Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim
Speaker 1: Fox along with my co host Lisa Abramowitz. Each day
Speaker 1: we bring you the most important, noteworthy, and useful interviews
Speaker 1: for you and your money, whether you're at the grocery
Speaker 1: store or the trading floor. Find the Bloomberg P L
Speaker 1: Podcast on iTunes, SoundCloud and at Bloomberg dot com. I
Speaker 1: want to turn back to the currency market since since uh, frankly,
Speaker 1: that's where a lot of the action has been and
Speaker 1: that seems to be driving a lot of flows around
Speaker 1: the world. I want to bring in Doug Borthwick, who
Speaker 1: is Managing director and head of f X at Chapter
Speaker 1: Lane and Company. UM. I want to start with China.
Speaker 1: I know the dollar has been the big story because
Speaker 1: of how strong it has gotten, but China seems to
Speaker 1: be one of the big wild cards of how quickly
Speaker 1: will it allow the un to depreciate? Um, Doug, what's
Speaker 1: your a forecast for next year? And then? Well, I
Speaker 1: think that China has been the whipping why this year,
Speaker 1: but maybe not necessarily, maybe it shouldn't have been. I
Speaker 1: think that certainly this year dollar China has moved up
Speaker 1: by seven percent, So China in effect, is divided by
Speaker 1: seven percent, but somewhere like you know, Switzerland's divided by
Speaker 1: three and no one's pointing fingers there. Over the last
Speaker 1: five years, the yen has depreciated by and China only nine.
Speaker 1: And yet China is pointed to and people say, you
Speaker 1: know that this is a currency that's being allowed to
Speaker 1: to weaken considerably, whereas the Japanese are being given the
Speaker 1: okay by G twenty to allow their currency to weken by.
Speaker 1: There seems to be sort of a double standard when
Speaker 1: it comes down to what currencies are doing around the world.
Speaker 1: And now dollar China trades nowadays based off of where
Speaker 1: the dollar is trading in general, because China obviously trades
Speaker 1: off of a basket. So if you see a stronger
Speaker 1: dollar globally in the dollar strengthens versus the euro, and
Speaker 1: the dollar strengthens versus the yen, it expected to strength
Speaker 1: and considerably against China. Now, our review certainly is that
Speaker 1: the dollar going forward into the next year will probably
Speaker 1: be plateauing around the levels we're seeing here. As the
Speaker 1: excitement and fraudness over the new administration sort of shart
Speaker 1: starts to turn over with the reality of what happens
Speaker 1: in Washington, how you expect to see the dollar to
Speaker 1: start to weaken versus the yen and also versus the euro.
Speaker 1: If that is to happen, then you'll see the dollars
Speaker 1: start to weaken against China, and you'll see a sort
Speaker 1: of a move back. There's one thing that we are
Speaker 1: concerned about, and that is extreme dollar strength is negative
Speaker 1: for the world in a number of different ways. One
Speaker 1: extreme dollar strength, they will probably not help President elect
Speaker 1: Trump when it comes down to his policies of exporting
Speaker 1: more US goods and employing more US you know, uh workers.
Speaker 1: Another thing the strong dollar does in Asia specifically, as
Speaker 1: it means that you know, the dollar rises versus Korea,
Speaker 1: versus Taiwan, versus Thailand, Indonesia, all emerging mark its currencies
Speaker 1: start to weaken considerably. When that happens, they have trouble
Speaker 1: and paying back their US dollar denominated debts. And when
Speaker 1: that happens, you get another emerging markets crisis. So we
Speaker 1: believe strongly that that while a strong dollar may have
Speaker 1: been in the US interest in terms of making America
Speaker 1: great again, a weaker dollar may actually be more important.
Speaker 1: Dog Borthark, I just want to push back a little
Speaker 1: bit on your sort of description of China as a
Speaker 1: whipping boy for currency manipulation, bringing in Japan and Switzerland.
Speaker 1: I mean, the Chinese have the highest trade surplus with
Speaker 1: the United States, the Netherlands, India, Vietnam, United Kingdom, Singapore.
