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.
Tuesday, the Dow Jones industrial average edged up 13.51 points, or 0.1%, to 18,312.39. The Standard & Poor’s 500 index lost 1.37 points, a sliver of a per cent, to 2,127.83. The NASDAQ composite dipped 8.41 points, or 0.2%, to 5,070.03.
Benchmark U.S. crude fell $2.17 to close at $57.26 a barrel in New York. Brent crude, a benchmark for international oil used by many U.S. refineries, fell $2.25 to close at $64.02 in London. Wholesale gasoline fell 4.6 cents to close at $1.995 a gallon. Heating oil fell 5.8 cents to close at $1.929 a gallon. Natural gas fell 6.2 cents to close at $2.948 per 1,000 cubic feet.
The U.S. housing market has given a sudden jolt to what appeared to be a slumping economy. Builders broke ground on homes last month at the fastest pace in more than seven years. The stepped-up construction is helping boost sales at stores like Home Depot and Lowe’s and improving the likelihood that the U.S. economy will accelerate. In part, the surge in housing starts in April reflected a rebound from a dismal winter, but there is reason for optimism. Construction of single-family houses rose in areas where the weather wasn’t so harsh, and the rate of approved building permits grew, reflecting strong demand. (AP)
Home Depot Nails it in Q1 as housing rebound emerges - A busy spring pushed Home Depot’s first-quarter profit and revenue above Wall Street expectations and the home improvement retailer raised its projections for both in 2015. Sales at U.S. stores open at least a year was also better than most had expected, rising 7.1%. Many retailers have been struggling, but that is not the case at companies that cater to home owners. Both Lowe’s and Home Depot have seen comparable-store sales in the U.S. rise for three consecutive quarters now. (AP)
Apple to hire up to 500 more than planned for Mesa Command Center - The wisps of iCloud over Mesa are filled with solid silver linings. More than 300 additional workers – up to as many as 500, will be added to the 150 Apple Computer executive-level positions planned for Apple’s Mesa Command Center. Apple CFO Luca Maestri and other top executives told Mesa Mayor John Giles in Cupertino, California, last week the now firm plans for its East Valley facility are better news than the speculation earlier this year. The 1.2 million-square-foot Apple Mesa data center will be led by a small contingent of Apple executives moving to the Silicon Desert from Silicon Valley. The remaining executive, leadership and engineering staff will be hired from local talent. The additional 300- to 500-person workforce will start as contract workers for Apple, and virtually all are expected to be local hires. Giles said that Apple executives reminded him that the first round of hiring in Austin totaled 150 people. (Phoenix Business Journal)
Shanghai led Asian markets higher today, following a record session for Wall Street and a rebound in the U.S. dollar. After climbing more than a third this year, the Shanghai Composite is poised to soar even further, as investors look forward to more monetary stimulus from Beijing. So far, the biggest winner of the rally has been the Chinese government, which has made billions in paper profits on its stakes in hundreds of listed state-owned corporations.
Four months into negotiations there is still no Greek deal, although the country's labor minister is maintaining that Athens will soon conclude an agreement with its foreign creditors. "There's a deadline, which is June 5," he said - the date on which Greece's next €1.5B repayment to the IMF falls due. "We all know that if there is no solution, let's say until then, in relation to funding, things will be difficult.
Aside from Greek worries, the euro tumbled the most in two months against the dollar today after ECB Executive Board member Benoit Coeure declared that the central bank would increase purchases under its QE program (from €60B in May and June) before an expected period of low liquidity in the summer. Stocks in Europe climbed following the announcement of the bond buying plan, soaring to fresh three-week highs. The euro is -1% to $1.1209.
Annual consumer price inflation in the U.K. has fallen below zero for the first time since the 1960s, as the drop in food and energy prices depresses the cost of living. Official data released on Tuesday showed that consumer prices fell 0.1% in April compared with the same month last year. The pound is -0.8% at $1.5531.
Founding members of the China-backed Asian Infrastructure Investment Bank will hold a three-day meeting in Singapore this week to discuss the draft articles of agreement and operational policies for the establishment of the institution. Although 57 countries have joined the AIIB as founding members, the U.S., Japan and Canada have remained notable absentees.
