Thursday December 4 Housing and Economic stories

TOP STORIES:

Oil at $40 Possible as Market Transforms Caracas to Iran - (www.bloomberg.com) Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union. Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by the Organization of Petroleum Exporting Countries last week to let the force of the market determine what some experts say will be the first free-fall in decades.

'US Fracking Is A Very Large Red Herring' - (www.businessinsider.com)  Jeremy Grantham is not a believer in the shale fracking boom. Earlier this month, we highlighted Grantham's full quarterly letter to GMO clients, in which he said, among other things, that the US shale boom has been "a very large red herring." So while some say the fracking boom has has helped keep oil prices low and aided the US on its path to energy independence, Grantham thinks it might have set us on a path to nowhere. "Its development has been remarkable," Grantham writes. "It will surely be seen in the future as a real testimonial to the sheer energy of American engineering at its best, employing rapid trials and errors – with all of the risk-taking that approach involves – that the rest of the world finds so hard to emulate. Similarly, it will always stand out as remarkable proof that, so late in the realization of the risks of climate change and environmental damage, the U.S. could expressly deregulate such a rapidly growing and potentially dangerous activity."

Oil Slumps Below $65 Amid OPEC Inaction to Stem Glut - (www.bloomberg.com) West Texas Intermediate tumbled below $65 a barrel to the lowest level since July 2009 amid speculation prices have further to drop before OPEC’s decision to maintain output slows U.S. shale supply. Benchmark futures in New York and London slumped more than 3 percent after capping their biggest monthly loss in about six years as the Organization of Petroleum Exporting Countries signaled the group will leave it to the market to reduce a global glut. Current prices are no guarantee of a significant decline in U.S. shale output, Iran’s Oil Minister Bijan Namdar Zanganeh said in an interview on Nov. 28. Oil has collapsed into a bear market as the U.S. pumps crude at the fastest rate in three decades while global demand growth slows. 

Black Friday Fizzles With Consumers as Sales Tumble 11%  - (www.bloomberg.com) Even after doling out discounts on electronics and clothes, retailers struggled to entice shoppers to Black Friday sales events, putting pressure on the industry as it heads into the final weeks of the holiday season. Spending tumbled an estimated 11 percent over the weekend, the Washington-based National Retail Federation said yesterday. And more than 6 million shoppers who had been expected to hit stores never showed up. Consumers were unmoved by retailers’ aggressive discounts and longer Thanksgiving hours, raising concern that signs of recovery in recent months won’t endure. The NRF had predicted a 4.1 percent sales gain for November and December -- the best performance since 2011. Still, the trade group cast the latest numbers in a positive light, saying it showed shoppers were confident enough to skip the initial rush for discounts.

Miners ‘Covering Their Eyes’ on China’s Commodity Cliff  - (www.bloomberg.com) After spending $1 trillion since 2002 on projects to feed China’s commodity boom, the world’s mining companies have a lot riding on their biggest customer. While commodities may be trading at five-year lows, the heads of three top miners BHP Billiton Ltd. (BHP), Vale SA (VALE3) and Rio Tinto Group (RIO) last week all backed China, the world’s second-biggest economy, to keep buying increasing amounts of their products deep into the next decade. Not everyone agrees. “The commodity guys are just too optimistic,” Tao Dong, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong, said in an interview, without referring to particular companies. As China moves to a consumer-led from an investment-led economy, there may be a substantial absolute drop in commodities demand, not just slower growth, he said.

OTHER STORIES:

Hong Kong Protesters Charge Police at Government Offices - (www.bloomberg.com)
Taiwan election results threaten to derail China rapprochement - (www.ft.com)

China Manufacturing Gauge Drops Amid APEC Factory Shutdowns - (www.bloomberg.com)

Oil at $40 Possible as Market Transforms Caracas to Iran - (www.bloomberg.com)
Nightmarish bond blowout predicted - (www.ft.com)

QE or not QE? Spotlight on the ECB as inflation dips - (www.reuters.com)
Swiss voters to reject gold initiative: TV projection - (www.reuters.com)

Fresh Signs of a Global Slump Pose a Challenge to U.S. - (online.wsj.com)

Ruble Drops to Record in Worst Month in Five Years as Bonds Fall - (www.bloomberg.com)