KeNo's Housing and Economic Portal: Thursday July 30 Housing and Economic stories

TOP STORIES:

Commodity Rout Extends Toward 13-Year Low as Gold Shunned on Fed - (www.bloomberg.com) The rout in commodities deepened with prices touching the lowest since 2002 as the prospect of higher U.S. interest rates sent gold tumbling. Raw materials are losing favor with investors as the dollar gains amid signals from Federal Reserve Chair Janet Yellen that the central bank may raise rates this year on the back of an improving U.S. economy. Higher borrowing costs curb the attractiveness of commodities such as gold, which doesn’t pay interest or give returns like assets including bonds and equities. The Bloomberg Commodity Index dropped as much as 1.4 percent, falling for a fifth day in the longest stretch of declines since March. Gold futures sank to the weakest in more than five years while industrial metals, grains, Brent crude and U.S. natural gas also slid as a measure of the dollar climbed to the highest since April 13.

Uber just threw down the gauntlet - (www.businessinsider.com) De Blasio and the city council have proposed a freeze on growth for for-hire vehicle companies, including Uber and Lyft. The city is conducting a study about congestion, traffic, and pollution, which it says Uber may be contributing to. If it were to become a law, the measure could stunt Uber's growth in New York. This could significantly hurt the company as New York is one of the company's largest and most mature markets and the company is generating hundreds of millions of dollars of revenue there. Under the proposed bill, for-hire vehicle companies that have bases with 500 cars or more — which includes Uber — would only be able to increase their number of vehicles by 1% every year. For Uber, this would mean adding just 201 new drivers for the next year. In a city where Uber says it's adding 25,000 new users every week, it's easy to see how this could affect Uber.

Puerto Rico Says Services Come Before Agency Debt Payment - (www.bloomberg.com) Puerto Rico’s budget director ratcheted up the risk of a default on some agency securities, saying cash from the commonwealth’s operating budget won’t be redirected to make debt payments due next month. The comments from Luis Cruz, director of the Office of Management and Budget, come as Standard & Poor’s slashed its rating on the Public Finance Corp.’s bonds to CC from CCC-, calling an Aug. 1 default on the securities a “virtual certainty.” Puerto Rico said last week the agency failed to transfer $36.3 million to a trustee to cover the Aug. 1 debt payment because the legislature didn’t appropriate the funds. Governor Alejandro Garcia Padilla last month directed island officials to create a debt-restructuring plan by Aug. 30, saying the commonwealth can’t sustain its $72 billion debt burden. “We all know the difficult situation we are facing in terms of cash flow,” Cruz said during a press conference Monday in San Juan. “And we have to decide how we handle that cash flow and our priority is to provide services to citizens: health, safety, education.”

Uber's nightmare scenario: Here's what a huge, expensive pain it would be to turn thousands of drivers into employees - (www.businessinsider.com) Last month, the California Labor Commission made a ruling against Uber that could have big implications for the $50 billion ride-hailing company. A San Francisco driver, Barbara Ann Berwick, filed a federal class-action claim against Uber saying she should be considered an Uber employee, not a contract worker. The California Labor Commission agreed with Berwick because it deemed Uber drivers are "involved in every aspect of the operation." Uber argues that the class-action part of the suit should be dropped and is appealing the ruling. But if Uber doesn't get its way, the lawsuit could seriously impact Uber's business model. In a worst-case scenario for Uber, it would have to reclassify all of its California drivers as W-2 employees, as opposed to independent contractors, which would be expensive.

Puerto Rico on the Brink Owes Investors $5 Billion in Next Year - (www.bloomberg.com) Puerto Rico faces $5.4 billion of bond payments over the next 12 months, showing the pressure on the Caribbean island as it moves closer toward defaulting on its debt. Puerto Rico and its agencies are on the hook for $635 million in August, the largest monthly bill for the rest of 2015, JPMorgan Chase & Co. said in a July 17 report, citing data from Bloomberg and Standard & Poor’s. That includes a $36.3 million payment due Aug. 1 from the Public Finance Corp., which may not be made because the legislature failed to appropriate the funds. The schedule illustrates the costs ahead for the cash-strapped commonwealth, where Governor Alejandro Garcia Padilla is pushing to restructure a $72 billion debt load he says the island can’t afford. The payments approach $1 billion in January and about $2 billion in July 2016, JPMorgan said. Puerto Rico has a $9.8 billion budget for the year through next June. “If we use dollars to make debt payments, we may not have the cash to pay for government services,” Luis Cruz, the commonwealth’s budget director, told reporters Monday in San Juan. He said officials are looking at “all options” for honoring its obligations.

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