The numbers are in on 2014 CEO compensation, and it does not look like the controversial income gap in America is narrowing. According to the AFL-CIO, the average S&P 500 company CEO made 373 times the salary of the average production and non-supervisory worker in 2014, up from 331 times in 2013. This translates into an average CEO pay package of $22.6M, up from $20.7M last year.
Starbucks and Spotify have struck a music partnership that will give the coffee chain's loyalty members access to exclusive content and input on in-store playlists. "This will be the first of many that we believe will create a significant new revenue source for the company," said Starbucks (NASDAQ:SBUX) CEO Howard Schultz. "Over the course of months there will be a series of verticals that will extend beyond Spotify." The collaboration will start this fall in the U.S., followed by Canada and the U.K.
In yet another turn of events, Argentina has now barred Citibank (NYSE:C) Argentina from exiting its role as custodian of some Argentine sovereign bonds while a row with U.S. creditors over unpaid debt rages on. The country has already suspended the bank from capital market operations and stripped its chief executive officer of his authority.
Deutsche Bank is studying whether to move large chunks of its British operations to Germany if the U.K. leaves the EU, underlining the potential fallout in the City of London in the event of a "Brexit". The German lender, which employs 9,000 people in the U.K., is the first major bank to start formally examining the consequences of a British referendum on EU membership. Meanwhile, Deutsche (NYSE:DB) has reportedly dismissed its retail banking chief, Rainer Neske.
Taking advantage of the lower borrowing costs in the eurozone, McDonald's (NYSE:MCD) and United Technologies (NYSE:UTX) are now the latest big U.S. companies to issue debt in euros (called "reverse Yankee" bonds), selling €2B and €750M, respectively. The total raised by U.S. companies issuing euro-denominated debt so far this year is just over €34B (not including the latest two deals), more than double the previous record of €17B in 2007.
MBIA has announced a secondary offering of 27.25M shares by funds affiliated with Warburg Pincus. Following the offering, Warburg will hold 18.37M shares of MBIA (NYSE:MBI) and will still have two nominees on its board. MBI -6.3% premarket.
Vodafone posted a rise in its quarterly sales measurement for the first time in nearly three years this morning, although the company's earnings remained under pressure. Net profit in the year to March 31 fell to £5.76B from £59.3B a year ago. Heavy competition has hit Vodafone (NASDAQ:VOD) both abroad and in its home market, where it is the No. 3 mobile carrier. In the U.K., BT and EE recently agreed to combine, while O2 and Hutchison Whampoa (OTCPK:HUWHY) decided to merge their mobile networks. VOD -3.2% premarket.
After close to a decade of research, Apple (NASDAQ:AAPL) "quietly shelved plans" to launch a TV set more than a year ago, sources told WSJ. Apple reportedly planned to make a 4K (Ultra HD) set, and considered including sensor-equipped cameras for making video calls. But it ultimately decided the TV's features wouldn't be "compelling enough" to enter a highly competitive market. Earlier yesterday, Carl Icahn hiked his price target on Apple to $240, from a $216 target set in February.
"We think that enabling that [business-to-consumer] messaging has good business potential for us ... As we learn those things, I think there's going to be opportunities to bring some of those things to WhatsApp, but that’s more longer-term than the near-term," said Facebook (NASDAQ:FB) CFO Dave Wehner at a JPMorgan conference. Facebook is less than 2 months removed from launching Businesses on Messenger, a solution that allows businesses to communicate with Messenger users via live chats and alerts. Nothing similar has been announced yet for WhatsApp, which has taken a minimalist approach to its apps and has been adamant about refusing to sell ads.
