Lots of jobs, rates still rising, ERTC, Ransomware, and a Portuguese startup.
What a Friday!
Guess what the jobs report came in at? Hint: expectations were at 170,000, and it was 180,000 the month before.
336,000 new jobs. Missed it by that much, 99!
That upset Wall Street because that keeps up the threat of additional Fed rate increases.
Wall Street really doesn’t like high interest rates because that usually puts a damper on stock prices.
Small business doesn’t like them because your prime rate loan is 8.5%, assuming the bank hasn’t tacked on a risk spread for your company.
Many business borrowers are paying 10.5%.
Two years ago, that was a hard money loan.
Consumers don’t like them because your 30-year mortgage is at 8.5%. Yep, google ’30-year mortgage rate’.
That’s still less than my first 9.875% fixed-rate loan in 1990, but it’s getting close.
So why aren’t housing prices coming down? It’s a supply/demand thing.
I’ll get into that next week.
The unemployment rate is at 3.8% - still really good. And wages increased year over year by 4.2%, just slightly down from the previous month.
This helps keep inflation in check because if wages aren’t growing too quickly, the idea is that prices won’t either.
Out this week: the Consumer Price Index, aka Headline Inflation.
The ERTC – Employee Retention Tax Credit or Employee Retention Credit, depending on who you talk to.
It’s been a while since I have mentioned this program, the last of the covid era rescue plans.
It was designed to help eligible businesses whose operations were fully or partially halted or whose gross receipts fell significantly, during the height of the pandemic.
So why mention it now? Well, many of you have been getting call after call from outfits promising to get you $26,000 for each employee you had during 2020 and 2021.
And now the calls and radio ads have stopped, assuming you listen to the radio and pick up your phone.
They stopped because the IRS has stopped processing any refund claim that was submitted after September 14. Evidently, there is a teensy-weensy amount of fraud.
You give away money, and people figure out how to get a piece of that pie. For reference sources, just look up California EDD Covid Fraud $32B.
They are, however, processing amended 941 forms – 941x – that were submitted prior to September 14, but it will take 180 days to get it processed as they are checking and re-checking the ERTC request.
Three things:
If you haven’t filed, wait. Ask your CPA, not the guy on the phone, if you should file. If your CPA says no, then you probably shouldn’t.
If you have filed but have not received your refund but now believe that it was incorrect, you can withdraw the 941x filing; the IRS is working on a process for that.
Finally, if you received your refund but now believe the claim was improper, just wait. The IRS will be announcing a program in the fall to let businesses repay erroneous ERTC refunds without penalties.
Ransomware
I was fortunate enough to attend a presentation sponsored by Advanced Office in Irvine. They had an outfit called Alvaka do a ransomware/cybersecurity presentation. What was different this time was that they presented what happens after you get hit.
These are the guys your insurance company calls.
You’ve been hit with a ransomware attack…
When your IT folks can’t figure it out or solve it, the next step is to call your insurance company.
Your insurance company will then bring in a law firm that will then hire Alvaka or any other IT firm. Why?
Because then anything that is discovered is part of attorney/client privilege and protects you and your firm.
In the first hour:
Do:
Disconnect internet
Power off network switches
Disconnect backup systems
Write-protect backup media
Collect ransom note
Contact Alvaka or the recovery team of your choice
Do NOT:
Power off systems other than critical servers that have NOT been encrypted.
Attempt to ‘clean’ malware
Contact threat actor
So, the four players are:
Breach counsel – they minimize legal exposure
Forensics Investigator and Containment – they determine the cause, evaluate the consequences, secure the network, and eject the threat
Negotiator – they communicate with the criminal actor to get you your best deal
Restoration – restore data and systems
Many times, the criminal actor has been monitoring your activity and knows everything about your company, including your insurance coverage, cash balances, confidential information, and so on.
Sometimes, the threat is twofold: pay to get your system back up and then pay so that they do NOT release sensitive information.
Finally, your negotiator is familiar with many of the bad actors and knows their reputations, and which ones will pay and perform as agreed.
Many of these bad actors are fully functional companies with customer service, IT support, and corporate structures.
They are just based in Russia or Ukraine.
You almost expect them to have customer reviews. I wonder what they look like:
“I was so stressed that I had no access to my data. I reached out, and Vladimir calmed me down and told me everything would be okay, just as long as I followed his every direction. He walked me through the process of buying Bitcoin, confirmed receipt of our funds, and released the decryption key as soon as they got the Bitcoin. We were up and running in 14 days, beating his estimate of 16 days. Russkie Ransomware gets a full 5 stars!”
One more thing: it’s rumored that MGM was hacked via social engineering. Someone called the IT department and convinced the IT guy that the caller needed their password reset.
That’ll do it.
Who was this self-educated, self-made man who started his career in the shipping/brokerage business?
He never had a formal education, but was well-read in the subjects of geography, history, and astronomy.
His father and mother owned a cheese stand, and his dad also worked as a wool weaver.
He joined a merchant ship at the age of 14, sailing the region and then becoming a successful buyer at the age of 22 for several well-known Spanish merchants.
At the age of 27, he married well, securing the hand of the daughter of a nobleman.
As a buyer for one of the wealthiest merchants, he spent a good deal of time traveling and securing contracts for various commodities.
Because of his various connections made during his career, his education, and helped, no doubt by some sales skills and smooth talking, he managed to talk some rich and powerful VC folks to fund an exploratory voyage that would enable their merchant company to establish a new trade route.
Money is always an incentive, and the upside was huge on this deal. There wasn’t a bank in the world that was going to fund this, but the venture capital was available, and like some present-day MIT grads, he secured funding just on the threat that he would take his idea to a competitor. Sounds like Silicon Valley to me.
Pretty amazing how this continues to work in the present day. But I digress…
He negotiated a contract that included royalties and finders fees, got the series A funding, secured his transport, hired the first round of employees, and set off in 1492.
Depending on the language or country he was in, his name in 16th-century Genoese was Cristoffa Corombo; in Italian, Cristoforo Colombo; and in Spanish Cristóbal Colón.
But we know him as Christopher Columbus.
Today, October 9, is Columbus Day in his honor, although he landed in the Bahamas on October 12. Ironically, he never landed in North America. In fact, he was always convinced he had landed in China in the Far East since that was the objective. He never thought there would be a land mass in the way.
It was Amerigo Vespucci who recognized that North America was not China. Hence the name “America”.
And now you know the rest of the story…
Just remember, the mail isn’t coming today, but the 4th quarter has started, and would you believe… a new year is right around the corner?
Sorry about that, Chief.
