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 for the day will be.
On Friday, the Dow Jones Industrial average advanced 263.17 points, or 1.6%, to 16,380.41 Friday. The Standard & Poor’s 500 index rose 24 points, or 1.3%, to 1,886.76. The NASDAQ composite rose 41.05 points, or 1%, to 4,258.44.
Benchmark U.S. crude rose 5 cents to close at $82.75 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 34 cents to close at $86.16 on the ICE Futures exchange in London. Wholesale gasoline rose 2.2 cents to close at $2.233 a gallon. Heating oil rose 2.8 cents to close at $2.498 a gallon. Natural gas fell 3 cents to close at $3.766 per 1,000 cubic feet.
EUROPE’S TOP POWERS DEADLOCKED AS ECONOMY SINKS
FRANKFURT, Germany (AP) — Europe’s economy needs help — fast. Yet the two powers that could take action, the European Central Bank and Germany, don’t see eye to eye about what to do. That leaves Europe’s currency union stuck in a dangerous policy limbo that has investors worried as it risks falling into recession for a third time in six years. Concern that the 18-country currency union, which accounts for 17% of the world economy, has no clear path out of its economic trouble is among the key factors in this week’s global market turmoil. The Stoxx 50 index of top eurozone stocks fell as much as 6.3% this week before recovering somewhat Friday. It is down 5.7% over the past three months.
RULES VARY ABOUT TRAVEL TO COUNTRIES HIT BY EBOLA
Demands are rising in Washington for the U.S. to ban travelers from countries in West Africa, but the Obama administration is resisting and says the screening measures already in place for travelers are more effective. There are no direct flights from Liberia, Guinea or Sierra Leone to the U.S. Officials say that about 150 passengers a day arrive in the U.S. from those countries after making a connecting flight, usually in Europe. Most arrive at one of five airports, where screening for fever — a symptom of the disease — began this week.
YELLEN: GREATLY CONCERNED BY WIDENING INEQUALITY A DEPARTURE FROM FED PROTOCOL
WASHINGTON — Federal Reserve Chair Janet Yellen sounded an alarm Friday about widening economic inequality in the United States, suggesting that America’s longstanding identity as a land of opportunity was at stake. The growing gap between the rich and everyone else narrowed slightly during the Great Recession but has since accelerated, Yellen said in a speech at a conference in Boston on economic opportunity. And robust stock market returns during the recovery helped the wealthy outpace middle-class America in wages, employment and home prices. Yellen’s extensive comments on economic inequality marked an unusual public departure for a Fed chair. Her predecessors as head of the U.S. central bank tended to focus exclusively on the core Fed issues of interest rates, inflation and unemployment. Indeed, the Fed’s mandate doesn’t explicitly include issues like income or wealth disparities. Economists and politicians blame the inequality on the inequity of the tax codes, the cost of healthcare, the welfare and benefit systems to care for the bottom 10%, rising costs of education versus the increased demand for more highly educated employees, the aging of the population, and so on. The proposed fixes therefore from Yellen are to lower the burden on the middle-class by raising taxes on the wealthy, downsizing welfare and benefit systems, and raising the minimum wage.
Others disagree with Yellen claiming , the problem with that analysis is that it indicates why those striving to achieve higher incomes and wealth in the future may have more problems. However, it does not explain how many of those who have had their educations, successful careers, or their own businesses for decades, have seen their previous wealth stagnate, decline, or even disappear, while the rich have gotten so dramatically richer. That is, left out of the accounting is how and why huge amounts of capital have periodically moved from the hands of the middle-class to the coffers of the wealthy, creating the inequality in the first place. Yet, it is quite obvious referring to the cycle of recurring 25% to 50% stock and bond market collapses and recoveries, and the bursting of housing and other asset bubbles. Those events gut the wealth of the trusting middle-class, while the top 5% come out of those cycles with their wealth intact, and even enhanced. It is those periodic ‘asset price meltdowns’ that create the inequality. Those recurring cycles of bull and bear markets in stocks and bonds, the blowing of bubbles and their bursting in real estate and other assets, are hugely profitable for the top 5% because they make it their business to understand what’s going on, so they can buy low and sell high, the basic definition of successful investing. For instance, it was primarily lower to middle-class buyers using subprime mortgages to buy houses at record high prices, and middle-class homeowners refinancing to take equity out of existing mortgages, near the real estate bubble top. Subsequently, their losses were transferred into big profits for the billionaire-owned hedge funds, private equity firms, and wealthy investors, who bought those houses in bulk at foreclosure auctions a few years later, when crushed home prices began to rise again. It should not be surprising that it’s a similar situation with bull and bear markets in stocks.
APARTMENTS PUSHED UP US HOMEBUILDING IN SEPTEMBER
WASHINGTON (AP) — Construction firms broke ground on more apartment complexes in September, pushing up the pace of U.S. homebuilding. Housing starts rose 6.3% to a seasonally adjusted annual rate of 1.017 million homes, the Commerce Department said Friday. Almost all of the gains came from apartment construction — a volatile category — which increased 18.5% after plunging in August. The sluggish recovery and meagre wage growth has left more Americans renting instead of owning homes. Apartment construction has surged 30.3% over the past 12 months. Starts for single-family houses rose just 1.1 per cent in September, contributing to an 11% gain during the past 12 months.
