Remember that the VIX tracks investor expectations of how volatile stock markets will be in the month ahead. The possibility that Mr. Flynn could implicate senior White House officials in Mr. Mueller’s investigation would certainly throw the markets into high uncertainty.
Major stock indexes have pulled back today as well, despite the tax news. The Standard & Poor’s 500 index was down nearly 1 percent at 2,622.12, while the Dow Jones industrial average was down a more modest 0.6 percent, at 24,120.72.
More potential holdouts back the Senate tax plan.
Two Republican senators who had previously opposed the bill for its treatment of so-called pass-through businesses, Ron Johnson of Wisconsin and Steve Daines of Montana, now say they will vote for the legislation.
What convinced them? Tweaks to how pass-through businesses are treated:
The Senate tax bill allows pass-through owners to deduct 17.4 percent of their business income as a way of lowering their taxes. Republicans were planning to increase the deduction to 20 percent to address the concerns over how pass-through owners were being treated by the bill.
Now, the deduction is to be raised to 23 percent, an aide to Mr. Daines said.
The remaining holdouts include Susan Collins of Maine and several senators concerned about the bill’s effect on the deficit.
The issues that still need to be addressed in the Senate bill.
Senators are still expected to vote today on the proposal. But its chances of succeeding may come down to whether deficit hawks in the Senate like Bob Corker of Tennessee can be convinced that the overhaul will not add to the national deficit. Last night, lawmakers were pushed to remove a provision that would have automatically raised tax rates if economic growth did not prove strong enough to pay for cuts.
That’s on top of other bad news for Senate Republicans, including the Joint Committee on Taxation finding that the bill would add $1 trillion to the deficit, though G.O.P. officials largely dismissed that conclusion. Here’s a handy breakdown of various analyses of the bill’s potential effect on the deficit.
How Republican leaders are proposing to find at least $400 billion in new revenue
• Slowly raising corporate rates above 20 percent
• Huge automatic cuts to government programs, from Medicare to farm subsidies to student loans
The big problem
According to Caitlin Owens of Axios:
Aides say they still hope to bring all 52 Republicans to yes. But it’s going to be extremely hard to find ways to raise as much as $500 billion in revenue overnight, and raising taxes could lose other members.
Via Carl Quintanilla of CNBC.
The tax flyaround
• The C.E.O. of the online investment firm Betterment writes that a provision in the Senate bill requiring investors to sell their oldest shares first as part of any divestment would “dramatically harm millions of retail investors.” (InvestmentNews)
• How different industries would fare under the Republican tax plans. (WSJ)
• President Trump says that he wouldn’t personally benefit from the Republican tax proposals. That’s not true, according to Jim Stewart. (NYT)
• G.E. successfully persuaded lawmakers in the Senate to keep a provision that allows the conglomerate to use losses of some overseas units in calculations of its tax liability. (WSJ)
• A group of academics, economists and think-tank officials asserted that the current Republican tax plans won’t prevent companies from shifting profit to low-tax countries. (DealBook)
• Foreign companies doing business in the United States worry that they would have to pay more in American taxes under the proposals. (WSJ)
About Martin Shkreli’s Wu-Tang Clan album …
Prosecutors have listed “Once Upon a Time in Shaolin” as a potential asset that could be seized from the convicted hedge fund manager.
A recap of the history of the controversial album:
• Only one copy of it reportedly exists.
• Mr. Shkreli paid roughly $2 million for it, according to Bloomberg.
• He played portions of the album online after President Trump was elected.
• He put the album up for sale on eBay three months ago and reportedly sold it for $1.2 million.
— Michael J. de la Merced
No chief executive wants to see this…
Shares of Blue Apron are up nearly 10% Friday. The bump in share price comes after the meal-kit maker said late Thursday that co-founder Matt Salzberg is stepping down as chief executive and is being replaced with chief financial officer Brad Dickerson.
Shares of Blue Apron have stumbled since its initial public offering in June. The company’s stock is down 70 percent from its I.P.O. price. That is the worst performance of any U.S.-listed I.P.O. this year.
