The I File

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DOW – 21 = 16,391
SPX – .05 = 1917
NAS + 16 = 4504
10 Y – .01 = 1.74%
OIL – 1.00 = 29.74
GOLD – 4.70 = 1227.00

So, stocks were basically flat on Friday but it was a good week. Big gains on Tuesday and Wednesday lifted the major indexes to their best weekly performances this year, with the Nasdaq gained 3.9% for the week, its strongest week since July. The S&P 500 gained 2.8% for the week.

Crude gained sharply earlier this week as major oil producers proposed a joint production freeze, but investors remain cautious whether the cap will actually materialize and worry about building U.S. crude inventories. Late yesterday the Energy Information Administration said crude stockpiles rose 2.1 million barrels last week, to a peak of 504.1 million barrels in the third week of hitting record highs in the past month. The EIA also cited record high gasoline inventories. Oil and stocks have been trading in lockstep, sort of. Oil down, stocks down. Oil up, stocks up. Not exactly, not a perfect correlation, but stocks can’t seem to get out of the shadow of oil.

In earnings news: Applied Materials (AMAT) posted a strong profit and revenue forecast for the current quarter. Nordstrom (JWN) shares dropped 6.7 percent after the department store operator’s quarterly profit and revenue missed expectations and they lowered guidance. Deere & Co (DE) shares fell 4.1 percent after the tractor maker cut its fiscal-year sales and profit outlook. Trinity Industries (TRN) dropped 22 percent after the railcar maker’s forecast missed expectations.

The overall Consumer Price Index, which measures inflation at the retail level, was unchanged in January after slipping 0.1 percent in December. The core rate, excluding food and energy prices, rose 0.3 percent last month, following a 0.2 percent increase in December. The overall price gauge has weakened since the summer of 2014, reflecting a steep drop-off in oil prices. The stronger dollar has also kept inflation in check, in part because it makes foreign goods relatively cheap for U.S. consumers. From a year earlier, overall prices rose 1.4%, the largest annual increase since October 2014. Core prices have risen 2.2% over the past year, the most since June 2012.

A new research paper published by the Federal Reserve concludes the US economy may be saddled with a “deflationary bias” after the last recession that makes it harder for the Federal Reserve to achieve its 2 percent inflation goal. The bias stems from a recognition by companies that the Fed has limited ability to spur the economy when interest rates are low. That in turn prompts firms to reduce expectations of future costs, affecting what they decide to charge for their products and services. Inflation has been below the Fed’s 2 percent target for about 3 1/2 years.

British Prime Minister David Cameron is in Brussels trying to get a deal on the U.K.’s membership of the European Union and late this afternoon came word of an agreement that gives the U.K. a seven-year “emergency-brake” period allowing it to impose welfare curbs on other EU citizens working in Britain. This doesn’t rule out a Brexit, or British exit from the EU, but it provides some sort of rationale for staying.

Apple has been given more time to respond to a government order to assist the FBI in unlocking an iPhone used by the perpetrators of last year’s terror attacks in San Bernardino. Its response in court will now be due February 26 instead of Tuesday. Facebook (FB), Twitter (TWTR) and Google (GOOGL) have all voiced support for Apple’s fight against a court order that Apple says would make iPhones less secure.

Later this afternoon, the Department of Justice filed a motion to compel Apple (AAPL) to comply with a judge’s order for the company to unlock the encrypted iPhone, portraying the tech giant’s refusal as a “marketing strategy.” And this is interesting because the government can compel a company or an individual to turn over something they have but it is doubtful the government can compel you to make something you don’t have. Apple says they don’t have the code to unlock the backdoor to encryption.

But information from a 2015 court case in New York, uncovered by the Daily Beast, suggests that Apple may have cooperated with the government and unlocked phones up to 70 times in the past. The report also implies the government might have developed its own ways of getting into at least some iPhones. If so, why push around Apple? And if the government truly is incapable of unlocking a phone, what does it say about our intelligence capabilities? Anyway, battle lines are being drawn. This afternoon Donald Trump tweeted: “Boycott Apple until such time as they give that information.” He tweeted on his iPhone. We’ll file that under “I” for irony.