Speaker 1: There's no, uh, there's no switzerlanda on that list. I
Speaker 1: mean the reason isn't it political? I mean, you're a
Speaker 1: currency trader. A lot of this has to do with
Speaker 1: just plain politics. I think plain politics is a huge
Speaker 1: part of all this. And one thing we have seen
Speaker 1: over the last five years in terms of where's the
Speaker 1: sphere of influence moving, it's certainly moving away from the
Speaker 1: US and towards China, especially on a trade basis. I say,
Speaker 1: five years ago, or well, let's say ten years ago,
Speaker 1: the US was the number one or number two trading
Speaker 1: partner pretty much for every country around the world, and
Speaker 1: China's now taken that spot. And that's something that's I
Speaker 1: think of considerable interest, not just when it comes down
Speaker 1: to currencies, but also when it comes down to matters
Speaker 1: at the U N matters when it comes down to
Speaker 1: talking about trade in that China now has much bigger
Speaker 1: say at the table because you normally vote with your
Speaker 1: largest trading partner and not necessarily with um, you know,
Speaker 1: the night the guy sitting next to you. But this
Speaker 1: has been going on since I mean, this has been
Speaker 1: going on since since two thousand thirteen. Right, China was
Speaker 1: the largest trading nation in the world as of then.
Speaker 1: We're talking about like almost two trillion dollars, more than
Speaker 1: two trillion dollars worth of stuff, and that doesn't even
Speaker 1: include foreign investments. That's right. Well, you know, I guess
Speaker 1: I'm trying to think about it from a trader's perspective.
Speaker 1: I mean, the political sphere right now is is pretty foggy.
Speaker 1: It's hard to get a clear sense of what exactly
Speaker 1: is going to happen in the next three months, let
Speaker 1: alone year. Um. But certainly we are getting a clear
Speaker 1: sense from the Federal Reserve that they are going to
Speaker 1: hike rate at a faster pace than people have been
Speaker 1: expecting back in September. Do you think that if the
Speaker 1: Fed does go through with three rate hikes next year,
Speaker 1: that will lead the dollar higher than sort of this
Speaker 1: level that we're at right now. I think the level
Speaker 1: that we're right now is looking at that information of
Speaker 1: the three rate hikes and is pondering it. I think
Speaker 1: that three rate hikes would be rather aggressive, given that
Speaker 1: we've had two rate hikes in the last two years,
Speaker 1: so saying that they will have three next year seems
Speaker 1: rather bullish. But then again, the FEDS always pushed this
Speaker 1: sort of very bullish game of the U s economy
Speaker 1: and then ended up sort of changing their opinions as
Speaker 1: time goes on. I think that what's what's really interesting
Speaker 1: is you've seen the US tenure moved from this one
Speaker 1: forty in mid two thousand and sixteen not to what
Speaker 1: two fifty five today. That's a huge move in ten years.
Speaker 1: And I think that you know, there's a lot of
Speaker 1: interest rate rises that are maybe priced into this this curve.
Speaker 1: But if the US wants to do a number of
Speaker 1: things that is, issued debts so they can get into
Speaker 1: infrastructure spending, they'd probably rather a lower interest rate than
Speaker 1: a higher interest rate. And also, if the FED was
Speaker 1: to be as aggressive as people are expecting, or the
Speaker 1: FED is certainly said, I think you would see a
Speaker 1: stronger dollar at least a stable around these levels. But
Speaker 1: I think that there's one thing we've seen in the
Speaker 1: US economy, and that is that it tends to disappoint
Speaker 1: relatives at bad expectations. I want to thank you very
Speaker 1: much for joining us Douglas Boorthwick as managing director ahead
Speaker 1: of FFX at Chapter Lane and Company. Well, there might
Speaker 1: not be that much going on in in sort of
Speaker 1: the corporate news world, but there is quite a bit
Speaker 1: going on in the legal world. I'm looking in this
Speaker 1: instance at the lawsuit the charge of UH the federal prosecutors.
