FFI Roundup: Technology + Common Sense + $100M Delis, Tax Savings, Mars, Russians, FBI, Thunderbirds, and More! (April 18, 2021)
Franklin Faraday Insights
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In this issue:
— $100 million dollar delis
— Busting a Russian cyber firm
— A new Thunderbirds show
— Yes, you can write off that ENTIRE business meal
— Bitche in France
— Did the FBI fix your computer?
— A strange hobby saves a life
— Yes, COVID is airborne
— The Mars helicopter nears flight, while another probe goes into hibernation
— Little drummer girl
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Bubblicious
David Einhorn’s Greenlight Capital may have lagged his benchmark—returning just 0.1% compared to 6.2% for the S&P 500—but his letter to investors this week was quite interesting.
Strange things happen to all kinds of stocks. Last year, on one day in June, the stocks of about a dozen bankrupt companies roughly doubled on enormous volume. Recently the Wall Street Journal reported a boom in penny stocks.
Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey. The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing. Small investors who get sucked into these situations are likely to be harmed eventually, yet the regulators – who are supposed to be protecting investors – appear to be neither present nor curious. From a traditional perspective, the market is fractured and possibly in the process of breaking completely.
Yeah, that’s totally normal. CNBC looked into it a bit more…
Low key Italian restaurants in Jersey… hmmm… seems like a setting for some movies and TV shows… we’ll know the real story if billionaire hedge fund managers start showing up on crutches…
Cybersecurity
Kim Zetter’s new newsletter “Zero Day”did a very nice job weaving together a story from the Associated Press and another earlier report from the Atlantic Council to conclude that the Russian cyber security firm Positive Technologies—sanctioned last week for helping Russian intelligence agencies—had been part of a Microsoft program that gave private security vendors early access to vulnerability information:
The Treasury Department sanctioned six companies on Thursday for assisting Russian government hacking operations in various ways, including providing expertise and developing malicious hacking tools. Some of those firms allegedly have ties to the recent SolarWinds hacking campaign that hit U.S. government agencies and private companies, but the government didn’t identify which companies played a role in that operation.
Of the six, Positive Technologies, which says it earned $73 million last year, stands out for its respected role in the international security community. In addition to its partnership with Microsoft, it also lists HP and VMware as technology partners. [Notably, the government disclosed on Thursday that the Russian foreign intelligence service SVR, which was behind the recent SolarWinds campaign, was also exploiting a zero-day vulnerability in VMWare.]
Of course, it’s not like any of this should be a big surprise. Zetter adds:
Positive Technologies states in its history document that the Russian Ministry of Defense became one of its first clients in 2004, two years after the company was founded. And in 2011, it began a cooperative relationship “with Russian law enforcement and security agencies.”
The technical FBI term for this is: a “clue.”
Yet according to the Associated Press story:
Positive Technologies claims more than 2,000 customers in 30 countries, including major European banks Societe Generale and ING, as well as Samsung, SK Telecom of South Korea and BT, the British telecommunications giant.
You can draw your own conclusions…
Dangerous Machines
When COVID-19 cancelled the 2020 air show season, the U.S. Air Force Thunderbirds decided to spend their time reengineering their performance. This weekend in Coco Beach, Florida, the team will debut the first major changes to their routine since they switched to the F-16 in 1983.
According to the press release:
The most noticeable changes to the performance are the reordering and implementation of new maneuvers during the aerial demonstration. The new show sequence now follows seven distinct themes that focus on increasing crowd excitement, tapping into the emotions of onlookers and showcasing the complexities of the maneuvers in a gradual manner. It also includes two new maneuvers: the Low Bomb Burst with Hit, which will be flown in every show; and the Stinger Cross Break, which will only be performed during the 6-ship low and flat shows as well as 5-ship shows.
The show has new music, narration, and a choreographed launch sequence with the ground crews. It’s also shorter at 50 minutes, compared to 90 minutes previously.
You can watch a livestream (or post show video) of the April 17 and 18 Coco Beach airshow here (free signup required.) The Thunderbirds will perform from 1430-1515 Eastern time both days. (But you already knew that because you are following us on Twitter, right?)
Eat, Drink, and Save Taxes
Yes, we are actually going to highlight an article from the Journal of Accountancy in the FFG Insights!
To help restaurants recover from the COVID-19 pandemic, Congress temporarily changed the tax laws to make business expenses for food and drinks at restaurants 100% deductible from January 1, 2021 to December 31, 2023. Normally these expenses are only 50% deductible for tax purposes.
