KeNo's Housing and Economic Portal: Friday February 24 2017 Housing and Economic stories

Thursday, February 23, 2017

Friday February 24 2017 Housing and Economic stories

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This is Why World Trade is the Weakest Since 2009 - (www.wolfstreet.com) World Trade has been on our worry-list for a while, most recently in December [World Trade Falls to 2014 Level, just in Time for a “Trade War”]. Why has world trade refused to boom recently? And it wasn’t just last year. But last year was particularly crummy. Lackluster global demand gets blamed. But that’s using a broad brush to sketch a troublesome development. Now the alarmed World Bank, in its report, Trade Developments in 2016 (PDF), barely blames the usual suspects for this lackluster global demand, but identifies a new and dominant one: “policy uncertainty.” It points out that 2016 was the fifth year in a row of “sluggish trade growth.” 2015 had already been the weakest year since 2009, when global trade collapsed as a result of the Financial Crisis. But 2016 was even worse than 2015.

Millennium Tower homeowners association to sue developer, nearby project - (www.constructiondrive.com) The two instances of legal action taken on behalf of some or all of the tower’s condo owners join a civil suit filed against the developer in November by San Francisco City Attorney Dennis Herrera alleging that it knew the tower was sinking but sold units anyway, failing to let buyers know of the structural concerns. City officials began investigating the tower this summer and amped up their efforts following an anonymous citizen call to the city’s 311 line in August. Initially, the developer claimed the settling was due to water drainage from construction activity on a neighboring $4.5 billion transit center project site. Transit officials, however, have since said that the sinking is due to foundation piles failing to reach bedrock. Homeowners likely face a protracted battle to resolve the issue after it emerged earlier this month that the insurance policies held by the developer and other project team members may not fully cover the cost to remedy damages caused by the sinking in addition to the measures required to prevent further settling.

Billions Wasted: Structures Built For 2016 Olympics In Brazil Are Now In Ruins – (www.zerohedge.com) Like many others, the government ignored the economic realities of the country, betting on inflation and cronyism in order to throw an unforgettable party. The 2016 Summer Olympics in Brazil cost Brazilian taxpayers $4.6 billion, conservative estimates show. But once related expenses covered by the Brazilian government are factored in, the overall costs hit the $12 billion mark, which equates to about 0.72 percent of Brazil’s national budget. Prior to the Olympics, however, the Brazilian government had already spent BR$39.5 billion on infrastructure, or about $12 billion. Stadiums and urban projects designed to ensure the country was ready for the sports event were built, but aside from the events scheduled for 2014 and 2016, there seemed to be little to no demand for such public investments, which prompted the country to wonder whether the expenses were worth the trouble.

Banks back off multifamily financing as apartment market cools - (www.constructiondrive.com) News that banks are getting cold feet over multifamily projects further underlines a softening in the apartments category as developers bring more schemes online than there are demand for. The slowdown is being seen acutely in country's biggest metros, with rents in San Francisco and New York dipping in February while rents nationwide inched up slightly. Much of the oversupply and subsequent price reduction is occurring at the upper end of the market. MPF Research reported last month that the luxury apartment market is weakening due to oversupply. In New York alone, 85% of the 30,000 new apartments set to be delivered in 2017 will be on the high end of the market. Nationwide, roughly the same share of the 189,100 units added from the fourth quarter of 2015 to the fourth quarter of 2016 were luxury.

HSBC Plunges After Missing Profit Estimates on Revenue Drop - (www.bloomberg.com) HSBC Holdings Plc dropped the most in 18 months in London trading after reporting fourth-quarter profit that missed estimates on a surprise drop in revenue, which it warned could fall again this year. HSBC reported a $3.4 billion pretax loss for the quarter that it blamed on slowing growth in its core markets of Hong Kong and the U.K., while its adjusted profit fell $1.2 billion short of analyst estimates. The lender said it will buy back $1 billion of stock in the first half and signaled it may repurchase more later this year. Chief Executive Officer Stuart Gulliver is battling to reverse five years of declining revenue as he pares back HSBC’s sprawling global footprint and reduces expenses.

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