Wednesday October 21 Housing and Economic stories

TOP STORIES:

Deutsche Bank Sees $7 Billion Quarterly Loss on Write-downs - (www.bloomberg.com) Deutsche Bank AG expects to report a surprise third-quarter loss of 6.2 billion euros ($7 billion) and may eliminate its dividend for the year after writing down the value of its two biggest divisions and boosting its reserve for legal costs. The estimates, announced in a statement Wednesday, are part of a strategy that co-Chief Executive Officer John Cryan will present Oct. 29 as he looks to shore up capital and boost profitability at Europe’s biggest investment bank. Deutsche Bank’s American depositary receipts tumbled 6.4 percent after the disclosure to $26.96 at 4:22 p.m. in extended trading in New York.

$3 trillion corporate credit crunch looms as debtors face day of reckoning, says IMF  - (www.telegraph.co.uk) Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund has warned, as it called time on a corporate debt binge in the developing world. Emerging market companies have "over-borrowed" by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, found the IMF's Global Financial Stability Report. This dangerous over-leveraging now threatens to unleash a wave of defaults that will imperil an already weak global economy, said stark findings from the IMF's twice yearly report. The Fund warned there was no margin for error for policymakers navigating these hazardous risks. The slightest miscalculation, they said, could collapse into a "failed normalisation" of interest rates and market conditions, wiping 3pc from the world's economic output over the next two years.

These Are the Big Funds That Were Slammed by the Biotech Rout - (www.bloomberg.com) It’s not just biotechnology specialists who have been hit by the slide in drug stocks. Of funds that invest across the stock market, the 20 that had the most exposure to biotech companies suffered a paper loss of more than $5 billion since Sept. 18, according to data compiled by Bloomberg and Morningstar Inc. Three days later, a tweet from Democratic presidential candidate Hillary Clinton helped start what has become a 14 percent slide in the Nasdaq Biotechnology Index.  The biotech-heavy mutual funds, which include the $37.2 billion Fidelity Growth Company Fund and the $15 billion JPMorgan Large Cap Growth Fund, fell an average of 3.8 percent from Sept. 18, the last day of trading before the slide started, to Oct. 6, while the Standard and Poor’s 500 Index rose 1.1 percent over that period. The Nasdaq Biotech Index and the S&P 500 each dropped less than 1 percent at 9:31 a.m. Thursday in New York.

Saudi Arabia Said to Order Spending Curbs Amid Oil Price Slump - (www.bloomberg.com) Saudi Arabia is ordering a series of cost-cutting measures as the slide in oil prices weighs on the kingdom’s budget, according to two people with knowledge of the matter. The finance ministry told government departments not to contract any new projects and to freeze appointments and promotions in the fourth quarter, the people said, asking not to be identified because the information isn’t public. It also banned the buying of vehicles or furniture, or agreeing any new property rentals and told officials to speed up the collection of revenue, they said. With oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude prices in the past 12 months has combined with wars in Yemen and Syria to pressure Saudi Arabia’s finances. While public debt is among the world’s lowest, with a gross debt-to-GDP ratio of less than 2 percent in 2014, that may rise to 33 percent in 2020, according to estimates from the International Monetary Fund.

Wealth Funds From Oslo to Riyadh Raid Coffers to Offset Oil Drop  - (www.bloomberg.com) From Oslo to Doha, Riyadh to Moscow, governments that rode crude’s historic rise to unprecedented wealth are now being forced to start repatriating their rainy-day funds just to make ends meet. The halving of oil to less than $50 a barrel has the potential to alter one of the most powerful economic and political forces of the past half century: the rise of the petrostate. These countries led a surge in state investments in the U.S. and Europe that now totals about $7.3 trillion globally, according to the Sovereign Wealth Fund Institute. During the last boom, the oil countries flaunted their wealth abroad by buying stakes in iconic companies such as Barclays Plc as well as trophy assets including Manhattan hotels, European soccer clubs and London luxury homes, often in the face of opposition from the local public.  Such swagger is fading.

OTHER STORIES:

Traders Flee Pharma Junk Bonds as Price Scandal Engulfs Industry - (www.bloomberg.com)
Russia Fires Cruise Missiles in Syria as Assad Begins a Ground Attack - (www.nytimes.com)

Wealth Funds From Oslo to Riyadh Raid Coffers to Offset Oil Drop - (www.bloomberg.com)

Chile Peso Falls Most in Emerging Markets on Inflation Surprise - (www.bloomberg.com)
German Exports Slump Most Since 2009 Recession as Risks Rise - (www.bloomberg.com)
Deutsche Bank's Riskiest Bonds Sink to Record Low on Coupon Risk - (www.bloomberg.com)