KeNo's Housing and Economic Portal: Tuesday October 13 Housing and Economic stories

Monday, October 12, 2015

Tuesday October 13 Housing and Economic stories

Big US hedge funds hit hard by Valeant sell-off - (www.ft.com) Three of the US’s biggest hedge funds have suffered billions of dollars in losses from their portfolios thanks to a sharp sell-off in the shares of Valeant Pharmaceuticals. Bill Ackman’s Pershing Square, Jeff Ubben’s ValueAct, and John Paulson’s Paulson & Co have been hit hard this week because of their concentrated bets on Valeant, with Mr Ackman holding 30 per cent of his fund in the pharmaceutical company’s shares. Valeant shares fell a further 5 per cent on Tuesday, adding to a 16.5 per cent plunge on Monday, as investors took fright after Democrat politicians called for a subpoena to force the company to hand over documents relating to “massive price hikes” for its drugs. One US-based investor in hedge funds said: “Large, focused bets on single companies can lead to huge returns for managers when they go well, but destroy years of gains when they go wrong. It is always a risky strategy no matter how much of an edge a hedge fund thinks it has”.

Japanese Pension Funds Find New Ways To Lose Money, Will Blow Retirement Funds On Junk Bonds - (www.zerohedge.com) With Japan's economy already sliding into its 5th recession of the past decade, once pensioners open their retirement statements in a few weeks and find a 15% plunge in their purchasing power, Japan can skip recession and proceed straight to a consumer-driven recession. But wait, there's more: because if pensioners are angry now, wait until they learn that they have lost everything, after buying all those junk bonds that Carl Icahn is now actively selling with both hands and feet, because: JAPAN PENSION FUND TO INVEST IN JUNK BONDS, NIKKEI SAYS. And just like that, with or without Krugman's active economic advice, Japan's fate is sealed because much to Japan's dismay, "junk" bonds are called that for a reason.

The Martin Shkreli incident could shake up the entire drug industry - (www.businessinsider.com) Last week, Martin Shkreli got as close to being a household name as any pharma CEO has in at least the past few decades. Shkreli is the CEO of Turing Pharmaceuticals, a new company that just bought the US marketing rights to Daraprim, a drug that fights parasitic infections. Almost immediately, he hiked the price of the drug up by 5,000% — causing public outrage and placing political attention on other drugs that have made similar moves. Even though Shkreli quickly backtracked and announced that he would lower the price, the pharmaceutical and biotech industries are still reeling.

IMF warns of coming spike in emerging market company failures - (www.ft.com) The International Monetary Fund has warned that emerging economies and bond markets need to prepare for an increase in corporate failures if and when the US Federal Reserve and other central banks in advanced economies begin raising rates. The IMF, which has urged the Fed to wait until next year to raise rates for the first time in almost a decade, and others have expressed growing concern about the surge in dollar-denominated debt in emerging economies and the potential impact that a sudden increase in rates would have. The issue is likely to be among the most discussed when central bankers and finance ministers from around the world convene for next week’s annual meetings of the IMF and World Bank in Lima, Peru. In a chapter of its Global Financial Stability Report prepared for those meetings and released on Tuesday, IMF economists warn that a surge in corporate leverage has preceded many emerging market financial crises in history.

Global Rally Shows Relief at End of $11 Trillion Stocks Meltdown - (www.bloomberg.com) From stocks to commodities to emerging-market currencies, traders got a measure of solace at the end of the most volatile quarter for financial markets since 2011. Global equities advanced from a two-year low, with U.S. stocks rising the most since mid-September and European shares surging with emerging markets. Copper and nickel jumped to ease losses among metals, while oil traded at the lowest average quarterly price since 2009. The yen weakened with Treasuries as demand for havens eased for at least a day. With almost $11 trillion erased from global shares in the three months, analysts debated whether Wednesday’s rally that stretched from Asia to Europe and the U.S. will be just a blip. Riskier markets have sold off amid a prolonged commodity slump, slowing growth in China and an exodus from emerging-market assets as the U.S. prepared to raise interest rates as soon as this year. Friday’s payrolls report will show the economy created 200,000 or more jobs for the sixth month this year, strategists forecast.

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