WhatsApp: A $19 billion bet for Facebook

NEW YORK -- Facebook is placing a $19 billion bet on reaching its next billion mobile users with the acquisition of WhatsApp, a popular messaging service that lets people send texts, photos and videos on their smartphones.

The $19 billion deal is by far Facebook's largest and bigger than any that Google, Microsoft or Apple have ever done. But it is likely to raise worries that Facebook and other technology companies are starting to become overzealous in their pursuit of promising new products and services, said Anthony Michael Sabino, a St. John's University business professor.

"This could be seen as a microcosm of a bubble," Sabino said. "I expect there to be a lot of skepticism about this deal. People are going to look at this and say, 'Uh-oh, did they pay way too much for this?"

Facebook, for its part, is taking the long view. WhatsApp has 450 million monthly users, 70 percent of whom use it every day. The service is adding a million new users a day. There are 19 billion messages sent and 34 billion received via WhatsApp each day, in addition to 600 million photos and 100 million video messages.

At this rate, Facebook CEO Mark Zuckerberg is confident the app will reach a billion users. Services that reach that milestone, Zuckerberg said in a statement, "are all incredibly valuable."

It's an elite group to be sure — one that includes Google (which owns YouTube), Facebook itself and little else.

Facebook said Wednesday that it's paying $12 billion in stock and $4 billion in cash for WhatsApp. In addition, the app's founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.

The transaction translates to roughly 11 percent of Facebook's market value. In comparison, Google's biggest deal was its $12.5 billion purchase of Motorola Mobility, while Microsoft's largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.

Facebook's $1 billion Instagram deal seems like a bargain in retrospect. Capturing mobile users — and young people — was a big reason behind Facebook's 2012 purchase of the photo-sharing app. Even its reported $3 billion offer for disappearing-message app Snapchat pales in comparison. Snapchat spurned the bid.

The deal stunned Gartner analyst Brian Blau. "I am not surprised they went after WhatsApp, but the amount is staggering," he said.

The world's biggest social networking company likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work.

WhatsApp also has a broad global audience.

Zuckerberg said the service "doesn't get as much attention in the U.S. as it deserves because its community started off growing in Europe, India and Latin America. But WhatsApp is a very important and valuable worldwide communication network. In fact, WhatsApp is the only widely used app we've ever seen that has more engagement and a higher percent of people using it daily than Facebook itself."

Blau said Facebook's purchase is a bet on the future. "They know they have to expand their business lines. WhatsApp is in the business of collecting people's conversations, so Facebook is going to get some great data," he noted.

In that regard, the acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers, interested. The company is developing a "multi-app" strategy, creating its own applications that exist outside of Facebook and acquiring others. It released a news reader app called Paper earlier this month, and has its own messaging app called Facebook Messenger.

"Facebook seems to be in acknowledgement that people are using a lot of different apps to communicate," said eMarketer analyst Debra Aho Williamson. "In order to continue to reach audiences, younger in particular, it needs to have a broader strategy...not put all its eggs in one basket."

Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million nearly two years ago.

At $19 billion, Facebook is paying $42 per WhatsApp user in the deal.

For Facebook, WhatsApp's huge user base, fast growth pace and popularity is worth the money.

"We want to provide the best tools to share with different sized groups and in different contexts and to develop more mobile experiences beyond just the main Facebook app, like Instagram and Messenger," Zuckerberg said in a conference call. "This is where we see a lot of new growth as well as a great opportunity to better serve our whole community."

WhatsApp, a messaging service for smartphones, lets users chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls. It's free to use for the first year and costs $1 per year after that. It has no ads.

"It'll be tempting to read this as a sign Facebook is scared of losing teens," said Forrester analyst Nate Elliot in an emailed note. "And yes, the company does have to work hard to keep young users engaged. But the reality is, Facebook always works hard to keep all its users engaged, no matter their age. Facebook is tireless in its efforts to keep users coming back."

Asked about the demographics of WhatsApp's users, Facebook finance chief David Ebersman said that, "if you look at the kind of penetration that WhatsApp has achieved, it sort of goes without saying that they have good penetration across all demographics, we would imagine.

That said, "it's not a service that asks you to tell them your age when you sign up," he added.

Facebook's shares fell $1.82, or 2.7 percent, to $66.24 in after-hours trading Wednesday after the deal was announced. Earlier in the day, the stock hit a 52-week high of $69.08.

Liedtke reported from San Francisco. AP Business Writer Tali Arbel in New York contributed to this story.

Baton Rouge home sales up in January

BATON ROUGE, La. -- Home sales in metro Baton Rouge were up 8.6 percent in January, thanks to strong sales in Ascension Parish.

There were 519 home sales that closed in January in the nine-parish area, according to figures from the Greater Baton Rouge Association of Realtors received by The Advocate (http://bit.ly/McIYLO). That compares with 478 closed sales in January 2013.

Sales in Ascension were up by nearly 44 percent, from 82 to 118 over the year. Livingston Parish and East Baton Rouge parishes were virtually unchanged for the month.

January was the 17th consecutive month there was a local year-to-year increase in home sales.

Utah Senate advances financial literacy bill

SALT LAKE CITY -- Utah Senators have advanced a measure to ramp up personal finance lessons for high school students.

The Senate voted unanimously on Wednesday to approve Holladay Democrat Sen. Pat Jones' proposal.

Utah high school students have been required to take classes on budgeting and basic economics since 2009. But advocates say teachers haven't been trained well enough to teach the classes, so students don't take them seriously.

Bill proponents say not enough people know how to balance a checkbook, make investments or decide on insurance.

Jones says students often take the classes online in order to accommodate busy schedules. She says the virtual lessons have mixed results.

The measure would put $500,000 toward training teachers and related costs.

The measure goes to the House for consideration.

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Online:

SB 40: http://1.usa.gov/1dI9GY3

Marriott's earnings fall on shorter quarter

NEW YORK -- Marriott International said Wednesday that its fourth-quarter net income fell 17 percent after the hotel company shortened its quarter.

The Bethesda, Md.-based company is changing its reporting calendar. But the hotel chain, best known for brands like Courtyard, Ritz-Carlton and Fairfield Inn, said its operations improved. It was one of the few consumer-oriented companies not to report any decline because of rough winter weather.

Snow can sometimes help hotels, said Laura Paugh, senior vice president of investor relations, in an interview.

"The colder it is in the Northeast, the more likely (people) are to head south," she said. "The Christmas season was fantastic," particularly in Mexico and the Caribbean.

The company's revenue per available room — or REVPAR — rose 4.3 percent to $98.22.For North American hotels, that key figure rose 5.1 percent, with the high-end Ritz-Carlton brand seeing the biggest jump at 10.4 percent.

New hotels also helped. During 2013, Marriott's portfolio of owned, franchised or managed hotels grew by 155 to 3,916 properties. The number of rooms grew by 2.3 percent to 675,623 worldwide.

For 2014, Marriott expects REVPAR to climb 4 to 6 percent in North America and 3 to 5 percent elsewhere.

The company reported net income of $151 million, or 49 cents per share, for the 92 days that ended Dec. 31. That was down from the $181 million, or 56 cents per share, it earned in 2012 during a 112-day quarter.

Marriott says revenue fell 14 percent, to $3.22 billion from $3.76 billion.

Wall Street had predicted the company would earn 49 cents per share on revenue of $3.37 billion, according to FactSet.

China's manufacturing slows to seven-month low

BEIJING -- China's manufacturing contracted for a second straight month in February as a mainstay of the world's No. 2 economy loses momentum amid government efforts to rein in credit and investment growth.

The preliminary version of the HSBC Corp. purchasing managers' index fell to a seven-month low of 48.3 from January's 49.5 on a 100-point scale. Numbers below 50 show activity contracting.

China's economic activity has slowed steadily as the government tries to reduce reliance on investment in industry and infrastructure and encourage more sustainable growth based on domestic consumption.

HSBC economist Hongbin Qu said in a statement that the buildup of pressure for prices to fall "implies that the underlying momentum for manufacturing growth could be weakening."

He said policymakers can and should "fine-tune policy to keep growth at a steady pace in the coming year."

February's PMI reading is the lowest since July's 47.7. It's the second month in a row that activity has contracted, after a larger-than-expected fall to 49.5 in January roiled global markets for days as investors grew concerned about fragility in China's huge manufacturing industry.

The HSBC survey is the latest evidence of the relentless slowdown in China over the past two years. Last year the economy grew 7.7 percent, which is high by the standards of advanced economies such as the U.S., Europe and Japan but barely half the 14.2 percent rate that China grew in 2007.

Economists are wary about drawing conclusions from Chinese factory data at the start of the year because they are typically distorted by the Lunar New Year holiday, which falls at different times in January and February each year. Factories often rush to fill orders ahead of the holiday, boosting output, and then shut down for up to two weeks as workers return home. This year's holiday began on the last day of January while last year it fell in the middle of February, so the effect may be minimal.

"Caution must be taken in in interpreting the monthly figures at this time of year, as shifts in the timing of Chinese New Year make seasonal adjustment less effective," said Julian Evans-Pritchard of Capital Economics in Singapore. "Nonetheless, the below 50 readings of the past two months leave little doubt that conditions in the manufacturing sector are downbeat."

