 per million British thermal units, its lowest level since 1998. But those hedges will play out by 2017, and replicating may be difficult with prices down so much now, Bennett said. The mismatch between supply and demand also is contributing to a glut of stored gas, with nearly 2.5 trillion cubic feet accumulated around the country, about 40% above the five-year average, according to the U.S. Energy Information Administration. Ponderosa Energy expects gas prices will remain low in the near term, but will rise later this year as cheap gas eats further into coal’s share of U.S. power plants. In fact, EIA predicts gas will fuel the largest share of U.S. elec-
PRICE FORECAST Ponderosa Energy is forecasting a 40.9% increase in natural gas prices by 2020. Average price per 1 million BTUs:
$2.86
’16
$3.25
’17
$3.50
$3.75
’18
’19
$4.03
’20
Source Ponderosa Energy KRIS KINKADE, USA TODAY
tricity generation in 2016, at 33%, compared with 32% for coal. That would mark the first time gas provides more electricity than coal on an annual average basis. The gas industry also stands to benefit from the recent start of
U.S. liquefied natural gas exports, although a soft global market for LNG makes uncertain how much U.S. producers can sell abroad. Perhaps the biggest boon for producers would be a hot summer, which would keep air conditioners and the power plants that support them running. But Bennett, who’s been in the energy analytics business for more than 30 years, acknowledges that relying on Mother Natural for a recovery is risky. “Temperature is not something I like to bet on,” he said. That said, Bennett sees signs of an eventual recovery as banks and other financiers help some producers restructure debt for the day they can ramp up drilling. “There’s a tremendous amount of private equity out there that wants to get into this business,” he said. “That’s where a lot of the money is going to come from to help bring things back.” Loveless is a veteran energy journalist and television commentator in Washington. He is a former host of the TV program Platts Energy Week.