Bitcoin futures are live

Quote of the Day

It is rare that you see something more volatile than Bitcoin, but we’ve found it.”

Market Snapshot

• Tech and energy led the way for U.S. indexes.
• Litecoin hit an all-time high, and is now up over 4,000% on the year.
• ETFs are crushing previous records, with 2017 inflows hitting $424 billion through November.
• Boeing boosted its dividend and raised its share buyback to $18 billion.

Bitcoin Futures Hit the Ground Running

The future is here and Bitcoin is no longer.

Only kidding. But, Bitcoin futures are here and contract prices surged 26% on their first day of trading. In fact, they rose so quickly, Chicago’s derivatives exchange CBOE had to pause trading...twice.

It certainly didn’t help that its website crashed, either.

Quick refresher:

Futures are a trading method employed by investors looking to bet on the direction of an underlying asset. If you’re a Bitcoin bull, you’ll buy a future, locking in a price of, say, $17,000 for the start of January.

If January comes around and the price of Bitcoin is now $18,000, you still get to “purchase” at $17,000. Congrats, you’ve made yourself a nice little profit.

We use the word "purchase" loosely because...well, Bitcoin futures are cash settled. Meaning investors never actually have to buy any Bitcoin before seeing profits from their positions.

Alas, another reason Wall St. is dogpiling for a piece of the action.

That’s not to say everyone’s on board

Those who aren’t actively buying futures (taking a long position) or selling them (taking a short position), believe the new derivatives open the door to price manipulation.

Consider this: CBOE futures are priced based on a single exchange—Gemini, a firm run by the notorious Winklevii twins. And while Bitcoin futures' trading volume might be 0.245% of global trading volume, it is already about 20% of Gemini’s.

Translation? If someone has the capital for a million dollar futures positions, then she theoretically has the capital to buy enough Bitcoin on Gemini, effectively driving up the price and cashing in on her futures position. (But you didn’t hear that from us).

Of course, that’s not the only way this goes down

The bulls charged from the gate late Sunday and early Monday, purchasing $40 million worth of contracts in the first eight hours. But there’s also a group of investors champing at the bit to short the crypto.

Any price manipulation could be drowned out with enough short sellers taking the other side of the trade (and helping to drive the price down). And then there’s Chicago’s second derivatives exchange, CME, which will list contract prices next Monday based on four exchanges...not just one.

Maybe that'll ease the minds of any futures naysayers.

Verizon and the NFL Blitz Mobile Streaming

Philadelphia Eagles fans will have even more ways of watching their Super Bowl hopes evaporate—Verizon (+1.47%) and the NFL announced a mobile streaming deal worth $2.5 billion.

This relationship isn’t new: Verizon partnered with the NFL back in 2010. But while that deal granted Verizon exclusive rights, this new arrangement allows other carriers to stream football games as well.

No, Verizon’s not doing this out of the kindness of its heart.

The goal is to put more popular content on its other digital platforms: AOL and Yahoo (now called Oath) and go90. If you’re asking “what’s go90?” that’s exactly the point. We got you covered: it’s a mobile streaming service that draws its name from users rotating their phones 90 degrees to watch videos.

The deal also makes sense for the NFL, which needs to right the ship from double-digit ratings declines. So in addition to promoting its somewhat out-of-date “whole family in front of a big screen with a bucket of KFC" model, it’s also taking the fight to where younger viewers actually watch football: their phones.

After Three Decades, Saudi Arabia Raises the Curtain on the Movies

In a blockbuster move to further modernize its economy, Saudi Arabia is reversing a 35-year old ban on commercial movie theaters.

The policy dates back to the early 1980s, when the government implemented an ultra-conservative version of Islam that limited public entertainment options.

The problem is, it also limited economic growth. The government loses billions of dollars each year as the next generation of Saudi Spielbergs head over to the UAE or Dubai to catch the new Avengers on the big screen.