Speaker 1: Basically the co founder of the bankrupt hedge fund Platinum.
Speaker 1: Platinum Partners. UH was charged with what federal prosecutors said
Speaker 1: was a one billion dollar fraud resembling a Ponzi scheme.
Speaker 1: I want to bring in Zeke Fox, a Bloomberg News reporter,
Speaker 1: to elaborate on what exactly this case is all about.
Speaker 1: Zeke High Um. Yes, So, Platinum Partners is a hedge
Speaker 1: fund that manages, or at least claim to manage, more
Speaker 1: than a billion dollars, and up until last year, it
Speaker 1: looked like it was one of the most successful hedge
Speaker 1: funds in the world. It had reported games on average
Speaker 1: since two thousand and three, with no down years and
Speaker 1: only actually a few down months. Um. Now it all
Speaker 1: started to come unraveled this summer when one of its
Speaker 1: managers was arrested for allegedly bribing a union official to
Speaker 1: invest and people start to think, if this fund is
Speaker 1: so good, why do they have to bribe people to
Speaker 1: invest in it? And now apparently we have the answer. Uh.
Speaker 1: The other managers of the fund got arrested or charged
Speaker 1: today by a grand jury, and prosecutors are saying that
Speaker 1: the fund wasn't really doing as well as it claimed. Well,
Speaker 1: how much money was potentially lost as a result of
Speaker 1: this uh ponzi leg scheme? That or at least that's
Speaker 1: how it's described by prosecutors. So in investors, you know,
Speaker 1: they're still getting uh their statements saying that they have
Speaker 1: you know, a total of one point four billion dollars
Speaker 1: in there. Now. After the first arrest this summer, the
Speaker 1: hedge fund closed, said it was entered bankruptcy protection and
Speaker 1: said it was going to liquidate its position slowly and
Speaker 1: distribute the money to investors. So just because it's bankrupt
Speaker 1: doesn't mean it went to zero. Um, but we really
Speaker 1: have no idea what investors will get back, and this
Speaker 1: arrest is certainly today is certainly not a good sign.
Speaker 1: Zeke aren't there controls in place to prevent funds from
Speaker 1: misrepresenting the information that they give out about their performance
Speaker 1: as well as the amount of money that they manage. Yes.
Speaker 1: So the way they were able to perhaps flip through
Speaker 1: the cracks is that their fund, unlike most funds, was
Speaker 1: made up of very ill liquid, hard to value investment,
Speaker 1: you know, like oil wells or just things that weren't traded,
Speaker 1: so they would get in California I believe, is the
Speaker 1: specific instance correct. Yes, So they had one of their
Speaker 1: biggest assets was the string of oil wells in California.
Speaker 1: They were claiming it's worth hundreds of millions of dollars UM.
Speaker 1: And I actually when it investigated this earlier this year
Speaker 1: and found that they basically never produced any oil um.
Speaker 1: But because this is a private company, it's not something
Speaker 1: that the SEC is really checking out UM, and the
Speaker 1: auditors when they audit the books are sort of relying
Speaker 1: on all these third party reports that say, oh, the
Speaker 1: oil well has a lot of potential or things like that.
Speaker 1: So it's just a little harder to uh see that
Speaker 1: they weren't getting the returns that that they claimed. And
Speaker 1: I'm sure they're going to try and argue that these
Speaker 1: things really are valuable, and that the prosecutors are wrong,
Speaker 1: that that they are worthless, and that the fund is
Speaker 1: a fraud. Who are who? As of the clients are
Speaker 1: the types of clients that could be on the hook
Speaker 1: for some potential losses if these things, if the assets
Speaker 1: are not as valuable as the hedge fund managers say. Well.
Speaker 1: The first is the New York City Prison Guards Union.
Speaker 1: That's the pension fund that its manager allegedly took a
Speaker 1: bribe to put tens of millions of dollars into this
Speaker 1: hedge fund, Norman Seabrook. That's right, um, and he was
Speaker 1: arrested as well. Most of the other investors are wealthy individuals.
