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Bitcoin Isn’t Digital Gold… Or At Least Not Yet, Anyway

Many investors have heard crypto experts refer to bitcoin as digital gold, but an analysis of these two assets' returns and volatility shows that bitcoin hasn't yet earned the right to be called digital gold. A recent report also downplayed the correlation between cryptocurrencies and equities that has appeared this year. Crypto enthusiasts have long touted bitcoin as digital gold, but an analysis of the cryptocurrency’s performance versus those of other assets shows that it hasn’t really earned that status yet. One thing that’s still lacking is a widespread market perception of crypto assets as a store of value. Cryptocurrencies remain a minuscule part of the global financial markets, with a total market capitalization of $1.1 trillion as of August, a significant decline from their record market cap of $3 trillion. The crypto markets are only about 2.5% of the total U.S. equity market cap. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. However, S&P Global agrees with crypto enthusiasts who are adamant that crypto assets and blockchain technology are here to stay. The firm noted that crypto assets and blockchain technology are an ecosystem with significant differences from the traditional financial system. However, the collapse of TerraUSD shows that the fundamental laws of finance still apply. For now, one of the greatest debates about cryptocurrencies is whether they should be considered currencies, commodities, securities or something else entirely. To better understand what crypto assets are, S&P Global compared their performance to that of various traditional financial assets. Bitcoin Versus Gold Of course, gold has been a store of value and hedge against market downturns for thousands of years. Central banks use the metal as a reserve asset and to hedge against inflation. When bitcoin was launched, many crypto wonks referred to it as "digital gold." As a result, the cryptocurrency has rallied off and on over the years due to expectations that it could play a similar role to the yellow metal at some point. However, to truly become digital gold, bitcoin would need a strong correlation with the metal's performance during similar periods, something that hasn't happened yet. In its recent report on those comparisons, S&P Global explained that crypto assets are significantly more volatile with the prospect of higher returns, making them more of a high-reward asset than a store of value like gold. For example, data from S&P Global indicates that the gold price rose more than 40% from mid-2019 to mid-2020 as investors turned to the yellow metal for protection during the COVID-19 pandemic. However, bitcoin did not behave the same way during that 12-month period. Additionally, the gold price has been volatile in 2022 but largely trended upward during this year's periods of heightened geopolitical risk. Meanwhile, bitcoin's performance didn't track the periods of increased geopolitical risk. S&P Global noted that the bitcoin price has plunged to its lowest level since November 2021, driven by intensifying inflation fears, a clear upward trend in inflation indices, and growing supply chain shortages, energy concerns, and military uncertainty amid the war in Ukraine. On the other hand, gold rallied during the first quarter but has averaged prices higher than where it stood before the pandemic. S&P Global also found that gold's volatility aligns closer with that of stablecoins than with other cryptocurrencies. The firm emphasized that while bitcoin doesn't currently deserve the classification of digital gold, it could at some point in the future. Crypto Assets Versus Equities S&P Global also compared the performances of various crypto assets to those of the S&P 500 and Nasdaq indices. The firm found that the daily returns of crypto assets are much more volatile than equities. According to S&P Global, cryptocurrency volatility has held heady above 60% since May 2020, while the volatility of the S&P 500's top three holdings, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN), didn't get much higher than 40, putting their volatility closer to that of stablecoins. While many other reports have called attention to a correlation between bitcoin and equities, S&P Global found that the crypto markets are not significantly correlated with equities despite the uptick in correlation in recent months. To gauge the correlation between equities and cryptocurrencies, the firm used Apple, Microsoft and Amazon as proxies for the equity market. S&P Global did discover that return correlations between bitcoin and the three largest equities increased during the pandemic period from March 2020 to the first quarter of 2022. Other than that, the firm found that correlations remained low. It feels the lack of comparability between crypto assets and equities is not surprising because the drivers for crypto valuations are different. According to S&P Global, the key performance drivers of the crypto markets include market confidence and adoption, regulatory frameworks, technology, and supply and demand or liquidity. On the other hand, the firm listed the drivers of traditional financial assets as operating profits, interest rates, inflation, and monetary and fiscal policies. Cryptocurrencies Versus Each Other Although S&P Global found that the crypto markets overall do not track equities, it did discover a noteworthy correlation in historical returns with each other, excluding stablecoins. The firm pointed out that the origin story of each cryptocurrency differs from those of the others and that they were created on different platforms using different protocols at different times. However, S&P Global's analysis of the performances of various cryptocurrencies shows a moderate-to-high correlation with each other since 2018. Stablecoins Versus Pegged Fiat Currencies Of course, stablecoins like Tether and USD Coin are far less volatile than other crypto assets. However, S&P Global still discovered that their volatility was greater than that of traditional pegged fiat currencies and that they have a low correlation with them. Do you think bitcoin has achieved digital-gold status yet? Share your thoughts in the comments section below......»»

