NEW$ & VIEW$ (11 JUNE 2013)

More volatility!

Treasury Fall Sends Shockwaves

European financial markets sold off, with stocks, bonds and commodities all under pressure and U.S. Treasurys leading the move as investors worried that the era of plentiful stimulus may be coming to an end.

Corporate Buyers Boosting Prices in New Housing Boom

In 2012, institutional buyers purchased about 138,540 of both distressed and non-distressed homes in the U.S., or about 3% of all sales, according to RealtyTrac. It estimates institutional buyers purchased 32,355 homes in the U.S. in the first quarter of this year, or about 3.5% of home sales.

That may sound like a small amount of purchases, but in certain markets institutional investors are taking a larger stake. For example, institutional buyers accounted for 5% and 8% of sales in Arizona and Nevada, respectively, so far this year.

And some of the hottest markets for big corporate buyers from 2010-2012 are seeing some of the biggest price jumps this year—Phoenix, Las Vegas, the San Franciso Bay Area, portions of Florida and elsewhere.

Alan Blinder: Fiscal Fixes for the Jobless Recovery

(…) The Brookings Institution’s Hamilton Project, with which I am associated, estimates each month what it calls the “jobs gap,” defined as the number of jobs needed to return employment to its prerecession levels and also absorb new entrants to the labor force. The project’s latest jobs-gap estimate is 9.9 million jobs. At a rate of 194,000 a month, it would take almost eight more years to eliminate that gap. (…)

The Federal Reserve has worked overtime to spur job creation, and there is not much more it can do. Fiscal policy, however, has been worse than AWOL—it has been actively destroying jobs. (…)

In fact, the private sector created 6.56 million net new jobs over the past three years while about 1.14 million net government jobs were eliminated via layoffs and spending cutbacks.

Never before in postwar history has government employment declined during a recovery. Compared with historic norms, we’re down over two million government jobs. (…)

Real GDP growth has averaged a paltry 2% per annum over the past three years. But growth of GDP excluding government purchases—the things governments buy, including hiring workers—has averaged 3%. If government purchases had increased enough to leave overall GDP growth at 3% instead of 2%, history suggests that an additional three million to four million jobs would have been created. (…)

OPEC sees room for its over-target oil output

OPEC predicted world oil demand will grow more quickly in the rest of 2013 and indicated the group can keep pumping more oil than the output target it retained at a May 31 meeting without over-supplying the market.

The Organization of the Petroleum Exporting Countries in a monthly report forecast world oil demand would expand by 900,000 barrels per day (bpd) in the second half, up from 700,000 bpd in the first six months of 2013.

For 2013 as a whole, it forecast world oil use would grow by 780,000 bpd, slightly lower than 790,000 bpd previously expected.

Shale could fuel world for decade, says US
Study finds 345bn barrels in 42 countries

Global shale resources are vast enough to cover more than a decade of oil consumption, according to the first-ever US assessment of reserves from Russia to Argentina.

The US Department of Energy estimated “technically recoverable” shale oil resources of 345bn barrels in 42 countries it surveyed, or 10 per cent of global crude supplies. The department had previously only provided an estimate for US shale reserves, which it on Monday increased from 32bn barrels to 58bn. (…)

Monday’s assessment indicated that Russia has the largest shale oil resource, with 75bn barrels. Russia and the US were followed by China at 32bn, Argentina at 27bn and Libya at 26bn.

The report said gas from shale formations increased world natural gas resources by 47 per cent to 22,882tn cu ft. (…)

World oil demand is about 90m barrels a day, suggesting the world shale oil resource covers 10.5 years of consumption. (…)

The new US estimate of world shale gas resources at 7,299tn cu ft is 10 per cent higher than a previous estimate made in 2011.

Inside the US, shale now constitutes 30 per cent of oil and 40 per cent of natural gas production, the department said.

 

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