Speaker 1: The managers of fund were very well known among the
Speaker 1: New York's Orthodox Jewish community, and many of the investors
Speaker 1: are people that knew from their charity work or just
Speaker 1: other prominent Orthodox Jews. They didn't attract a lot of
Speaker 1: investment from other big pension funds. I think because the
Speaker 1: pension on consultants I showed it to said that there
Speaker 1: are already so many red flags with this funds that
Speaker 1: would be hard to get a big institution to invest
Speaker 1: what kinds of red flags. I mean, other than the
Speaker 1: fact that that they invested in only highly liquid assets
Speaker 1: that were hard to check out. It's hard to know
Speaker 1: where to start. So I first, uh, I've been investing
Speaker 1: in these guys for a few years. They invest in
Speaker 1: all sorts of random things, and often the things go poorly,
Speaker 1: even though they're always saying they make money. UM. An
Speaker 1: example is this is a few years ago, they invested
Speaker 1: in this sort of they found this what they thought
Speaker 1: was a loophole in variable annuity contracts. They essentially got
Speaker 1: hospice patients to sign up for veriable annuities using the
Speaker 1: hedge funds money. And it was the idea was that
Speaker 1: there was like a sign up bonus and if the
Speaker 1: patients died quickly, they could earn a sign up bonus
Speaker 1: for the hedge fund. They ended up getting in trouble
Speaker 1: with the sec for this UM it was not a
Speaker 1: loophole as they thought. So there's like a million little
Speaker 1: stories like this, and I think some people start the
Speaker 1: question is if they're always trying to operating in these
Speaker 1: gray areas, are they really going to be honest with
Speaker 1: their own investors too? Right? Zeke Fox, I remember that story.
Speaker 1: It was a great story. Zeke Fox and Bloomberg News,
Speaker 1: thank you so much for joining us. All right, let's
Speaker 1: solve the issue of the US dollar and its strength.
Speaker 1: I want to bring in Joel Stern. He is the
Speaker 1: chairman and the chief executive of Stern Value Management. Joel Stern,
Speaker 1: always a pleasure give us your take on the strength
Speaker 1: of the U. S dollar, what's causing it and what
Speaker 1: do you believe will happen next. The US dollar is
Speaker 1: strong because everybody is going to be doing lots more
Speaker 1: business in US. Listen, around the world, people are expecting
Speaker 1: much higher rates of return to be earned on capital employees.
Speaker 1: That's very important. UH. There are two reasons for that.
Speaker 1: Number one is getting rid of onerous regulations. What that
Speaker 1: does is it not only improves the existing returns, but
Speaker 1: it reduces the risk about making future investment as well.
Speaker 1: And the second has to do with the UH cutting
Speaker 1: of the maginal statutory tax rate from say, if you
Speaker 1: include city and state trading partners in Europe alone, twenty
Speaker 1: three percent. If you take about of our major trading partners,
Speaker 1: it actually averages close. In other words, if why would
Speaker 1: you not take your business overseas? If you could have
Speaker 1: a lower tax rate by fully half. It just doesn't
Speaker 1: make any In other words, what I'm saying to you is,
Speaker 1: I don't think that Donald Trump has to be rate
Speaker 1: companies for doing something that is simply the result of
Speaker 1: normal gravitation, sation, old forces in the economy, people going
Speaker 1: overseas for a good reason. If he takes care of
Speaker 1: these two things, I believe it will be only a
Speaker 1: trickle leaving the country. And I believe lots of what
Speaker 1: left the country will actually start to come back because
Speaker 1: there were reasons why companies wanted to do business in
Speaker 1: the United States in the first place. Well, we're taking
Speaker 1: away the impediments. That's what it comes down to. So
Speaker 1: joel Um, based on what you're saying, the dollar to
Speaker 1: the dollar rally, how much of what you're talking about,
Speaker 1: which is tax reform and making the tax policies in
Speaker 1: the US more business friendly for companies that have already
Speaker 1: taken their business overseas to bring them back. How much
Speaker 1: of that bringing back of business and tax reform gotten
Speaker 1: priced into the dollar versus how much has the dollar
Speaker 1: risen on the expectation that this will happen, but could
Speaker 1: get dampened if it doesn't happen fast enough. Well, fast
Speaker 1: enough is not someone of me. There's a legislative process here.