Category: blogSource: valuewalkNov 22nd, 2022

"Dr Doom" Nouriel Roubini says "literally 90% of crypto is a scam" and Sam Bankman-Fried and FTX are not outliers in the market

"Literally 90% of crypto is a scam. A criminal activity. A total real-bubble Ponzi scheme that is going bust," economist Nouriel Roubini said. Nouriel Roubini.Photo by Pier Marco Tacca/Getty Images "Dr. Doom" economist Nouriel Roubini told Yahoo Finance Live that 90% of crypto is a scam. He described the stricken industry as a "total real-bubble Ponzi scheme that is going bust." The former NYU professor called most crypto execs "crooks" and said FTX founder Sam Bankman-Fried is not an outlier. Economist Nouriel Roubini, also known as "Dr. Doom," blasted the embattled cryptocurrency industry on Wednesday."Literally 90% of crypto is a scam. A criminal activity," Roubini, who is known for his dire global economic predictions, said on Yahoo Finance Live. "A total real-bubble Ponzi scheme that is going bust."Vulnerable retail participants have lost tons of money from investing in digital assets, he said, with traders jumping into bitcoin during its all-time highs. The crypto has since plunged almost 70% from its peak in November of 2021, according to Messari."You have to stay away [from crypto.] You have to absolutely stay away," Roubini said. "Most of these people belong literally in jail. Literally, they're all crooks."Speaking outside the World Economic Forum in Davos, Switzerland, the former New York University econ professor also took aim at disgraced founder Sam Bankman-Fried and his failed crypto exchange FTX. "FTX and SBF are not an exception — they're a rule," he added.Bankman-Fried pleaded not guilty to eight criminal counts earlier this month and is accused by US prosecutors of orchestrating a years-long scheme to defraud investors. FTX filed for bankruptcy in November after his crypto exchange lost at least $8 billion of customer funds.Roubini, one of the first experts to call the 2008 crisis, has been sounding other alarms lately too, including a stagflationary debt crisis.And last week, he warned the Federal Reserve will wimp out on its inflation fight, and predicted gold is the best protection for investors as volatility batters the economy.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 18th, 2023

7 Factors Bitcoin Investors Should Watch In 2023

7 Factors Bitcoin Investors Should Watch In 2023 Authored by Craig Deutsch, Dylan LeClair, and Same Rule via BitcoinMagazine.com, The below is an excerpt from a recent year-ahead report written by the Bitcoin Magazine PRO analysts. Download the entire report here. Bitcoin Magazine PRO sees incredibly strong fundamentals in the Bitcoin network and we are laser-focused on its market dynamic in the context of macroeconomic trends. Bitcoin aims to become the world reserve currency, an investment opportunity that cannot be understated. In our year-ahead report, we analyzed seven notable factors that we recommend investors pay attention to in the coming months. 1. CONVICTED BITCOIN INVESTORS We can put investor conviction into perspective by looking at the number of unique Bitcoin addresses holding at least 0.01, 0.1 and 1 bitcoin. This data shows that bitcoin adoption continues to grow with a growing number of unique addresses holding at least these amounts of bitcoin. While it is entirely possible for individual users to hold their bitcoin in multiple addresses, the growth of unique Bitcoin addresses holding at least 0.01, 0.1 and 1 bitcoin indicate that more users than ever before are buying bitcoin and holding it in self-custody. Unique bitcoin addresses continues to grow across the board. Another promising metric is the amount held by long-term holders, which has increased to almost 14 million bitcoin. Long-term holder supply is calculated using a threshold of a 155-day holding period, after which dormant coins become increasingly unlikely to be spent. As of now, 72.49% of the bitcoin in circulation is not likely to be sold at these prices. Long-term holder supply reached 72.52% of the circulating bitcoin supply. There is a large subset of bitcoin investors who are accumulating the digital asset no matter the price. In a December 2022 interview on “Going Digital,” Head of Market Research Dylan LeClair said, “You have people all over the world that are acquiring this asset and you have a huge and growing cohort of people that are price-agnostic accumulators.” With a growing number of unique addresses holding bitcoin and such a significant amount of bitcoin being held by long-term investors, we are optimistic for bitcoin’s advancement and rate of adoption. There are many variables that demonstrate the potential for asymmetric returns as demand for bitcoin increases and adoption increases worldwide. 