Tuesday November 8 20916 Housing and Economic stories

TOP STORIES:

“More than a Dozen” Drugmakers under Criminal Investigation for Price-Fixing, Shares Plunge, after Getting Crushed All Year - (www.wolfstreet.com) The digital ink wasn’t dry yesterday on my article on How PE Firms Are Flipping Drugs in Price-Gouging Scheme that Cannibalizes the Entire US Economy, when Bloomberg reported that US prosecutors “are bearing down” on “more than a dozen” drugmakers “in a sweeping criminal investigation into suspected price collusion.” According to Bloomberg: The antitrust investigation by the Justice Department, begun about two years ago, now spans more than a dozen companies and about two dozen drugs, according to people familiar with the matter. The grand jury probe is examining whether some executives agreed with one another to raise prices, and the first charges could emerge by the end of the year, they said.

The "Forgotten" Clinton Foundation Review Quietly Labors On At IRS's Dallas Office - (www.dallasobserver.com) The Earle Cabell Federal Building in downtown Dallas is an all purpose office complex, a bastion of federal bureaucracy located at 1100 Commerce St. Most people come for a passport or to get business done in front of a federal judge. But inside, a quiet review is underway that has direct ties to the raging presidential election: The local branch of the IRS' Tax Exempt and Government Entities Division is reviewing the tax status of the Bill, Hillary and Chelsea Clinton Foundation. This IRS review has not generated similar waves as Department of Justice probes into the foundation, and has largely been forgotten in the campaign's melee. It's just not as sexy as private email servers, FBI infighting and charges of political pressure applied to law enforcement.

Junk-Bond Sales Cool in Market’s Worst Slump Since February - (www.bloomberg.com) The worst debt-market slump in seven months is starting to disrupt bond sales by risky companies as investors retreat from funds that buy the debt. Construction company Tutor Perini Corp. pulled a $500 million speculative-grade bond offering because of “adverse market conditions,” it said in a statement late Wednesday. That left Wall Street underwriters without a junk-rated sale for the second day this week as anxiety about Tuesday’s U.S. presidential election and a possible interest-rate hike next month by the Federal Reserve gripped capital markets. A unit of ServiceMaster Global Holdings Inc. is offering $1 billion of notes in a deal that is scheduled to price Thursday.

Another European Bank Becomes a Penny Stock - (www.wolfstreet.com) Despite receiving some of the most generous public subsidies in recorded history, Europe’s financial sector continues to hemorrhage. In Italy, the total market value of Monte dei Paschi di Siena, the world’s oldest bank and Italy’s third largest, is a fraction over €500 million, as its shares hover just 23 European cents above zero. In the EU’s largest economy, Germany, the country’s only G-SIB (Global Systemically Important Bank), Deutsche Bank, has seen its stock plummet close to 90% in the last 10 years from €117 to €12.30. This year alone it’s down well over 40%. Take a quick glance at many of Europe’s smaller big banks and things look even grimmer. Four of Europe’s 29 “biggest” banks now share the dubious distinction of being penny stocks: Spain’s Bankia (€0.79), Italy’s Monte dei Paschi (€0.23), the National Bank of Greece (€0.21) and Bank of Ireland (€0.20).

Big Hit on Drug Stocks Caps $26 Billion Decline for John Paulson - (www.wsj.com) John Paulson’s subprime trade led to historic fortune. His drug-company investments? Big losses and plunging assets. Mr. Paulson’s hedge-fund firm, Paulson & Co., is suffering painful losses this year, extending a period of uneven performance that has left the firm managing about $12 billion, down from $38 billion in 2011. Behind the recent difficulties: A big, faulty bet on pharmaceutical companies, as well as excessive caution about the broader market, according to people close to the matter. Over the past two years, Mr. Paulson has argued to his investors that the pharmaceutical industry’s consolidation would accelerate, boosting growth prospects of specialty drug companies cutting deals. Six of Paulson & Co.’s 10 largest holdings as of June 30 were pharmaceutical companies, the most recent securities filings show, including the firm’s four largest positions. At one point in late 2014, Mr. Paulson told a client that one of Paulson’s major holdings, Valeant Pharmaceuticals Inc., would hit $250 a share. At the time, the stock was trading at around $140. To hedge, or protect, his drug investments, Paulson adopted bearish positions on the overall market, viewing stocks to be expensive.

OTHER STORIES:

Risks of ultra-easy ECB policy increasingly clear: Weidmann - (www.reuters.com)
Emerging markets to see fourth year of net capital outflow in 2017 -IIF - (www.reuters.com)
China May Be Set for a Shock Fall in Foreign-Exchange Reserves - (www.bloomberg.com)
Investors Are Pouring Into an ETF That Protects Against Higher Inflation - (www.bloomberg.com)

Turkey’s Crackdown Sweeps Through Business and Finance, Imperiling the Economy - (www.wsj.com)

S&P 500 losing streak runs to 8 days as Facebook weighs - (www.reuters.com)
Is China Repeating Japan’s Missteps? - (www.bloomberg.com)
Egypt floats pound, eyes IMF deal within days - (www.reuters.com)