Good Thursday morning. This just in: Morgan Stanley reported $686 million in fourth-quarter profit, while fixed-income trading revenue fell 46 percent. What to think of Apple’s big cash repatriation. And how Goldman Sachs stumbled.
As it repatriates most of its $252 billion cash hoard from foreign subsidiaries, Apple has become a triumphant example for Republicans of what the new tax law can do.
President Trump’s reaction:
Perhaps more important than the one-time $38 billion that Apple will pay in tax is what said it would do with the rest of the money: 20,000 jobs and a new domestic campus, among other initiatives.
Tim Cook said in a statement:
The big question: How much of an economic effect will this have? The company says more than $350 billion over the next five years, but how much of that goes beyond what it would have spent anyway is unclear. (For starters, its new campus won’t be as ambitious as Amazon’s planned HQ2.)
The tax flyaround
• Verizon will save nearly $17 billion because of the new tax code’s effect on its deferred tax liabilities. (WSJ)
• What corporate America says will come of the tax overhaul: more annual savings, bigger pension contributions and larger stock buybacks. (WSJ)
Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Amie Tsang in London.
Most of its businesses did well in the fourth quarter. Then there was fixed-income trading.
Though Goldman’s $1.9 billion loss for the fourth quarter was because of a $4.4 billion charge related to the new tax law, the big number was 50 percent. That was how much its so-called FICC (fixed-income, currency and commodities) trading revenue had fallen.
Put another way: Goldman’s FICC revenue for the quarter was $1 billion — the amount the division brought in nearly every two weeks at its peak.
• Lex suggests that Goldman now “wants to execute more perfunctory corporate transactions of a kind traditionally handled by Bank of America and its ilk.” (FT)
• Aaron Back writes of a dip in Goldman’s share price, “Any near-term weakness could prove to be a buying opportunity.” (Heard on the Street)
On David Solomon’s wine collection
You may already know Goldman’s co-president as a top-flight investment banker with a taste for fine food. (And almost definitely as DJ D-Sol.) But he’s also allegedly the victim of wine theft by his former assistant, Nicolas De-Meyer, who was arrested this week.
• Among the stolen wines were seven bottles of Domaine de la Romanée-Conti, a Burgundy known as “liquid velvet,” that had cost him $133,650.
• Overall, the value of the stolen bottles was over $1.2 million.
• The wine storage area in Mr. Solomon’s Manhattan home can hold 1,000 bottles.
What’s next: House Republicans plan to introduce a short-term funding bill today or tomorrow to keep the government operating for a month. But it’s unclear whether Democrats would back it without a deal on immigration, or if House Republicans have the votes to pass it on their own.
How close lawmakers are to an immigration compromise: Not very.
Here’s Senator John Cornyn, Republican of Texas, quoted in the WSJ about the current state of affairs:
More on immigration: John Kelly, the White House chief of staff, told Democratic lawmakers that some of Mr. Trump’s immigration policies — including the border wall — were “uninformed,” according to the WaPo. Mr. Kelly also reiterated that the president supported permanent legal protection for the young immigrants known as Dreamers.
The Washington flyaround
• Steve Bannon will be interviewed by Robert Mueller’s investigators instead of testifying before a grand jury, according to an unidentified person, signaling that he’s cooperating. (NYT)
• A White House lawyer had asked Mr. Bannon to assert executive privilege before the House Intelligence Committee. Mr. Bannon slipped up. (Bloomberg, Axios)
• Two news stories this week offered more details about a purported relationship between Mr. Trump and a porn star professionally known as Stormy Daniels. (NYT)
The Dow Jones industrial average is on a sprint again, closing yesterday above 26,000 for the first time. Naturally, some people are starting to worry.
From Corrie Driebusch, Michael Wursthorn and Chris Dieterich of the WSJ:
Pimco is in the same boat:
This post on what may be next for Alwaleed bin Talal by Jeffrey Towson, a professor at Peking University and a former employee of the prince’s Kingdom Holding, has started to circulate around the financial world. (A reminder: Mr. bin Talal has been caught up in Mohammed bin Salman’s anti-corruption purge.)
Among Mr. Towson’s forecasts:
• Mr. bin Talal would be prepared to stay imprisoned for a long time.
• He would not sign any plea deal that implies serious wrongdoing, like corruption.
