DealBook Briefing: Is the Bitcoin Rocket Starting to Stall?

Good Friday morning. A bad day for Bitcoin, just as more people are trying to pile in. Why is Eric Schmidt leaving Alphabet? And a showdown over a government shutdown is punted to next month.

A note to readers: This is the last DealBook Briefing for 2017. Thanks for reading and for your feedback — we’ve appreciated every single comment and email. We’ll have more in store when we return on Jan. 2. Happy holidays!

Where Bitcoin was on Sunday: $19,511

Where Bitcoin is this morning: $13,577

What Stephen Innes, the head of Asia-Pacific trading for Oannes, told Richard Frost and Eric Lam of Bloomberg:

What does a top look like?

Maybe like a host of companies rebranding themselves as having something to do with digital currency or blockchain technology. What gained a huge amount of attention yesterday, of course, was the beverage maker Long Island Iced Tea Corp. announcing that it was changing its name to Long Blockchain Corp. and pivoting to virtual money. (It will still maintain a beverage division, of course.)

What happened was predictable:

But maybe we’re not at a top. Shane Chanel, a wealth adviser at ASR Wealth Advisers, told CNN Money that investors may just pile into other digital currencies, adding, “I feel the cryptocurrency madness is only beginning.”

Goldman Sachs is jumping in

The firm is opening a digital currency trading desk, according to Bloomberg. The firm already clears Bitcoin futures, one of the few banks on Wall Street to do so.

Speaking of a Wall Street firm getting into Bitcoin, who said this late last month?


Today’s DealBook Briefing was written by Andrew Ross Sorkin (@andrewrsorkin) in New York, and Michael J. de la Merced (@m_delamerced) and Amie Tsang (@amietsang) in London.


Eric Schmidt was more than the adult in the room during the early days of Google. He was the technology giant’s person in Washington, Brussels and Beijing. But does his departure as executive chairman next month mean that his services are no longer vital?

It comes as Alphabet, now Google’s parent company, and other tech giants need friends in political capitals around the world — and Mr. Schmidt’s connections to previous administrations like the Obama White House may not be as useful.

From Dai Wakabayashi, Katie Benner and Claire Miller of the NYT:

The personal angle

There was no mention in Google’s announcement about why Mr. Schmidt left. But one issue that has hung in the air is the executive’s well-known personal life — including the bringing of girlfriends to corporate events, the World Economic Forum in Davos and other occasions.

The Information reported recently on how the hiring of Marcy Schmidt, a marketing expert who was in a relationship with Mr. Schmidt, at the company’s Android division caused some consternation in the unit.

Critics’ corner

• Shira Ovide writes, “Google isn’t in desperate need of more adults. But the rest of the technology industry might be.” (Gadfly)

• Jennifer Saba writes, “Hiring a strong, independent chairwoman would reflect well on co-founders and controlling shareholders Larry Page and Sergey Brin in more ways than one.” (Breakingviews)

Or, put another way, government funding has been extended until Jan. 19. The deadline was today.

Yesterday’s votes in Congress to prevent a shutdown prevented Republicans from suffering an embarrassment so soon after passing their tax overhaul. But here’s what will confront lawmakers when they return to Washington next month:

• What to do about the young immigrants known as Dreamers

• Long-term funding for the Children’s Health Insurance Program beyond March

• The future of the warrantless wiretap program run by the N.S.A. and the F.B.I.

The Washington flyaround

• Conservative groups plan to spend millions on advertising extolling what they view as the benefits of the Republican tax cuts to a deeply skeptical public. (Politico, NYT)

• Republicans are scrambling to address political weaknesses ahead the 2018 midterm elections — and that led to a loud dispute at the White House this week. (Politico, NYT)

• A federal judge dismissed a lawsuit accusing President Trump of violating the Constitution by continuing to own and profit from his business empire, arguing that the plaintiffs didn’t have legal standing. (NYT)

• The bonuses that AT&T is paying employees because of the tax bill appear auspiciously timed: Under the current tax code, they amount to a $70 million deduction for the expense, while the deduction would be $42 million under the new tax rates. (WSJ)

• Ford’s C.E.O., Jim Hackett, publicly apologized for nearly three decades’ worth of harassment by employees at two Chicago plants, an issue that was the subject of a recent NYT investigation. (NYT)

• Six symphonies have cut ties to the famed classical music conductor Charles Dutoit after four women accused him of sexual assault. (AP)

• Major League Baseball had pushed out Bob Bowman, the longtime head of the league’s former digital platform, after knowing about accusations of dating subordinates and shoving and verbally abusing colleagues. (WSJ)

Sure, the iPhone maker’s shares have jumped this year, pushing its market value into uncharted territory above $900 billion. How long can the tech giant continue to breathe that rarefied air?

