Saturday, February 6, 2016
Weak US job growth shows rate rise was a mistake; ArcelorMittal slumps to $8bn loss; Apple's spaceship-like campus
1 Weak US job growth shows rate rise was a mistake (Larry Elliott in The Guardian) It is hard to imagine that the Federal Reserve would have raised interest rates in December had it known then what it knows now. News that employment growth as measured by the increase in non-farm payrolls was up by 151,000 is just the latest piece of evidence to suggest that the US economy is going through a tough period.
Growth in the fourth quarter was weak, sales of durable goods suggest that businesses are reluctant to invest, and consumers are saving rather than spending the windfall from lower oil prices. Even so, Janet Yellen, chairman of the Fed, is not going to hit the panic button and reverse December’s increase – at least not yet.
There are two reasons for that: a U-turn would be a considerable blow to the central bank’s reputation; and the Fed will want to see more evidence before it decides that the world’s biggest economy is heading for a recession rather than simply going through a temporary soft patch.
When the Fed raised rates in December, there was an assumption it would move for a second time in March. Two months of market turmoil and indifferent economic news means that is now completely out of the question. Employment is a lagging indicator of economic performance: it says more about what was happening a few months ago than it does about the present state of activity.
The Fed will sit tight and wait to see whether the strong jobs data in the last few months of 2015 was as good as it gets. If that is the case, the US is heading for a bumpy, perhaps even a hard, landing. And it will be time for Yellen to panic.
2 ArcelorMittal slumps to $8bn loss (BBC) ArcelorMittal has slumped to an annual loss of almost $8bn as the world's biggest steelmaker was hit by plunging commodity prices. The net loss included $4.8bn of writedowns, mainly in its mining division, and $1.4bn of exceptional charges in its steel operations.
The loss was more than four times worse than the $1.86bn posted for 2014. The company plans to axe the dividend and cut costs in response. ArcelorMittal's Amsterdam-listed shares have sunk more than 60% in the past 12 months.
Lakshmi Mittal, chairman and chief executive, said 2015 was a very difficult year for the steel and mining industries, with steel prices falling because of excess capacity in China. The crisis in the steel industry has hit the UK. Last month, Tata Steel said it was cutting more than 1,000 UK jobs. They came on top of the 1,200 jobs that went last October.
ArcelorMittal is also one of the world's largest producers of iron ore and coal. Sales fell 20% to $63.6bn, largely because of sinking iron ore prices, even though steel shipments only fell slightly. It produced 92.5 million tonnes of crude steel last year and 62.8 million tonnes of iron ore.
The company aims to raise $3bn in new capital and sell a minority stake in automotive engineering company Gestamp to reduce its debt. The debt pile stood at $15.7bn, down $1.1bn, to the lowest level since the ArcelorMittal merger.
3 Apple’s spaceship-like campus (Emily Price in San Francisco Chronicle) It looks like Apple’s new Cupertino headquarters is getting closer to becoming a reality. A new video shows a bird’s eye view of the office building under construction, and it’s starting to look a lot more like a building (and a spaceship, but that’s neither here nor there).
The video, recorded by local videographer Duncan Sinfield using a drone, captures some of the first shots of the inside of the structure, including a look at the headquarter’s underground auditorium (with a circular space-like roof). The office space is truly massive, something that comes across in the filming.
Apple’s new headquarters is being built on a 176-acre site, which equates to it being essentially a 2.8 million-square-foot office building. Once completed, the space is expected to house close to 13,000 employees and include 300,000 square feet of research facilities, as well as underground parking.
Glass on each side of the ring will allow employees to look out from both sides. Solar panels will be used as backup power for the building, while it will get most of its power from the Cupertino power grid.
Originally Apple employees were expected to start moving into the structure last year. That move-in date has been adjusted to sometime in 2016. Employees are expected to move in to the main structure, while construction continues on other pieces of the building. The project is expected to cost Apple roughly $5 billion before it is completed.