Crown Prince Mohammad bin Salman (MBS) is looking to change that with sweeping social and economic reforms (like allowing women to drive). His methods have bordered on authoritarian, like when he rounded up dozens of business moguls in what most would call a “power grab.”

Whatever you want to call it, MBS is set on diversifying the economy away from oil. One way is to boost domestic spending on entertainment. With the new policy, the Saudi government expects commercial cinemas to bring in $24 billion* and create 30,000 jobs by 2030.

*Estimated revenue from Milk Duds alone.

Mattel Isn't Expecting Any Visits From Santa

Mattel can’t seem to solve that plummeting kid-to-toy multiple in time for the holiday season, announcing lower fourth quarter and full-year revenue estimates.

That seemed to be the last straw for credit rating agencies like S&P, Moody’s, and Fitch, which downgraded Mattel’s debt to “junk” bond status—the corporate equivalent of timeout.

One look through the kaleidoscope, and you might’ve seen this coming. Mattel’s biggest buyer, Toys ‘R’ Us, filed for Chapter 11 in September and its top line has been falling since 2013.

In fact, cash flows have gotten so tight heading into Christmas, the toymaker is actually issuing $1 billion in high-yield debt to fund operations and pay off other debt.

But there is hope...? Just last month Hasbro approached Mattel to join forces. So who knows, maybe two Mr. Potato Heads are better than one.

What Else Is Happening…

• Apple (+1.95%) confirmed rumors that it’s buying Shazam for $400 million.
• Alphabet’s (+0.25%) AI company DeepMind might have developed algorithms to prevent AI from “taking over.” Oh dear God, thank you...
• Broadcom (+0.02%) filed paperwork to begin its proxy fight for all of Qualcomm’s (+1.47%) board seats.
• Mall owner GGP (-0.17%) has rejected a $14.8 billion bid from Brookfield Property (-1.34%).
• Read about an entrepreneur who made over $1 million wearing companies' t-shirts.

Economic Calendar

• Monday     Earnings: No Events

                    Economic Events: JOLTS (-)

• Tuesday    Earnings: No Events

                  Economic Events: No Events

• Wednesday    Earnings: Pier 1 Imports, Progressive

                        Economic Events: FOMC Meeting Announcement

• Thursday   Earnings: Costco, Oracle

                   Economic Events: Jobless Claims

• Friday       Earnings: No Events

                 Economic Events: Baker-Hughes Rig Count

By the Numbers: 20th Century Fox

You grab some more popcorn. The lights dim. And then on the screen...you hear that familiar drum-roll with searchlights and the famous brass fanfare. It can only mean one thing: 20th Century Fox. With the iconic film studio (maybe) up for sale to Disney, we decided to roll the tape.

$2.78 billion—Worldwide box office receipts of Avatar, 20th Century Fox’s highest grossing movie of all time.

2025—Year set for Avatar 5, which will follow three other sequels in the series. Hey, if you got a good thing going….

12.3%—Fox’s market share of the domestic box office. Warner Bros. takes the cake with 20.3%, followed by Disney at 18.1%.

1%—Global box office revenue growth in 2016. Which makes the M&A activity hardly surprising.

$44 million—Cost to produce and market Cleopatra, a 1963 historical epic. It’s considered one of the most expensive movies of all time...equivalent to $344 million today.

The Breakroom

Question of the Day

A9543B represents a six-digit number in which A and B are digits different from each other. The number is divisible by 11 and also by 8.

What digit does A represent?

(Answer located at the bottom of newsletter)

Business Trivia

Can you list the five biggest companies in the Dow by market cap?

(Answer located at the bottom of newsletter)

Stat of the Day

$80 million—Price of billionaire sports team owner Vinnie Viola’s townhouse on the upper east side of NYC, complete with a sauna, swimming pool, and panic room. If the deal closes, it’ll set the record for most expensive NYC townhouse ever sold.

Breakroom Answers

Question of the Day: A=7 (Explanation)

Business Trivia: Apple, Microsoft, Johnson & Johnson, JPMorgan, ExxonMobil