Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.
Friday, the Dow Jones industrial average fell 211.61 points, or 1.3%, to 16,204.97. The Standard & Poor’s 500 index lost 35.40 points, or 1.9%, to 1,880.05 and the NASDAQ composite dropped 146.41 points, or 3.3%, to 4,363.14.
U.S. crude fell 83 cents to $30.89 a barrel on the New York Mercantile Exchange. Brent crude, the international benchmark, fell 40 cents to $34.06 a barrel in London. Heating oil fell 2 cents to $1.059 a gallon, wholesale gasoline fell 3.6 cents to 99.27 cents and natural gas rose 9 cents to $2.063 per thousand cubic feet.
Many see cause for optimism despite slower US job growth — Consider looking past January’s so-so job growth. At first glance, Friday’s government report on U.S. hiring was a downer — 151,000 added jobs, well below the pace of the previous few months. Yet once you take a fuller view, a brighter picture of the job market emerges: A sub-5% unemployment rate. And a stream of people who grew confident enough in the job market to start looking for work.
Negative Rates in the U.S.? Here’s Why It Could Happen “Less than two months after the Fed enacted its first rate hike in more than nine years, market talk already has turned to whether the central bank's future may not be more hikes, but rather negative rates. Intensifying recession fears, volatile financial markets and moves toward negative rates by other central banks have triggered speculation over whether the Fed may have to reverse course on its tightening policy.” (CNBC)
If There Is a Recession in 2016, Here’s How It Will Happen “What we’re dealing with isn’t just a run-of-the-mill economic slowdown in emerging markets, but the reversal of a 15-year cycle in which capital has flowed into emerging markets year after year while debt grew. Now that’s reversing, and we’re seeing a version of Warren Buffett’s maxim that ‘you only find out who is swimming naked when the tide goes out.’” (The New York Times)
J.C. Penney Considering the Sale of a its Plano Headquarters “J.C. Penney is pursuing a possible sale and partial leaseback of its headquarters building in Plano as part of an ongoing effort to reduce debt and manage expenses. CBRE Capital Markets is representing Penney. New owners will also own part of the huge Legacy West project under construction next door that will include the North American headquarters for Toyota and others.” (Dallas Morning News)
Bet Your Real Estate Dollars on Debt in 2016 “Wealthy investors who like real estate may wonder where to put their money this year as prices for high-quality properties in global developed markets top out. The answer could be private real estate debt funds that take the place of banks in lending to top-tier commercial properties in prime markets like London, Tokyo and New York. Real estate debt funds may also answer another conundrum for investors in today’s markets: where to get a decent yield. Expected returns on these funds are 8% to 10%.” (Barron’s)
Colony’s Barrack Says Private Equity Undervalued Stock Sector “Private equity firms such as Blackstone Group LP and KKR & Co. are good investments for both stock buyers and pension funds seeking higher returns, according to Thomas Barrack Jr., founder and chairman of Colony Capital Inc. Their advantage is established records of sourcing deals, along with managers who have histories of turning around companies, fixing real estate and understanding credit as traditional banks limit lending, according to Barrack.” (Bloomberg)
Sports Authority Preparing to File for Bankruptcy: Report “Sports Authority is preparing to file for bankruptcy, according to a Bloomberg report that cited sources with knowledge of the situation. The sporting goods retailer has a debt payment due in less than two weeks and is discussing a reorganization deal with lenders, the sources told the news service. Part of the plan includes the previously rumored move to close as many as 200 of its roughly 450 stores.” (CNBC)
Commentary: These are the Types of Stores Amazon Should Open “It makes no sense for Amazon.com to open the type of physical bookstores it helped obliterate, not when the online giant already has the physical infrastructure in place to support a large scale rollout of another type of store in one of retail’s hottest sectors. The notion that Amazon.com wants to open hundreds of physical books stores has been fueled by several recent developments.” (Chain Store Age)
TD Banks Ups NYC Real Estate Game “Mr. Gerken, TD’s head of U.S. commercial real estate, and Mr. Chin, regional director for commercial real estate in New York, didn’t quadruple TD’s New York real estate book since 2010 by recklessly leaping headfirst into luxury condo deals with breakeven prices that would make their bosses in Toronto blush. Yet, they also didn’t transform TD’s real estate business by avoiding risk altogether. Back in 2010, as the more established banking giants were still licking their wounds from the financial crisis, Mr. Gerken and Mr. Chin pounced.” (Commercial Observer)
