Platinum Partners Hedge Fund Pulls A Madoff, Plus The Industries With The Top Christmas Bonuses

by 10 months ago

morning-brew-new

Enjoy your December 20th hand-crafted Brew!

QUOTE OF THE DAY

“Convenient target” — Apple’s lead lawyer, complaining that the European Union antitrust chief is simply driven by the “headlines” of targeting the world’s most valuable company. Yesterday, Apple officially appealed a $14 billion tax demand from the EU. Not like a ton of money is on the line here or anything.

Market Snapshot

  • U.S. markets finished higher in a choppy session of trading after investors brushed off two tragic events in Ankara and Germany yesterday, adding to rising geopolitical risk that sent treasury bonds and gold up heavily

Is That You, Bernie Madoff?

…Nope, just some serious déjà vu. Story time: Platinum Partners is a hedge fund that specializes in investing in illiquid securities—aka not your typical Apple stock, we’re talking stuff like loans to bankrupt companies and investments in obscure energy securities. The fund gained fame for its remarkable performance—turns out it was a little too remarkable. After falling into a cash crunch when investors tried to pull their money out, Platinum allegedly overvalued its positions and used new investor capital to pay back old investors (pretty Ponzi-esque, huh?). This is one of the biggest cases of defrauding investors since Madoff, and seven of the firm’s top executives were arrested yesterday. All told, investors may have been swindled out of $1 billion. Yikes.

Guilty

…But not charged. Let’s start with the guilty part: yesterday, International Monetary Fund (IMF) chief Christine Lagarde was found guilty of negligence. Lovely. The second part: although Ms. Lagarde was guilty while she was the French finance minister, the French court still decided that she shouldn’t be punished. That means no jail time, and not even a fine. How did we get here in the first place? The current head of the IMF was accused of allowing misuse of public funds in 2008, after settling a legal battle between France and businessman Bernard Tapie. In summary, no jail time, no fine and she might even get to keep her job. The IMF’s executive board is expected to convene shortly to “consider the most recent developments.” Nothing like some good ol’ law and order drama.

Picture Your First Self-Driving Car

…Is it a minivan? It very well might be. Just one week after spinning off its autonomous driving unit into its own division (charmingly named Waymo), Google (+0.33%) and Chrysler (+0.80%) have debuted a whole fleet of self-driving Chrysler Pacifica minivans. As autonomous vehicles have become the next big thing in auto, the two companies partnered up earlier this year. By the looks of it, they’ve already been hard at work.

BlackBerry Puts It In Drive

…Or more like a pivot. We’ve got more self-driving news: you know BlackBerry (+1.72%) for its dying smartphones. But the company isn’t dead yet. Yesterday, it opened its new autonomous car research center in Ontario. Wait…BlackBerry? It’s not talked about much, but the Canada-based tech firm’s software is already employed in tens of millions of cars worldwide through its subsidiary, QNX. While its smartphones haven’t fared well, the company plans to leverage its proven software success in the industry of the future. Better yet, it’s already secured a top tier deal with Ford to supply the software for its self-driving cars. Stay tuned.

You’re Not Alone

…Unfortunately. Yesterday, Facebook (-0.53%) launched Group Video Chat, which looks pretty much like a direct challenge to live video chatting app Houseparty. With Group Video Chat, you can talk to up to six of your friends through a split screen (meaning you can all see each other)—and if you’re feeling extra social, Facebook allows up to 50 people to get together on one call. Group Video Chat also features “3D masks“—think Snapchat filters, but on live video calls. No way was Facebook going to let Houseparty get all the video chat action without taking a bite out of its business.

Other Stories

  • Barclays is prepared to fire 7,000 low-volume trading clients
  • PayPal accuses India’s largest mobile wallet company of copying its logo
  • Fairfax Financial to buy Allied World for $4.9 billion in cash and stock
  • Boeing plans further cost reductions in 2017, including voluntary layoffs

Economic Calendar

  • Monday: Janet Yellen Speech
  • Tuesday: Nike, BlackBerry, FedEx, General Mills, Carnival, CarMax, Darden Restaurants Earnings
  • Wednesday: Accenture, Bed Bath & Beyond Earnings; Existing Home Sales
  • Thursday: Rite Aid Earnings; U.S. Q3 GDP (3rd Estimate); Weekly Jobless Claims; Durable Goods Orders; Personal Income and Outlays
  • Friday: New Home Sales; Consumer Sentiment

All I Want for Christmas is a Big Bonus

Year-end bonuses are pretty great. That’s hard to argue with. But what jobs offer the highest bonuses? Luckily, LinkedIn’s new salary tool has the answers. Some might be pretty obvious, but the industries with the highest bonuses might surprise you. Here are the numbers:

  • Investment banking associates came in first at $100,000. IB analysts? They fared pretty well too—fourth-highest at $45,000. Must be nice.
  • The rest of the top five were surgeons, radiologists and medical directors, with $60,000, $47,500 and $40,000 average bonuses, respectively.
  • What about the highest bonus in terms of industry? Energy and mining. That’s right, workers in energy and mining average $10,000 in year-end bonuses.
  • The other four in the top five aren’t as surprising: hardware, software/IT, consumer goods and finance. So the main takeaway? If you want to be a big Christmas spender, go to medical school, become an investment banker or go into energy and mining.

Interview Question of the Day

What’s the best performing stock in the S&P 500 in 2016? How about the worst performing? (Best) (Worst)

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Business Person of the Day

Vincent “Vinnie” Viola, owner of the Florida Panthers and former Army officer, has been nominated to be the next Secretary of the Army by president-elect Trump. And he brings with him a net worth of over $2 billion, adding to what will likely be the wealthiest administration ever.

Food for Thought

As college tuition continues to rise, enrollment in higher education continues to drop. In 2016, total college enrollment fell by 1.4%. For-profit colleges had it worst, with a 14.5% decline. Where’s the silver lining in all of this? Public four-year schools. They saw a 0.2% increase thanks in large part to an improvement in educational quality.


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