He said the latest data is "not necessarily a concern" as the manufacturing weakness reflects attempts by authorities to reduce the economy's reliance on investment.

The HSBC survey is based on 85-90 percent of responses from 420 factories. The full version is due March 3.

Kelvin Chan in Hong Kong contributed to this report.

Grain mixed, cattle mixed and pork higher

CHICAGO -- Grain futures were mixed Wednesday in early trading on the Chicago Board of Trade.

Wheat for March delivery was unchanged at 6.12 a bushel; March corn was 1.75 cents higher at 4.5025 a bushel; March oats were unchanged at $4.2875 a bushel; while March soybeans was 3.25 cents lower at 13.5775 a bushel.

Beef mixed and pork was higher on the Chicago Mercantile Exchange.

April live cattle was .60 cent higher at $1.4272 a pound; March feeder cattle was 0.15 cents higher at 1.7185 a pound; April lean hogs gained .43 cent to $.9780 a pound.

Fed minutes point to continued paring of stimulus

WASHINGTON -- Federal Reserve officials agreed at their January meeting that further gradual reductions in their stimulus would be appropriate as long as the economy keeps improving.

Officials weighed the need to stress to investors that the Fed's key short-term interest rate would remain near zero, according to the minutes of the Jan. 28-29 meeting released Wednesday. But Fed officials couldn't agree on how to modify their commitment to keep the rate near zero "well past" the time the unemployment rate falls below 6.5 percent. The rate is now 6.6 percent.

At its January meeting, the Fed voted 10-0 to trim its monthly bond purchases to $65 billion. In December, the Fed had decided to make a first reduction from $85 billion to $75 billion. The bond purchases have been intended to keep long-term borrowing rates low to spur spending and growth.

The minutes said "several participants" argued that unless the Fed's economic outlook changed, it should continue to reduce its bond purchases by $10 billion at each meeting this year.

The policy statement the Fed released after its January meeting made no mention of recent turbulence in financial markets. But the minutes showed that officials had discussed market volatility.

Though the officials thought the turbulence in emerging markets should be monitored, they felt that so far it posed little threat to U.S. markets.

Many economists think the Fed will keep trimming its bond purchases this year until they're eliminated altogether in December.

The Fed met in January just two days before Ben Bernanke stepped down after eight years as chairman. Bernanke was succeeded on Feb. 3 by Janet Yellen.

Delivering the Fed's twice-a-year report to Congress last week, Yellen said the central bank would likely take "further measured steps" to scale back its bond purchases.

Yellen agreed that the economy was strengthening enough to withstand a reduction in bond purchases. But she signaled that the Fed still planned to keep short-term rates at record lows "well past" the time unemployment falls below 6.5 percent.

The minutes showed that the participants discussed how and when to change their statement's assurances that short-term rates will remain low. Some suggested scrapping the 6.5 percent unemployment threshold and instead describing the changes in the job market and inflation that might trigger a rate increase.

No decision was made. But the minutes said the officials thought "it would soon be appropriate" to alter its guidance about short-term rates. Analysts said a change could come at the next meeting on March 18-19. That will be the first meeting with Yellen in charge.

The minutes noted that "a few participants" raised the possibility that an initial increase in short-term rates should come "relatively soon."

But Sal Guatieri, senior economist at BMO Capital Markets, said, "That's not going to happen." He and other economists said Yellen and the majority of Fed officials continue to believe that rates should remain low.

Economists say the decline in unemployment to the current 6.6 percent overstates the health of the job market. Much of the drop in unemployment reflects disappointed job seekers who have given up looking for work and are no longer counted as unemployed.

In her testimony, Yellen acknowledged that fact, saying, "The recovery in the labor market is farm from complete."

Analysts are forecasting that the Fed will keep its target for short-term rates, which has been at a record low near zero since December 2008, at that level until late 2015.

Sbarro says it will close 155 locations

NEW YORK -- Sbarro Inc. says it's closing 155 of its U.S. locations, mostly in mall food courts where traffic has declined.

The Melville, N.Y.-based pizza chain said Wednesday the closures affect 1,400 workers. The move comes as the company is trying to improve its financial performance and update its image under yet another CEO who took over just last year.

Jonathan Dedmon, a representative for Sbarro, says the targeted locations will close Thursday.

"The last day of business is today," he wrote in an email.

Sbarro filed for bankruptcy protection in April 2012 when it was no longer able to contend with declining sales and rising costs. It emerged from Chapter 11 protection in November 2012, saying that it had significantly cut its debt and received a new $35 million capital infusion. Shortly after, it named James Greco, a former head of bagel chain Bruegger's Enterprises, as its CEO. Greco led a push to revitalize the chain's image by touting new recipes and ovens. But the efforts apparently didn't take hold; Sbarro named David Karam its CEO last year.

Dedmon did not respond when asked why Greco was replaced.

Sbarro owns 400 locations in North America. The closures do not affect the additional 175 Sbarro locations in the region that are owned by franchisees. After the closures, Sbarro said it will operate 800 stores worldwide, including 81 that were opened last year.

Feds: No more false starts on Alaska gas pipeline

JUNEAU, Alaska -- Federal agencies are ready to work on an Alaska liquefied natural gas project but don't want another false start, state lawmakers were told Wednesday.

In testimony submitted to the Senate Finance Committee, Larry Persily, the federal coordinator of Alaska gas pipeline projects, said agencies would like to know a project has a real shot at making it this time.

Persily said this time could well be different than past efforts, like the proposed gas line from the North Slope into Canada that has been set aside because of market changes in favor of the current project that would be capable of overseas exports.

Working in Alaska's favor is that liquefied natural gas demand is the strongest growth industry for energy in the world, he said. While the state faces a lot of potential competitors, he said it's not an impossible market.

Gas could be flowing in the next decade if markets perform as expected, the companies and state can keep costs down, and financial terms work for all parties, he said.

A project of this type carries the potential for serious risk and reward. The Alaska project has substantial advantages, like shorter tanker runs to Japan than from the Gulf Coast, but it also has substantial disadvantages, like seasonal construction limits and the fact oil and gas issues can be a hard sell amid Alaska politics, he said.

The project under consideration would feature an 800-mile pipeline. Current cost estimates for the project range from $45 billion to more than $65 billion.

The state has signed an agreement with TransCanada Corp., the Alaska Gasline Development Corp., or AGDC, and the North Slope's three major players, BP PLC, ConocoPhillips and ExxonMobil Corp., spelling out terms for pursuing the project. The agreement anticipates a state stake of about 20 to 25 percent. The state has signed a separate agreement with TransCanada for pipeline services.

The agreements are contingent upon passage of enabling legislation aimed at moving the project into a phase of preliminary engineering and design. Lawmakers have been trying to digest both the bill and the agreements, particularly the complex memorandum of understanding with TransCanada.

In the Senate Resources Committee on Wednesday, Sen. Lesil McGuire, R-Anchorage, said she didn't want the deal to fall apart but had reservations about the proposed creation of a subsidiary of AGDC to carry the state's interest in a liquefaction facility. She said she didn't want AGDC's focus on an in-state gas line to be compromised or diluted. The state has continued to pursue the smaller, in-state project through AGDC while it has pursued the big line, in case one of the projects falters.

Deputy Revenue Commissioner Mike Pawlowski said AGDC is not just about the in-state line and there is long-term strategic value in having AGDC involved in the way the bill proposes.

Sen. Hollis French, D-Anchorage, asked whether the bill, which references the oil tax law, will have any impact on the oil tax referendum later this year. A Department of Law attorney said she was not prepared to answer that question.

French, who supports the repeal effort, said later that he doesn't believe it will endanger the referendum but wanted to hear from the administration. He said he also has requested a legal opinion of his own.

Bank of England united on interest rates vote

LONDON -- Policymakers at the Bank of England voted unanimously at their last meeting to keep the key interest rate at the record low of 0.5 percent, buoyed by a strengthening economy and subdued inflation.

Minutes published Wednesday for the February meeting showed policymakers were also united in opting to refrain from pumping more money into the economy and to broaden their view as to what might prompt them to raise rates.

Until recently, the bank said its key interest rate would remain on hold until joblessness fell to 7 percent. But as that unemployment threshold neared, Mark Carney, the governor, decided to update the so-called forward guidance to consider wage growth and productivity in the calculation.

Figures released Wednesday showed unemployment at 7.2 percent for the quarter ending in December.

Work to resume on Panama Canal expansion

PANAMA CITY -- The administrator of the Panama Canal says work will resume Thursday on a major expansion of the canal two weeks after it was halted over a disagreement with a contractor on $1.6 billion in cost overruns.

It says the European-led construction consortium will go back to work even though they haven't reached a final agreement on how to finance the remaining work on a set of new locks

The dispute that began in January threatens to further delay completion of the $5.25 billion expansion project that will allow extra-large tankers and container ships to use the canal and cut travel time between Asia and the eastern U.S.

The consortium led by Spain's Sacyr blames poor planning for the cost overruns. Panama says the company is responsible for any unforeseen costs.

Central, western Mass. broadband project completed

WESTBOROUGH, Mass. -- Officials say a project to bring high-speed Internet access to public safety facilities, town halls, schools and hospitals in rural areas of central and western Massachusetts has been completed.

The Massachusetts Broadband Institute at the Massachusetts Technology Collaborative announced Tuesday that construction and testing of a 1,200-mile fiber-optic network has been completed.

