| Credit Suisse takes $4.7 billion hit, Biden's plan gets a boost, and nuclear talks begin in Vienna. Leaving a mark Credit Suisse Group AG will take a 4.4 billion franc ($4.7 billion) writedown tied to the implosion of Archegos Capital Management. The firm will also replace at least seven executives and cut dividends, suspend buybacks and scrap bonuses for top executives. Shares in ViacomCBS Inc., Vipshop Holdings Ltd. and Farfetch Ltd. declined in postmarket trading after the bank unloaded $2.3 billion worth of those companies' stocks in block trades tied to the Archegos blowup before this morning's announcement. Boost President Joe Biden's economic agenda got a boost when Senate Parliamentarian Elizabeth MacDonough ruled that Democrats could enact another resolution package this year. In simple terms, this means that additional bills can be passed this year without any Republican support. The tax issue is a big one in Biden's $2.25 trillion plan, with pharmaceutical and technology companies expected to be hit hardest by the proposed changes. Treasury Secretary Janet Yellen is arguing for a global corporate tax minimum rate of 21%. Talks Iran and the U.S. will take part in negotiations with the EU, Russia and China in Vienna today aimed at finding a path to reviving the 2015 nuclear deal. There will be no direct talks between the two countries, and negotiations are expected to be long and difficult. Crude, which dropped yesterday on fears that a breakthrough could lead to a massive supply boost from Iran, is recovering some ground this morning as analysts see little chance of progress in the near term. Markets mixedGlobal equities very mixed today as some gauges are trading for the first time since last Thursday. Overnight the MSCI Asia Pacific Index slipped 0.4% while Japan's Topix index fell 1.5% as exporters were hit by the strengthening yen. In Europe, the Stoxx 600 Index climbed to a record high, with cyclical stocks leading the advance. S&P 500 futures were pointing to a pullback at the open, the 10-year Treasury yield was at 1.706% and gold was higher. Coming up... The International Monetary Fund releases its latest World Economic Outlook at 8:30 a.m. Jolts job openings data for February is at 10:00 a.m. Richmond Fed President Thomas Barkin speaks later. President Biden will give an update on U.S. vaccination progress at 3:45 p.m. Paychex Inc. reports results. What we've been readingHere's what caught our eye over the last 24 hours. And finally, here's what Joe's interested in this morningIf you look on a U.S. exchange like Coinbase right now, the price of Bitcoin is around $58,500. However, check out the popular Korean exchange Bithumb and the price is more than $69,000 when converted from Korean won into dollars. The so-called "Kimchi premium" is back in a big way. This phenomenon, where Bitcoin trades at a significantly higher price on Korean exchanges from time to time, has existed in the crypto world for years. So what's the deal? Bitcoin is fungible and universal and can instantly be zapped from one user anywhere in the world to anyone else in the world. So you'd think there would just be one price for the coin, more or less, across all world exchanges.
This actually came up in a recent Odd Lots interview that Tracy Alloway and I did with Sam Banken-Fried, the CEO and co-founder of the crypto hedge fund Alameda Research as well as the FTX exchange. Sam previously was an international ETF trader at the prop shop Jane Street, so his specialty is market structure and spotting arbitrage opportunities. He walked us through the issue with Korea, starting around the 19-minute mark.
...the real thing is finding trades that are really good and really scalable. And so from that perspective, from late 2017 to early 2018, there's this really highly publicized spread called the 'Kimchi Premium,' and what it was was the price of Bitcoins on Korean exchanges. At its heart, there is huge demand for crypto all over the world. But it wasn't equal everywhere. And there's even huger demand in a number of countries, including Korea. So you saw massive net buying of crypto among Korean users. And the Korean won is also a restricted currency. You can't just freely sell it. You can't freely get it out of the country, trade it for USD. So you had all these Korean citizens trying to sell their Korean wons for Bitcoins. And nobody could do much with the Korean won.... that spread got up to 50% at the peak. Korean bitcoins started trading at $15,000, while everywhere else in the world it was $10,000. So that was a completely insane spread. But -- and this was the big catch -- you get back to this restricted currency thing. Where, sure, you could turn $10 US dollars into $15 worth of Korean won doing this. But then it's stuck. You're not regulatorily allowed to just turn that Korean won back into US dollars. If you really wanted to buy a bunch of consumer goods in Korea you could do it. But you can't easily loop that arbitrage through. You get stuck at one end. A lot of people tried to do this trade. Many found a way to do it for small size. Very, very hard to do it for big size, even though there are billions of dollars a day of volume trading. Because you couldn't offload the Korean won easily... No one is known to have cracked it for massive size. Incidentally at the time, there was also a big spread between the price of Bitcoin in the US and on Japanese exchanges, though for different reasons, and it's worth listening to the rest of the discussion to hear how Sam made gobs of money every single day by exploiting that spread. Joe Weisenthal is an editor at Bloomberg. Like Bloomberg's Five Things? Subscribe for unlimited access to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. | 
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