How Hedge Funds Found a New Tax Loophole: DealBook Briefing

How Hedge Funds Found a New Tax Loophole: DealBook Briefing

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And elsewhere in hedge funds: Yesterday was 13F day: Here’s what the big firms invested in.


Andrew White for The New York Times

Politics prompts a Silicon Valley legend to split

Why is Peter Thiel — the PayPal co-founder, early Facebook backer and notable Trump backer — leaving the Bay Area for Los Angeles, as the WSJ reports, citing unnamed sources?

The headline reason is his belief that Silicon Valley is too intolerant of conservatives and libertarians. But there’s an interesting second reason in the article (emphasis added):

Mr. Thiel has grown more disaffected by what he sees as the intolerant, left-leaning politics of the San Francisco Bay Area, and increasingly pessimistic about the prospects for tech businesses amid greater risk of regulation, they said.

The WSJ reports that Mr. Thiel will spend at least a bit more time working on a non-tech endeavor: a right-leaning media organization. He will still be involved in Founders Fund, the V.C. firm he co-founded, as well as stay on the boards of Facebook, the data consultancy Palantir and other tech companies.

— Michael de la Merced

Can 100 years old become the new 60? That’s the goal of Celularity.

The New Jersey-based start-up co-founded by Dr. Peter Diamandis, the founder of X-Prize Foundation, and Dr. Bob Hariri, a former Celgene executive, announced that it has raised $250 million.

The company is developing treatments for diseases from cancer to autoimmune disorders using stem cells from the placenta.

“My goal is to make it so the next generation grows up in a world where cancer is managed just like the common cold, and the body’s natural regenerative engine remains empowered throughout our lives,” said Dr. Hariri.

Celgene, United Therapeutics, Sorrento Therapeutics, Human Longevity, the Dreyfus Family Office and Section 32 took part in the series-A funding.


Richard Drew/Associated Press

Stocks investors shrug off inflation, but bond investors don’t

Asian and European stock indexes are up this morning. So are S. & P. 500 futures, indicating a strong open.

And in the bond markets? Ten-year Treasury yields are at a four-year high.

Why? The Bureau of Labor Statistics’ inflation report was higher than expected. But weaker retail sales tempered those fears — at least for equity investors.

What economists think: “The risk is now that the Federal Reserve pencils in four rate hikes [for this year] when it meets in March,” Peter Hooper, the chief economist at Deutsche Bank, told the FT.

Peter Eavis’s take

To some, the bond market is a particularly prescient predictor of economic trends. So is it picking up on an inflationary surge that the Federal Reserve likely will take too long to recognize?

But the overheating fears may be overdone. Yesterday’s January inflation report was hardly conclusive. Michael Feroli, an economist at JPMorgan Chase, said that the January increase “probably overstates the underlying trend.”

Still, even though there are reasons to believe that while the U.S. economy is breaking out of its recent rut — thanks to big tax cuts and a revival of the global economy — it may not be as vibrant as it looks.

The economic flyaround

• Reasons for doubt about the Trump administration’s economic optimism. (Upshot)

• How Harvard and others bet on markets staying calm. (WSJ)

• The stock market should be cheaper, argues Eduardo Porter. (NYT)


Charles Platiau/Reuters

Nestlé opens a path to selling its L’Oréal stake

If Nestlé won’t expand its holdings in the cosmetics giant beyond 23 percent, as its C.E.O. said during an earnings report today, that leaves one logical place to go. (Caveat: Selling might make Third Point’s Dan Loeb happy, but Nestlé doesn’t want to rush and lose out on L’Oréal’s sales growth.)

Nestlé added that its future is likely to contain more deals in the several-hundred-million range of the Blue Bottle Coffee takeover. “The sweet spot is in small to mid-sized deals, but we don’t want to rule out anything,” its C.E.O., Mark Schneider, said.

The deals flyaround

• The Goldman Sachs bankers who helped Amazon buy Whole Foods Market feared that the Trump administration would squash the deal to spite Jeff Bezos. (BI)

• Fox’s bid for control of Sky may hinge on Rupert Murdoch’s character. (Bloomberg)

• Thomson Reuters’ chairman has reservations about his company’s $17 billion deal with the Blackstone Group. (WSJ)

• Was Broadcom wise to offer a big antitrust breakup fee in its Qualcomm bid? (Gadfly)

The Washington flyaround

• Tax authorities have requested documents from lenders and investors in real estate projects managed by Jared Kushner’s family, an unnamed source says. (Bloomberg)

• Rebekah Mercer wrote in an op-ed that Steve Bannon had taken Breitbart in the wrong direction, and it could expand its influence without him. (WSJ)

• The F.C.C.’s inspector general is investigating whether its chairman, Ajit Pal, timed deregulatory moves to benefit Sinclair Broadcasting. (NYT)