Facilities in more than 120 towns are connected.

The project was financed by state money and a $45 million federal stimulus grant.

The move is designed to boost the economy, education and public safety.

State officials say completing the so-called backbone network will make it more economically viable for the private sector to come in and connect homes and businesses.

Gov. Deval Patrick says reliable and affordable high-speed Internet is necessary to compete in the global economy.

Olympics coverage keeps NBC the ratings leader

NEW YORK -- To no one's surprise, the ongoing Olympics handed NBC last week's most-watched seven telecasts, keeping the network in the Nielsen stratosphere and dwarfing its rivals.

Tuesday was NBC's biggest night, seen by more than 23 million viewers. Its least-followed Olympics coverage, on Saturday, still placed seventh for the week, drawing 17 million viewers.

Right behind, ranking eighth: AMC's "The Walking Dead," with 13 million viewers.

Fox's pair of "American Idol" editions placed 10th and 11th.

Overall for the week in prime time, NBC averaged 21.2 million viewers. Runner-up CBS had 5.3 million, followed by Fox with 4.4 million and ABC with 3.7 million. Univision had 2.9 million, ION Television had 1.3 million, Telemundo had 1.2 million and the CW had 860,000 viewers.

The week's top-rated cable networks were TNT with 2.88 million, USA with 2.55 million and Disney Channel with 2.16 million.

Boosted by NBC's coverage of the Olympics, the network's Sochi-based "Nightly News" topped the evening newscasts with an average of 11.6 million viewers, its best showing in nine years. NBC says "Nightly" has won the evening-news race for 231 consecutive weeks. ABC's "World News" was second with 8.8 million and the "CBS Evening News" had 8.0 million viewers.

For the week of Feb. 10, the top 10 shows, their networks and viewerships: Winter Olympics (Tuesday), NBC, 23.72 million; Winter Olympics (Thursday), NBC, 22.94 million; Winter Olympics (Monday), NBC, 22.40 million; Winter Olympics (Sunday), NBC, 21.27 million; Winter Olympics (Wednesday), NBC, 20.81 million; Winter Olympics (Friday), NBC, 19.11 million; Winter Olympics (Saturday), NBC, 17.10 million; "The Walking Dead," AMC, 13.34 million; "The Big Bang Theory," CBS, 11.78 million; "American Idol" (Wednesday), Fox, 11.68 million.

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ABC and Disney Channel are owned by The Walt Disney Co. CBS is owned by CBS Corp. CW is a joint venture of Warner Bros. Entertainment and CBS Corp. Fox is owned by 21st Century Fox. NBC, USA and Telemundo are owned by Comcast Corp. ION Television is owned by ION Media Networks. AMC is owned by AMC Networks. TNT is owned by Time Warner.

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Online:

Nielsens: http://bit.ly/1muLyha

Marquette announces layoffs to trim costs

MILWAUKEE -- Marquette University is eliminating 25 staff positions in a cost-cutting move, the university's interim president said Wednesday.

In a letter to faculty and staff, the Rev. Robert A. Wild said the cuts are part of an effort to create efficiencies so that a Marquette education will continue to be affordable.

"I am sad to share that 25 of our Marquette colleagues have been told or are in the process of being told that their employment with Marquette has ended," Wild said in the letter, emailed across campus. "The colleagues affected by this news are wonderful people who have contributed well to the university."

The cuts are Marquette's first workforce reduction since the mid-1990s. No faculty members are affected, the Milwaukee Journal Sentinel (http://bit.ly/1fh9Sxz ) reported.

The reductions, combined with future employee turnover, retirements and not filling some vacancies, are expected to reduce Marquette's employee base of 2,800 by about 105 positions, according to Wild's letter.

The university declined to reveal which department or departments are affected, citing confidentiality and respect for those involved.

Each person whose position is eliminated will receive a severance package that includes extended pay and benefits, and will be offered spiritual and career transition assistance, Wild said.

Since returning to campus as interim president in the fall, Wild has often discussed consolidating work and emphasizing operational efficiencies to reduce financial strain on students.

It will cost about $47,000 for an undergraduate to attend Marquette next year, including tuition, fees and room and board, although about 98 percent of students receive financial aid.

Conn. House speaker backs repeal of keno

HARTFORD, Conn. -- Connecticut's House speaker said Wednesday he will work to halt the introduction of keno, a bingo-style game that was authorized by the legislature last year as part of a deal to balance the state budget.

Democratic Rep. Brendan Sharkey of Hamden said before a conference of the Connecticut Council of Small Towns in Cromwell that the revenue from the game is no longer needed.

"Keno was a late addition to the budget last year as a way to help fill a budget hole, but now the revenue is not needed so I don't see a reason to go forward with it, particularly when it hasn't even started," Sharkey said. He noted there was never a "groundswell of support" for keno.

Gov. Dannel P. Malloy said last week it was not his idea to bring keno terminals to the state and suggested he would sign a bill to repeal the legislation if one reaches his desk. A bill to repeal keno has been introduced by Sen. Andrea Stillman of Waterford.

State Senate President Donald Williams, D-Brooklyn, said Wednesday that he has never supported keno and he shares many of the concerns raised by Stillman and Sharkey.

"Because of Connecticut's improving fiscal outlook, we can now begin to have a conversation about budget options," he said.

Senate Minority Leader John McKinney, R-Fairfield, who originally opposed including Keno in the budget, said he was not surprised Sharkey and Malloy "had a change of heart shortly after a political poll found that the vast majority of Connecticut residents oppose their plan."

McKinney is a GOP candidate for governor.

The budget deal in the General Assembly last year relied on $31 million in projected revenues from keno over two years. Today, the state has a projected $500 million surplus.

The game is available in supermarkets, gas stations, convenience stores, bars and restaurants in neighboring states, and Connecticut had batted around the idea of introducing it locally for years.

Because both the Mashantucket Pequot and Mohegan Tribes contend they have exclusive rights to such games at their casinos under a compact with the state, the budget bill authorized the tribes to each receive 12.5 percent of keno's gross operating revenues.

Obama pressed by neighbors on sensitive issues

TOLUCA, Mexico -- Pressed by North American allies on an array of politically fraught issues, President Barack Obama on Wednesday vowed to press ahead with stalled efforts to expand trade agreements for the Americas into Asia and overhaul fractured U.S. immigration laws. But Obama made no promises to frustrated Canadian leaders about his long-anticipated decision on the Keystone XL pipeline.

Closing a day of talks with the leaders of Mexico and Canada, Obama said the North American partners must maintain their "competitive advantage" on trade, in part by expanding into the fast-growing Asia-Pacific region. While Obama acknowledged that "elements in my party" oppose the Trans-Pacific Partnership deal, he disputed the notion that Democratic concerns would derail the agreement.

"We'll get this passed if it's a good agreement," Obama declared during a joint news conference with Mexican President Enrique Pena Nieto and Canadian Prime Minister Stephen Harper.

The North America Leaders' Summit — often referred to as the "Three Amigos" meeting — coincided with the 20th year of the North American Free Trade Agreement among the three countries, a deal that has vastly expanded cross-border commerce in the region but which remains a contentious issue in the United States over its impact on jobs and on environmental protections.

Trade experts say the agreement is due for an upgrade to take into account the current globalized environment and to address issues not touched in the original pact. But rather than reopen NAFTA, the three countries are instead relying on negotiations underway to complete the TPP, which is a trade bloc of 12 countries in the Americas, Asia and the Pacific.

Pena Nieto heralded the "innovative spirit" that spurred NAFTA and said new trade agreements "are bound to go beyond and enhance all together the progress that each one of our countries has made." And Harper made clear that he was "focused on bringing those negotiations to a successful conclusion."

Despite the widespread agreement on trade, there were some sources of tension between the North American partners on immigration and the Keystone XL pipeline, both sensitive political issues in the United States.

In Mexico, government officials and the public alike are eager for progress in overhauling U.S. immigration laws. The prospects for sweeping legislation this year has dimmed in recent weeks, with many House Republicans unwilling to tackle the issue in a midterm election year.

Still, Obama declared: "Immigration reform remains one of my highest priorities."

For Canada, a key source of frustration with the U.S. has been the Obama administration's long and drawn out review of the Keystone XL pipeline, which would carry oil from tar sands in western Canada 1,179 miles to Nebraska, where existing pipelines would then carry the crude to refineries on the Texas Gulf Coast. Canada has been pushing the U.S. for years to approve the pipeline, but environmental groups oppose it, and Obama has said he won't approve it if it increases greenhouse gas emissions.

A Nebraska judge on Wednesday struck down a law that allowed the pipeline to proceed through the state, a victory for opponents who have tried to block the project.

While Obama acknowledged that the U.S. review has been "extensive," he defended the process, saying "these are how we make these decisions about something that could potentially have significant impact on America's national economy and our national interests."

A final decision on Keystone isn't expected until this summer, at the earliest, meaning the verdict could potentially come in the run-up to November's midterm elections, in which energy issues are likely to be a factor in some key races.

Harper, an ardent supporter of the pipeline, said the U.S. State Department's review was definitive in determining the pipeline won't increase emissions.

"My views in favor of the project are very well known," Harper said.