Shares of companies that have gone public this year on exchanges in the United States have gained, on average, 24 percent, according to Thomson Reuters. Shares of tech companies that have debuted in the United States this year are up 17 percent so far.
Robert Mercer has financial ties to Project Veritas.
A family investment vehicle tied to the billionaire helped finance Project Veritas, a conservative activist organization, according to tax filings obtained by BuzzFeed.
From the article:
Gravitas Maximus LLC — a Mercer investment vehicle through which he also funded the conservative outlet Breitbart — gave $25,000 to Project Veritas, according to a nonpublic portion of a 2012 tax form. The family’s involvement has not previously been made public.
Project Veritas popped up in the news this week when the WaPo reported that the organization tried to convince some of its reporters to write about false claims involving the Alabama Republican senate candidate Roy Moore.
Mr. Mercer stepped down in November as co-chief executive of Renaissance Technologies amid signs of unease among the firm’s clients over his embrace of polarizing political figures.
He has tried to distance himself from Breitbart’s executive chairman, Steve Bannon, by selling his investment in Breitbart to his daughters. But people with knowledge of his thinking previously told the NYT that that he was likely to accelerate his political donations.
— Amie Tsang
A key figure from ‘Barbarians at the Gate’ is taking a step back.
Peter Cohen, a longtime financier, will step down as the financial firm’s C.E.O. He will remain chairman, but leading the firm on a day-to-day basis will be Jeffrey Solomon.
Mr. Cohen has had a long career in banking, one whose highlights include a starring role in the famed fight over RJR Nabisco. It was Mr. Cohen — then the head of Shearson Lehman Hutton — who, along with his colleague Tom Hill, provided the financial backing for F. Ross Johnson’s attempted leveraged buyout of the company. Of course, he and Mr. Johnson were eventually defeated by KKR.
The banker later founded Ramius Capital, a hedge fund, in 1994 and later merged it with the much older Cowen in 2009 to become a firm whose offerings run from investment banking to asset management.
Mr. Cohen said in a statement:
“The new year will mark my 50th anniversary in the industry and will also be Cowen’s 100th year anniversary. We have transformed Cowen over the last eight years, through a series of acquisitions and organic initiatives, into an organization that has a solid foundation with tremendous growth opportunities.”
Are stock investors still confident on a tax overhaul?
The Dow Jones industrial average smashed through 24,000 on Thursday, largely on increased optimism that the Senate would pass its tax bill. The Dow has had 63 record closes this year, and it has crossed five one-thousand-point markers this year, the most ever.
But today is a new day. Futures in both the Dow and the S.&P. 500 were down in premarket trading.
Why investors shouldn’t be so optimistic on taxes: Lower corporate tax bills might not bolster the earnings of big companies that much. “The effective tax rate among S.&P. 500 companies is already 26 percent. A 20 percent corporate tax rate would help, but it would not be as big a boon to large companies as it would be to small companies,” Jack Ablin, chief investment officer at BMO Private Bank, told CNBC.
“If the tax reform doesn’t get done, I think there will be a pretty sharp correction,” said Bruce Van Saun, chief executive of Citizens Financial Group, one of the largest banking companies in the northeastern United States.
Mr. Van Saun told the NYT that stock markets could plunge as much as 15 percent if the tax cut were to be derailed in Congress.
The pessimistic line on the market: “All good things must come to an end,” strategists at Goldman Sachs wrote in a recent note, according to Bloomberg.
Shervin Pishevar is the latest tech star to face misconduct claims.
Mr. Pishevar, an outspoken venture capitalist who was an early backer of digital darlings like Uber and Airbnb and is a major donor to Democratic politicians, is accused of repeatedly assaulting or harassing women. Five women spoke with Bloomberg about what they said were incidents of him forcibly kissing, groping or otherwise harassing them.
And it had been previously reported that he had been arrested in London earlier this year after being accused of assaulting a woman, though he was released by police.
In a statement, Mr. Pishevar denied the claims and said he was the victim of “an organized smear campaign.”