The Temptation of Co-Working Spaces “Increasingly, these untethered employees are gathering in a new kind of office known as the co-working space. Surely, you’ve heard of these places. But their numbers have multiplied across the country in the last few years, filling a niche for those who need more than a cafe, but less than an office. They now come in a wide range of options. Some are fancy; some are not. Some require memberships; some do not. Some target technology workers; others are for writers or small businesses.” (The New York Times)
Fatal Crane Collapse in Manhattan “One person was killed and three others injured – two seriously — when a massive construction crane collapsed in Lower Manhattan on Friday morning, officials said. The crane – which was swinging a wrecking ball — fell over at 40 Worth St. between West Broadway and Church Street in Tribeca at 8:24 a.m., crushing several cars parked on the street, according to witnesses and fire officials.” (New York Post)
Twitter moves to actively seek out terrorist supporters — Twitter is now using spam-fighting technology to seek out accounts that might be promoting terrorist activity and is examining other accounts related to those flagged for possible removal, the company announced Friday. The effort signalled efforts by Twitter to automatically identify tweets supporting terrorism, reflecting increased pressure placed by the U.S. government for social media companies to respond to abuse more proactively. Child pornography has previously been the only abuse that was automatically flagged for human review on social media, using a different kind of technology that sources a database of known images. Twitter also said Friday it has suspended more than 125,000 accounts for threatening or promoting terrorist acts, mainly related to Islamic State militants, in the last eight months.
Congress unites in scorn for Shkreli, but gridlock remains — A smirking Martin Shkreli briefly united Democrats and Republicans on Capitol Hill this week, as lawmakers took turns blasting the price-hiking former CEO who has become the new poster child for corporate greed. But the gridlocked state of Congress virtually assures federal efforts to lower drug prices will remain in limbo for years. And even then, experts warn that the options available to Congress would not stop companies like Turing Pharmaceuticals, where Shkreli engineered a 5000% price increase of a critical anti-infection drug.
US exports fell in 2015 for first time since recession — The U.S. trade deficit rose in December as American exports fell for a third straight month, reflecting the pressures of a stronger dollar and spreading global weakness. Those factors contributed to the first annual drop in U.S. export sales since the Great Recession shrank global trade six years ago. The December deficit increased 2.7% to $43.4 billion, the Commerce Department reported Friday. Exports fell by 0.3%, driven by sales declines of civilian aircraft, autos and farm products. Imports increased 0.3% as Americans bought more foreign-made cars and petroleum. For all of 2015, the deficit rose 4.6% to $531.5 billion. Exports fell 4.8%, the first setback since 2009 when the world was in the grips of recession. Imports also retreated 3.1%.
US consumer borrowing accelerated in December — U.S. consumers in December increased their borrowing at the fastest pace in three months. The result suggests that consumer spending should remain strong in the coming months. Borrowing expanded $21.3 billion in December, the strongest showing since an increase of $28.6 billion in September, the Federal Reserve reported Friday. That pushed total borrowing to a fresh record of $3.55 trillion. Borrowing in the category that covers credit cards rose $5.8 billion, slightly below the November gain. Borrowing in the category that covers auto and student loans jumped $15.4 billion in December, notably higher than the November gain of $7.7 billion.
HSBC reaches $470 million deal with US, states over banking abuses — Banking giant HSBC has reached a $470 million settlement with the federal government and nearly all states over mortgage lending and foreclosure abuses that officials say helped intensify the country’s economic meltdown, the Justice Department announced Friday. The agreement requires the bank to pay $100 million and to provide an additional $370 million in consumer relief to borrowers and homeowners, including by reducing mortgage interests rates as well as the principal on mortgages for homeowners who are at risk of default. The deal also requires the bank to improve standards for how it services loans and handles foreclosures.
Chinese-led investors plan to buy Chicago Stock Exchange — The Chicago Stock Exchange, founded more than a century ago, said it has agreed to be acquired by a Chinese-led investor group. The buyers are considering opening a stock exchange in southwest China and also hope to list Chinese stocks in the U.S., Chicago Stock Exchange CEO John Kerin said in an interview Friday. The exchange needs the cash from the buyout to launch its new trading products and platforms, Kerin said. Terms of the deal were not disclosed.