The Era of Easy Money Is Ending, and the World Is Bracing for Shocks [NYT]
Investors concluded that interest rates would rise faster than they had anticipated, almost certainly in the United States, and perhaps eventually in Europe and Asia, too. They yanked their treasure out of stocks and entrusted it to safer repositories of wealth like bonds and cash.
A wave of selling commenced in New York on Friday, continued in Asia and Europe on Monday, and then completed its trans-global journey with a sharp drop where it had all started. While a global rout continued into Tuesday, anxiety subsided in the United States, with the Standard & Poor’s 500-stock index up 1.7 percent at the close. The gains helped erase some of the losses over the past week, although the S.&P. 500 is still more than 6 percent off its peak in late January.
Dow is headed for a more than 200-point drop at the open, following Tuesday's wild ride [CNBC]
After two major sell-offs, leading U.S. indexes saw sharp swings yesterday, with the Dow Jones industrial average starting Tuesday significantly lower, before rallying and closing up 567.02 points at 24,912.77. The index traded in a range of 1,167.49 points through the course of Tuesday's session.
Some of the reasons that investors gave for yesterday's sharp swings included fears over interest rates, obscure volatility funds that use leverage, and computer-driven trading.
Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says [Bloomberg]
Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they’re replaced by a small set of future competitors, Goldman’s Steve Strongin said in a report dated Feb. 5. While he didn’t posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn’t rational for a “few-winners-take-most” market.
“The high correlation between the different cryptocurrencies worries me,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”
Mortgage volume stalls as rates rise to the highest level in four years [CNBC]
Total mortgage application volume barely moved last week, up just 0.7 percent on a seasonally adjusted basis from one week earlier, according to the Mortgage Bankers Association. Volume was 5 percent higher than the same week a year ago.
Applications to refinance a home loan, which usually fall when rates rise, eked out a 1 percent gain for the week and were nearly 2 percent higher than a year ago, when interest rates were lower. Some borrowers may have jumped to get the last low rates now, fearing even higher ones coming soon.
Musk’s Big Questions: Can Tesla Make Model 3s and Burn Less Cash? [Bloomberg]
Elon Musk is a man with quite a few balls in the air. On Tuesday afternoon, he watched the private rocket company that he runs, SpaceX, successfully launch its first Falcon Heavy. On Wednesday afternoon, Wall Street will watch as the public automaker that he runs, Tesla Inc., reports fourth quarter earnings.
Information-starved investors will be on high alert, as will thousands of would-be drivers waiting for Tesla to produce and deliver new electric cars. Here are five key questions to ask as a way to gauge Tesla's prospects going into a decisive year.
Goldman Sachs in Talks With Apple to Finance iPhone Sales [WSJ]
The Wall Street firm is in talks to offer financing to shoppers buying phones, watches and other gadgets from Apple, people familiar with the matter said. Customers purchasing a $1,000 iPhone X could take out a loan from Goldman instead of charging it to credit cards that often carry high interest rates.
Talks between the tech giant and the investment bank are continuing and could still fall apart. A spokesman for Goldman declined to comment. Apple didn’t respond to requests for comment
Casino magnate Steve Wynn quits as CEO after sexual misconduct claims [Reuters]
Wynn, 76, has denied the accusations published by the Wall Street Journal as “preposterous” and said they were instigated by his ex-wife, an accusation that a representative for Elaine Wynn has denied.
He also resigned as finance chairman of the U.S. Republican Party’s fundraising arm, the Republican National Committee, in January.
“In the last couple of weeks, I have found myself the focus of an avalanche of negative publicity...I have reached the conclusion I cannot continue to be effective in my current roles,” he said in a statement.
Dealmaker talks company merger while running marathon [NYPost]
Dealmaker Martin Franklin picked an odd place to hammer out his latest acquisition: between mile 11 and mile 15 while running a marathon in Miami on Monday.
And oh yeah, it was his seventh marathon in seven days on seven continents.
Franklin, an accomplished runner who has bought and sold a wide range of companies, including Burger King and Jarden, was just checking in with The Post on Tuesday during what was already an impressive feat — completing the World Marathon Challenge.