Thursday, March 27, 2014

Friday March 28 Housing and Economic stories


Iron Ore’s Bear Market Deepens on Demand Concern in China - (www.bloomberg.com)  Iron ore extended its decline into a bear market on concern that demand in Chinamay slow as credit tightens in the largest buyer, exacerbating the impact of rising global supplies that are seen spurring a surplus. Ore with 62 percent content delivered to Tianjin fell 8.3 percent to $104.70 a dry ton, the lowest since October 2012 and the biggest drop in more than four years, according to data from The Steel Index Ltd. yesterday. The benchmark price lost 27 percent since Aug. 14, when it reached a five-month high of $142.80. The raw material dropped into a bear market on March 7. BHP Billiton Ltd. (BHP) and Rio Tinto Group predict lower prices this year after producers spent billions of dollars to expand output. Banks from Citigroup Inc. toStandard Chartered Plc predict a surplus, and Goldman Sachs Group Inc. listed iron ore among its least-preferred commodities for 2014. Credit concerns in China may have helped to amplify volatility in prices, according to Jimmy Wilson, BHP’s head of iron ore.

Staples to shut 225 stores in North America as sales fall - (www.reuters.com) Staples Inc. said it would close up to 225 stores in the United States and Canada - 12 percent of its North America outlets - and forecast another quarter of sales decline as it loses customers to mass market chains and e-retailers. Shares of the largest U.S. office supplies retailer fell as much as 17 percent after the company also reported weaker-than-expected fourth-quarter results and forecast a profit for the current quarter that fell far below analysts' estimates. Staples has 1,846 stores in the United States and Canada. "Our customers are using less office supplies, they're shopping less often in our stores and more online, and their focus on value has made the marketplace even more competitive," Chief Executive Ronald Sargent said on a post-earnings call. Staples said it had initiated a multi-year cost reduction plan that was expected to generate annualized pretax cost savings of about $500 million by 2015.

Copper Prices Hit Four-Year Low on China Fears - (online.wsj.com)  Copper prices fell to their lowest level in nearly four years Tuesday, amid continued worries that a slowdown in China—the world's biggest buyer—will damp demand for the industrial metal. The most actively traded contract, copper for May delivery, was recently as low as $2.9420 a pound on the Comex division of the New York Mercantile Exchange, losing nearly 2.5% to hit its lowest level since July 2010. Copper futures have been on shaky ground, as investors fear that China's economy will cool off as the government shifts its focus to longer-term growth. China accounts for 40% of the world's copper imports. "Investors are beaten down and they don't know what China's plans are," said Ira Epstein of the Linn Group. "The mentality is to watch and wait and see what happens next." Losses in copper have ramped up in recent days, after China's first corporate debt default intensified concerns about the country's banking system. 

Top German body calls for QE blitz to avert deflation trap in Europe - (www.telegraph.co.uk) A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites. Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap. "It is high time for the ECB to act. Otherwise Europe risks falling into a dangerous downward spiral of sliding prices and declining demand", he wrote in Die Welt. "The ECB must counter the deflation threat quickly and decisively, and launch a broad-based programme of bond purchase along the lines of the Federal Reserve," he said. The scale should be 0.7pc of eurozone state debt each month, comparable to 'QE3' in the US.

Fed’s Aid in 2008 Crisis Stretched Worldwide - (www.nytimes.com) Tuesday morning, Sept. 16, 2008, was perhaps the darkest time for the United States economy in modern memory — even if nobody knew it quite yet. It was barely 24 hours removed from the bankruptcy of Lehman Brothers, and a few hours before the government would rescue the insurer American International Group. Events had been set in motion that would drive the unemployment rate to double digits and cause half a decade of economic misery. But before they would confront any of that, the men and women of the Federal Reserve received an urgent briefing on Norway. A few minutes into the meeting of the Fed’s policy committee, according to newly released transcripts, William C. Dudley, then the head of the markets desk at the New York Fed, brought dangerous tidings from across the Atlantic. “I have just sketchy details based on a phone call,” Mr. Dudley said. “But my understanding is that this morning Norway put in place a facility by which they are going to offer their banks dollars, up to $5 billion,” adding that “the fact that Norway is doing this suggests that the situation has broadened quite a bit further.”




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