Why Bitcoin Buyer MicroStrategy Is Doing Even Better Than Bitcoin

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Macy's finds a $154 million accounting problem. And the company that's tied its success to Bitcoin for better or worse. Plus, however, Republicans are juggling priorities for the tax bill they plan to send Trump next year. This balance between how much could you cut Medicaid, cut food stamps, repeal tax breaks for clean energy without costing votes among Republicans.

It's Monday, November 25th. I'm Tracy Hunt for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

We'll get to all that in just a minute, but first, Special Counsel Jack Smith has moved to dismiss a pair of landmark prosecutions against President-elect Donald Trump, one alleging he sought to undermine the 2020 election results, the other that he unlawfully retained classified documents after leaving office.

Smith today said he was following the Justice Department's long-standing policy against prosecuting a sitting president. A spokesman for Trump said Smith's move quote, and the unconstitutional federal cases against President Trump and is a major victory for the rule of law. Two other state-level prosecutions against Trump remain pending but could also fade away.

Macy's is delaying its quarterly earnings report after it discovered that an accounting employee hid up to $154 million in expenses. Our retail reporter Suzanne Capner said Macy's is investigating the matter and the person responsible is no longer with the company.

This hasn't affected the company's cash balances or payments to vendors, so it's not like this employee was stealing the money to keep for him or herself. It looks like it was an accounting maneuver to lower delivery expenses, and we don't know why this employee did it, except that Macy's has said it was intentional, it was not a mistake.

The disclosure comes as Macy CEO Tony spring tries to revamp the company's business by closing underperforming locations and improving customer experience. It could potentially have some impact. It's not quantified, but keep in mind that the amount is fairly small.

given that the delivery expense that Macy's recognized in this period was $4.36 billion. Now they're scheduled to report December 11th and we're hoping that we will get some more details then. And speaking of Macy's, airing the retailer's annual Thanksgiving parade is about to get pricier.

NBC has had the broadcasting rights to the parade since 1953, and now we're exclusively reporting that is trying to nail down a new deal to keep it on the network and its peacock streaming service for the next decade. People familiar with the talk say the proposed deal would kick in next year, with NBC paying on average more than $60 million a year, up from around $20 million in the current contract.

Bitcoin prices have surged about 40% since Election Day. MicroStrategy has climbed even faster. The software company turns itself into a Bitcoin buying machine back in 2020, and today it announced its biggest Bitcoin purchase so far, snapping up $5.4 billion worth. And for many individual investors, the stock is a more popular Bitcoin play than the cryptocurrency itself.

Vicki Huang is a WSJ reporter covering crypto and retail investing. So Vicki, catch us up. What is MicroStrategy? The company is more than just buying Bitcoin, right? MicroStrategy started out as a software intelligence company back in the 80s. It was founded by Michael Saylor, who's this tech entrepreneur. But in 2020, Michael Saylor came up with this idea of buying Bitcoin.

to enhance the value of the company. And soon Bitcoin started rising in value and micro strategy stock took off as well, just like Bitcoin.

What strategy has he been using to buy all this Bitcoin? So the strategy he used is very much the kind of strategy you can do as a publicly traded company in the United States. He issued a lot of stock and sold a lot of convertible bonds, which are basically debt that can convert into stock at a certain price.

Through issuing stock and selling bonds, he was able to use the proceeds from these deals to purchase a lot of Bitcoin. It seems like investors like the company's approach. You report its stock is trading at more than twice the value of its underlying Bitcoin. What are the potential rewards from a strategy like this?

The company used borrowed money from investors to buy Bitcoin. This makes it essentially a leveraged strategy. And leverage is something that Wall Street traders hedge funds like to use a lot.

to amplify the gains that they can get from executing any type of financial trading strategy. And because he used leverage to buy Bitcoin, micro-strategy stock jumped more when Bitcoin jumps. What kind of criticism has micro-strategy gotten because of this approach?

a lot of investors think that the way this stock has been surging, especially since election day, means that this stock has basically detached from reality. As one short seller put it, they basically think that first stock that has so much leverage embedded in it, and it's so volatile that it usually

is a signal of something bad that will come. And some investors also just think that buying a stock that holds Bitcoin and has all this leverage and volatility, it's almost like you're taking more times the risk that you could be taking. So critics say that if you like Bitcoin, just buy Bitcoin. That was our reporter, Vicki Wong. Thank you so much, Vicki. Thank you for having me. And in broader markets,

Trump's pick of Scott Besant as his nominee for Treasury Secretary late Friday prompted a rally in treasuries today and sent the major U.S. stock indexes higher. The Dow rose 1% and the S&P 500 and the Nasdaq both ticked up 0.3%.

