Zynga, as a result of now offering real money online poker throughout the United Kingdom, experienced strong earnings for the first quarter of this year.

 

Shares of Zynga surged more than 12 percent on Wednesday after the company announced that it had just started offering real-money online wagering in the United Kingdom.

 

Zynga, which is widely known for its popular internet games such as FarmVille, has soared approximately 40 percent this year based on expectations that it would further penetrate the lucrative online wagering market. 

 

The new ZyngaPlusCasino and ZyngaPlusPoker games are now offered in partnership with London-based bwin.party, one of the largest online gambling sites in Europe. Through this partnership, players will have access to various table games, poker and slots. 

 

Online gambling is legal in a number of places throughout the world but is mostly prohibited in the United States. However, investors are optimistic that an opportunity for online gambling may soon be a reality in the states. 

 

“Our vision in the long-run is to offer players the next generation of wagering games on various platforms in regulated markets throughout the world,” said Zynga’s chief revenue officer, Barry Cottle. 

 

The gambling industry has been lobbying the United States Congress to relax online gambling bans, claiming that table games and poker revolve around skill as oppose to luck. New Jersey, Nevada and Delaware have all recently legalized various forms of online gaming. 

 

While Zynga built its reputation and brand on Facebook through games like FarmVille, the popularity of those titles has taken a hit over the past year; Zynga has shuttered over a dozen of its titles since October. 

 

Even though, the gaming company has enjoyed considerable success this year, its current stock price of roughly $3.50 is still 65 percent below its initial offering of $10. 

Zynga went public in December of 2011; shares of Zynga are currently 80 percent below the all-time high, which was hit in March of 2012. 

 

Source: CNN

 

Counterstrike: Facebook’s New Weapons against Google

 

Facebook is planning to use Google’s own platform—the Android Operating System—against it. 

 

The last time Facebook and Google had an opportunity to make friends was during the fall of 2007, when the two mega powers discussed an advertising alliance. Ultimately, Facebook rejected Google in favor of archrival Microsoft. 

 

The relationship between Facebook and Google has soured since the snubbing as Facebook grew to become an online superpower it opted to poach salespeople, engineers, and executives from Google. The battle for talent is now seemingly perpetual, along with feuds over privacy issues and advertisers. The feud became so intense that Facebook even attempted to orchestrate a smear campaign against the search giant. Google responded to this low blow by paying astronomical sums to retain their talent and spending billions to develop Google+, the search engine’s own social network and direct competitor to Facebook. 

 

Now, Facebook is taking aim at one of Google’s other crown jewels: the open-source Android operating system for mobile devices. Through the creation of a new application called Home, Facebook is venturing into the world of mobile devices, placing itself front and center on popular smart phones while pushing Google’s prized creations, like maps, Gmail, and search into the background. 

 

CEO and founder of Facebook, Mark Zuckerberg said he was not sure how Google would react, but suggested that Home could help Android devices by separating themselves from the iPhone. 

 

In the short-run, Zuckerberg could be right; any boost to Android will help Google, which a significant chunk of its revenue on mobile devices through ads in search results, apps and web pages. However, over time, if the Facebook mobile app platform succeeds, Google could suffer. If Facebook takes the lead role on Android mobile devices, the value of a new Android device to Google will decrease, and its grip on the Android consumer base will weaken. 

 

Facebook is not the first rival to use Android for its own benefit. Amazon, through the creation of the Kindle Fire, also markets Android devices. Moreover, Google’s ally Samsung has made tweaks to the interface of its Android devices and offers cloud storage services to rival the search giant. 

 

Source: AP

Facebook’s Initial Public Offering made founder Mark Zuckerberg a multi-billionaire; however, it also left him with a pretty hefty tax bill. 

 

Facebook’s stock market debut left founder and CEO Mark Zuckerberg with a fortune valued at roughly $13 billion and a 2012 tax bill of around $1.1 billion. 

 

Zuckerberg’s enormous tax burden stems from his move last May to increase his stack in Facebook. On the day of the company’s IPO, Zuckerberg exercised a stock option and purchased 60 million shares at a strike price of 6 cents per share. Even if these shares are never sold, the Internal Revenue Service treats them as regular income once they are exercised. The rational is that said options are a form of compensation similar to regular wages.