JUDGE VOIDS TAJ MAHAL CASINO UNION CONTRACT
ATLANTIC CITY, N.J. (AP) — The Trump Taj Mahal Casino Resort may survive after all, but it’s likely to do so with angry employees. A federal bankruptcy judge in Delaware on Friday voided the struggling casino’s contract with its union workers, giving owner Trump Entertainment Resorts a big part of its plan to keep the casino open and save its 3,000 jobs. But those workers were seething after Judge Kevin Gross granted the company’s request to terminate its contract with Local 54 of the Unite-HERE union. Trump Entertainment said if the ruling went against it, it would close the Taj Mahal on Nov. 13. The company and billionaire investor Carl Icahn had said the casino can’t survive without shedding costly pension and health care obligations.
CHIMERIX GETS FDA OK TO TEST DRUG FOR EBOLA
WASHINGTON (AP) — A North Carolina drugmaker plans to test its experimental antiviral drug in patients who have Ebola, after getting authorization from regulators at the Food and Drug Administration. Chimerix Inc. said that it has received FDA clearance to proceed with a trial examining the safety and effectiveness of its brincidofovir tablets in patients who have the virus. The company said in a statement that the drug is available for immediate use in testing. With the FDA’s permission, the Durham, North Carolina, drugmaker previously made the drug available to the first Ebola patient diagnosed in the U.S., who died in Dallas last week. Chimerix did not immediately return requests for comment.
GE SEES STRONG US ECONOMY AS PROFIT RISES
NEW YORK (AP) — General Electric Co. posted strong third-quarter results, issued an upbeat forecast for the fourth quarter and said U.S. industrial activity is at its highest level since the financial crisis. CEO Jeff Immelt said there is uncertainty in the global economy, but that nations around the world are still going ahead with large infrastructure projects and companies are buying equipment. GE reported an 11% jump in third-quarter profit Friday due to cost reductions and strong performance from its aviation and oil and gas divisions. The company reported net income of $3.54 billion for the quarter on sales of $36.17 billion. Last year during the same period the company earned $3.19 billion on revenue of $35.66 billion.
RETAILERS SUPPORT EFFORTS ON SECURITY & INFO SHARING
WASHINGTON - The National Retail Federation issued the following statement today from President and CEO Matthew Shay, who was present for a White House announcement regarding data and payment security: “We applaud the administration for taking proactive and positive steps by adopting PIN and chip technology for government-issued debit and credit cards, among other things. From insisting on PIN and chip cards to facilitating greater information sharing among retailers and others sectors, we are committed to finding the right answers with the latest technologies to stop these cyber thieves. This is not an issue about large retail versus small, or global financial institutions versus community banks and credit unions, or the federal government versus municipalities. We all stand together in seeking solutions to prevent criminals from accessing personal financial data regarding our customers, investors and citizens through preventable data breaches.”
BANK OF ENGLAND CHIEF ECONOMIST: RATES TO STAY LOW
LONDON (AP) — The Bank of England’s chief economist signaled Friday that interest rates could remain at record lows for longer than expected due to weaker wage growth and global economic uncertainties. Andrew Haldane told business leaders he had become “gloomier” because real wages are falling, productivity is stagnant and savings interest rates are at their lowest since the 1970s, even as Britain’s economic growth rate remains the envy of other G-7 nations. The comments helped boost British stocks, which had fallen on investor concern that the Bank of England would increase interest rates. Haldane’s remarks came after James Bullard, president of the St. Louis Federal Reserve, said U.S. central bankers should consider delaying plans to wind down bond purchases this month.
Q3 LESS ROBUST FOR MANUFACTURERS BUT OUT STILL GOOD
“The decline in the composite index and most of the individual indexes point to a slowing of the momentum the sector had coming out of the second quarter. With the exception of U.S. and non-U.S. investment, however, the indexes remain at relatively high levels and point to continued growth,” MAPI said. While the manufacturing sector ended a nearly two-year upward trend due to a hiccup in the third quarter, industry group Manufacturers Alliance for Productivity and Innovation says that expansion will continue. The MAPI Foundation Business Outlook reported that its October 2014 composite index slipped to 67 from 71 in the July 2014 survey, ending a run of six quarters of incremental improvement. Still, it marked the 20th consecutive quarter the index has remained above the threshold of 50, the dividing line separating contraction and expansion. The Composite Business Outlook Index is based on a weighted sum of the Prospective U.S. Shipments, Backlog Orders, Inventory, and Profit Margin Indexes. “The third quarter was less robust than the second quarter for manufacturers but the current index levels nonetheless indicate expansion for the sector,” said Donald A. Norman, Ph.D., MAPI Foundation director of economic studies.