Speaker 1: You can't just a president. Although a recent current president
Speaker 1: decided through executive order to do various things. But Donald
Speaker 1: Trump has said he doesn't like that idea. He wants
Speaker 1: to reduce the executive power and turn much of that
Speaker 1: back to the legislature. What so we need to simply
Speaker 1: get this thing done and done quickly. What will happen
Speaker 1: is that the President will give a State of the
Speaker 1: Union address UH after his inauguration, and that will tell
Speaker 1: us a great deal because by that time, UH, he
Speaker 1: will be able to get some notion as to whether
Speaker 1: or not the Republican leadership in the in the House
Speaker 1: is going to go along with him. Because this is
Speaker 1: the Ways and Means Committee, this is not the United
Speaker 1: States Senate. He has to deal with the Congress. So
Speaker 1: having a strong liaison with the Congress will tell us
Speaker 1: a great deal about that. The liaison to the Congress.
Speaker 1: That's what we have to get onto the news programs
Speaker 1: on Sunday. You get the liaison on there will learn
Speaker 1: a lot a lot more. But the important thing now
Speaker 1: is that there is a complete change in attitude keep
Speaker 1: in mind that when Hillary Clinton was running for president,
Speaker 1: whether it was caused by Sanders or not, she said,
Speaker 1: I'm going to increase eat regulations, I'm going to increase taxation.
Speaker 1: Can you believe that? Now? What? By the way, the
Speaker 1: test is going to be simple. My teacher Milton Friedman
Speaker 1: used to say, it would be nice if monetary policy
Speaker 1: was expensive and Kansian policy tight, or the reverse, so
Speaker 1: we could test the two theories. We're gonna be able
Speaker 1: to test the political theory on on this whole subject
Speaker 1: by whether or not. And of course it's happening already.
Speaker 1: The stock market takes the present value of the future
Speaker 1: performance and why the market is so strong the markets
Speaker 1: I'll believing that there's going to be a very substantial
Speaker 1: improvement in operating performance of companies. And what I'm saying is,
Speaker 1: even if it doesn't happen in the current year, that's
Speaker 1: the year two thousand seventeen. If it doesn't happen, that
Speaker 1: it won't matter, because it's whether it happens in eighteen
Speaker 1: or nineteen and twent so forth. It's the present value
Speaker 1: of that that is already in the price of the shares.
Speaker 1: Let me just mention Joelstern. Some news from Bloomberg that
Speaker 1: the President elect Donald Trump is considering nominating x U
Speaker 1: S Attorney Debra Wang Yang to run the Securities and
Speaker 1: Change Commission. She would be the second consecutive former federal
Speaker 1: prosecutor to lead UH this regulatory body. Joel Stern, interest rates,
Speaker 1: rising interest rates, and inflation or expectations of inflation. Give
Speaker 1: us your thoughts, then it's a great question. Everybody has
Speaker 1: been talking about the rise in interest rates as being
Speaker 1: caused by an increase in inflationary expectations. In my view,
Speaker 1: that is absolutely false, and the evidence is the decline
Speaker 1: in the gold price. The gold price is a function
Speaker 1: of the reciproc it's it's it's a function of the
Speaker 1: real US interest rate on governmental securities. What's happened is
Speaker 1: that the increase and interest rates, real interest rates, has
Speaker 1: caused the gold price to go down. If interest rates
Speaker 1: went up and the gold price went up at the
Speaker 1: same time, then I would say, oh, here comes inflation.
Speaker 1: But it interest rates rise because of a rise in
Speaker 1: what are called real interest rates. And what's the reason
Speaker 1: for that? Because the rates of return on cap in
Speaker 1: the United States are going to be much much higher
Speaker 1: than they are now, and the signal to the rest
Speaker 1: of the world is the real industrate. I would prepare
Speaker 1: that real infustrates would be five percent, because then it
Speaker 1: would be saying, Wow, we're going to go back to
Speaker 1: the time when the average industrial cooperation in America earned
Speaker 1: a return of between twelve and on its capital employed.
