KeNo's Housing and Economic Portal: Tuesday December 15 Housing and Economic stories

TOP STORIES:

Iron Ore Plummets Below $40 a Ton as Global Glut Hurts Outlook - (www.bloomberg.com) Iron ore sank below $40 a metric ton on rising low-cost supply from the world’s top miners and weakening demand in China, with investors assessing the impact of the first shipments from Gina Rinehart’s Roy Hill mine within the coming days. Ore with 62 percent content delivered to Qingdao lost 2.4 percent to $39.06 a dry ton, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to May 2009. The raw material is headed for a third annual decline and has lost 80 percent since peaking in 2011 at $191.70. Shares of top producer Vale SA fell to an 11-year low. Iron ore has been pummeled as a slowdown in China hurt demand as producers including Brazil’s Vale and BHP Billiton Ltd. and Rio Tinto Group in Australia boosted supply to defend market share. As data last week showed China’s steel industry shrank further, billionaire Rinehart’s mine in Australia’s Pilbara geared up to start exports, with two vessels set to be loaded at Port Hedland. Stockpiles at China’s ports, tracked as a gauge of demand in the largest user, climbed to the highest in about seven months.

OPEC Unshackled From Quota Could Add Millions of Barrels - (www.bloomberg.com) OPEC’s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. “Everyone does whatever they want” now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It’s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya. “It means more OPEC oil next year,” Jamie Webster, a Washington-based oil analyst for IHS Inc., said of the organization’s Dec. 4 decision. “OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production.”

Puerto Rico Talks Risk Rises With Supreme Court Hearing Appeal - (www.bloomberg.com) The U.S. Supreme Court’s decision to review a Puerto Rico local debt-restructuring law rejected by a lower court risks prolonging negotiations with creditors to reduce the island’s obligations just as the commonwealth says its running out of cash. The high court Friday said it would hear an appeal by the commonwealth to reinstate an island law that would allow some public agencies to ask bondholders to accept losses on the securities they hold. The disputed law would affect about $22 billion of the $70 billion in debt that Puerto Rico is seeking to impose losses on for holders. Restoring the law would give the commonwealth additional leverage as it negotiates with mutual funds, hedge funds, bond-insurance companies and lenders, said Matt Fabian, a partner at Concord, Massachusetts-based Municipal Market Analytics.

A Revolving Door Helps Big Banks’ Quiet Campaign to Muscle Out Fannie and Freddie - (www.nytimes.com) A behind-the-scenes effort of Wall Street banks to take over the mortgage market is driven by advocates who switch between roles in Washington and the private sector. Seven years after their dubious lending practices helped push the United States economy to the brink of disaster, the nation’s largest banks are closing in on a long-sought goal: to unseat Fannie Mae and Freddie Mac, the mortgage finance giants, and capture their share of the profits in the country’s $5.7 trillion home loan market. Taking place largely behind the scenes, the movement to take over the mortgage market has been propelled in part by a revolving door between Washington and Wall Street, an investigation by The New York Times has found. While the big banks’ effort to enshrine their vision into law has failed so far, plans to replace Fannie and Freddie — which have long supported the housing market by playing a unique role as so-called government-sponsored enterprises, or G.S.E.s — are still very much alive. The Obama administration has largely embraced the idea, and government regulators are being pushed to put crucial elements into effect.

Sovereign wealth funds withdraw $19bn from asset managers - (www.ft.com) Sovereign wealth funds in the Gulf have been pulling money out of asset managers at the fastest rate on record as they rush to boost their economies following the collapse in the oil price. At least $19bn was withdrawn by state institutions during the third quarter, according to data provider eVestment, denting investment managers' profits and raising concerns about the prospect of further outflows. However, the true level of this year's withdrawals is likely to be much greater as some asset managers, including BlackRock, the world's biggest fund house, do not disclose their dealings with sovereign funds. Morgan Stanley estimates BlackRock suffered redemptions of $31bn from government institutions during the second and third quarters. BlackRock declined to comment.

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