Events elsewhere in the world competed for the leaders' attention, most notably the violence that erupted in Ukraine as the government of President Viktor Yanukovych cracked down on protesters. Obama warned that there would be consequences if the clashes continued. Obama cautiously noted reports of a truce between the president and the protesters, saying it "could provide space for the sides to resolve their disagreements peacefully."

Obama spent just about nine hours in Toluca, the Mexican leader's hometown, with Air Force One touching down Wednesday afternoon and returning to Washington shortly after the evening news conference.

Trade bills divide Obama, fellow Dems

WASHINGTON -- The White House says it will continue to press Congress for "fast track" authority to speed approval of trade deals even as election-year politics makes the task harder.

The Obama administration is engaged in two difficult trade negotiations, one with Japan and 10 other Pacific nations, and the other a proposed trans-Atlantic deal with European Union nations. The trans-Pacific talks are closer to completion.

President Bill Clinton used such powers to push through the North American Free Trade Agreement among the U.S., Canada and Mexico in 1993. President George W. Bush used fast-track authority to push through Congress the Central American Free Trade Agreement in 2005.

The fast track process, more formally known as "trade promotion authority," empowers presidents to negotiate trade deals and then present them to Congress for up-or-down votes, with no amendments allowed.

Such trade deals have always been more popular with Republicans than Democrats.

That's largely because business interests aligned with Republicans have always formed the core support for efforts to expand trade, while labor unions traditionally supportive of Democrats claim trade deals like NAFTA have cost U.S. jobs, helping to send them overseas.

Politically, what it means is that House Speaker John Boehner, R-Ohio, is on President Barack Obama's side this time. Fast-track critics Senate Majority Leader Harry Reid, D-Nev., and former House Speaker Rep. Nancy Pelosi, D-Calif., are working against him.

The day after Obama asked for fast-track authority in his State of the Union address last month, Reid asserted: "I'm against fast track. ... Everyone would be well-advised just to not push this right now."

White House spokesman Jay Carney said Tuesday that despite such objections from Democratic leaders, "we're going to continue to press for this priority."

Carney was asked whether recent generally pessimistic-sounding comments on prospects for fast track by Vice President Joe Biden to a Democratic conference could be taken as recognition by the White House that the trade legislation wasn't going anywhere anytime soon.

Carney said no but added that the administration is "mindful ... that there are differing views in both parties, not just the Democratic Party" on the subject.

But opposition to the trade deals is more pronounced on the Democratic side.

Late last year, 151 House Democrats, roughly three-quarters of the chamber's Democratic membership, signed a letter to Obama signaling their opposition to granting him fast-track trade authority.

In the past, Obama has not been an ardent supporter of the fast-track process. Even without fast track, Obama was able to win congressional passage of free-trade pacts with Colombia, Panama and South Korea the old-fashioned way in 2011. And he has yet to make a high-profile major push for renewal of the powers since his State of the Union comments.

If ratified, the proposals — the Trans-Atlantic and Trans-Pacific Trade and Investment Partnerships — would create the largest free-trade zone in the world, covering roughly half of all global trade.

But the free-trade talks are generating strong emotions at home and abroad.

Many Democrats up for re-election in November are fearful of drawing primary-election opposition over the issue. Concerned about lost jobs that are important to labor unions, they're abandoning Obama on this issue.

Meanwhile, some European allies are pushing back, still peeved over recent disclosures of National Security Agency surveillance of them.

Obama had hoped an agreement could be reached on the trans-Pacific talks before he visited Japan and other Asian nations in April. But the trans-Pacific talks have been complicated by disputes over environmental issues and resistance in some Asian countries to a wholesale lowering of trade barriers.

Boehner, R-Ohio, taunts Obama by asserting that "trade promotion authority is ready to go. So why isn't it done?"

"It isn't done because the president hasn't lifted a finger to get Democrats in Congress to support it," Boehner said, answering his own question. "And with jobs on the line, the president needs to pick up his phone and call his own party, so that we can get this done."

A fast-track bill may be "ready to go" in the GOP-controlled House but certainly isn't in the Democratic-led Senate.

Little by little, the politics of approaching midterm elections are intruding.

"Neither political party at this point has any appetite for taking on an issue that would divide that party's caucus in Congress," said William Galston, Clinton's domestic-policy adviser when NAFTA was passed. "That being said, I suspect that very little is going to happen between now and November" on the trade front.

"Bill Clinton had to go against the majority of his own party, especially in the House," noted Galston, now a senior fellow at the Brookings Institution think tank.

U.S. Trade Representative Michael Froman says that, regardless of the political season, the administration will continue to push for fast-track authority. Without it, "You can't negotiate (trade deals) with our partners and you can't implement (them) here in the United States," Froman said.

But Alan Tonelson, an economist with the United States Business and Industry Council, argues that "American workers on the whole have been leading victims" of such free-trade agreements, beginning with NAFTA.

"Rather than rushing to conclude and endorse new trade initiatives, Congress and the administration should first figure out how to ensure that they serve as engines of domestic growth and job creation, rather than of offshoring and lower living standards," he said.

State official to plead guilty in federal cases

GULFPORT, Miss. -- The former director of the Mississippi Department of Marine Resources plans to plead guilty in a federal fraud case, according to a motion filed Wednesday.

Court records show William W. "Bill" Walker will plead guilty to one count of conspiracy to defraud the government. A change-of-plea hearing is scheduled for March 10 in U.S. District Court in Hattiesburg.

Walker was indicted along with his son Scott Walker and former DMR employees Tina Shumate and Joseph Ziegler Jr., on charges that include conspiracy to commit federal-program fraud, and conspiracy to commit mail fraud. The three had been scheduled for trial June 2.

The case involves the Department of Marine Resources and the Mississippi Marine Resources Foundation. The charges against the Walkers and Shumate stem from a land transaction involving property the father and son had an interest in. Shumate persuaded a nonprofit to buy the land with money supplied by the DMR, the indictment says.

The charges against the Walkers and Ziegler involve a private foundation Bill Walker founded in 2004, about two years after he became DMR director. The indictment alleges the three funneled money intended for the state to Bill Walker's foundation, then used the money to enrich themselves or others.

On Tuesday, Scott Walker filed a change of plea notice in two cases — the one involving his father and a separate fraud case.

His change of plea hearing is scheduled for Friday in the Hattiesburg court.

In the second case, Scott Walker and D'Iberville City Manager Michael Janus were charged with conspiracy to commit program fraud, money laundering and other counts. The indictment alleges the two defrauded the city of D'Iberville out of $180,000 in federal grant money through phony invoices from a consulting firm in which Walker was a partner.

Courts documents show Scott Walker will plead guilty to one count of conspiracy to commit federal program fraud in the first case, and one count of federal program fraud in the second indictment.

Governor: Colorado pot market exceeds tax hopes

DENVER -- Colorado's legal marijuana market is far exceeding tax expectations, according to a budget proposal released Wednesday by Gov. John Hickenlooper that gives the first official estimate of how much the state expects to make from pot taxes.

The proposal outlines plans to spend some $99 million next fiscal year on substance abuse prevention, youth marijuana use prevention and other priorities. The money would come from a statewide 12.9 percent sales tax on recreational pot. Colorado's total pot sales next fiscal year were estimated to be about $610 million.

Retail sales began Jan. 1 in Colorado. Sales have been strong, though exact figures for January sales won't be made public until early next month.

The governor predicted sales and excise taxes next fiscal year would produce some $98 million, well above a $70 million annual estimate given to voters when they approved the pot taxes last year. The governor also includes taxes from medical pot, which are subject only to the statewide 2.9 percent sales tax.

Washington state budget forecasters released a projection Wednesday for that state, where retail sales don't begin for a few months.

Economic forecasters in Olympia predicted that the state's new legal recreational marijuana market will bring nearly $190 million to state coffers over four years starting in mid-2015. Washington state sets budgets biennially.

In Colorado, Hickenlooper's proposal listed six priorities for spending the pot sales taxes.

The spending plan included $45.5 million for youth use prevention, $40.4 million for substance abuse treatment and $12.4 million for public health.

"We view our top priority as creating an environment where negative impacts on children from marijuana legalization are avoided completely," Hickenlooper wrote in a letter to legislative budget writers, which must approve the plan.

The governor also proposed a $5.8 million, three-year "statewide media campaign on marijuana use," presumably highlighting the drug's health risks. The state Department of Transportation would get $1.9 million for a new "Drive High, Get a DUI" campaign to tout the state's new marijuana blood-limit standard for drivers.

Also, Hickenlooper has proposed spending $7 million for an additional 105 beds in residential treatment centers for substance abuse disorders.

"This package represents a strong yet cautious first step" for regulating pot, the governor wrote. He told lawmakers he'd be back with a more complete spending prediction later this year.

The Colorado pot tax plan doesn't include an additional 15 percent pot excise tax, of which $40 million a year already is designated for school construction. The governor projected the full $40 million to be reached next year.

The initial tax projections are rosier than those given to voters in 2012, when state fiscal projections on the marijuana-legalization amendment would produce $39.5 million in sales taxes next fiscal year, which begins in July.

The rosier projections come from updated data about how many retail stores Colorado has (163 as of Feb. 18) and how much customers are paying for pot. There's no standardized sales price, but recreational pot generally is going for much more than the $202 an ounce forecasters guessed last year.