 

For Zuckerberg’s sake, these rules require the CEO to report income last year of roughly $2.3 billion for his stock options alone. To augment his obligation, add the top 2012 federal tax rate of 35 percent and the highest state income tax rate of California’s 13.3 percent and you get a total tax obligation of 48.3 percent. 

 

This massive amount owed comes before factoring in deductions and other income collected by the CEO of Facebook last year. Although the government and California’s tax agency know what is labeled in Zuckerberg’s return, but several California CPAs told various media outlets that the Facebook founder’s tax obligation will likely exceed $1 billion. 

 

Such a burden is highly unusual, even for billionaires. 

 

The Internal Revenue Service does not comment on the returns of individual taxpayers, but each year the agency releases aggregate data on the 400 American tax filers with the largest reported incomes. According to last year’s list, the average top earner possessed an income of roughly $245 million and a federal income tax bill of nearly $50 million. 

 

To cover the massive bill he knew was approaching, Zuckerberg dipped into his treasure chest of Facebook stock, selling over 30 million shares during the company’s IPO. At the time, Facebook announced in a regulatory filing that Zuckerberg planned to use the majority of the $1.135 billion in proceeds to cover the taxes on his stock-option purchase. 

 

In addition to his tax bill, Zuckerberg faces another sizeable hit in the upcoming years. 

Zuckerberg is sitting on over 60 million of unexercised options that expire during the winter of 2015. At Facebook’s current share price, Zuckerberg’s options would generate $1.6 billion worth of taxable income. If Zuckerberg were to redeem these shares today with the nation’s current tax rates, Zuckerberg would face a $826 million bill. 

 

The United States’ treasury will gladly accept such a large payment, as will California, which is expecting to receive a windfall from thousands of Facebook employees who are cashing in on stock grants and options. The state of California expects to collect approximately $1.5 billion in Facebook-related tax revenue, according to estimates from the state’s Legislative Analyst’s Office. 

 

 

After flirting with the milestone for the past few weeks, the S&P 500 finally topped its all-time closing high in morning trading today. The benchmark index climbed roughly 3 points to 1565.58, inching just beyond its record closing high of 1565.15 reached in October of 2007. 

 

Despite the new record, trading was relatively stagnant on Thursday as investors were busy watching the ongoing crisis in Cyprus and mulling over fresh economic data in the domestic markets. The NASDAQ, S&P 500 and the Dow Jones Industrial Average were all up between .1 and .2 percent during trading hours. 

 

That said, the first quarter of this year has been far from boring. The Dow, which has been enjoying record highs since early March, is up a staggering 11.5 percent and poised to secure its best first quarter since 1998; the S&P 500 is up almost 10 percent; and the NASDAQ is up roughly 8 percent. 

 

Despite the success, experts argue that valuations remain attractive for domestic stocks. The S&P is trading at just 16 times its 2012 earnings, compared to roughly 17 times profits for the period it reached its previous high in October of 2007. 

 

Volume is expected to remain low today, ahead of Good Friday, when markets will be closed throughout the United States and the majority of Europe. 

 

Banks in Cyprus reopened this morning after being shut down since March 16th. The island nation is planning to limit the amount of funds depositors can withdraw in an attempt to prevent a run on banks. In addition to shrinking its banking sector for a 10 billion European Union bailout, the nation agreed earlier this week to raise billions of euros from large depositors at the Popular Bank of Cyprus and at the Bank of Cyprus. 

Meanwhile in the United States, the Federal Government released weekly data on the initial jobless claims and the fourth quarter GDP tally. 

 

Jobless claims in the United States totaled 357,000 in the week that ended on the 23rd of March, which is an increase of 16,000 from the prior week. The forecast called for a total of 335,000 based on a consensus of economists and industry professionals. 

The government report for the fourth-quarter GDP revealed an annual increase of 0.4 percent, which was slightly better than the expected increase of 0.3 percent. 

 

 

Source: Associated Press

Banks in Cyprus reopened today for the first time in nearly two weeks. The reopening was met with strict limits on cash withdrawals as authorities are attempting to prevent a run on the island nation’s bank following a bailout by the European Union. 

