Sunday, November 29, 2015

Monday November 30 Housing and Economic stories


Steel Is the Poster Child For Oversupplied Commodity Markets, and It's in Shambles - (www.bloomberg.com) The collapse in oil prices following the shale revolution has stolen the limelight for investors mulling the end of the commodities supercycle. But the real "poster child for problems in commodities markets is perhaps the global steel industry," according to Macquarie analysts led by Colin Hamilton, the firm's global head of commodities research. The front-month contract for U.S. hot-rolled coil steel futures traded on the New York Mercantile Exchange is down nearly 40 percent year-over-year: Forecasts for a boom in Chinese consumption helped spur a rise in production that left the segment with a massive glut. The successful realization of economic rebalancing in China, meanwhile, necessarily entails a material slowdown in that nation's demand for steel. Macquarie observes that global steel consumption has contracted on an annual basis throughout 2015. "With 1.6 billion tonnes of consumption globally, steel remains the lynchpin of industrial growth," wrote Hamilton. "However, the growth part of this equation is an increasing problem, and not only in China."

Copper Reaches Six-Year Low as All Efforts to Revive Metals Fail  - (www.bloomberg.com) Copper traded little changed after touching a six-year low as investors added to bearish positions amid expectations for a global supply glut and slowing demand in China, the world’s biggest consumer. Short positions in the metal increased 39 percent, the most since January 2014, according to U.S. Commodity Futures Trading Commission data released Monday. A rally for Chinese stocks fizzled Tuesday after technology and small-company shares plunged, as the Asian nation heads for the slowest economic growth in 25 years. The metal has lost 25 percent this year. “The copper market has been one of the worst markets I’ve ever seen, copper demand is basically non-existent right now, and all this started when there was a downturn in the Chinese stock market this summer,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “Copper prices are going to continue to travel down to historical levels.”

Junk-Bond Buyers Said Seeking Bounty to Fund Carlyle Deal - (www.bloomberg.comThe banks backing Carlyle Group LP’s $8 billion buyout of Symantec Corp.’s data-storage business are facing one of the costliest debt deals of the year to offload part of the financing in the corporate-bond market. As investors squirm at the amount of debt being piled onto the unit, known as Veritas, underwriters are discussing yields of 11.5 percent to 12.5 percent to lure potential buyers to a $1.775 billion junk-rated portion of the debt, according to people with knowledge of the talks. That would be one of the highest bond yields of 2015 and shows just how risk-averse fixed-income investors have become as the global economy cools and the U.S. Federal Reserve moves to raise interest rates for the first time in almost a decade. Borrowing costs on junk bonds are soaring back toward a three-year high set last month as investors grow wary of increasing their exposure to risky assets in the credit markets. That is beginning to impact banks that have committed to finance buyouts in the last few months and are now finding it difficult to syndicate the debt.

Commodities Rout Weighs on U.S. Stocks as Bonds Fall on Fed Bets - (www.bloomberg.com) Firming inflation in the U.S. reinforced speculation the Federal Reserve will raise rates next month, triggering a selloff in Treasuries and boosting the dollar. U.S. stocks added to a rebound from the worst week since August. Yields on 10-year Treasury notes rose to 2.30 percent as price data pushed the odds for a Fed rate increase to 68 percent. The Standard & Poor’s 500 Index extended its best rally in three weeks, as retailers gained on earnings from Wal-Mart Stores Inc. and Home Depot Inc. The stronger dollar hurt commodities, while a weak euro boosted exporters and sent European shares to their biggest gain in six weeks.

Struggling U.S. oil producers get credit lifeline amid downturn - (www.reuters.com) An autumn credit crunch was expected to hit many independent U.S. oil producers, starving the industry of billions of dollars and further denting company budgets and drilling plans. But banks that adjust their loans to energy companies every six months based on the oil price and volumes of reserves were more lenient than many expected this time, leaving producers with more cash for drilling and allowing them to supply more oil to a market already flush with excess crude. The biannual process, known in the industry as redetermination, shaved only 4 percent off bank loans to oil and gas companies, according to a Reuters analysis of loan data, surprising experts who had expected deeper cuts because of a protracted oil price rout.



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