2. TOTAL ADDRESSABLE MARKET During monetization, a currency goes through three phases in order: store of value, medium of exchange and unit of account. Bitcoin is currently in its store-of-value phase as demonstrated by the long-term holder metrics above. Other assets that are frequently used as stores of value are real estate, gold and equities. Bitcoin is a better store of value for many reasons: it is more liquid, easier to access, transport and secure, easier to audit and more finitely scarce than any other asset with its hard-cap limit of 21 million coins. For bitcoin to acquire a larger share of other global stores of value, these properties need to remain intact and prove themselves in the eyes of investors. Estimations of global stores of wealth. As readers can see, bitcoin is a tiny fraction of global wealth. Should bitcoin take even a 1% share from these other stores of value, the market cap would be $5.9 trillion, putting bitcoin at over $300,000 per coin. These are conservative numbers from our viewpoint because we estimate that bitcoin adoption will happen gradually, and then suddenly. 3. TRANSFER VOLUME When looking at the amount of value that was cleared on the Bitcoin network throughout its history, there is a clear upward trend in USD terms with a heightened demand for transferring bitcoin this year. In 2022, there was a change-adjusted transfer volume of over 556 million bitcoin settled on the Bitcoin network, up 102% from 2021. In USD terms, the Bitcoin network settled just shy of $15 trillion in value in 2022.  Bitcoin transfer volume was higher than ever in USD terms. Bitcoin’s censorship resistance is an extremely valuable feature as the world enters into a period of deglobalization. With a market capitalization of only $324 billion, we believe bitcoin is severely undervalued. Despite the drop in price, the Bitcoin network transferred more value in USD terms than ever before. 4. RARE OPPORTUNITY IN BITCOIN’S PRICE By looking at certain metrics, we can analyze the unique opportunity investors have to purchase bitcoin at these prices. The bitcoin realized market cap is down 18.8% from all-time highs, which is the second-largest drawdown in its history. While the macroeconomic factors are something to keep in mind, we believe that this is a rare buying opportunity. The realized cap drawdown in 2022 was the second largest in bitcoin's history. Relative to its history, bitcoin is at the phase of the cycle where it’s about as cheap as it gets. Its current market exchange rate is approximately 20% lower than its average cost basis on-chain, which has only happened at or near the local bottom of bitcoin market cycles. Current prices of bitcoin are in rare territory for investors looking to get in at a low exchange rate. Historically, purchasing bitcoin during these times has brought tremendous returns in the long term. With that said, readers should consider the reality that 2023 likely brings about bitcoin’s first experience with a prolonged economic recession. 5. MACROECONOMIC ENVIRONMENT As we move into 2023, it’s necessary to recognize the state of the geopolitical landscape because macro is the driving force behind economic growth. People around the world are experiencing a monetary policy lag effect from last year’s central bank decisions. The U.S. and EU are in recessionary territory, China is proceeding to de-dollarize and the Bank of Japan raised its target rate for yield curve control. All of these have a large influence on capital markets. Nothing in financial markets occurs in a vacuum. Bitcoin’s ascent through 2020 and 2021 — while similar to previous crypto-native market cycles — was very much tied to the explosion of liquidity sloshing around the financial system after COVID. While 2020 and 2021 was characterized by the insertion of additional liquidity, 2022 has been characterized by the removal of liquidity. Interestingly enough, when denominating bitcoin against U.S. Treasury bonds (which we believe to be bitcoin’s largest theoretical competitor for monetary value over the long term), comparing the drawdown during 2022 was rather benign compared to drawdowns in bitcoin’s history.  