Cyprus became the first Eurozone nation since the currency was launched on the 1st of January 1999, to place restrictions on how much money companies and individuals can take across its borders. 

 

Cyprus banks had been closed since the 16th of March when it became clear that deposits would be raided as a condition of the bailout. The island nation was brought to the cusp of collapse and a possible exit from the Eurozone after its two largest banks—Popular Bank and the bank of Cyprus—took massive losses on Greek government debt, wiping out over a third of their combined capital. 

 

Following months of negotiations, the banks signed up for a bailout from its Eurozone partners worth roughly 60% of the island nation’s gross domestic product. 

 

In return for the bailout, Cyprus is committed to raising billions from leading depositors to recapitalize the Bank of Cyprus and the winding down of Popular Bank. The European Union wants the island nation to shrink its banking industry by 50 percent by 2018. 

 

Deposits above 100,000 euros were frozen at both big banks since the 16th of March. These deposits may be wiped out entirely at Popular while 40 percent may be converted into equity at the Bank of Cyprus. 

 

Deposits of less than 100,000 euros are guaranteed at all Cyprus banks. Moreover, the bailout will not impact smaller banks in Cyprus, which account for roughly 60 percent of the nation’s total deposits of 68 billion euros. 

 

Many of these deposits belong to foreign investors, specifically Russians, and authorities in Cyprus fear an uncontrolled flight of funds that would cause the economy to collapse. 

 

The use of austerity controls breaks new ground for the European Union, which was established on the principle of free movement of payments and capital. Many economists and those close to the situation argue that a partial collapse of the Eurozone is underway because a Euro held in Cyprus is no longer worth the same amount as a Euro held in Germany. 

 

In addition to the limits placed on withdrawals, debit and credit use abroad has been capped at 5,000 euros per month, and individuals leaving the island nation may only take 3,000 euros in cash each trip. 

 

Federal investigators, on Friday, charged Michael Steinberg of SAC Capital with securities fraud to which he pleaded not guilty. 

 

The high-ranking trader at SAC Capital—the powerful hedge fund run by multi-billionaire Steve Cohen is at the center of an insider trading investigation—was formally charged with securities on Friday, according to the Federal Government of the United States. 

 

Mr. Steinberg, a prominent portfolio manager with the hedge fund is facing five counts—including securities fraud—for allegedly short-selling tech stocks Nvidia and Dell based on inside information, according to documents for the U.S. Attorney’s Office for the Southern District of New York.

 

Steinberg pleaded not guilty in federal court and posted bail of $3 million. The trader’s next court date is set for May 3rd. 

 

“As alleged, Mr. Steinberg was another Wall Street insider who fed off a corrupt trail of confidential information cultivated by other professionals who created their own rules to make obscene amounts of money,” said U.S. Attorney Preet Bharara. 

 

Steinberg was arrested at 6 in the morning at his Manhattan residence; FBI officials claim that Steinberg was at the center of an elite criminal circle, where corruption and cheating were rewarded with million-dollar payouts. 

 

Steinberg’s lawyer, Barry Berke insists that the Wall Street trader is innocent. “Mr. Steinberg did nothing wrong; his trading decisions were based on detailed analysis and information that he understood had been legitimately obtained through the channels that institutional investors rely upon.” 

 

The charges of securities fraud come on the heels of a settlement reached on March 15th of this year between the Securities and Exchange Commission and SEC. 

On March 15th, two sectors of SAC Capital agreed to pay $614 million to the SEC to settle insider trading charges. The settlement, which was the largest in SEC history, required hedge fund advisory firm CR Intrinsic Investors to pay roughly $600 million in fines for making $275 million in illegal profits or to avoid losses and Sigma Capital to pay $14 million for trading based on nonpublic information.

 

The SEC stated that Steinberg worked at Sigma, where he allegedly received illegal tips from an analyst who is being charged by the U.S. Attorney’s office as being a co-conspirator. The SEC claims that Steinberg’s “illegal conduct” netted north of $6 million in profits and avoided significant losses. 