Mason Tvert, a legalization activist who ran Colorado's 2012 campaign, said other states are watching closely to see what legal weed can produce in tax revenue.

"Voters and state lawmakers around the country are watching how this system unfolds in Colorado, and the prospect of generating significant revenue while eliminating the underground marijuana market is increasingly appealing," said Tvert, who now works for the Marijuana Policy Project.

Meanwhile, The Denver Post reported Wednesday that banks holding commercial loans on properties that lease to Colorado marijuana businesses say they don't plan to refinance those loans when they come due. Bankers say property used as collateral for those loans theoretically is subject to federal drug-seizure laws, which makes the loans a risk.

Colorado's two largest banks, Wells Fargo Bank and FirstBank, say they won't offer new loans to landowners with preexisting leases with pot businesses. And Wells Fargo and Vectra Bank have told commercial loan clients they either have to evict marijuana businesses or seek refinancing elsewhere.

"Our policy of not banking marijuana-related businesses and not lending on commercial properties leased by marijuana-related businesses is based on applicable federal laws," Wells Fargo spokeswoman Cristie Drumm told the Post.

Associated Press writer Rachel La Corte in Olympia, Wash., contributed to this report.

Homeland Security warns airlines of new threat

By ALICIA A. CALDWELL and KIMBERLY DOZIER The Associated Press

WASHINGTON -- The Homeland Security Department has warned airlines that terrorists could try to hide explosives in shoes. It's the second time in less than three weeks that the government has issued a warning about possible attempts to smuggle explosives on a commercial jetliner.

Homeland Security said Wednesday it regularly shares relevant information with domestic and international partners, but it declined to discuss specifics of a warning sent to airlines.

"Our security apparatus includes a number of measures, both seen and unseen, informed by the latest intelligence and as always DHS continues to adjust security measures to fit an ever evolving threat environment," the department said in a statement.

A U.S. intelligence official told The Associated Press that DHS released a notice to airlines reiterating that liquids, shoes and certain cosmetics were of concern, all of which are covered under existing Transportation Security Administration security policies.

The latest warning was focused on flights headed to the United States from abroad.

The official said "something caused DHS concern, but it's a very low threshold to trigger a warning like this." The official spoke on condition of anonymity because he was not authorized to discuss the issue publicly.

Earlier this month Homeland Security warned airlines with flights to Russia to be on the lookout for explosive devices possibly hidden inside toothpaste. The Transportation Security Administration then banned passengers from bringing any liquids in their carry-on luggage on nonstop flights from the U.S. to Russia. That warning became public just days before the opening ceremonies of the Winter Olympics in Sochi.

It is unclear if the latest warning, first reported Wednesday by NBC News, is related to the earlier threats to Russia-bound flights.

Air passengers in the United States have had to take off their shoes at airport security checkpoints since shortly after Richard Reid tried to ignite explosives hidden in his shoes on a Miami-bound flight in late 2001. Reid pleaded guilty to terrorism charges and is serving a life sentence.

The traveling public has grown increasingly impatient with expanding security checks at airports.

TSA in recent years has changed some security procedures to allow young children and passengers 75 and older to keep their shoes on. The security agency has also launched a fee-based program that allows willing flyers to submit to background checks and avoid having to remove their shoes, jackets and small amounts of liquids packed in carry-on luggage.

Follow Alicia A. Caldwell on Twitter at http://bit.ly/1dPiHP8

Obama defends US process on Keystone XL

TOLUCA, Mexico -- President Barack Obama is defending the lengthy process the U.S. is using to decide whether to approve the Keystone XL pipeline.

Canada has been pushing the U.S. for years to approve the pipeline, which would carry oil from Canada's tar sands to the Texas Gulf Coast. Environmental groups oppose it and Obama has said he won't approve it if it increases greenhouse gas emissions.

Obama says all nations must take emissions into account in making decisions. He says climate change science is irrefutable.

Obama spoke at a joint news conference with Canadian Prime Minister Stephen Harper and Mexican President Enrique Pena Nieto.

Harper says the U.S. State Department's review was definitive in determining the pipeline won't increase emissions. He says his views that the pipeline should be built are well-known.

Here's What You Said $10.10 Would Mean for You

Last week, we asked what raising the minimum wage meant to you.

The stories you shared are a strong argument for exactly how important it is we get this done. Raising the minimum wage helps Americans young and old. It helps provide relief for those who are just scraping by, and it helps those saving for a rainy day. And it's also the right thing to do -- but don't take our word for it.

Read these stories from folks like you -- then forward them on, and submit your own.

read more

Wash. insurance exchange debuts new ad campaign

SEATTLE -- Depending on your age, you may find the new commercials promoting the Washington health exchange laugh-out-loud funny, somewhat amusing or just plain cringe worthy.

That was — more or less — the intention of the new campaign debuting on TV, radio, online and in print on Wednesday, said exchange spokesman Michael Marchand.

The exchange wanted to catch the attention of young people, between the ages of 18 and 34, who are essential to making the exchange financially viable.

Of the 90,000 people who have bought private insurance through the exchange so far, only 23 percent are in the desired 18-to-34 age group. Young people tend to be healthier, and the Kaiser Family Foundation estimates that they need to make up about 40 percent of enrollment in the federal health care program to balance out the higher costs of insuring older, sicker people.

The video and audio ads in Washington feature two new characters: rappers. In the commercials, they interview real users of the Washington health insurance exchange, to get some ideas for lyrics.

The subjects — who Marchand says are real people who now have insurance in Washington state thanks to the exchange — seem awkward and a little embarrassed by the attention.

One ad shows the rapper interviewing a 26-year-old woman who bought insurance when she was no longer eligible for her parent's coverage. The other shows a couple who were previously turned down for insurance because of preexisting conditions and paid for more than $200,000 worth of care out of their own pockets.

Marchand says the young people who checked out the ads before they aired found them very funny and so did the people featured in them. Some folks over 40 may not be amused.

"We have a lot of outtakes that we're going to be sharing on social media," said Marchand, 47. "A lot of this stuff was very, very funny."

The ads will run through the end of March — when the open enrollment period ends — on 17 television stations in the Seattle-Tacoma, Spokane and Yakima media markets, as well as cable TV. Radio ads in both English and Spanish will run on more than 30 radio stations across the state.

New print ads in English, Chinese, Korean, Russian, Spanish and Vietnamese are running in 25 publications through Washington, but most won't mirror the broadcast ads.

The exchange has launched several other marketing initiatives to reach out to young people without insurance. They include partnerships with a major music promoter, eight roller derby teams and four junior ice hockey teams.

The Washington exchange has a goal of selling private insurance to 340,000 people by the end of March, according to a federal report of enrollment targets.

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Contact Donna Blankinship at http://bit.ly/1hwLQBU

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Online:

Washington Healthplanfinder: http://bit.ly/1eUjjys

Pastides: Year of Constitution classes not needed

COLUMBIA, S.C. -- University of South Carolina President Harris Pastides is asking lawmakers to help tweak requirements that university students spend one year learning about the U.S. Constitution, the Declaration of Independence and the Federalist Papers.

The requirement has become an issue in the race for student body president. Two state lawmakers wrote Pastides last week to ask his position.

Pastides says 60 percent of university students take at least one class that deals with the historical documents. He says requiring a year of lessons would stall graduation for students and force them to pay more in tuition and costs.

Clemson and the College of Charleston don't require the courses, while Winthrop and Coastal Carolina require three credit hours.

The story was first reported by the USC's student newspaper, The Daily Gamecock.

Zale, Eli Lilly are big market movers

NEW YORK -- Stocks that moved substantially or traded heavily Wednesday on the New York Stock Exchange and the Nasdaq Stock Market:

NYSE

Zale Corp., up $6.01 to $20.92

Signet Jewelers Ltd., the owner of Jared and Kay Jewelers stores, said it agreed to buy rival Zale for about $900 million.

Lumber Liquidators Holdings Inc., up $4.98 to $100.58

The hardwood flooring retailer said that its fourth-quarter net income rose nearly 51 percent.

La-Z-Boy Inc., down 63 cents to $26.48

The furniture maker reported third-quarter results that missed Wall Street expectations as harsh weather hurt sales and deliveries.

LinkedIn Corp., up $4.40 to $196.32

The online professional networking service said it is now letting its members write longer posts about their industries or jobs.

Eli Lilly & Co., up $2.84 to $58.09

The drugmaker said previously treated lung cancer patients who took its experimental drug lived longer.

Devon Energy Corp., up $1.34 to $64.25

The oil and natural gas company said it will sell some Canadian assets for $2.8 billion to Canadian Natural Resources Ltd.

Nasdaq

Garmin Ltd., up $4.51 to $51.68

Activity trackers and video cameras helped boost the navigation maker's fourth-quarter net income, even as sales for its GPS devices fell.

Spirit Airlines Inc., up $2.93 to $50.59

The airline reported net income for its fourth quarter that easily beat what Wall Street analysts were expecting.

Satellite reaches California for next Sea Launch

LONG BEACH, Calif. -- A communications satellite built for France-based Eutelsat has arrived in California to be prepared for liftoff from Sea Launch AG's oceangoing rocket pad.

The companies said Wednesday that the Eutelsat 3B spacecraft built by Airbus Defense and Space was flown from Toulouse to Long Beach Airport. It was then transported to a payload processing facility at the home port of the Sea Launch system's two vessels.

