Week InReview

Crypto Confusion as Tax Deadline Nears

If you thought trading Bitcoin was wild, try figuring out how to pay taxes on it.

Cryptocurrency investors are wrestling with spotty records, tangled blockchain addresses and rudimentary guidelines issued back in the ancient days of 2014. After last year's boom in values, many people are likely disclosing transactions for the first time, adding to confusion.

For investors in need of help, it can be difficult to find someone who can adeptly take on the filing challenge. Many tax preparers are put off by the industry's lack of records, as well as its association with criminal activity, said David Klasing, an accountant and tax lawyer in Irvine, California, who specializes in digital currencies. Others simply don't have the expertise.

"The government is basically just telling practitioners to take a wild-ass guess," he said.

Friday | Apr 13, 2018
Limited investor security in debt agreements seen ending badly as credit cycle peaks; S&P Global has warned investors in the $1 trillion leveraged loan market that weak lending terms pose a risk as the credit cycle approaches a peak and deal making has surged in recent months (Financial Times | Apr 13)

Post-crisis bank rule overhaul proposed by Fed, OCC
On the table: raise capital requirements for largest US banks, reduce them for less systemically important banks; relax stress tests; eliminate "capital conservation buffer" (Market Watch | Apr 11)

Big bond trades would stay secret under proposal
Wall Street would get a break from reporting prices on trades over $10 million in pilot proposed by a Securities and Exchange Commission advisory panel  (The Wall Street Journal | Apr 10)

Slow start to anti-money laundering rule
Regulators say they won't immediately crack down on financial institutions once a new anti-money laundering rule takes effect next month; rule requires financial institutions to identify the true owners of companies when they open bank accounts (The Wall Street Journal | Apr 9)

Tax cuts to fuel historic U.S. deficits: Congressional Budget Office 
Massive tax cuts and spending increases are boosting interest rates, prices, do little to boost long-term economic growth, and will balloon the U.S. deficit, which will surpass $1 trillion two years ahead of estimates (Bloomberg Politics | Apr 9)
The Cyber Cafe
Cybersecurity news every Friday
Best bug branding
"Heartbleed" inspires the Pwnie Awards - pronounced 'Pony' - at annual Black Hat computer-security conference in Las Vegas.

Tales of dirty deeds and unscrupulous activities
Ransomware attacks accounted for 39% of all malware-related data breaches in 2017, double the share in 2016. Today's attacks are causing more damage as they worm their way more deeply into critical information infrastructure systems. And social engineering attacks such as phishing or financial pretexting played a role in 98% of the incidents studied and 93% of breaches.

Cybersecurity: How to devise a winning strategy
A risk-minimizing strategy checklist: determine the type of attacks you might face, analyze how to take appropriate precautions, and carry out periodic reviews.
GSEs likely to have high ratings post-reform: Fitch
(Apr 10) -- Entities that securitize and/or guarantee U.S. mortgages will be appropriately capitalized, have ample access to capital markets and be regulated such that high investment-grade ratings will likely be warranted should housing finance reform become effective, Fitch Ratings said in a statement. Some highlights:
  • Legacy GSE corporate securities will likely continue to benefit from either indirect or explicit support from the U.S. government
  • U.S. government unlikely to vacate support of residential mortgage market given how entrenched Fannie Mae and Freddie Mac remain in housing finance, importance of the 30-year mortgage to the U.S. housing market
  • Believes $3b reserve FHFA, Treasury allowed in December should be sufficient to cover income volatility during the normal course of business
FSOC meeting readout
(Apr 12) -- The Financial Stability Oversight Council held a closed meeting at the U.S. Department of the Treasury to discuss potential amendments to FSOC's interpretive guidance regarding nonbank financial company designations. 
  • Members heard an update on ongoing staff discussions about potential changes, including those recommended in the Treasury Department's November 2017 report on FSOC's designations processes. 
  • Members discussed the ongoing annual reevaluation of its designation of a nonbank financial company, a potential application to FSOC from a bank holding company or its successor, and potential amendments to FSOC's bylaws. 
  • Staff provided information about potential changes designed to facilitate FSOC member agency participation in the event that a voting member is recused from participating in a discussion or action. Members voted to approve the minutes of its Feb. 21 meeting.
Binge reading disorder
Hand-curated, chosen with love
London home prices now offer clues for buyers in New York, Tokyo
Home prices across the globe are increasingly moving in the same direction at the same time, according to a new International Monetary Fund analysis. Growing integration of financial markets is a key reason.
How did the big four auditors get $17 billion in revenue growth? Not from auditing.
Consulting is now a cash cow for accounting firms, raising concerns about conflicts of interest.

Why most financial media hinders, rather than helps, investors
It's not that journalists deliberately set out to mislead the investing public. The fact is, however, that most of what gets written and broadcast in both the mainstream financial media and the trade press, is of far more benefit to the investing industry than it is to investors.
- The Evidence-Based Investor