Opening Bell: 12.21.17

Taxes taxes taxes; JPMorgan dinged over 1MDB; PE firms regret plunging into subprime auto; someone just put a million bucks on bitcoin $50,000; yes, there is a crypto dominatrix; and more.
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(Trump image courtesy Flickr user Gage Skidmore)

(Trump image courtesy Flickr user Gage Skidmore)

Companies are rushing to announce special bonuses and pay hikes after the GOP tax plan (CNBC)
Fifth Third Bancorp will pay more than 13,500 employees a bonus and raise the minimum wage of its workforce to $15 an hour after the passage of the Republican tax plan that will cut the bank's corporate tax rate. Wells Fargo, meanwhile, also said it would be boosting its minimum wage for employees to $15 an hour, which was prompted by the tax plan. The banks will also target $400 million in donations to community and nonprofit organizations next year.

Swiss find serious shortcomings at JPMorgan in 1MDB case (Reuters)
Swiss financial watchdog FINMA said on Thursday the Swiss subsidiary of U.S. bank JPMorgan had committed serious anti-money laundering breaches in relation to Malaysian sovereign wealth fund 1MDB. The case adds to the political storm that has raged for more than two years over the scandal at 1Malaysia Development Berhad (1MDB), the focus of money-laundering investigations in at least six countries including Singapore, Switzerland and the United States.

A Million-Dollar Bet That Bitcoin Will Hit $50,000 (WSJ)
Daily trading records released Wednesday by LedgerX show that an unidentified trader or traders entered the bullish bets using bitcoin call options that expire next December. The trade wagering on a move to $50,000 was the first of its kind on LedgerX. If bitcoin is below $50,000 on Dec. 28, 2018, the options will expire worthless, and the $1 million will be lost. If bitcoin rises above that level, the options will give their owners the right to buy 275 bitcoins for $50,000 apiece—a transaction that would cost about $13.8 million.

Subprime Auto Defaults Are Soaring, and PE Firms Have No Way Out (BBG)
Private-equity firms that plunged headlong into subprime auto lending are discovering just how hard it might be to get out. A Perella Weinberg Partners fund has been sitting on an IPO of Flagship Credit Acceptance for two years as bad loan write-offs push it into the red. Blackstone has struggled to make Exeter Finance profitable, despite sinking almost a half-billion dollars into the lender since 2011 and shaking up the C-suite multiple times. And Wall Street bankers in private say others would love to cash out too, but there’s currently no market for such exits.

The long history of dodgy art “investing” (FT Alphaville)
Many aficionados believe the use of the art market to shield assets from the authorities is a modern phenomenon. New research by Kim Oosterlinck suggests otherwise. Art was a popular way to store wealth within Nazi-occupied France because it was relatively easy to transport and would maintain its value better than the normal alternatives. Oosterlinck notes that “the Occupation period provided huge profit opportunities for galleries.” These profit margins were worth paying by buyers, since the artworks purchased “outperformed all other investment opportunities” including shares, bonds, and gold.

This dominatrix made men mine $1 million in cryptocurrency for her (Marketwatch)
MarketWatch: Do you cash out your crypto or hold it?
Theodora: I hold it but it depends on the currency — I have my favorite currencies that I am betting on. Bitcoin could crash in two days, you don’t know what’s going to happen, so if you have enough to invest in smaller currency you should.
For me, it’s play money. You have to bet on several currencies to see what will happen, and if it’s your main source of income you have to be smart with it.
MarketWatch: How do you decide what to invest in?
Theodora: Funnily enough I learned via my clients because lots of them are high profile businessmen, so they know about money.

Apple Throttles iPhones That Have Old Batteries (But Didn't Tell You About it) (Motherboard)
Apple told TechCrunch that it throttles iPhone performance to prevent the phone from being shut down if a performance spike draws too much power. Lithium-ion batteries lose capacity over time, so such a system is fine and makes sense. What doesn’t make sense and is indefensible is that Apple has not been forthright about this behavior. What makes it worse is that Apple does not make it easy to replace the battery yourself, discourages third party repair, and doesn’t have the first party repair infrastructure to handle large numbers of in-store battery swaps, especially in states that don’t have lots of Apple Stores.

Estonia, the Digital Republic (New Yorker)
“If everything is digital, and location-independent, you can run a borderless country,” Kotka said. In 2014, the government launched a digital “residency” program, which allows logged-in foreigners to partake of some Estonian services, such as banking, as if they were living in the country. Other measures encourage international startups to put down virtual roots; Estonia has the lowest business-tax rates in the European Union, and has become known for liberal regulations around tech research.

Thanks to Marc Cohodes, We’re Back to the Bad Old Days at Overstock.com (White Collar Fraud)
When it comes to the integrity of its CEO and the longtime practice of hounding critics, there isn’t a “new Overstock” or “new Patrick Byrne” any more than there was a “new Nixon” in 1968. Byrne, who has refrained from antics in recent months, now has Cohodes to roll down in the mud for him. He has become the kind of stock promoter that the Cohodes I knew a short while ago, before he loaded up on Overstock shares, would have found disgusting.

Alcohol level in air at fraternity party registers on Breathalyzer (ABC7)
Police say so much alcohol was being consumed at an American University off-campus party that the air inside the house registered a .01 on a Breathalyzer. Officers broke up the party at a house in Bethesda, Maryland last month, where around 70 underage kids were attending a "Tequila Tuesday" party inside.

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(Trump image courtesy Flickr user Gage Skidmore)

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The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview. U.S. Tax Cheats Picked Off After Adviser Mails It In (Bloomberg) Everybody knows the danger of sending things inadvertently in an e-mail. Beda Singenberger’s case shows you also have to be pretty careful when you mail things the old-fashioned way. Over an 11-year period, federal prosecutors charge, Swiss financial adviser Singenberger helped 60 people in the U.S. hide $184 million in secret offshore accounts bearing colorful names like Real Cool Investments Ltd. and Wanderlust Foundation. Then, according to a prosecutor, Singenberger inadvertently mailed a list of his U.S. clients, including their names and incriminating details, which somehow wound up in the hands of federal authorities. Now, U.S. authorities appear to be picking off the clients on that list one by one. 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