Monday February 1 2016 Housing and Economic stories

TOP STORIES:

IPOs Crash, Startup Valuations Plunge, Era Ends - (www.wolfstreet.com)   Box, which tries to fight it out with the big boys in the “cloud” collaboration and file-sharing environment, plunged 7.7% on Tuesday and 3.5% this morning, to $9.07. It had gone public a year ago at an IPO price of $14, jumped to $24.73, and went downhill. It’s down 63% from its instant peak and down 35% from its IPO price. It has been that kind of hell for startup companies. The Renaissance US IPO Index, which tracks newly public companies for two years, peaked in April 2015 and has since plunged 29% as of Tuesday’s close. Behind the scenes, it doesn’t look any better. There have been a spate of startups that recently raised money in a “down round,” where the high-flying “valuations,” negotiated by a handful of people and leaked to the media to create the requisite hype for future rounds of funding, were cut in half.

Europe on the verge of collapse: Soros - (www.bloomberg.com) Billionaire financier George Soros has warned that the European Union is on the "verge of collapse" over the migrant crisis and is in "danger of kicking the ball further up the hill" in its management of the issue which has seen more than a million migrants and refugees arrive in the region in 2015. In an interview with the New York Review of Books, Soros added that the German Chancellor Angela Merkel is key to solving the crisis. Merkel led Europe's response to the migrant crisis, opening Germany to the refugees that had travelled from the Middle East, in particular Syria, to try and find a new home in Europe. The decision by the German leader marked a sea-change in her policy. In the interview, Soros said he welcomed Merkel's move.

Italian banks' bad loans continue to mount - (www.marketwatch.com) The increased levels of bad loans confronting the Italian banking system is raising investors' concerns about the health of the sector, prompting another selloff in local banking stocks on Tuesday. According to data published Tuesday by Italy's banking lobby ABI, Italian banks' gross bad loans, measured at their face value, stood at EUR201 billion in November, 11% higher than the same period a year prior. Gross bad loans were 10.4% of total loans in November, the highest percentage figure since 1996. "The stock of bad loans is only bound to grow in the near future," said Giuseppe Lusignani, vice chairman of risk-management consultancy Prometeia SpA, which estimates that total bad loans will start to decline between the end of this year and the beginning of 2017.

Junk-Bond Risk Gauge Set for Biggest Year-Start Jump Since 2009 - (www.bloomberg.com) A measure of investors’ fear of junk-bond defaults has staged its biggest jump at the start of a year since 2009, when the world was in the midst of a financial crisis, as investors have globally rushed out of riskier assets.  The risk premium on the Markit CDX North American High Yield Index, a credit-default swaps benchmark tied to the debt of 100 speculative-grade companies, surged 87 basis points between Dec. 31 and Wednesday, reaching 564 basis points, the highest level since 2012. That jump was the biggest since the start of 2009, when it rose 227 basis points. A similar index for investment-grade debt also rose to a three-year high. Weakness in North American corporate-bond prices was one piece of larger market turmoil on Wednesday as investors brace for slower growth in China. Global shares are at the verge of entering a bear market, with the Dow Jones Industrial Average sinking nearly 250 points, and oil prices fell to their lowest levels since 2003.  

Ruble Plunges 26% in 90 days, 6% in Two Days, Hits New Low, Government Says to Heck with it - (www.wolfstreet.com)  The ruble plunged 3.8% on Wednesday and another 2.8 on Thursday to a new all-time low of 83.85 to the dollar, at 5:30 PM Moscow time, blowing through the previous catastrophic panic low of December 2014. At the time, the Ministry of Finance and the Central Bank deployed desperate, and ultimately very costly shock-and-awe measures to stop the ruble from spiraling out of control. And it triggered all kinds of drama. On December 16, 2014, the Central Bank announced that it increased its benchmark rate by a brutal 6.5 percentage points to a dizzying 17%, after having already jacked up rates in the prior week to 10.5%. And the Ministry of Finance announced it would begin selling Russia’s crown jewels, its dwindling foreign currency reserves, and with the proceeds mop up rubles.

OTHER STORIES:

PBOC Injects Most Cash in Three Years in Open-Market Operations - (www.bloomberg.com)
Asian Stocks Gain as Rebound in Oil Eases Global Equities Rout - (www.bloomberg.com)
SoftBank's Drop Deepens on Sprint Shares, Debt at Multiyear Lows - (www.bloomberg.com)
U.S. Stocks Close Lower After Late-Day Rally - (www.bloomberg.com)

Oil Tumbling Most in Four Months Deepens Gloom for Producers - (www.bloomberg.com)
Global Bond Downgrades Climb to Highest in Six Years, S&P Says - (www.bloomberg.com)
These Favorite Hedge Fund Holdings Are Among 2016's Worst Stocks - (www.bloomberg.com)
Why China Can't Keep a Stock Rally Going - (www.bloomberg.com)
Gross Says Global Selloff Shows Failure of Central Bank Efforts - (www.bloomberg.com)