Meanwhile, if you want to protect your own privacy, the best bet is to use a nice long password. Even if Apple or the government develops a backdoor, it still must use brute force to unlock the password; basically trying multiple passwords until it hits on the exact combo. They can test up to 750 passwords per minute; at that rate, they can guess any 4-digit password in about 13 minutes. Using longer, more complex passwords renders brute force impotent. A combination of 8 lowercase letters and numbers would take up to 7,152 years to crack, unless they get lucky.

General Electric has struck a deal to install new lights at 5,000 JPMorgan Chase (JPM) U.S. bank branches. “Current”, the new GE unit that sells LED lighting systems, estimates that, once installed, the new lights could reduce the banking giant’s lighting-related energy use in its branches by 50%. The deal is also considered a shot in the arm for Current, which represents a new front in GE’s effort to revive its industrial offerings and shake up the company’s public image.

Of the almost 175 companies that made their U.S. stock-market debuts in 2015, more than 70% are now trading below their IPO prices (on average their shares are down about 20%). There were no U.S. initial public offerings in January, and there have been only four new listings this month.

The FBI raided United Development Funding offices outside of Dallas on Thursday without elaborating on the nature of its move, sending the company’s shares plunging more than 50%. Earlier this month, Texas hedge fund manager J. Kyle Bass launched a website that accused the company of operating a “Ponzi-like real estate scheme.” United Development Funding calls itself a mortgage REIT that lends money to develop properties and charges interest on the loans.

Italian prosecutors are investigating Credit Suisse Group on suspicion of money laundering and tax evasion over billions of euros of insurance policies sold Italian clients and used to shield funds from authorities. Starting in 2005, Credit Suisse allegedly helped about 4,000 clients protect as much as $8.9 billion of funds that were earned illicitly, mainly as income that was undeclared to Italian tax authorities. Clients were sold insurance policies issued by subsidiaries of the bank. The scheme enabled them to skirt a Swiss withholding tax on deposits in foreign-held accounts while retaining access to their cash, which they could still manage from Swiss accounts.

Newly discovered memos and emails suggest that Volkswagen executives pursued a strategy of delay and obfuscation with U.S. regulators after being confronted in early 2014 with evidence that its diesel vehicles were emitting far more pollutants than allowed. The documents could raise the penalties for VW based on laws requiring public disclosure of problems that could potentially affect a company’s stock price. Separately, South Korean prosecutors raided the local office of Volkswagen and sister firm Audi today as part of the widening probe into its emissions scandal.

Ratings agency Standard & Poor’s warned on Friday it may cut the credit rating of billionaire investor Carl Icahn’s Icahn Enterprises to junk status because the portfolio had suffered heavy losses in the last few months. S&P put the company on “CreditWatch with negative implications.” Icahn Enterprises has lost “at least $1.4 billion in value” since the end of September, S&P wrote in a statement, adding it thought Icahn’s hedge fund had lost money this year as markets around the world tumbled. We’ll file that away under “I” for irony.

Three U.S.-based oil and gas companies defaulted this week, lifting the global tally for 2016 to 19. S&P lowered its ratings on Paragon Offshore to D, or default, from CC, after the company said it was filing for Chapter 11 bankruptcy protection. The agency lowered its ratings on Energy XXI Ltd. and its unit EPL Oil & Gas to D from CCC-plus, after that issuer missed an interest payment on senior notes. The agency lowered ratings on Venoco and its parent Denver Parent Corp. to D from CCC-plus, after that company missed an interest payment on senior notes.

Moody’s Investors Service has downgraded a total of 28 energy companies since December, as it continues a global review of the troubled sector. In January, Moody’s placed 120 energy companies and 55 mining companies from around the world on review for a possible downgrade.

Google moved $12 billion through the Netherlands to Bermuda in 2014, as part of a structure which allows it to earn most of its foreign income tax free. Accounts for Google Netherlands Holdings BV published on Thursday show the unit transferred almost all its revenue, mainly royalties from an Irish affiliate through which most non-U.S. revenue is channeled, to a Bermuda-based, Irish-registered affiliate called Google Ireland Holdings.

The tax strategy is known to accountants as the “double Irish, Dutch Sandwich’. It allows Google, now part of holding company Alphabet, to avoid triggering U.S. income taxes or European withholding taxes on the funds, which represent the bulk of the group’s overseas profits. Bermuda charges companies no income tax. The decade-old arrangement allowed Alphabet to enjoy an effective tax rate of just 6 percent on its non-U.S. profits last year, around a quarter the average tax rate in its overseas markets.