As we wrote in “The Everything Bubble: Markets At A Crossroads,” “Despite the recent bounce in stocks and bonds, we aren’t convinced that we have seen the worst of the deflationary pressures from the global liquidity cycle.” In “The Bank of Japan Blinks And Markets Tremble,” we noted, “As we continue to refer to the sovereign debt bubble, readers should understand what this dramatic upward repricing in global yields means for asset prices. As bond yields remain at elevated levels far above recent years, asset valuations based on discounted cash flows fall.” Bitcoin does not rely on cash flows, but it will certainly be impacted by this repricing of global yields. We believe we are currently at the third bullet point of the following playing out: Source: Dylan LeClair 6. BITCOIN MINING AND INFRASTRUCTURE While the multitude of negative industry and worrying macroeconomic factors have had a major dampening on bitcoin’s price, looking at the metrics of the Bitcoin network itself tell another story. The hash rate and mining difficulty gives a glimpse into how many ASICs are dedicating hashing power to the network and how competitive it is to mine bitcoin. These numbers move in tandem and both have almost exclusively gone up in 2022, despite the significant drop in price. Bitcoin mining difficulty continues to rise. Bitcoin hash rate continues to rise. By deploying more machines and investing in expanded infrastructure, bitcoin miners demonstrate that they are more bullish than ever. The last time the bitcoin price was in a similar range in 2017, the network hash rate was one-fifth of current levels. This means that there has been a fivefold increase in bitcoin mining machines being plugged in and efficiency upgrades to the machines themselves, not to mention the major investments in facilities and data centers to house the equipment. Because the hash rate increased while the bitcoin price decreased, miner revenue took a beating this year after a euphoric rise in 2021. Public miner stock valuations followed the same path with valuations falling even more than the bitcoin price, all while the Bitcoin network’s hash rate continued to rise. In the “State Of The Mining Industry: Survival Of The Fittest,” we looked at the total market capitalization of public miners which fell by over 90% since January 2021. The market cap of all public mining equities has dropped by 9 We expect more of these companies to face challenging conditions because of the skyrocketing global energy prices and interest rates mentioned above. 7. INCREASING SCARCITY One way to analyze bitcoin’s scarcity is by looking at the illiquid supply of coins. Liquidity is quantified as the extent to which an entity spends their bitcoin. Someone that never sells has a liquidity value of 0 whereas someone who buys and sells bitcoin all the time has a value of 1. With this quantification, circulating supply can be broken down into three categories: highly liquid, liquid and illiquid supply. Illiquid supply is defined as entities that hold over 75% of the bitcoin they deposit to an address. Highly liquid supply is defined as entities that hold less than 25%. Liquid supply is between the two. This illiquid supply quantification and analysis was developed by Rafael Schultze-Kraft, co-founder and CTO of Glassnode. Bitcoin's illiquid supply continues to grow. 2022 was the year of getting bitcoin off exchanges. Every recent major panic became a catalyst for more individuals and institutions to move coins into their own custody, find custody solutions outside of exchanges or sell off their bitcoin entirely. When centralized institutions and counterparty risks are flashing red, people rush for the exit. We can see some of this behavior through bitcoin outflows from exchanges. In 2022, 572,118 bitcoin worth $9.6 billion left exchanges, marking it the largest annual outflow of bitcoin in BTC terms in history. In USD terms, it was second only to 2020, which was driven by the March 2020 COVID crash. 11.68% of bitcoin supply is now estimated to be on exchanges, down from 16.88% back in 2019.  