Winklevoss Twins Will Launch New Bitcoin Exchange , Plus BP Finally Pays Up For The 2010 Oil Spill

morning-brew

“You cannot change any society unless you take responsibility for it, unless you see yourself as belonging to it and responsible for changing it.” — Legendary activist Grace Lee Boggs, who died yesterday at the age of 100. Boggs was a lifelong activist, supporting such revolutionary causes as civil rights, Black Power and the feminist movement.

MARKET SNAPSHOT 

Merry Monday

  • Monday provided quite the kickstart to the week, with rallies occurring across all U.S. markets. Names to know: Twitter, which jumped nearly 7 percent after officially naming Jack Dorsey as its permanent CEO, and General Electric, which rallied over 5 percent after noted hedge fund Trian announced it has taken a cool $2.5 billion stake in the company.
  • Glencore, the British mining and commodities giant that has been decimated by a huge debt burden and falling commodities prices, turned back on the right path with a 17 percent rebound after reports that the company is considering selling a portion of its agricultural business.
  • Continuing the bullish news, oil finished at its highest level in two weeks on renewed hopes that China will take action to stimulate its economy, which would strengthen energy demand from the most populous country on the planet.
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WORLD MACRO 

Trans-Pacific Partnership: Mission Accomplished

Yesterday, the United States and 11 other countries in the Pacific reached a historic global trade agreement, the Trans-Pacific Partnership. Considering these eleven countries make up 40 percent of the world’s GDP, this pact is pretty legendary:

  • Who’s involved? Here’s the full list: the U.S., Canada, Chile, Australia, New Zealand, Vietnam, Japan, Malaysia, Mexico, Peru and Singapore.
  • What does this pact do? It creates a “free trade zone” in the Pacific Rim, knocking down many tariffs and barriers to trade and making it cheaper to import and export goods.
  • Why is this good? The deal is expected to help out U.S. exports, create many high-paying jobs, add billions to the global economy and even improve environmental and labor standards in the Pacific.
  • What could go wrong? Critics are worried that the deal could make jobs and businesses more concentrated overseas as companies exploit lower wages in developing economies. Also, the details of the agreement have been kept under lock and key, raising a red flag in terms of transparency.
  • What’s next? The agreement moves on to Congress and the legislatures of the other countries before it can be implemented. Meanwhile, China will be keeping a watchful eye, as it was not one of the countries included in the pact.
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CORPORATE PRIMER

American Renewal

American Apparel: down but not out. The clothing manufacturer took one in the jaw yesterday by filing for bankruptcy in order to restructure its massive debt, sending its stock price down all the way to 11 cents. It’s not all bad news—American Apparel has secured financing of up to $70 million to reorganize and recapitalize its business, and has entered into a deal that could potentially reduce its total debt by $165 million during restructuring.

BP Finally Pays Up

The oil and gas superpower finally handed over $20.8 billion in penalties for the Deepwater Horizon oil spill of 2010 (about time). The environmental disaster was horrific, staining miles of shoreline with oil, damaging local ecosystems and economies and displacing American families. Fittingly, the settlement is the largest pollution punishment in U.S. history.

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TODAY IN TECH

Microsoft Goes Hard

Microsoft would rather be a big fish in a medium-sized pond than a small fish in a big one. The tech giant is planning to announce two new high-end Lumia smartphones today. But due to its poor sales track record with Windows phones, it’s now targeting specific niches, such as business users, rather than the mass market, which hasn’t exactly been rushing to get in on the Windows phone non-craze. That’s not all—Microsoft is also planning on using its recent Windows 10 release to drive interest for its Windows phones.

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OTHER STORIES

  • DuPont CEO steps down
  • Nestle in talks to merge international ice cream ops
  • Farmers struggling with “cage-free” craze
  • Supreme Court denies request to hear insider trading case
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ECONOMIC CALENDAR

  • Monday: ISM Non-Manufacturing Index
  • Tuesday: U.S. Trade Gap, Yum Brands/PepsiCo Earnings
  • Wednesday: Monsanto Earnings
  • Thursday: FOMC Minutes Release, Weekly Jobless Claims, Alcoa/Domino’s Earnings
  • Friday: Import/Export Prices

TWO BIT TWINS

Remember the Winklevoss twins—aka the Facebook guys who aren’t Mark Zuckerberg? Well, they’re trying to make a new name for themselves: specifically, the name Gemini. Gemini is a bitcoin exchange started by the twins, and the company just received approval from the New York State Department of Financial Services as a chartered limited liability trust company. So what does this mean? The Brew is here to help:

  • A lot of companies that deal with Bitcoin receive a BitLicense from the NYSDFS, but Gemini’s approval was subject to stricter regulations.
  • Why take the hard route? According to CEO Tyler Winklevoss, the charter means Gemini will be an exchange both “Main Street and Wall Street can use and trust.”
  • Gemini deposits can be in both Bitcoin and U.S. Dollar, and will be held in a New York-based, FDIC insurance-eligible bank—a big deal, since most traditional financial institutions aren’t a big fan of Bitcoin.
  • The plan isn’t without risk: don’t forget about Mt. Gox, a Bitcoin exchange which shut down last year after losing over $450 million. The hope is Gemini will be much more secure than its less-regulated predecessors.

INTERVIEW QUESTION OF THE DAY

What’s the size of the market for disposable diapers in China? (Answer)

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BUSINESS TERM OF THE DAY

Capitalization Rate — The rate of return on a real estate investment property based on the income that the property is expected to generate. The capitalization rate is used to estimate the investor’s potential return on his or her investment.

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FOOD FOR THOUGHT

9.6 percent: portion of the world that will live in extreme poverty this year, as estimated by the World Bank, down from 12.8 percent in 2012.

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