The concrete maker Quick Crete has struck a $9.2 billion deal to acquire summit materials. The deal would combine summit and Quick Crete's cement and concrete businesses, bringing together two of the biggest makers of building materials in the U.S. Deal activity in the building material sector has ramped up recently with more government spending on infrastructure projects.

Coming up, Republicans in Congress want to send Trump a tax bill as soon as he takes office. We'll look at the tightrope they have to walk to do it. That's after the break.

The two things that I think will matter most over the next decade are abundant and inexpensive, intelligence and abundant and cheap energy. And if we can get these two things, then it's almost difficult to imagine how much else we could do. Check out TNB Tech Minute in the Tech News Briefing Feed from The Wall Street Journal.

Officials from the U.S. Lebanon and Israel say they're closing in on a ceasefire deal that would halt more than a year of fighting between Hezbollah and Israel in Lebanon. U.S. National Security Council spokesman John Kirby said the U.S. is deeply involved in getting a deal finalized.

Nothing is done until everything is done. Nothing's all negotiated until everything is negotiated. We need to keep at the work to see it through so that we can actually get the ceasefire for which we've been working for so long and so hard. Lebanese officials say the proposal would give the Israeli military up to 60 days to withdraw and let the Lebanese armed forces secure the area to prevent Hezbollah fighters from re-establishing a presence there.

Republican lawmakers are getting ready for the incoming Trump administration. First on the agenda, one bill to rule them all. Republicans are trying to fit in as many priorities as possible into a single tax bill early next year, combining tax cuts, spending cuts, energy policy, border security, and President-elect Donald Trump's campaign promises.

WSJ reporter Richard Rubin covers US tax policy. Richard, what are Republicans hoping to accomplish by putting everything into this one tax bill? The key thing to know is that tax bills, fiscal bills can get around the 60 vote requirements in the Senate. So Republicans are trying to maximize what they can do with the 53-47 majority they'll have in the Senate and the very slim majority that they'll have in the House.

and they're trying to find what can unify them and rack up a win as soon as possible. But negotiating what to cut and what to keep probably won't be easy. What would be the approach on things like Medicaid food stamps and clean energy initiatives?

between ideas that produce lots of savings in the budget, spending cuts or repealing tax credits in the case of clean energy with not losing votes. How much could you cut Medicaid, cut food stamps, repeal tax breaks for clean energy without costing votes among Republicans?

A lot of Republicans view the clean energy tax breaks that Democrats created or expanded two years ago in the inflation reduction act as bad economics. But a lot of that money, whether it's battery plants, electric vehicle plants, solar installations, wind energy, carbon capture, is happening in Republican controlled areas of the country. And Republican members are seeing jobs, investment, the kinds of things in their districts that they want, and even from a policy that broadly they may disagree with.

And I want to ask about another point of contention you write about, the salt cap. That's a rule that limits how much state and local taxes that people, especially people in high-tax states, can write off on their federal taxes. What would be some of the conversations within the GOP on that?

This was one of the tax increases that Republicans created in 2017 to pay for their tax cuts, which are set to expire at the end of 2025. And at the time, there were a handful of Republicans who voted against the bill and the House, but Republicans had a bigger majority. This time around, it's totally different. The margins in the House will be potentially as slim as 217 to 15 for a while for Republicans.

which empowers a very small group of people. And there are enough Republicans from just outside New York City to the north and New Jersey, Long Island, some in California who really care about this cap and are not likely to approve any bill or let any bill pass that doesn't significantly raise that $10,000 figure.

Richard Rubin is a tax policy reporter for The Wall Street Journal. And that's what's news for this Monday afternoon. Today's show was produced by Anthony Fancy with Deputy Editor Chris Zinsley. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.