 

The investigation focused on conversations from 2008 between the analyst and Steinberg. The indictment accuses the analyst of telling Steinberg that an employee at Dell warned him the company was going to miss its earnings projections, prompting Steinberg to sell short 30,000 shares before the stock dropped 13 percent. 

The analyst allegedly emailed Steinberg saying, “please keep this information to yourself,” to which Steinberg replied, “Yes, we would never divulge information like this, so please be discreet.”

 

Steve Cohen, the founder of SAC Capital, has not charged, though investigators have been circling him for months, looking for signs of insider trading. 

 

 

Source: Associated Press

 

French President Francois Hollande is reviving calls for a 75 percent top income tax rate for the wealthy. 

 

President Hollande altered his failed proposal for a 75 percent top tax rate this week to shift the burden of payment from individuals to companies that pay salaries over 1 million euros. 

 

President Hollande, during last year’s presidential campaign, proposed the 75 percent tax rate on individuals earning at least 1 million euros per year; however, the proposal was ultimately rejected by the nation’s judiciary body. 

 

Following rejection, Hollande created a new payroll tax proposal on large salaries during a late night television appearance. Hollande claimed the measure is mandatory to ensure transparency at large businesses, which seemingly are the only companies that can afford to pay employees such a hefty salary. 

 

President Hollande’s initial proposal, which never was enforced, inspired French actor Gerard Depardieu to leave the country and renounce his citizenship. Depardieu, who now holds a Russian citizenship and lives in Belgium, is a cultural icon in France, and his departure triggered a firestorm of public comment for and against him. 

 

In the United States, the Democratic Party has also raised the argument that the wealthy should pay higher taxes as a matter of equality and fairness. As part of the fiscal cliff deal during the beginning of this year, the top marginal tax rate on income was allowed to revert to the pre-2001 level of 39.6 percent. 

 

President Hollande’s popularity has taken a drastic hit during the recent months, and the embattled leader used the television broadcast earlier this week to urge for more reforms. 

 

The proposal comes at an awkward time as the French economy, which is second in size only to Germany in the euro-zone, has stagnated. Several economists stated earlier this month that France’s performance in the first quarter of this year was shaping up to be the worst since 2009. 

 

“The widespread weakness across manufacturing leaves little room for hope, with a range of indicators from backlogs, new orders, output prices and employment all residing at depressed levels,” said economist Jack Kennedy. 

 

The nation of Germany, by contrast, saw increased improvement in business activity last month for a third consecutive month. Kennedy claims the gap in performance between the Eurozone’s healthiest economies was at its widest margin since surveys began in the early stages of 1998. Kennedy believes that France is begging to look like it belongs on the periphery of the Eurozone’s strong economies, rather than at the core. 

 

Source: CNN

 

 

An additional half a billion dollars has been returned to the victims of Bernard Madoff’s Ponzi scheme. 

 

Roughly $506 million was returned to victims of the Ponzi scheme according to a Monday press release by the Securities Investor Protection Corporation and the office of trustee Irving Picard.

 

This now means that a total of $5.44 billion has been returned to victims since Madoff’s monumental scam was uncovered. 

 

However, more than four year after Madoff’s conviction over two-thirds of the stolen funds are either unaccounted for, or are yet to be returned to duped investors. 

 

Federal investigators claim that $17.5 billion was lost to Madoff’s Ponzi scheme, which crumbled with his arrest in December of 2008. Since then, investigators have recovered assets, including a yacht, jewelry and property and have reached settlements totaling nearly $9.2 billion. 

 

That said, many of the victims are still awaiting a settlement, and have yet to receive compensation for Madoff’s illegal activity. The trustee associated with the case claim that 1,106 accounts have been fully reimbursed out of a total 2,178 victims. 

 

Bernard Madoff, the mastermind behind the record-setting scheme is languishing in a federal prison in Butner, North Carolina. Mr. Madoff pleaded guilty in March of 2009 to running the massive Ponzi scheme, and as a result, was sentenced to 150 years without the opportunity for parole. 

 

Madoff’s brother Peter recently began 10-year prison sentence for aiding in the concealment of the scheme. 

