from Counterparties:

Buying a tax break

By Ben Walsh
May 8, 2014

The UK tax rate on profits made from UK patents is just 10%. The nominal US corporate tax rate is 35%. Because of that, US pharmaceutical company Pfizer has spent the last four months trying to acquire London-based AstraZeneca, the maker of heartburn drug Nexium and cholesterol-lowering Crestor. The problem, of course, is that neither AstraZeneca’s board nor the British government seems particularly fond of the tax-avoidance play.

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Winning BID

By Ben Walsh
May 6, 2014

Seven months ago, Dan Loeb sent an acerbic letter to Sotheby’s, disclosing he owned 9.3% of the auction house’s shares. The Third Point hedge-fund founder demanded several board seats, cost cutting, and the CEO’s resignation.

from Counterparties:

Mr Markets: Remembering Gary Becker

By Ben Walsh
May 5, 2014

Economist Gary Becker, the Nobel Laureate who embodied and helped define what it means to be a Chicago school economist, died on Sunday at age 83. He “was the most important social scientist in the past 50 years”, writes Justin Wolfers. No economist since Marx, Wolfers says, has been as influential in changing the way we think about the social sciences. Becker “had the audacity to suggest that virtually every aspect of human behavior was amenable to economic analysis”.

from Counterparties:

Letting the sun shine in

By Ben Walsh
May 1, 2014

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The market is finally doing clean energy a favor. Kyle Chayka writes in Pacific Standard that the price of solar energy has been “falling like a meteor over the past several years, even dipping below” some fossil fuels. Last year, solar energy was already as cheap as conventional sources in Germany, Italy, and Spain, achieving what the energy industry calls grid parity. This scares traditional utilities, the Washington Post’s Matt McFarlandwrites:

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BofA: Too big to fail a math test

By Ben Walsh
April 29, 2014

Bank of America has joined Citi in the dubious group of banks who have failed the Fed’s stress test twice. The Federal Reserve announced yesterday that the bank would have to resubmit its capital plan due to incorrectly reported data.

from Counterparties:

Square’s dance

By Ben Walsh
April 21, 2014

Five months ago, Square was talking to Goldman Sachs and Morgan Stanley about a 2014 IPO. Now the payments company is trying to sell itself before it runs out of cash. The WSJ reports that Google discussed purchasing the company, whose card reader plugs directly into mobile phones. Google’s interest in buying Square was reported earlier this month by Jessica Lessin. Apple and PayPal are also potential acquirers, according the WSJ and confirmed by Forbes.

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Ex-ecutive pay

By Ben Walsh
April 17, 2014

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In January, fifteen months after he joined Yahoo, chief operating officer Henrique de Castro was firedSEC filings show that the company paid him $58 million to walk out the door, or around $130,000 per day of service, weekends included.

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Chart of the day: Goldman’s shrinking FICC

By Ben Walsh
April 17, 2014

Goldman Sachs released its first-quarter earnings this morning. Reuters' Lauren LaCapra reports that profit was down 11% compared to last year and revenue from fixed income, currency, and commodities (FICC) was down 11% compared to last year. LaCapra writes that "since 2009 - when markets flourished briefly in the aftermath of the financial crisis," Goldman's FICC business has been declining steadily as a portion of its overall revenue.

from Counterparties:

The housing density is too damn low

April 16, 2014

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Your rent really is too damn high.

Kim-Mai Cutler has a long, detailed explainer on San Francisco’s real estate crisis inTechCrunch. To begin with, she says, there’s just not enough supply: “San Francisco has a roughly 35% homeownership rate. Then 172,000 units of the city’s 376,940 housing units are under rent control”, a number equal to a remarkable 75% of the city’s rental units. That doesn’t leave much for the rental market. As a result, any rents which can rise, will rise. (Marc Andreessen notes that tech has been driving up prices in the area for at least 30 years, and population boom cycles have been part of the city’s history since the Gold Rush.)

from Counterparties:

Explanatory journalism

By Ben Walsh
April 11, 2014

Something troubling is happening in the stock market. Not only are markets are down – the Nasdaq and the S&P 500 are down 3.1% and 2.6%, respectively, this week – but no one has come up with a convenient, compelling (and misleading) reason why. Never mind, says Matthew Klein, that US stocks are up 30% since the start of 2013. We need to know why they are down this week, as Barry Ritholz writes, because we crave meaning in a random world.