KeNo's Housing and Economic Portal: Wednesday April 8 Housing and Economic stories

Tuesday, April 7, 2015

Wednesday April 8 Housing and Economic stories

Record Borrowing for Stocks Shows Canada Debt Binge Grows - (www.bloomberg.com) Dennis Colpitts could pay down the mortgage on his house in western Canada early if he wanted. He’s investing in the stock market instead -- and in some cases borrowing to do so. With a mortgage rate of 2.35 percent, Colpitts said it makes more sense to put his money into stocks or other investments that hold the potential for higher gains. He primarily invests in exchange-traded funds, including through a margin account, which allows him to borrow money from his broker to buy securities. “I could liquidate all my stocks and ETFs and put them into my mortgage, but I don’t,” said Colpitts, 39, a technology consultant who lives with his wife and two children in Calgary. “I keep them with the hope of getting my 6 or 7 percent return.”

Iron Ore Sinks Below $50 as Worldwide Glut Swells, China Slows - (www.bloomberg.com) Iron ore slumped below $50 a metric ton on prospects for a widening global glut as the largest producers boost supply and Chinese demand growth weakens. Rio Tinto Group, BHP Billiton Ltd. and Vale SA fell. Ore with 62 percent content at Qingdao, China, retreated 3.5 percent to $49.53 a dry ton on Wednesday, according to Metal Bulletin Ltd. That’s the lowest level since 2004-2005, based on data from Metal Bulletin and annual benchmarks compiled by Clarkson Plc, the world’s largest shipbroker. Prices collapsed last year and extended losses in 2015 as Rio Tinto and BHP Billiton boosted low-cost output into a saturated market, betting higher volumes would protect their market share and cut unit costs while less competitive miners faced closure. Global iron ore demand will shrink this year for the first time since 2009, Deutsche Bank AG said in a report on Tuesday, forecasting that prices may drop below $40 as weaker currencies and lower energy prices eased producers’ costs.

China to Insure Deposits in Move Toward Scrapping Rate Curbs - (www.bloomberg.com) China said an insurance system for bank deposits will start on May 1, a step toward scrapping remaining controls on interest rates and allowing lenders to fail in a more market-driven economy. Deposits and interest up to 500,000 yuan ($81,000) will be fully covered, the State Council said in a statement on its website on Tuesday. Over that level, compensation would be according to the amount available from a bank’s liquidated assets, it said. China is pressing ahead with rate liberalization just as bad loans at a six-year high and forecasts for the weakest economic growth since 1990 raise the stakes for ensuring that reform progresses without financial turbulence. The dominance of state-controlled lenders has previously left savers believing in an implicit government guarantee in the only major economy in Asia to lack a formal deposit insurance system.

Iron Ore's 10-Year Low Not Slowing China Production Push - (www.bloomberg.com) To understand why iron ore prices have dropped to a 10-year low, look no further than a $10 billion mine being developed by China’s state-owned Citic Ltd. on Australia’s remote northwest coast. The Sino Iron project, the world’s costliest mine, has been called a “disaster” by critics. It began shipping iron ore in December 2013, about four years later than planned. Now, even with prices at their lowest level in 10 years, Citic is adding four production lines at the project, a plan that could pump millions of tons of ore into an already saturated market. The effort underscores China’s refusal to capitulate to slumping prices as the Asian nation fights to diversify its future supply, said Caue Araujo, Sydney-based iron ore industry director at the research company AME Group.

Bank threat to Democrats backfires - (www.usatoday.com) If Citigroup, JPMorgan Chase and other big banks wanted to send a message to congressional Democrats with a "symbolic" withholding of donations, they can rest assured it was heard — but not in the way they intended. The gesture by the banks to each withhold $15,000 in donations to the Democratic Senatorial Campaign Committee until lawmakers like Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio softened their tone on Wall Street was first reported last week by Reuters. Warren immediately seized on the report, using it in a defiant fundraising appeal for her network of supporters nationwide to make up the amount in contributions to the Senate campaign fund. "The big banks have thrown around money for years," she wrote in an e-mail posted on her blog. "But they are moving out of the shadows. They have reached a new level of brazenness, demanding that Senate Democrats grovel before them."

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