Speaker 1: I would like to see that again. If that happens,
Speaker 1: we'll see the doubt Jones industrial average probably up around
Speaker 1: Let me just mention that the price of gold has
Speaker 1: dropped about fifteen per cent since the November election. That's right,
Speaker 1: you know, as you talk to Joel, I'm thinking to
Speaker 1: myself usually when people talk about higher real rates, it
Speaker 1: might be helpful for the economy once we get there,
Speaker 1: but the but the path there is pretty rocky. I mean,
Speaker 1: what do you think, what's your outlook for for bonds
Speaker 1: in the first half of next year. I think investors
Speaker 1: in bonds, Lisa are going to be in big trouble. Uh.
Speaker 1: In fact, you know, the pin comes of the world
Speaker 1: have been moved the shorter and shorter materities because they
Speaker 1: don't want to get whacked on those long term bond
Speaker 1: rates changing. If long term interest rates go up as
Speaker 1: they have. Incidentally, the thirty year bond right now is
Speaker 1: around three fifteen. Do you know that when Trump was
Speaker 1: elected at the beginning of November, I think that rate
Speaker 1: was somewhere around two forty And so this is a
Speaker 1: huge increase and that's why the gold price has come
Speaker 1: but very sharply down. But again, the gold price coming
Speaker 1: down means that it's a rise in real interest rates
Speaker 1: and not inflationary expectations. Can I just make one other comment.
Speaker 1: I was listening to you before I found your discussing
Speaker 1: fascinating about the real estate prices in Washington. Keep in mind,
Speaker 1: one of the major reasons why the prices go up
Speaker 1: is because the people who were in office company. That's fair.
Speaker 1: Thank you so much for joining us to all Stern
Speaker 1: Chairman and CEO of Stern Value Management talking about why
Speaker 1: the increase in rates is not necessarily because of INFLA
Speaker 1: and why the dollar could get stronger ahead. Apple is
Speaker 1: preparing for a tax battle, particularly one in the European Union.
Speaker 1: It has officially appealed the European Union's August decision UH
Speaker 1: to claw back thirteen point six billion dollars and unpaid
Speaker 1: taxes from the iPhone maker. Over taxes that they did
Speaker 1: not have to pay in Ireland. I want to bring
Speaker 1: in somebody who can speak much better about this than
Speaker 1: I can. Matt Larsen, litigation analyst and Bloomberg Intelligence back,
Speaker 1: can you just sort of give us an overview of
Speaker 1: what this case really is about? Yeah, certainly so. Back
Speaker 1: in the European Commission requested Ireland uh submit how taxes
Speaker 1: were calculated on a number of companies that either claimed
Speaker 1: residents or non taxable residents in Ireland. Ireland has a
Speaker 1: very low corporate tax rate and a lot of multinational
Speaker 1: corporations make use of the favorable tax laws in Ireland
Speaker 1: to get pretty good deals on how the company transfers
Speaker 1: things to various subsidiaries and reduces their overall tax liability. UM.
Speaker 1: Among those companies was Ireland, and in March of the
Speaker 1: European Commission instituted a formal investigation of Ireland's tax arrangements
Speaker 1: with Apple That took a couple of years and will
Speaker 1: fast forward to when the European Commission basically found that
Speaker 1: Ireland had undercollected uh fourteen I'm sorry, thirteen billion euros
Speaker 1: of taxes. So these are thirteen billion on essentially Uh,
Speaker 1: internal revenues, transfer prices, intellectual property licensing revenue that went untaxed. Uh,
Speaker 1: kind of that that Apple was was transferring between subsidiaries
Speaker 1: in Ireland. Right, So is it just this third team
Speaker 1: point six billion dollars or thirteen euros thirteen billion euros
Speaker 1: that's on the line here, or does this appeal sort
Speaker 1: of set a precedent for an even larger amount of money.