Harder to predict: What will happen to Kingdom Holding, which owns stakes in Citigroup, Lyft and Twitter.
• Mike Moritz of Sequoia Capital told Silicon Valley start-ups to be more like Chinese companies, where longer work hours and a disregard for physical fitness is the norm and where discussions about “life’s inequities” are seen as distractions. (FT)
• Facebook said it would reopen and broaden an investigation into whether Russia sought to influence the 2016 Brexit vote. (NYT)
• Microsoft said that A.I. would require new laws and regulations. (Bloomberg)
• Google has created an A.I. system for creating A.I. applications. (NYT)
• Apple should try to reduce customers’ iPhone addiction, Farhad Manjoo argues in his latest column. (NYT)
• See which pieces of art the WSJ’s portraits of Warren Buffett, Sheryl Sandberg and more look like, according to Google’s hit Arts & Culture smartphone app. (Pieter Anthony Wakkerdak’s “Portret van Kenau Simonsdochter Hasselaer” and BToy’s “LizTaylor,” for the record.) (WSJ)
Earlier this week, the virtual currency dropped below $10,000. Now, it’s above $11,000.
It’s been a wild/scary ride in particular for newcomers who were late to the Bitcoin game. This is from a Reddit user who persuaded family members to buy cryptocurrency late last year:
The context: Bitcoin’s run has dwarfed the Nasdaq run of the dot-com boom and, potentially, Dutch tulip-mania, according to Bloomberg.
More in virtual currency news: Ledger, a specialist in blockchain security technology, has raised $75 million in a fund-raising round led by Draper Esprit.
William Bain Jr., the management consulting mogul who helped turn Mitt Romney into a private equity power, died on Tuesday. He was 80.
The native Tennessean went from Vanderbilt’s alumni office to Boston Consulting Group to founding Bain & Company. Several years later, he capitalized on his firm’s relationships and expertise to found Bain Capital, where he installed Mr. Romney as C.E.O.
Here’s Mr. Romney on Mr. Bain, via the Boston Globe:
• CircleCI, a software platform, closed a $31 million series C round of funding led by Top Tier Capital Partners. Industry Ventures and Heavybit also joined the existing investors, Scale Venture Partners, Baseline Ventures, Harrison Metal and DFJ Ventures. (CircleCI)
• Starboard Value is attempting to remove the entire board at the semiconductor company Mellanox. (WSJ)
• One reason G.E. may not be so easy to dismantle: Even after years of winding down, GE Capital is a top-20 bank with $140 billion in assets. (WSJ)
• Dalian Wanda is selling hotel and development projects ahead of a March due date for $2 billion of debt. (Bloomberg)
• Celgene is in talks with Juno Therapeutics, but it may have to open its wallet again if it wants to solidify its future. (WSJ)
• CNN “won” four mentions at President Trump’s “Fake News Awards,” the NYT two. (NYT)
• Some of the largest hospital systems in the United States are responding to drug scarcity and skyrocketing prices by going into the drug business themselves. (NYT)
• The pace of China’s economic growth accelerated last year for the first time in seven years, the government says. The reality is anybody’s guess. (NYT)
• A former Department of Energy photographer is seeking whistle-blower protections after leaking photos of Secretary Rick Perry meeting with a major energy industry donor to President Trump. (NYT)
• Bonnier Corporation laid off 70 staff at its magazines, including several at the food and travel title Saveur. (NYT)
• SurveyMonkey, last valued at $2 billion, is preparing to go public later this year, according to people familiar with the plans. (Recode)
• Shari Redstone is renewing her push to merge CBS with Viacom and will propose replacing several CBS board members at the annual meeting in May, according to people familiar with the matter. (WSJ)
• Chinese bidders are circling a diabetes care business owned by Johnson & Johnson that could fetch up to $4 billion, according to five people with direct knowledge of the matter. (Reuters)
• Rolls-Royce will consider selling its loss-making commercial marine business to cut costs. (FT)
• Nomad Foods bought the British pizza company Goodfella’s Pizza for about $275 million after a two-year hiatus from deal-making. (FT)
• Canada’s Brookfield Asset Management is considering options after the serviced office group IWG rebuffed its second takeover offer. (FT)
• Cfius has cleared its first Beijing-backed takeover of a U.S. company under the Trump administration. (FT)
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