Exchanges saw a massive decrease in the bitcoin balances on their platforms. Bitcoin balance on exchanges decreased in 2022. These metrics of an increasingly illiquid supply paired with historic amounts of bitcoin being withdrawn from exchanges — ostensibly being removed from the market — paint a different picture than what we’re seeing with the factors outside of the Bitcoin network’s purview. While there are unanswered questions from a macroeconomic perspective, bitcoin miners continue to invest in equipment and on-chain data shows that bitcoin holders aren’t planning to relinquish their bitcoin anytime soon. CONCLUSION The varying factors detailed above give a picture for why we are long-term bullish on the bitcoin price going into 2023. The Bitcoin network continues to add another block approximately every 10 minutes, more miners keep investing in infrastructure by plugging in machines and long-term holders are unwavering in their conviction, as shown by on-chain data. With bitcoin’s ever-increasing scarcity, the supply side of this equation is fixed, while demand is likely to increase. Bitcoin investors can get ahead of the demand curve by averaging in while the price is low. It’s important for investors to take the time to learn how Bitcoin works to fully understand what it is they are investing in. Bitcoin is the first digitally native and finitely scarce bearer asset. We recommend readers learn about self-custody and withdraw their bitcoin from exchanges. Despite the negative news cycle and drop in bitcoin price, our bullish conviction for bitcoin’s long-term value proposition remains unfazed. *  *  * For the full report, follow this link to subscribe to Bitcoin Magazine PRO. Our team of experts covers macroeconomics, on-chain data, derivatives markets, the bitcoin mining industry & more to unpack the most important market trends. Tyler Durden Sun, 01/15/2023 - 16:30.....»»

Category: blogSource: zerohedgeJan 15th, 2023

Binance admits its stablecoin sometimes lost the full backing it needed to keep its price fixed at $1

The crypto exchange hadn't always maintained the necessary dollar reserves to keep its BUSD-linked token stable, leading to a $1 billion shortfall at times. Binance CEO Changpeng Zhao, known as "CZ".Ben McShane/Sportsfile for Web Summit via Getty Images Binance said its BUSD stablecoin hasn't always had the dollar backing needed for its price to stay fixed. The peg for the listed crypto token wore thin due to a "timing mismatch", the exchange said Tuesday. Last year Terra's UST stablecoin lost its peg, helping feed a massive selloff in crypto markets. Crypto giant Binance has admitted that it hasn't always maintained the reserves needed to keep the price of its BUSD stablecoin fixed at $1, creating a shortfall of as much as $1 billion in backing for the token.Stablecoins are cryptocurrencies that derive their value from an asset like the US dollar or gold, which are less volatile in price than digital assets. That cushions investors against wild swings in the wider crypto market.The mechanism that is supposed to keep Binance-peg BUSD's price stable had sometimes worn thin in the past, the world's biggest crypto exchange said Tuesday. The rhythm of managing the token meant it wasn't always fully "pegged" to the dollar, it said."Binance has always rebalanced or updated the assets in the pegged addresses periodically, not in real time. We now rebalance much more frequently to ensure it's always 1:1 backed," it said in a blog post.The exchange keeps the token's market price at $1 by holding reserves of BUSD, which is equivalent to the dollar. BUSD is a separate stablecoin with Binance branding that is issued and managed by regulated blockchain company Paxos Trust."For operational reasons, on occasion in the past, there was a timing mismatch in backing Binance-peg BUSD with BUSD," it said. "From the data it is clear that the rebalancing did not always keep pace with the demand for Binance-peg BUSD.""Having identified this ourselves last year, we now rebalance more frequently to ensure that Binance-peg BUSD is transparently fully backed."The gap between the reserves held by Binance and the amount of BUSD circulating on the exchange topped $1 billion three separate times between 2020 and 2021, according to ChainArgos data first reported by Bloomberg.BUSD is the third-largest stablecoin by market capitalization with a total value of $16.4 billion, according to CoinMarketCap.Stablecoin issuer Terra's inability to keep the price of its token fixed at $1 was one story that fueled to the brutal crypto selloff of 2022.Terra pegged UST's price to $1 using an algorithm, but heavy selling on May 7 broke that mechanism. The stablecoin's value plunged below 10 cents in the space of days.The double death spiral of UST and its sister token luna wiped out over $20 billion in value in seven days. That's the second-highest amount lost by crypto investors in a single week last year, according to Chainalysis data.Read more: From Sam Bankman-Fried's arrest to bitcoin plunging below $20,000, here are the 9 craziest crypto stories of 2022Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 11th, 2023

One Great Big Nasty Prediction For 2023