• Senators agreed on an immigration proposal, one of a sort that President Trump has threatened to veto. (NYT)

• After Mr. Trump’s personal lawyer declared that he himself had paid $130,000 to the pornographic actress Stormy Daniels, he faces questions about ethics and breach of contract. (NYT)

• More than 130 administration officials — including Ivanka Trump, Jared Kushner and the White House counsel, Don McGahn — lacked permanent security clearance as recently as November. (NBC)

• Fannie Mae is seeking $3.7 billion from the Treasury Department after reporting a $6.5 billion loss for the fourth quarter. (WSJ)

• The E.P.A.’s chief, Scott Pruitt, said he had traveled in first class and on military jets for security reasons. And read about a loophole in emissions regulations for trucks favored by backers of the Trump administration.


Mike Cohen for The New York Times

Uber’s C.E.O. sounds off on SoftBank and more

Here’s what Dara Khosrowshahi said of the company’s deep-pocketed new backer yesterday at Goldman Sachs’s annual tech conference: “Rather than having their capital cannon facing me, I’d rather have their capital cannon behind me, all right?”

He added that SoftBank’s Masa Son “is a visionary — if a visionary wants to make a bet on you, let’s make it happen.”

He also offered this ambition: “I want you to be able to take an Uber and get into the subway — if the trains are running on time, you’ve got real-time data — get in the subway, get out and have an Uber waiting for you for right now. Or know that there’s a bike right there for you that gets you where you’re going in the fastest manner.”


Loic Venance/Agence France-Presse — Getty Images

The tech flyaround

• Amazon will work with Bank of America on small-business lending, unnamed sources say. Its Washington lobbying operation has become formidable. And it’s planning 2,000 new hires in France.

• Mark Zuckerberg has accelerated sales of his Facebook stocks to fund the philanthropic Chan Zuckerberg Initiative. (Recode)

• Google’s Chrome browser will block some online ads. Critics say the choice of which types to block is self-serving. (WSJ)

• Snapchat said it would let creators of “Official Stories” see analytics about the performance of their work. (Axios)


Dado Ruvic/Reuters

Do we need a new crypto-cop?

In the latest White Collar Watch column, Peter Henning considers the potential benefits of a separate regulator for virtual currencies:

Whether the S.E.C. or the C.F.T.C. are the best venues for this type of regulation is something Congress will have to decide. Neither agency has experience in overseeing virtual currencies, so assigning responsibility to one (or both) will require increased appropriations to develop rules and effective oversight.

Elsewhere in virtual currencies: Charlie Munger thinks Bitcoin is “noxious poison.”

And Bitcoin’s up 12 percent over the last 24 hours, at $9,972, according to CoinMarketCap.


Erin Schaff for The New York Times

The banking flyaround

• Elizabeth Warren has written to Wells Fargo about its botched efforts to repay wronged customers. (WSJ)

• Goldman may be having some success in turning around its fixed-income trading unit, but it might do even better by buying Bank of New York Mellon. (Breakingviews)

• Some senior Credit Suisse executives had their secretaries complete compliance training for them. (TheStreet)

• Citigroup has won its first local mandate in Saudi Arabia since returning to the kingdom, advising a budget airline owned by Kingdom Holding on its I.P.O. (Bloomberg)

• One of India’s largest commercial lenders said it had detected fraudulent transactions worth $1.77 billion at just one of its branches, raising fears of a potential ripple effect across Indian banking. (NYT)


Richard Drew/Associated Press

Revolving door

• Goldman Sachs named Dusty Philip as a co-head of its global M. & A. team, joining Michael Carr and Gilberto Pozzi. Matt McClure, currently a co-head of Americas M. & A., will replace Mr. Philip as co-head of the global industrials team. (DealBook)

Deirdre Latour is stepping down as G.E.’s chief communications officer next month. Linda Boff, the company’s chief marketing officer, will be her interim replacement. (G.E.)


Ryan Murphy, 52, has spent most of his career at 21st Century Fox.

Chris Pizzello/Invision, via Associated Press

Quote of the day

“For any uber-premium creator, the value has gone up 10 times. And Ryan is a once-in-a-lifetime creator.”

— Dana Walden of Fox, on Ryan Murphy’s blockbuster five-year, $300 million deal with Netflix

The Speed Read

• State financial regulators in New York said that they would investigate reports that gay men had been denied insurance because they were taking H.I.V.-prevention medication. (NYT)

• Private equity firms are doing more of their own capital markets work, bringing new risks as well as new fees. (WSJ)

• Bridgewater has made a $22 billion bet against some of Europe’s biggest companies, according to filings. (Reuters)

• Lucio Lanza, a longtime venture capital investor, is being sued by the founder of a medical start-up, who accuses him of sexually assaulting her on a plane. (Business Insider)

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