Putting Apple’s market cap into context

Courtesy of Jeff Sommer and Karl Russell of the NYT:

• When adjusted for inflation, Apple’s market capitalization just recently surpassed Microsoft’s record high. At the heights of the dot-com bubble in 1999, Microsoft’s market capitalization peaked at $647 billion.

• Apple’s share of the total stock market doesn’t even rank in the top 20, going back to 1925.

Is Apple doing better in China?

Morgan Stanley says that the iPhone X is helping stanch the flow of customers defecting from Apple to makers of cheaper smartphones. In a research note, the bank said that Apple has a 57 percent retention rate among iPhone users when they upgrade. That’s 20 percentage points higher than any other brand in China.

Why is the country important to Apple? It accounted for nearly 20 percent of iPhone sales last quarter — and the iPhone accounts for more than 55 percent of Apple’s sales during that time.

The battery controversy

Yes, Apple is slowing down the performance of older iPhones. No, it’s not meant to force customers into buying newer models, it says.

The tech flyaround

• Facebook signed a deal with Universal Music Group that lets its platforms carry songs from the music label’s artists, settling a long-running dispute. (Bloomberg)

• Qualcomm has gotten a permit to test self-driving cars on public roads in California. (CNBC)

• We knew Furbys were trouble: The latest model, as well as other toys, could be vulnerable to hackers and identity thieves. (NYT)

• Boeing is seeking to buy the Brazilian aircraft maker Embraer to try to gain a bigger foothold in the regional jet market — but is awaiting the blessing of Brazil’s government. Separately, a former Embraer executive pleaded guilty to U.S. charges of bribing a Saudi Aramco official to secure a sale. (WSJ, Reuters)

• Liberty Global agreed to sell its Austrian unit to Deutsche Telekom for 1.9 billion euros, or $2.25 billion, potentially helping set up a bigger deal with Vodafone down the road. (Reuters, FT)

• Roche agreed to buy Ignyta, a maker of an experimental cancer treatment, for $1.7 billion. (Bloomberg)

• Royal Dutch Shell has agreed to buy First Utility, a British-based electricity provider, for an undisclosed amount to expand its non-oil business. (NYT)

• Mark Ein, a Washington-based investor, said that he would buy the Washington City Paper after its current owner put the independent newspaper up for sale. (Washington City Paper)

It did so by completing transactions with the controversy-ridden Malaysian government investment fund that have now gotten the attention of the Swiss financial regulator Finma.

The Swiss agency will install a person inside the bank to review its money-laundering policies, “given the inadequacy of the bank’s controls.” JPMorgan said that the activity had taken place years ago, and that the firm has since improved its staff training and surveillance operations.

Potential more scrutiny ahead: Finma said it had referred to case to the U.S. Office of the Comptroller of the Currency.

U.S. lawmakers are calling for increased scrutiny of the Chinese conglomerate from the Committee on Foreign Investment in the United States, or Cfius, the WSJ reports.

The Treasury Department, the Justice Department and the Defense Department have endorsed a bill that would make it easier for Cfius to reinvestigate past foreign deals.

In HNA fund-raising news: The conglomerate pledged part of its stake in Postal Savings Bank of China to borrow money as concerns about its debt load have started to weigh on its finances. And it still does not have approval to buy a controlling stake in SkyBridge Capital, Anthony Scaramucci’s investment firm.

• John Schnatter, who blamed the N.F.L.’s handling of the national anthem controversy for Papa’s John’s declining sales, will step down as chief executive. (NYT)

• Vince McMahon, the chairman and chief executive of World Wrestling Entertainment, filed details with the S.E.C. of a sale of $100 million of shares to fund an exploration of opportunities in other sports, including football. (ESPN)

• MetLife hired a law firm to investigate how it failed find and pay pension benefits to thousands of people. It said it would hire a specialty firm to locate these people. (WSJ)

• AC Milan, the city’s oldest football club, is struggling to find investors willing to refinance its more than $300 million in high-interest loans from Elliott Management. (FT)

• Timing is of the essence when making stock donations, as Michael Milken, the former junk-bond financier knows after two gifts to charity just before the shares plunged in value. (WSJ)

• The online gambling company, GVC, will buy the British bookmaker Ladbrokes Coral in a deal worth as much as 4 billion pounds, or nearly $5.4 billion. (Sky)

• UBS has to pay $903,300 to one of its former senior strategists who accused it of illegally firing him for blowing the whistle on attempts by commercial mortgage-backed securities traders to influence his independent research reports. (Bloomberg)

• More American universities than ever are sitting on endowments worth at least $1 billion, helped by heavy investments in stocks. (Bloomberg)

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