One Great Big Nasty Prediction For 2023 Authored by MN Gordon via EconomicPrism.com, Welcome to 2023! The New Year’s edition of the Economic Prism is a place of wild conjecture and rough suppositions.  A place where abstract thinking is celebrated.  Imaginative cycle theories, deep metaphysics, fractal wave patterns, happy accidents, and amateur fortune tellers of all stripes are invited too. Today, with perfect 20/20 vision, we set our sights on the year ahead.  After all, the New Year’s here.  What better time than now to peer out 12 months through our proprietary prism and report back what we see? On the periphery, we find new dreams, new directions, and new delusions, swirling about like storm clouds interspersed with warm radiant light.  We see opportunities and contretemps.  We see doom and despair.  And we also see hope and redemption. But what else?  What are the essential insights you should take along as you set out to make another pass around the sun? What does the New Year have slated for stocks, the 10-Year Treasury note, gold, oil, bitcoin, and everything else?  Will junk bonds be roiled by massive corporate defaults? Will Joe Biden’s recession turn into a depression?  Will Federal Reserve issued digital dollars – a Central Bank Digital Currency (CBDC) that’s traceable and programmable – replace the privacy of cash? Will there be a painful inflation flareup?  Will Sam Bankman-Fried mysteriously perish?  What about Maxine Waters…will she croak too? Will there be riots in your city?  Will the power grid meltdown?  Will California finally dry up and blow away?  Will your social credit score be tarnished for not recycling your food waste? Are we fated for complete societal breakdown?  Will 2023 culminate in the second coming of Jesus? The questions are limitless.  The answers are exponentially limitless. Where to begin… Believe In Yourself To clarify, our predictive methodology is rudimentary.  We eschew popular forecasting techniques – including trend lines, relative strength and/or stochastic oscillators, and other data driven models – for a conjectural approach. We look to our sixth sense and developed intuition for guidance and pragmatic guesses. But before we begin, we pause to ask: “What say you, dear reader?” You likely have opinions on these matters.  Most people do, even your dense uncle can reckon a thing or two.  Without a doubt, the answers to these questions will be revealed in due course.  Some before you die.  Some after. In the meantime, our advice is to keep it simple and trust your gut.  Many gurus don’t know what they’re talking about.  So, believe in yourself.  For your guesses are better than most. Besides, after a demoralizing 2022, and with Karine Jean-Pierre as White House Press Secretary, anything and everything can happen in 2023 – including World War III! Thus, we’re abstaining from a broad range of predictions for the 12 months before us.  But not to worry, we won’t leave you empty handed. Rather, with humility and modesty our intensive research has brought us to one critical – yet overlooked – event that will come to pass in 2023.  Our claim is bold and of ultimate importance.  Because it will drive the outcome of just about everything else. By way of full disclosure, our primary conjecture is not unique or unknown.  In fact, many can sense what’s coming.  But like when confronted with the presence of a war veteran with missing limbs, nearly all look the other way.  The horrors are too grave to contemplate. Not today, however.  Free of charge, and with the sole intent of separating you from the common herd, we’re considering something nasty and unpleasant.  Yet it’s something that will come to pass in 2023, nonetheless. We’ll tell you all about it in just a moment.  But first, some context is needed… Who Done It? To be perfectly frank, if you haven’t already come to this conclusion on your own, WWIII started on February 24, 2022, when Russia invaded Ukraine.  Many Americans remain incapable of comprehending this. Right or wrong, for 20 years NATO goaded Russia through progressive eastward expansion towards Russia’s border.  An aggressive reaction was bound to happen. If you recall, the U.S. and its NATO allies quickly responded with a ‘sanctions war’ against Russia, and an actual shooting war using the Ukrainians as proxies.  The initial centerpieces of the massive sanctions included cutting Russian financial institutions off from SWIFT and preventing the Bank of Russia from using its foreign currency reserves.  Orders to ‘freeze and seize’ the assets of Russian oligarchs soon followed. But Putin had his own countermeasures ready.  