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Daily Agenda: Fallout from North Korea Bomb Hits Markets

Pyongyang claims to test a hydrogen bomb; beleaguered Valeant to name interim CEO; Chinese property makes second privatization attempt.

North Korea proclaimed a successful test of a hydrogen bomb today local time (late last night in the U.S.). The despotic regime in Pyongyang is alleging that it has succeeded in developing hydrogen-enhanced nuclear technology, triggering an emergency meeting of the United Nations Security Council. Many scientists, however, question the validity of North Korean claims. Multiple experts have questioned whether the blast represented a true hydrogen-grade explosion, which is capable of temperatures of more than 400 degrees Celsius upon detonation, or merely a traditional atomic blast. In response to the geopolitical threat, financial markets reacted, with February-delivery Brent crude futures contracts reaching the lowest front-month price levels since 2004 and European cash equities and futures for primary U.S. equity indexes declining significantly.

Valeant to name new CEO. In the latest chapter in a corporate soap opera, Laval, Quebec–based pharmaceutical company Valeant Pharmaceuticals International announced yesterday that it will appoint an interim CEO to replace Michael Pearson, who was hospitalized recently with severe pneumonia. In recent months, the company has been attacked by short sellers and questioned by regulators for everything from its pricing policies to its debt. The company had said Pearson would be replaced by a group of executives, sending the stock falling further.

Chinese real estate developer makes second go-private attempt. The parent company of New World China Land today announced a nearly $3 billion bid to privatize the firm, a repeat of an offer rejected by shareholders in 2014, in a so-called headcount test, which took into account the number of shareholders as well as their shares. The current bid is not subject to the same Hong Kong regulation, which means shareholder votes will be weighted by the size of the stakes.

JPMorgan Chase fined. Yesterday the Office of the Comptroller of the Currency announced a $48 million fine to be levied against JPMorgan Chase & Co. for failing to meet settlement terms over pre-credit-crisis mortgage-marketing practices. The fine is a minor addendum to the original charges, which exceeded $2 billion.

Central bank lowers bar for yuan again. On Wednesday, China’s central bank, the People’s Bank of China, reduced its reference rate on the yuan to the lowest level since 2011, as forward contracts traded in Hong Kong declined by more than 1 percent. This follows a perceived intervention in currency transactions Tuesday by the central bank and sent a mixed message to investors.

Yahoo shareholder calls for a change. New York activist investor hedge fund firm Starboard Value today publicly called on Yahoo’s board to oust current management led by CEO Marissa Mayer. Starboard, which has a small position in Yahoo’s common stock, argues that Yahoo management has failed to revitalize the Sunnyvale, California company’s core business, while enjoying the price appreciation of its stake in Chinese ecommerce giant Alibaba.

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