 

Source: Associated Press

The number of Americans filing new claims for unemployment benefits edged higher this past week, but a trend reading dipped to its lowest in five years and pointed to ongoing improvement in the labor market. 

 

Initial claims for state unemployment compensation increased 2,000 to a seasonally adjusted 336,000 according to the Labor Department via a statement released today.

Economists polled by various media outlets had expected 342,000 first-time applications for unemployment benefits this week. 

 

The month-long moving average for new unemployment claims, a significant measure of labor market trends, dropped 7,500 to 339,750, which marks the lowest level since February of 2008.

 

These figures could bode well for job growth in March as last week’s claims data covered the survey period for the U.S. government’s monthly tally of non-agricultural or non-farm jobs. The four-week average of new unemployment claims dipped 6 percent relative to the survey week last month, when nonfarm payrolls increased by 235,000.

Still, while layoffs have dipped over the recent months, companies remain cautious concerning hiring and the Federal Reserve has appeared worried that tightening the government belt could dampen progress in the labor market. The Federal Reserve on Wednesday announced that it would move forward with its aggressive stimulus policy, pointing to high unemployment, risks from abroad and fiscal headwinds out of Washington. 

 

The Federal action came despite a rash of data revealing the economy gaining steam. Retail sales are getting stronger, manufacturing output has increased and employment growth is moving faster than most expected, with the jobless rate failing to 7.7 percent in February from 7.9 percent in January. 

 

The Central Bank maintained that it will continue purchasing $85 billion in bonds per month, promising to maintain its asset purchases until it sees a significant improvement in the labor market outlook. 

 

Earlier this month, the number of people still collecting benefits under regular state programs after an initial week of receiving benefits rose 5,000 to a shade over 3 million in the first week of March. Analysts from the labor Department reported that jobless claims data had not been estimated for a number of states, and there were no significant factors influencing their report. 

 

Source: CNN

 

In finance, binary options are a specific type of option where the payoff can either be a fixed amount of the asset or just nothing at all. Binary options come in two different types, cash-or-nothing binary option and asset-or-nothing binary option.  In a cash-or-nothing binary option, the option pays a fixed amount of money if it expires in-the-money. On the other hand, the asset-or-nothing binary option pays the amount of the underlying security of the option. Thus, both options are binary in nature since there are just two different possible outcomes. These two binary options are also called to as all-or-nothing options, digital options, or fixed return options.

Like a typical vanilla European or American style option, binary options are described by their strike price, maturity date, and underlying reference unit, instrument, commodity or security price.  Binary options are sold for a premium payment made upfront, like other options.  Calls and puts are both available for binary options.

Binary options are characteristically sold and bought in over the counter markets between different financial hedge funds, institutions, large trading partners, and corporate treasuries. Binary options are highly used when the underlying instrument at hand is a rate, event, commodity, currency, or index.  

Binary options can be widely to hedge weather events, like hurricanes, rainfall, or temperature. This is because many transportation and agricultural companies can be heavily affected by the weather conditions.  Since the weather is very unpredictable and hard to measure, it makes it the perfect opportunity for binary options since it lets the binary option seller to assume a set amount of risk associated to the happening of a future event that is impossible to predict. 

Binary options can also be traded on inflation figures, like the Consumer Price Index or the Producer Price Index in the U.S.  These values are reported rather infrequently based on sampling methods done independently, and are typically revised after they are first released once certain input values are further proved.  There is no continuing stream of prices since inflation is not actually a traded instrument.  Without the continual input prices, it is extremely very difficult to mark-to-market binary options, whose values are strongly dependent on the dense volatility and price data.  Binary options allow the buyer to get inflation protection, while at the same time providing the binary option seller with a limited risk in the case where that inflation drops or jumps unexpectedly.

Lastly, binary options are extremely popular in foreign currency markets.  Often, emerging market currencies are subject to quick jump risk resulting from economic or political instability, or just due to the comparatively small volume of foreign trade.  Cultured currency speculators use low-rate developed economy currencies like the USD or EUR and invest them in high-rate market currencies, and then purchase the binary options as a means of protection against any currency risk.  This allows the binary option speculator to earn some profit while protecting being protected from jump risk.