Morning Money Memo…
A Louisiana jury has ordered an international drug firm to pay one of the largest corporate fines in U.S. history. Takeda Pharmaceuticals, Japan’s biggest drug-maker, has been hit with $6 billion in punitive damages for hiding a possible link between a best-selling diabetes drug and a patient’s bladder cancer.
The fight is over Actos. Eli Lilly, which marketed the drug in the U.S. until 2006, was ordered to pay a $3 billion penalty. Takeda Senior Vice President Kenneth Greisman said the company disagrees with the verdict and plans an appeal.
The drug comes with warnings about serious side effects, including liver problems, broken bones and higher risk of bladder cancer. Both companies have been hit by hundreds of lawsuits from patients. Takeda’s share price dropped more than 7 percent today on Japan’s stock exchange.
Credit Risk for Parents
Many parents are putting their credit scores at risk when they offer to cosign a loan to their 20-something children. The warning comes from Experian, the largest credit reporting firm.
“If the person on the loan doesn’t end up paying on time, the parent becomes responsible to cover that debt,” said Experian executive Ken Chaplin. “The most common types of contracts requiring cosigning are college tuition – about 35 percent used parents for that – and the other is to lease or rent a house.”
An Experian survey found up to two-thirds of millennials got their parents to co-sign a loan. If the borrower doesn’t pay “then that credit and collection is the parent’s obligation,” said Chaplin.
Stock futures fell again this morning after the market’s biggest three-day plunge since January. Things were even worse at the tech-heavy Nasdaq. As Sandy Cannold pointed out, after surging much of last month, the Nasdaq index was down for the year, falling 5 percent since Thursday. It was its steepest three-day loss since November 2011. There were a lot of questions from analysts and investors about whether stocks were overpriced. The S&P 500 fell by more than 1 percent Monday. The 167-point drop for the Dow Jones Index was actually smaller than the percentage drop for other averages.
The corporate earnings season will get underway after the market closes today. Alcoa leads off with its most recent quarterly financial results.
Echoes of the Mortgage Mess
Citigroup says it has agreed to pay $1.13 billion to settle claims by 18 institutional investors. They wanted Citi to buy back billions in residential mortgage-backed securities. The settlement offer would release Citi from having to buy back mortgages sold to the trusts. But the bank could face other types of investor claims.
Declining smartphone prices hit profits at Samsung Electronics for a second straight quarter. The consumer technology giant said it expects operating income of about $8 billion for the January-March quarter, down 4 percent from last year. Samsung is counting on the fifth version of its Galaxy S smartphone, which goes on sale Friday, to boost results.
Limes in Limelight
Some airlines have stopped offering sliced limes with drinks from the beverage service. That’s because of the soaring price.
Alaska Airlines says it made the move about two weeks ago. It said it normally goes through about 900 limes a day. In one lime-growing Mexican state, growers reduced their supply because of unrest caused by drug cartels, and then were hit by flooding from heavy rains. Combined with a drought in California and with a growing demand for limes for margaritas and tacos, it’s driven up the price of limes to a three-year high.