5 top finance stories, and how Bitcoin is like a pyramid scheme

Sam Ro
Managing Editor
What’s news?

Here are the top finance stories right now:

Democrats say they have deal with Trump on young immigrants (AP): “The top House and Senate Democrats say they have reached agreement with President Donald Trump to protect thousands of younger immigrants from deportation and fund some border security enhancements — not including Trump’s coveted border wall. The agreement represents the latest instance of Trump ditching his own party to make common cause with the opposition. It was announced by Senate Democratic Leader Chuck Schumer and House Democratic Leader Nancy Pelosi late Wednesday following a White House dinner that Republican lawmakers weren’t invited to attend. It would enshrine protections for the nearly 800,000 immigrants brought illegally to this country as kids who had benefited from former President Barack Obama’s Deferred Action for Childhood Arrivals, or DACA, program, which provided temporary work permits and shielded recipients from deportation.”

Trump bars Chinese-backed firm from buying U.S. chipmaker Lattice (Reuters): “U.S. President Donald Trump blocked a Chinese-backed private equity firm from buying a U.S.-based chipmaker on Wednesday, sending a clear signal to Beijing that Washington will oppose takeover deals that involve technologies with potential military applications. Canyon Bridge Capital Partners’ planned $1.3 billion acquisition of Lattice Semiconductor Corp was one of the largest attempted by a Chinese-backed firm in the U.S. microchip sector and was the first announced deal for the buyout fund, which launched last year with a focus on technology investment.”

China’s economy losing some steam as investment growth hits 18-year low (Reuters): “China posted a rare flurry of disappointing data on Thursday — including its slowest growth in investment in nearly 18 years — suggesting the world’s second-largest economy is finally starting to lose some momentum as borrowing costs rise. Fixed-asset investment, a key growth driver for the world’s second-largest economy, grew 7.8 percent in January-August from a year earlier, the weakest pace since December 1999 and cooling from 8.3 percent in January-July. The main drag appeared to be a slowdown in infrastructure investment due to a significant drop-off in government fiscal spending over the past two months, analysts said.”

Tenet Healthcare is exploring options including a possible sale of the company (WSJ): “Tenet Healthcare Corp., facing shareholder-activist pressure, is exploring strategic options including a possible sale of the hospital company, according to people familiar with the matter. Tenet is working with investment banks Lazard and Barclays PLC on a range of options and has started to arrange meetings with possible buyers, the people said.”

Congress wants this $2 trillion tax break. US companies don’t (Bloomberg): “Congressional tax writers want to offer U.S. companies an “unprecedented” way to slash their tax bills by investing in new equipment. But firms that stand to benefit most are saying no thanks, just give every company a bigger rate cut . A lobbying group for companies including AT&T Inc., Verizon Communications Inc. and Intel Corp. — all of which were among the biggest spenders on equipment and facilities over the past 12 months — says a major cut to the current 35 percent corporate tax rate is the better way to drive economic growth. ‘Making America great starts with the rate — ideally in the low 20s,’ said James Pinkerton, co-chair of the RATE Coalition, which has dozens of corporate members. ‘Every other tax decision is subordinate to what the rate is.’”

Market update:

World markets are a bit lower. In Asia, Japan’s Nikkei fell 0.3% and Hong Kong’s Hang Seng slid 0.4%. Europe is mixed with England’s FTSE 100 flat while Germany’s Dax is down 0.3%. S&P 500 futures are up 1 point while Dow futures are down a point. The major currencies and commodities are little changed.

… A few more headlines:

N.Korea threatens to “sink” Japan, reduce U.S. to “ashes and darkness”

Pharma Bro Martin Shkreli has bail revoked, heads to jail

Ryan backs off promise not to add to deficit (AP Exclusive)

U.S. probing high-pressure mortgage sales that target veterans

Samsung enters autonomous driving race with new business, funding

LaCroix fizzy water is everyone’s favorite. Nobody knows what’s in it (WSJ)

What’s ahead Thursday:

Via Yahoo Finance’s Myles Udland: “Investors will have two pieces of economic data to sift through with the weekly report on initial jobless claims and the monthly report on inflation due out in the morning. The claims number will be more closely watched by investors than usual given that some distortions owing to the recent hurricanes in Texas and Florida could impact this figure, which tracks weekly first-time filings for unemployment insurance. Inflation data will be a key point for Fed watchers, as “core” inflation — which excludes the more volatile costs of food and gas — is expected to have risen just 1.6% over last year in August, well below the Fed’s 2% target. Recall that the next Fed interest rate decision is due out on September 20 with the next FOMC meeting kicking off on Tuesday, September 19.”

Something to think about: Bitcoin a pyramid scheme?

A day after JPMorgan CEO Jamie Dimon characterized Bitcoin as a “fraud,” JPMorgan strategist Marko Kolanovic circulated a research note comparing the market for cryptocurrencies like Bitcoin with pyramid schemes. From his note: “[A]nother worrying aspect of cryptocurrencies are some parallels to fraudulent pyramid schemes. Initiator of a pyramid scheme often ensures ownership of a disproportionally large share of future profits. For instance, in the case of bitcoin, it is believed that an unknown person (or persons) known as ‘Satoshi Nakamoto’, before disappearing, mined the first 1­2M coins or ~10% of the coins that will ever exist ($4­8bn USD current value). While initial mining requires a negligible effort, the benefits for subsequent participants start diminishing. Mining becomes progressively more difficult, and eventually unprofitable, marking the likely end of a scheme.”

Yahoo Finance originals worth checking out:

What really happened with Apple’s Face ID demo ‘faill’

Bernie Sanders’ health care plan is headed in the wrong direction

Uber’s rating system is getting better

How real estate developers are luring millennial homebuyers