The context: Three other prominent investors — Steve Jurvetson, Justin Caldbeck and Dave McClure — have left or been forced out of their firms following accusations of sexual misconduct.
More in sexual misconduct news
• Matt Lauer apologized after he was fired by NBC, but asserted that some of the claims against him were “mischaracterized” or untrue. His former boss, the CNN President Jeff Zucker, said that he had been unaware of inappropriate behavior. (NYT, NYT)
• Top House lawmakers, including the minority leader, Nancy Pelosi, called upon Representative John Conyers of Michigan to resign. And more women accused Senator Al Franken of Minnesota of inappropriate touching. (NYT)
• The hip-hop mogul Russell Simmons has resigned from his companies after a second woman accused him of sexually assaulting her. (LAT)
The health care deal that Wall Street has been waiting for is near.
CVS is closing in on an agreement to buy Aetna for more than $66 billion, in which it would pay at least $200 per Aetna share, according to the WSJ. (Michael has heard the same thing.) A transaction could come as soon as Monday.
Shares in CVS rose on the news, but those in Aetna hadn’t risen much. The research analyst Ana Gupte of Leerink Partners told Bloomberg that Aetna shareholders may be worried about how much of the offer would be in CVS stock, given the complexity of putting together a big pharmacy chain and a health insurance provider — in other words, two relatively dissimilar businesses.
While the White House works to get closer to Saudi Arabia …
The Economist takes a close look at the civil war in Yemen, which the magazine calls “the worst humanitarian crisis in the world,” and the kingdom’s role in it:
As a result, Yemenis have become the pawns in the regional power struggle between Saudi Arabia and Iran. Alarmed by Iran’s spreading influence, the Saudis have begun to speak of the Houthis rather as Israelis refer to the Lebanese militia, Hezbollah: a dangerous Iranian proxy army on their border.
It’s another critical look at Saudi Arabia, which has been courting the international business community while also shocking business leaders with its mass detention of royals, including the businessman Prince Alwaleed bin Talal.
Kirkland Poaches Lawyers From Debevoise
An exclusive from our NYT colleague David Gelles:
Erica Berthou and Jordan Murray, two senior investment fund lawyers, are jumping to Kirkland & Ellis from Debevoise & Plimpton. Both will be partners in Kirkland’s Investment Funds Group.
At Debevoise, Ms. Berthou was leader of the firm’s global investment management and funds group, and Mr. Murray was deputy chair of the global corporate department.
“Their experience and talent will be a major benefit to our many private equity sponsor clients and will significantly enhance our global platform, which aims to provide full coverage throughout the life cycle of a fund,” John O’Neil, global head of Kirkland’s investment funds group, said in an internal memo that will go out this morning.
• The Blue Apron co-founder Matt Salzberg has stepped down as C.E.O. The stock of the meal kit delivery pioneer tumbled after its I.P.O. (Blue Apron)
• The White House will name Jelena McWilliams, an executive at the Fifth Third bank, as the next head of the F.D.I.C. (Reuters)
• The Aspen Institute has named Dan Porterfield, president of Franklin & Marshall College in Pennsylvania, as its next president. He will succeed Walter Isaacson on June 1. (Aspen Institute)
• Pinterest’s president, Tim Kendall, is leaving the social network to create a health care start-up. (Recode)
• Cruise, the self-driving business that G.M. acquired, has hired A. G. Gangadhar, a former Uber executive, as its chief technology officer. The move was criticized by Susan Fowler, the Uber whistle-blower who has described a hostile work environment at the department that Mr. Gangadhar had led. (Recode)
• KKR named 23 new members and 44 new managing directors. (KKR)
• Lloyd Blankfein has left open the possibility that he will be succeeded as Goldman Sachs’s C.E.O. by not one but two people. (FT)
Each weekday, DealBook reporters in New York and London offer commentary and analysis on the day’s most important business news. Want this in your own email inbox? Here’s the sign-up.
You can find live updates of DealBook coverage throughout the day at nytimes.com/dealbook.
We’d love your feedback as we experiment with the writing, format and design of this briefing. Please email thoughts and suggestions to firstname.lastname@example.org.