The self-propelled launch platform and command ship will sail from Long Beach to the equatorial Pacific for a mid-April liftoff.

The satellite is designed to last more than 15 years in orbit.

Sea Launch, now based in Switzerland, has been lofting heavy satellites into orbit since 1999.

August hearing for NC home insurance increase

RALEIGH, N.C. -- North Carolina's top insurance regulator is scheduling an August hearing for insurance companies to explain their request to raise the cost of homeowners coverage by an average of 25 percent.

Insurance Commissioner Wayne Goodwin's office said Wednesday the hearing was needed after insurance companies represented by the North Carolina Rate Bureau provided too little detail on why they need such a large increase. Goodwin's staff said the requested rate increases may be excessive and unfairly discriminatory.

The rates were increased by an average of 7 percent increase starting in July.

Rate Bureau insurance operations director Sue Taylor says companies haven't had time to study Goodwin's reasons for calling a hearing, but that August is a reasonable time frame. Companies say the requested increase is mostly based on claims projections.

VW union chief won't give up fight for US plant

BERLIN -- Volkswagen's top workers' representative says he won't give up the fight for unionization at the German automaker's plant in Chattanooga, Tennessee.

Employees there voted 712-626 last week against joining the United Auto Workers union after state Republicans warned that it could hurt the local economy.

Bernd Osterloh, who is also a member of VW's supervisory board, told the German daily Suddeutsche Zeitung in an interview published Wednesday that U.S. labor law experts will check whether undue pressure was put on employees to reject the UAW.

Osterloh says "all options will be examined" to introduce a "works council" at the only major VW plant worldwide without formal worker representation.

He told the paper that the failure to achieve this might prevent Volkswagen from building future plants in the U.S. South.

Regulators increase oversight of Iowa nuke plant

PALO, Iowa -- Federal regulators are imposing tougher oversight on Iowa's only nuclear power plant after finding two problems with back-up equipment there in the past year.

The Nuclear Regulatory Commission said Wednesday that the Duane Arnold Energy Center near Palo will face more scrutiny and inspections now.

The NRC and the plant's majority owner, NextEra Energy Resources, say public safety was never threatened by the concerns at the plant about 8 miles from Cedar Rapids.

NextEra Energy spokeswoman Renee Nelson both problems were discovered by plant employees conducting inspections and fixed promptly.

In one case, a diesel generator had an oil leak in March 2013. The other violation related to a back-up reactor cooling system that wouldn't start automatically but could be operated manually.

Mexico feels energy buzz with N. America summit

MEXICO CITY -- The North American Free Trade Agreement has been good for Eugenio Madero's company. Now he's hoping that a deeper plunge into economic integration, focused on Mexican energy, will be even better.

Madero is CEO of SANLUIS Rassini North America, a Mexico-based maker of suspension and brake systems for an auto industry that has embraced free trade by increasingly sending components and vehicles across borders.

The company has a plant in Montpelier, Ohio, and just opened another in Flint, Michigan to serve clients such as Chevrolet, Ford and Chrysler. It has seven plants in Mexico and two in Brazil. Revenues have grown 70 times — to nearly $11.5 billion pesos — in the last 25 years, significantly aided by the free trade deal that took effect in 1994.

"Being in Mexico is just geography. We could be in Detroit," Madero said.

The leaders of the three NAFTA nations met Wednesday in Mexico in part to highlight the economic cooperation that has grown since NAFTA joined the U.S., Canada and Mexico 20 years ago. But all eyes, including Madero's, were on one key area that NAFTA didn't touch: energy.

Experts say the continent of three oil-producing countries could become energy independent with Mexico's reform, which eliminates the state monopoly and opens the oil sector to international investment and contractors with expertise to extract the country's vast proven reserves.

For Madero and plant owners across Mexico, the more near-term impact could be cheaper electricity. His company now must import natural gas and electricity from Texas to run its border plant in Coahuila, even though Mexico sits on a vast supply of shale gas it so far has been unable to tap.

"We're paying higher electricity in our Mexican facilities than in the U.S.," he said. "The sooner we get more gas out of the ground here, the volume, it's going to lower prices."

Energy and other reforms Pena Nieto pushed through congress last year have once again created buzz about Mexico as a good place for foreign investment, despite a stagnant economy in 2013 and security problems. But much depends on how laws to implement the reforms will be written, and just how open Mexico's energy sector will become after decades of constitutional restrictions that gave state-run Petroleos Mexicanos a monopoly and left most of Mexico's vast reserves still in the ground.

While oil output has been rising in the U.S. and Canada, Mexico's production has fallen 25 percent since 2004 despite increased investment.

Pena Nieto's reforms also open telecommunications and aim to improve Mexico's education and the tax structure. U.S. Commerce Secretary Penny Pritzker brought 17 corporations to Mexico two weeks ago in anticipation of Obama's trip, some looking to do business in Mexico for the first time.

"Our goal right now is to help those companies figure out where their next opportunity is," she said. "They know the Mexican government wants them there."

U.S. foreign direct investment in Mexico has increased steadily since NAFTA was signed, to more than 400 percent to a total of $92 billion, and trade between the two countries has more than tripled.

Jindal asks Congress to stop flood insurance hikes

BATON ROUGE, La. -- After months largely silent on the issue, Gov. Bobby Jindal is urging congressional leaders to stop higher flood insurance premiums from hitting homeowners and businesses.

Jindal sent a letter late Tuesday to the Republican and Democratic leaders of both the U.S. House and Senate, asking them to support an immediate delay in the increases set in motion by a 2012 revamp of the federally run National Flood Insurance Program.

The Republican governor described the rate increases tied to the program overhaul as "irrational, not actuarial."

The "rates are not based on the true risk of our citizens, rather they are distorted by excessive fees and charges associated with an inefficient federal bureaucracy, paying for the Corps of Engineers failures and holding Louisiana's home and business owners liable for ongoing coastal land loss in our state," Jindal wrote.

The letter came more than a week after The Associated Press began asking questions about what efforts the governor has made to influence the congressional debate over flood insurance.

It was Jindal's first public and direct intervention to seek relief from the steep rate increases. Other Louisiana officials and business leaders have warned for months that soaring premiums could severely damage local economies.

About 480,000 Louisiana homes and businesses have federal flood insurance.

Until changes were enacted by Congress, the program subsidized rates for people who lived in areas without flood maps or who built their homes and then saw the maps and their risk levels changed.

Designed to cut the federal government's costs, the bipartisan program overhaul stripped the subsidy provisions and made other changes that threaten some homeowners with premium increases that would make many people unable to afford their homes or sell them.

Congress included a provision pushed by Republican Rep. Bill Cassidy in an omnibus spending bill that will put off higher premiums required by new flood maps until fall 2015 at the earliest. But the chambers are considering broader legislation to tweak the program.

A Senate-passed bill pushed by Democratic Sen. Mary Landrieu would amount to a four-year delay of premium increases. The House is expected to consider its own version of the legislation this month.

Backers of the 2012 rewrite of the flood insurance program — including some tea party organizations that are among Jindal's supporters — say the federal government can't afford to subsidize insurance for people who live in areas vulnerable to flooding.

Louisiana officials said flood maps drawn up by FEMA don't recognize local levees or other flood mitigation efforts that could lower a community's risk.

Jindal described efforts to cut the program's costs "a laudable goal." But he said the congressional overhaul two years ago didn't attack the right problems, instead shifting government liabilities to homeowners and distorting the insurance rates. He said only 44 percent of payments for flood insurance premiums in 2012 went to flood claims.

"Better, more fiscally responsible solutions are available," he wrote.

Jindal's letter was sent to House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell.

Sunday alcohol sales approved in Oxford

OXFORD, Miss. -- The Oxford Board of Aldermen has approved an ordinance allowing restaurants to sell liquor on Sundays.

The board voted 6-1 Tuesday. The ordinance will go into effect in 30 days.

If state regulators agree, Oxford restaurants will offer liquor, wine and beer by the glass every Sunday between 11 a.m. and 9 p.m.

It does not affect retail liquor and wine sales, which are limited to state-licensed package stores. State law limits when those stores can operate.

After decades of a near-total ban on Sunday alcohol, the city in 2011 legalized Sunday sales by the drink on nine or 10 Sundays a year, including football weekends at the University of Mississippi. They also voted last year to allow Sunday sales of beer and light wine for off-premises consumption.

How A Remote Alaska Road Became A Political Wedge Issue

hide captionThe village of King Cove, Alaska wants an all-weather road to the outside world. Election year politics is complicating that wish.

AP

Judging from an attack by one of his Republican opponents, you could easily draw the conclusion that Democratic Sen. Mark Begich of Alaska opposes a road that would serve as a lifeline to the remote Aleutian village of King Cove. But you would be wrong.

Begich, who is counted among the Senate's most vulnerable Democrats, actually supports a road that would run through the Izembek National Wildlife Reserve. After Interior Secretary Sally Jewell rejected a state-sponsored land swap meant to make the road more acceptable to environmentalists, Begich this year introduced legislation to mandate the land exchange and get a road built.

His bill was the latest step in a long Alaskan quest for the road, which has put King Cove residents and many other Alaskans at odds with environmentalists.