This part of tax law is unnecessarily complex, so it’s important to talk to an accountant to get clarification (the FFG lawyers reminds you that we are not accountants). For example, the IRS says that these expenses cannot be “lavish or extravagant under the circumstances” and an employee must be present. There are also restrictions on meals that take place with entertainment (the meals must be itemized separately), and of course there are restrictions on what is and is not a “restaurant” for these purposes:
Under the notice, the term “restaurant” means a business that prepares and sells food or beverages to retail customers for immediate consumption, regardless of whether the food or beverages are consumed on the business’s premises. A restaurant does not include a business that primarily sells prepackaged food or beverages not for immediate consumption, including a grocery store; specialty food store; beer, wine, or liquor store; drug store; convenience store; newsstand; or a vending machine or kiosk. The 50% limitation continues to apply to the amount of any deduction otherwise allowable to the taxpayer for any expense paid or incurred for food or beverages acquired from those types of businesses (unless another exception in Sec. 274(n)(2) applies).
In addition, an employer may not treat as a restaurant for purposes of
§ 274(n)(2)(D), (1) any eating facility located on the business premises of the employer and used in furnishing meals excluded from an employee’s gross income under § 119, or (2) any employer-operated eating facility treated as a de minimis fringe under § 132(e)(2), even if such eating facility is operated by a third party under contract with the employer as described in § 1.132-7(a)(3).
Have you set up your LLC yet? There are a ton of benefits to doing so… we may outline them in a future article… which you won’t see unless you subscribe!
#FAIL
Sacré Bleu!
Facebook “accidentally” deleted the page for Bitche, France because… hahahaha of course they did!
We conducted an informal snap poll of nearby French people on this topic, which concluded: “Where?”
There’s a good bet Bitche, France, is going to get a lot more tourists and start losing a LOT of street signs soon...
It turns out that there’s a name for this type of thing: The Scunthorpe Problem, named after Scunthorpe, England, where AOL’s profanity filter blocked residents from creating accounts in 1996. Why? We’ll leave that as an exercise for the reader.
The Verge won the headline contest on this one: “Facebook pulled the page for Bitche, France because it was not Nice”
Government (is here to help… remotely)
In a very unusual—probably first of its kind—move, the FBI obtained a court order in Houston to remotely remove backdoors in hundreds of Microsoft Exchange servers across the United States, according to Zack Whittaker (@zackwhittaker) at TechCrunch. This follows what Microsoft described as a Chinese state-sponsored attack they named “Hafnium” that hit at least 30,000 organizations in the United States in March. The FBI is now working to inform the owners of systems that they touched, though they were only able to remove the backdoor, not patch the vulnerability or remove malware.
While the Microsoft patch corrected the vulnerability, it couldn’t help the companies that the Chinese had already hit and installed backdoors that remained open. Within days of the attack, criminals began exploiting these backdoors to install ransomware and cause other damage.
Health
Everyone is sick of COVID-19, so we only run stories when they are important, like this one:
An article in The Lancet this week outlines 10 reasons to believe that COVID-19 is airborne. This is very different from saying that COVID spreads through large droplets, and it has significant policy implications. In short: an airborne virus is a worst-case scenario, and the measures to contain it are much more difficult. For that reason, policymakers have been very reluctant to draw this conclusion, despite evidence building for months. It may very well mean that some facilities simply cannot be made safe.
Based on anecdotal and first-hand experience, we believe the airborne conclusion to be true. One of the indicators for an airborne virus is that people have no idea where they got it, and contact tracing fails. This has been observed for some time. In our experience, when someone gets COVID-19, the first assumption is that they were not careful. However, we now personally know many cases where people were careful and still got sick without any link to another sick person. From the article:
If an infectious virus spreads predominantly through large respiratory droplets that fall quickly, the key control measures are reducing direct contact, cleaning surfaces, physical barriers, physical distancing, use of masks within droplet distance, respiratory hygiene, and wearing high-grade protection only for so-called aerosol-generating health-care procedures. Such policies need not distinguish between indoors and outdoors, since a gravity-driven mechanism for transmission would be similar for both settings. But if an infectious virus is mainly airborne, an individual could potentially be infected when they inhale aerosols produced when an infected person exhales, speaks, shouts, sings, sneezes, or coughs. Reducing airborne transmission of virus requires measures to avoid inhalation of infectious aerosols, including ventilation, air filtration, reducing crowding and time spent indoors, use of masks whenever indoors, attention to mask quality and fit, and higher-grade protection for health-care staff and front-line workers.