Newmark Grubb Buys Retail Advisory Firm Excess Space “Newmark Grubb Knight Frank has entered an agreement to acquire real estate firm Excess Space Retail Services for an undisclosed amount, NGKF parent company BGC Partners announced Monday. (The Real Deal)
SL Green to Buy NYC’s 11 Madison Ave. for $2.29 Billion “SL Green Realty Corp. agreed to buy 11 Madison Avenue, the Manhattan tower that houses Credit Suisse Group AG’s U.S. headquarters, for $2.29 billion in one of the biggest real estate transactions ever in New York City.” (Bloomberg)
Manhattan's Office Leasing Activity, Rents Uptick in April “CBRE is reporting this week that Manhattan's office leasing activity totaled 3.02 million square feet during April 2015. This is 37% higher than the five-year monthly average of 2.21 million sq. ft. Monthly absorption moved into positive territory this month, measuring 210,000 sq. ft. at 11.0%, Manhattan's availability rate in April remained steady, compared to last month. The average asking rent finished the month at $68.54 per sq. ft., up 5% from the $66.04 per sq ft. average reported one year ago.” (World Property Journal)
Walmart Reports Tepid Sales and a Profit Drop “Walmart, the nation’s largest retailer, reported flat sales and a drop in profit as the company battled a stronger United States dollar.” (New York Times)
HFF Secures Financing for Office Tower in Downtown Portland “ScanlanKemperBard Cos. has received $60 million in financing to acquire the KOIN Center, a 352,023-square-foot, Class A office tower in downtown Portland, Ore., for which it paid $88 million ($250 PSF) in cash.” (Commercial Property Executive)
Las Vegas ReCon Attendees: It’s possible to have too much of a good thing “In the midst of a storm of controversy about its junk-bond downgrade of Chicago, Moody's Investors Service has issued a follow-up report that could ease concerns about the city's financial future, but only a little.” The credit ratings agency says clearly that it doesn't expect bankruptcy or a bond default, according to a Q&A explaining the rating reduction to Ba1, from Baa2 or one level above junk. Although Moody's hasn't previously said a default was on the horizon, the report today could ease jitters about the double-notch downgrade on May 12. (Crain’s Chicago Business)
Las Vegas ReCon Attendees: It’s possible to have too much of a good thing, as commercial real estate professionals can attest. A fair number of attendees at the 2015 RECon show is talking about how the influx of investment capital into the U.S. real estate market and uncertainty surrounding the next interest rate hike have combined to make owners hold on to their assets far too tightly.
Not your Ma’s Bell: AT&T evolves beyond phones - The company whose name has long been synonymous with telephones is looking for new ways to reach out and touch someone. AT&T, which had a popular “Reach Out and Touch Someone” slogan in the 1980s, now wants to be on your TV, car and even trashcan. AT&T Inc. is spending $48.5 billion to buy satellite TV provider DirecTV as it looks for new ways to package access — wireless and wired — with traditional and online video. (Yahoo News)
There seems to be no bottom for Ukraine’s economy. The extent of the damage caused by the conflict in the country’s east was highlighted in a report showing the economy had shrunk by almost a fifth since the violence began last year. Other indicators likewise show a country on the edge, with inflation rampant and the state out of money. With much of the country’s industry in the hands of pro-Russian rebels in the east, stabilizing the economy has become a big, difficult task for President Petro Poroshenko’s government. (Itemlive.com)
United Parcel Service Co. agreed to pay more than $25 million to settle complaints that it kept false records to hide late deliveries and collect more for overnight packages to government customers. The Department of Justice said Tuesday that the payment settles a whistleblower lawsuit filed by a former UPS employee, who will get $3.75 million. A UPS spokeswoman said the company still disputes the government’s claim but settled the case to avoid long and expensive litigation. (AP)
ConAgra Foods is likely to face a criminal charge now that the U.S. government has completed its investigation of the company’s 2007 peanut butter recall. A spokeswoman for the U.S. attorney’s office in Georgia, Pam Lightsey, said Tuesday that prosecutors plan to reveal details of the investigation Wednesday. ConAgra spokeswoman Teresa Paulsen declined to comment Tuesday, but the company previously has said it was negotiating an end to the investigation that would likely include a misdemeanour charge of shipping tainted products. (Fox News)
Federal regulators are proposing that PayPal Inc. pay $25 million to resolve allegations that it illegally signed up customers for its online credit product, used misleading advertising and mishandled billing disputes. The Consumer Financial Protection Bureau announced Tuesday its proposed consent order against the digital payments processor. If the order is approved by a federal judge in Maryland, PayPal would refund $15 million to customers and pay a $10 million fine. PayPal, based in San Jose, California, is a division of eBay Inc. The two companies plan to separate. (Daily Mail.com)