But there's no room for subtlety in competitive Senate races. Despite the legislation, Dan Sullivan, one of three Republicans vying to take on Begich, nevertheless faulted the senator after a recent King Cove medical incident. Like an episode from the Weather Channel's Coast Guard Alaska, an emergency crew recently had to fly a helicopter through nerve-jarring weather to medevac a seriously ill woman from the remote village.

The Sullivan campaign had a suggestion for how Begich could truly demonstrate that he stands with the residents of King Cove: vote against the confirmation of Rhea Sun Suh, Obama's nominee for Interior Department assistant secretary for fish, wildlife and parks.

Suh is opposed by Senate Republicans who accuse her of opposing natural gas development in Western states and hold her role in the 2010 offshore drilling moratorium against her.

"If Senator Begich really supports the King Cove road he should vote against Suh to send a message to the Obama administration that he isn't the get along, go along Washington politician that his 97% voting record with Obama would portray him to be," Mike Anderson, Sullivan's communications director, wrote in an email. "A vote against Suh would certainly send a message that life is more precious than maintaining his 97% voting record with Obama."

Begich's campaign manager, Susan Fleek-Green, responded: "Helping the citizens of King Cove isn't about politics, it's about saving lives."

Begich hasn't said publicly how he plans to vote on the nomination. And it's unclear if he will have to decide before the midterm elections. While an aide to Sen. Mary Landrieu, chair of the Senate Energy and Natural Resources Committee, said a confirmation vote by the panel would be scheduled before the mid-term elections, Begich isn't on that committee. So what would matter would be his vote once the nomination was put to the entire Senate for a vote. And Senate Majority Leader Harry Reid could slow walk such a vote until after the election.

Either way, this recent attack on Begich illustrates the challenges facing red state Democrats like him. Republicans will take every opportunity to staple them to the administration — even on issues where, for all intents and purposes, those Democrats disagree with the administration.

Stocks slip as Fed rate talk spooks some investors

NEW YORK -- U.S. stocks turned mostly higher in mid-morning trading Wednesday as investors waited to hear from the Federal Reserve later in the afternoon.

KEEPING SCORE: The Dow Jones industrial average rose 82 points, or 0.5 percent, to 16,211 as of 10:40 a.m. Eastern. The Standard & Poor's 500 index rose six points, or 0.3 percent, to 1,847 and the Nasdaq composite fell less than a point to 4,262.

FED MINUTES: On an otherwise quiet day for corporate and economic news, investors will get a chance later Wednesday to look over minutes from the Federal Reserve's policy meeting last month. The minutes will be released at 2 p.m. Eastern time. At that meeting, Fed policymakers voted to further reduce the bank's bond-buying program, which has held down long-term interest rates and helped push the stock market higher. It was also the last meeting led by former Fed Chairman Ben Bernanke.

NETFLIX SLOWS: Netflix fell $2.90, or 1 percent, to $433.95. The company is reportedly in a dispute with Verizon Communications and other telecom companies over the cost of carrying Netflix's programming over their networks. Netflix is one of the biggest users of Internet bandwidth in the U.S., and it usage continues to grow as more high-definition video becomes available. Verizon and other Internet service providers want Netflix to pay more to use their network, according to The Wall Street Journal and other news outlets.

TARIFF DECISION: U.S. Steel fell $1.46, or 6 percent, to $25.27. The Commerce Department decided not to impose tariffs on South Korean steel pipe makers. The U.S. is South Korea's biggest market for steel, and imports from Korea push down steel prices in the U.S., hurting companies like U.S. Steel.

CARLYLE EARNINGS: Private equity giant the Carlyle Group rose $1.18, or 3 percent, to $36.64 after the company reported earnings that easily beat analysts' estimates. The company also increased its quarterly dividend.

FCC won't appeal ruling on Internet neutrality

WASHINGTON -- The Federal Communications Commission says it won't appeal a court decision that struck down rules it designed to ensure that the transmission of all Internet content be treated equally. The agency says it will fashion new rules.

The chairman of the FCC announced Wednesday that the agency will rewrite the anti-discrimination and anti-blocking rules following the ruling by a federal appeals court last month. The ruling said the FCC has the authority to regulate broadband providers' treatment of Internet traffic but the agency failed to establish that its regulations don't overreach.

The court's decision could affect the prices consumers pay to access entertainment, news and other online content.

FCC chairman Tom Wheeler said in a statement the agency will propose new rules to meet the court's requirements.

The FCC's "net neutrality" rules barred broadband providers from prioritizing some types of Internet traffic over others. The directives aligned with the Obama administration's goal of Internet openness. President Barack Obama has said that "net neutrality" is an issue he cares deeply about, partly because his campaign was powered by an Internet free of commercial barriers.

Proponents of net neutrality maintain it ensures a level playing field for big and small companies. They believe it protects consumers and competition, and fosters innovation.

Wheeler said that in writing the new rules, the FCC "will look for opportunities to enhance Internet access competition."

But two Republican commissioners on the five-member FCC panel object to the agency's new plan. Michael O'Rielly said in a separate statement he is "deeply concerned ... that the FCC will begin considering new ways to regulate the Internet." O'Rielly's view is that the agency doesn't have legal authority in this area and there is no evidence that consumers are unable to get access to the content of their choice.

Commissioner Ajit Pai said that instead of proposing new rules, Wheeler should seek guidance from Congress. The Internet is free and open as it stands today and net neutrality "has always been a solution in search of a problem," Pai said in his statement.

Comcast Corp., the nation's No. 1 pay TV and Internet provider, praised Wheeler's decision. The FCC chairman "has taken a thoughtful approach which creates a path for enforceable rules," Sena Fitzmaurice, Comcast's vice president for government affairs, said in a statement.

USTelecom, a trade group that represents telephone companies, said it welcomed Wheeler's move but also urged the FCC to work carefully on the rules. The regulations "will have a direct impact on the nature of the Internet, the development of new service offerings, technological innovation and broadband investment," said USTelecom president Walter McCormick.

Verizon Communications Inc. "remains committed to an open Internet that provides consumers with competitive choices and unblocked access to lawful websites and content when, where, and how they want," spokesman Ed McFadden said Wednesday.

Verizon, one of the biggest telecom companies, sued in 2011 to overturn the FCC rules, arguing that the agency overstepped its authority.

The appeals court did affirm that the FCC has the authority to regulate broadband providers' treatment of Internet traffic. In its ruling, the three-judge panel of the appeals court acknowledged concerns that if it overturned the FCC rules, some broadband companies might act to undermine competition.

"For example, a broadband provider like Comcast might limit its end-user subscribers' ability to access the New York Times website if it wanted to spike traffic to its own news website, or it might degrade the quality of the connection to a search website like Bing if a competitor like Google paid for prioritized access," the court said.

The judges said the FCC's rules effectively treated all Internet service providers as common carriers — transporters of people or goods for the general public on regular routes at set rates. Examples of common carriers include airlines, railroads, trucking companies and utilities. At the same time, the judges said, the agency itself already had classified broadband providers as exempt from treatment as common carriers — setting up a legal contradiction. The FCC failed to establish that its rules do not impose common carrier obligations on the Internet companies, the judges ruled.

Some public advocacy groups insist that broadband must be reclassified as a common carrier in order to protect Internet competition.

The court's decision means that leading Internet providers can decide which Internet services — such as Netflix movies, YouTube videos, news stories and more — they allow to be transmitted to consumers over their networks.

In some cases, Internet providers such as Verizon, AT&T and cable companies can demand, for example, that Google pay them to ensure that YouTube videos are accessible to all their consumers, or Google could pay extra to ensure that YouTube videos are delivered faster.

"Pretending the FCC has authority won't actually help Internet users when websites are being blocked or services are being slowed down," said Craig Aaron, president of Free Press, a public-interest group that focuses on the media industry. "If the agency really wants to stop censorship, discrimination and website blocking, it must reclassify broadband as a telecommunications service," he said in a statement.

The revised rules to be proposed by the FCC, as outlined by Wheeler, "would enhance transparency for consumers so they know if and when their Internet service provider is slowing down or blocking online content," said Rep. Anna Eshoo of California, the senior Democrat on the House subcommittee that oversees the FCC.

Netflix Inc., one of the biggest users of Internet bandwidth in the U.S., reportedly is in a dispute with Verizon and other telecom companies over the cost of carrying Netflix's programming over their networks. Those service providers want Netflix to pay more to use their network, according to The Wall Street Journal and other news outlets. The dispute is said to have slowed Netflix's content flow over Verizon's fiber optic network, just as Netflix debuted the second season of its popular "House of Cards" dramatic series.

Comcast last week announced plans to buy Time Warner Cable, another of the biggest broadband companies, for $45.2 billion.

US stocks end a back-and-forth day with a loss

NEW YORK -- Stocks are ending lower after a choppy day as investors react to news that the Federal Reserve will likely continue to pare back its economic stimulus.

Netflix fell on reports that the video-streaming company is in a dispute with Verizon and other broadband carriers over the cost of carrying Netflix's programming.

Major indexes bobbed between slight gains and losses for much of the day, then turned lower in the last hour of trading.

The Dow Jones industrial average lost 89 points, or 0.6 percent, to close at 16,040 Wednesday.

The Standard & Poor's 500 index fell 12 points, or 0.7 percent, to 1,828. The Nasdaq composite fell 34 points, or 0.8 percent, to 4,237.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.73 percent.