Here are the ten reasons:
Superspreading events account for substantial SARS-CoV-2 transmission; indeed, such events may be the pandemic's primary drivers.
Long-range transmission of SARS-CoV-2 between people in adjacent rooms but never in each other's presence has been documented in quarantine hotels.
Asymptomatic or presymptomatic transmission of SARS-CoV-2 from people who are not coughing or sneezing is likely to account for at least a third, and perhaps up to 59%, of all transmission globally and is a key way SARS-CoV-2 has spread around the world, supportive of a predominantly airborne mode of transmission.
Transmission of SARS-CoV-2 is higher indoors than outdoors and is substantially reduced by indoor ventilation.
Nosocomial infections have been documented in health-care organisations, where there have been strict contact-and-droplet precautions and use of personal protective equipment (PPE) designed to protect against droplet but not aerosol exposure.
Viable SARS-CoV-2 has been detected in the air.
SARS-CoV-2 has been identified in air filters and building ducts in hospitals with COVID-19 patients; such locations could be reached only by aerosols.
Studies involving infected caged animals that were connected to separately caged uninfected animals via an air duct have shown transmission of SARS-CoV-2 that can be adequately explained only by aerosols. [FFG Comment: What’s the difference between caged animals and working in cubicles? The animals get free food!]
No study to our knowledge has provided strong or consistent evidence to refute the hypothesis of airborne SARS-CoV-2 transmission.
There is limited evidence to support other dominant routes of transmission—ie, respiratory droplet or fomite.
Get your vaccine, and plan on getting a booster for both Pfizer and Moderna in the fall!
Hobbies
Some people play sports, some people knit, some people play with model trains. Benjamin Kuo tries to geolocate photos, and very likely saved the life of lost hiker Rene Compean.
Compean had sent a photo to a friend before reporting that he was lost and his cellphone was about to run out of power. The Los Angeles Sheriff’s Department asked for help, and Kuo responded with possible coordinates. A police helicopter went to the location… and found Compean!
The initial story quoted Compean as saying that he got lost because a recent wildfire had burned down signs; however, subsequent stories reported that he could now face a $10,000 fine and 6 months in jail for wandering into an area closed for safety reasons following the fire.
(Yes Compean probably could have used GPS or E-911 on his phone, but that story wouldn’t have been as good.)
Mars
With software fixes in place, NASA announced that Ingenuity, the Mars Helicopter, will conduct a first flight on Monday, April 19. The flight will take place at approximately 0300 EDT, but the livestream with the data will not start until 0615 on Monday. Thus, east coasters can get up a normal-ish time while those on the west coast might as well just stay up really late!
The postflight briefing will take place at 1400 EDT on Monday. NASA will deliver the livestream and briefing through numerous methods: NASA TV, the NASA app, the NASA website, and social media platforms, including YouTube and Facebook. If in doubt, just check the easier to remember mars.nasa.gov.
Yet there was another important story this week with another Mars Probe — the NASA InSight Mars Lander.
InSight is an $800 million dollar program that landed in 2018 and was designed to study the “crust, mantle, and core” of Mars, according to NASA.
Although Mars has a very thin atmosphere, the planet’s dust can cover solar panels, and landers rely on wind to clean the dust off. InSight has detected more than 10,000 “dust devils,” but there hasn’t been enough wind to keep the panels clean. As of February, InSight’s solar panels were producing 27% of their capacity.
NASA has been turning systems off to conserve power needed to keep the lander warm through the cold Martian winter, which continues until July. This week NASA decided to put InSight into “hibernation mode” and shut down all systems that are not necessary to keep the lander alive. NASA fears that if InSight’s batteries die, they will be unable to wake the probe back up, which is unfortunate since the probe is otherwise in fairly good condition. Some press reports indicated that InSight was in crisis; however, NASA is refusing to put the situation in such terms, noting that the shutdown planning had started in February.
InSight has detected more than 500 earthquakes on Mars, including two sizable (for Mars, not for California) quakes of magnitude 3.3 and 3.1 in early March 2021.
Random
Here’s a video of a 5 year old girl playing drums better than you… and she knows it! H/T Mike Wolf!
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