Speaker 1: Are a large amount of back taxes that Apple would
Speaker 1: potentially have to pay? Yeah, So the investigation, the investigation
Speaker 1: that's going on now just looks at these thirteen point
Speaker 1: six but there's there's a bigger story here. There's there's
Speaker 1: a lot more dollars at stake in terms of how, um,
Speaker 1: how the Irish Revenue Service is going to revisit its taxation,
Speaker 1: how the European Commission is cracking down on these deals.
Speaker 1: So there's potentially a much larger universe of revenue, and
Speaker 1: not just for Apple, but for other tech companies in
Speaker 1: Ireland as well. I mentioned it the onset that in UM,
Speaker 1: the European Commission was looking into a number of different companies. Uh.
Speaker 1: They just published a public version of the opinion in
Speaker 1: the Apple decision. UM and they used nine comps. They
Speaker 1: didn't list to the companies were, but they took a
Speaker 1: look at practices across nine different companies, and UM alluded
Speaker 1: to the fact that there wasn't a uniform way that
Speaker 1: taxes were calculated in any one of those scenarios. So
Speaker 1: it signals that there could be a much bigger issue
Speaker 1: of taxation in Ireland that's gonna be revisited UM And
Speaker 1: obviously Apple's future tax liabilities in question here depending on
Speaker 1: what happens with the with the current litigation. Matt, how
Speaker 1: about the European Union investigate the tax policies of other
Speaker 1: European Union countries because I was looking at the ire
Speaker 1: the Irish tax, uh, world corporate tax Let's just do
Speaker 1: the comparison, right, corporate tax rate in the United States
Speaker 1: thirty five. Ireland's taxation rate for corporations twelve and a
Speaker 1: half percent, but they only charge six and a quarter
Speaker 1: percent for revenue that's tied to a company's patent or
Speaker 1: intellectual property. And dig this. Even if you lose money
Speaker 1: as a startup, there's a twenty five percent tax credit
Speaker 1: which is applied against the corporate tax rate of twelve
Speaker 1: and a half percent. And they get like more than
Speaker 1: ten percent of the total the country's revenue comes from taxes.
Speaker 1: Apple's got two hundred and thirty eight billion dollars in cash.
Speaker 1: This is a check, Yeah, yeah, it really is. It's
Speaker 1: a it's a fraction of their um, you know, a
Speaker 1: fraction of their liability if you if you look at
Speaker 1: the the EPs estimates, even if you know this is
Speaker 1: gonna be litigated for a while, it's going to take
Speaker 1: a couple of years to play out. But um, it's
Speaker 1: really just kind of a marginal difference on um on
Speaker 1: Apple's balance sheet. Uh yeah, the stock is up to stop.
Speaker 1: Stock is up a buck and a quarter right now,
Speaker 1: it's a hundred and seventeen four. Yeah, you know it's
Speaker 1: no one's getting phased by this. Yeah, it's it's a
Speaker 1: minor dent. It's some headline risk. It's negative news for
Speaker 1: the company. Obviously, you don't want to be involved in
Speaker 1: any proceeding that seems to instin risk for Ireland. Maybe yeah,
Speaker 1: yeah there. You know. It was funny that the decision
Speaker 1: was supposed to be released before elections in Ireland, and
Speaker 1: some speculated that they pushed the decision back so that
Speaker 1: they didn't upset Irish voters and influenced politics, influencing business
Speaker 1: and taxes. Matt Larson, litigation analyst of Bloomberg Intelligence, giving
Speaker 1: us some details about Ireland and taxes. Thanks for listening
Speaker 1: to the Bloomberg pien L podcast. You can subscribe and
Speaker 1: listen to interviews at iTunes, SoundCloud, or whatever podcast platform
Speaker 1: you prefer. I'm Pim Fox. I'm out there on Twitter
Speaker 1: at pim Fox. I'm out there on Twitter at Lisa Abramo.
Speaker 1: It's one before the podcast. You can always catch us
Speaker 1: worldwide on Bloomberg Radio