From Mexico, Obama warns Ukraine to ‘show restraint’ on protests

TOLUCA, Mexico -- President Barack Obama on Wednesday warned Ukraine’s government to show restraint as clashes escalated in the capital of Kiev, urging the Ukrainian military to avoid violence to quash protests.

Obama, who’d arrived earlier in Mexico’s industrial city of Toluca for a summit with the leaders of Canada and Mexico, also called on pro-Europe protesters in Ukraine to refrain from violence, which has taken 26 lives in the past two days.

“We’re going to be watching closely, and we expect the Ukrainian government to show restraint, to not resort to violence in dealing with peaceful protesters,” the president said. He also urged “peaceful protesters to remain peaceful.”

Obama made it clear that he thinks the majority of Ukrainians want to establish a closer relationship with Europe in defiance of Russia, which has held sway over Ukraine for centuries. The country is a key transit point for Russian natural gas exports to Europe.

Other administration officials voiced fears that the clashes in the streets of Kiev might worsen.

“As NATO’s military commander, I ask that responsible leaders avoid the use of military force against the people of Ukraine,” said Gen. Philip M. Breedlove, the highest-ranking U.S. military officer in Europe, said in a tweet.

Speaking aboard Air Force One en route to Mexico, National Security Council spokesman Ben Rhodes said the clashes unfolding in Kiev were “completely outrageous and have no place in the 21st century.”

Rhodes alerted Russia that the White House expects it to play a low-key role in Ukraine and allow its citizens to peacefully decide their own fate.

“We understand that Ukraine is a neighbor of Russia, has historic ties to Russia, but that that need not preclude Ukraine from, again, continuing to pursue a European path as well,” Rhodes said.

The violence in the Ukraine appeared to eclipse the early hours of the half-day summit, which brought together Obama, Mexican President Enrique Pena Nieto and Canadian Prime Minister Stephen Harper.

They were once dubbed the Three Amigos, but strains on their friendship have cast a chill over the world’s largest trading bloc.

A bilateral spat between Mexico and Canada and anger in Ottawa over U.S. indecision on whether to build the Keystone XL pipeline from western Canada to the U.S. Gulf Coast cooled the atmosphere of the seven-hour summit.

Obama landed in Toluca, some 40 miles west of Mexico City, at about 12:10 p.m. local time (1:10 pm. EST). He popped his head through the door of Air Force One seven minutes later and bounded down the stairs.

Before boarding the plane at Joint Base Andrews for the four-hour flight, the White House said, the president signed an executive order that’s intended to reduce bureaucratic barriers and speed up imports and exports, helping businesses strengthen supply chains across borders. The move signaled that Obama wouldn’t cede to opposition to his trade agenda at home.

The gathering in Toluca, Mexico’s fifth largest city, coincides with the 20th anniversary of the North American Free Trade Agreement, which formed a market of 470 million people from Canada’s Yukon to the Yucatan Peninsula in Mexico. The bloc represents more than 30 percent of global economic output.

But even as manufacturing chains are more integrated among the three nations, experts say the bloc has drifted on autopilot with a lack of strategic vision.

“Twenty years later, it’s hard for us to talk to each other and reach agreement,” said Laura Macdonald, a political scientist who specializes in the region at Carleton University in Ottawa.

Rather than re-debate NAFTA, Obama is expected to press Pena Nieto and Harper to speak with one voice as they negotiate the Trans-Pacific Partnership, a proposed trade bloc that includes 12 countries around the Pacific Rim.

Multiple tensions surround the summit, though, and it unfolds “at the worst moment in the trilateral relationship” since the Sept. 11, 2001, terrorist attacks in the United States triggered concerns over border security, Macdonald said.

The bright spot is an energy revolution that’s altering the global energy map and shifting its epicenter to North America, revitalizing manufacturing.

“We are in a fundamentally different place than we were even five years ago,” said Eric Farnsworth, the vice president of the Council of the Americas, a Washington-based business group that promotes free trade, democracy and open markets in the hemisphere.

Farnsworth said bilateral issues and faltering political intentions had hindered efforts to develop the NAFTA region “in a comprehensive and strategic manner.”

“That sense of broader purpose here is missing,” he said.

Mexico is irked at Canada over visa requirements that have caused its tourism to Canada to drop by about 50 percent since 2008 to about 130,000 Mexicans per year. In contrast, 1.9 million Canadians visit Mexico annually.

Mexican diplomats say Canada requires 10 times more information from Mexican citizens to grant visas than the U.S. government does.

Harper and Pena Nieto oversaw the signing Tuesday of an expanded air transport accord that will allow more direct flights between Canada and Mexico, but Harper made no public mention of whether Canada would ease visa requirements.

Harper is irritated with Obama for U.S. delays on deciding whether to proceed with the $5.4 billion Keystone XL pipeline, designed to carry oil made from tar sands in the province of Alberta through the U.S. Midwest to refineries along the Gulf Coast.

Macdonald said the pipeline project “is the most important foreign policy objective of the Harper government” in its quest to become an energy superpower.

“Some of the Harper government statements have had an air of petulance about them: ‘You just have to answer us now,’ ” Macdonald said.

Also irritating U.S.-Canada relations are delays in replacing the aged Ambassador Bridge between Detroit and Windsor, Ontario, the busiest international land border crossing in North America in terms of trade volume.

Even without coordinated policies to reinvigorate NAFTA, manufacturing supply chains increasingly bind the three nations. More than 8 million U.S. jobs depend on trade with Canada, and another 6 million on trade with Mexico.

U.S.-Mexico trade topped $500 billion last year, and components and finished products travel back and forth across the border. Vehicles built in North America are said to have their parts cross the U.S. borders eight times before they’re fully assembled.

“We design it together and we produce it together,” Farnsworth said of most goods, noting that 40 cents of each dollar’s worth of Mexican exports to the United States comes from materials and parts produced in U.S. plants.

Once-annual summits between the NAFTA leaders have grown less frequent. The leaders met in Guadalajara in 2009 and in Washington in 2012.

The initial promise of the NAFTA trade bloc led to the moniker the Three Amigos for the leaders of the countries, taken from a 1986 comedy Western starring Steve Martin, Chevy Chase and Martin Short.

Pa. Marcellus Shale production increases

PITTSBURGH -- State regulators report that Marcellus Shale natural gas production in Pennsylvania topped three trillion cubic feet in 2013. That's more than double the previous year's production, and the energy equivalent of over 500 million barrels of oil.

The Department of Environmental Protection reported the production figures. The data is submitted by energy companies and sometimes contains errors, but the report of 3.1 trillion feet for total 2013 production is very close to independent estimates.

The Marcellus Shale is a gas-rich formation deep underground that extends across several states, but most of the current production is in Pennsylvania.

The U.S. Department of Energy estimates that the Marcellus Shale now provides about 18 percent of the nation's natural gas, but that figure includes some West Virginia production.

MGM Resorts 4Q loss narrows as expenses decline

LAS VEGAS -- MGM Resorts International's fourth-quarter loss narrowed, helped by reduced expenses.

The casino operator owns and runs properties in Nevada, Mississippi and Michigan, including 10 casinos on the Las Vegas Strip. It also has a 51 percent holding in a Chinese gambling enclave in Macau.

"Las Vegas is truly recovering, MGM China continues to grow, our balance sheet has improved dramatically and we are working toward the several exciting projects which we believe will accrue to the value and benefit of our shareholders," CEO Jim Murren said during a conference call with analysts and investors Wednesday.

MGM is working on expanding into several new U.S. markets, including Maryland and Massachusetts. The company is also building a $350 million sports arena on Strip in partnership with sports and entertainment promoter AEG. The arena is expected to open in spring of 2016 between the New York-New York and Monte Carlo hotel-casinos.

CFO Daniel D'Arrigo hinted that MGM might have more Las Vegas projects in the works, though he said the company doesn't want to add additional rooms on the Strip, where inventory is already thought to be too high. He suggested MGM might work with other companies to capitalize on property it already owns by attracting more events.

MGM lost $38.3 million, or 8 cents per share, for the period ended Dec. 31, 2013. That compares with a loss of $1.22 billion, or $2.50 per share, a year ago. Analysts, whose estimates typically exclude one-time items, predicted a loss of a penny per share.

Expenses declined to $2.2 billion from $2.72 billion.

Revenue rose 10 percent to $2.51 billion from $2.29 billion, driven by gains in the casino arena as well as rooms, entertainment and food and beverages. Wall Street forecast revenue of $2.47 billion.

At wholly owned domestic hotel-casinos, revenue per available room improved to $114 from $112. This figure is a key gauge of a lodging company's health. The average daily rate increased to $133 from $130, while occupancy declined by one percentage point to 85.

MGM China reported a 27 percent rise in revenue during the quarter. The subsidiary announced a $500 million special dividend on Wednesday, which will be paid on March 17. MGM Resorts will receive $255 million, which is its share of the special dividend.

For the year, MGM Resorts lost $156.6 million, or 32 cents per share, versus a loss of $1.77 billion, or $3.62 per share, in 2012.

Annual revenue climbed 7 percent to $9.81 billion from $9.16 billion.

The Las Vegas company's stock rose 41 cents, or 1.6 percent, to $26.25 in midday trading. Its shares have doubled over the past year.

Michelle Chapman reported from New York.