To stabilize the ruble, the Bank of Russia offered to buy gold from Russian banks at a fixed price of 5,000 rubles per gram, thus linking the ruble to gold.  This quickly limited the ruble’s devaluation in terms of U.S. dollars because gold trades in dollars. Then, in retaliation for the sanctions, Putin required foreign buyers of Russian natural gas pay for their imports using rubles.  By linking the ruble to gold and the price of natural gas to rubles, Putin, in effect, linked the price of natural gas to the price of gold. By linking the ruble to gold and then linking energy payments to the ruble, the Bank of Russia and Putin fundamentally altered the entire rulebook of the global trade system.  They also accelerated change in the global monetary system. Since 1971, the global reserve status of the U.S. dollar has been underpinned by oil.  The petrodollar era has remained in place because of the world’s continued use of U.S. dollars to trade oil and the U.S. government’s – and the U.S. military’s – ability to prevent any competitor to the dollar.  Might makes right. On September 26, 2022, a series of secret bombings disrupted the flow of gas through the Nord Stream pipelines between Russia and Germany via the Baltic Sea.  Who done it? We may never know. At this point, sanctions have been much less effective at deterring Putin than Javelins and Stingers.  Still, do you follow the wisdom of sending an additional $45 billion to Ukraine along with Patriot missile defense systems? Are these strokes of genius or strokes of madness?  Moreover, when does a proxy war stop being a proxy war? Alas, if you must ask the question, the fine line has already been crossed. With this context behind us, let’s turn to the year ahead.  What is the big – yet overlooked – event that will come to pass in 2023? One Great Big Nasty Prediction for 2023 In October, Chinese President Xi Jinping successfully completed a report to the Chinese Communist Party’s 20th National Congress.  He emerged from the party congress with a historic third five-year term as general secretary of the Chinese Communist Party (CCP) and chairman of the Central Military Commission. This outcome lifted Xi into the exalted air of Mao Zedong.  He’s ‘emperor for life.’  The event also underscored the CCP’s position that Taiwan unification is “a natural requirement for realizing the rejuvenation of the Chinese nation.”  Xi and the CCP view Taiwan as Mao’s unfinished business. On Christmas day, not long after Santa Claus traversed the globe, China sent 71 fighter jets and seven ships near Taiwan.  Many of these fighter jets crossed the median line of the Taiwan Strait.  The Taiwanese military counted 47 jets breaching the de facto boundary line. The casus belli, in this instance, was President Biden signing the 2023 National Defense Authorization Act, which includes $10 billion in military assistance to Taiwan.  A similar reaction was triggered over the summer following a visit to Taiwan from House Speaker Nancy Pelosi. About the same time as Pelosi’s visit, simulated war games of a Chinese invasion of Taiwan were conducted at the Center for Strategic and International Studies.  The results were grim for both China and the U.S. Certainly, an invasion of Taiwan across the Taiwan Strait by China’s People’s Liberation Army (PLA) seems improbable.  But so did Russian tanks rolling across the border into Ukraine, until just moments before it happened. According to JPMorgan, “while the world is short on commodities, China is not given they have started stockpiling commodities since 2019 and currently hold 80 percent of global copper inventories, 70 percent of corn, 51 percent of wheat, 46 percent of soybeans, 70 percent of crude oil, and over 20 percent of global aluminum inventories. Why, just why, is China stockpiling such massive amounts of commodities? At the same time, U.S. sanctions on Russia had the unintended consequence of compelling China and Russia into strategic cooperation.  All year Russia has been selling oil to China in exchange for yuan. In addition, Xi recently met in Saudi Arabia with Crown Prince Mohammed bin Salman and other Gulf Arab leaders.  In a direct challenge to the petrodollar, Xi remarked that China would work to buy oil and gas from Arab nations in yuan. What to make of all this? Economic warfare is being waged.  The geopolitical stage is being set for the next stage of WWIII in the Pacific Theatre. With all modesty, and full acknowledgement of the limitations of abstract thinking, that’s our one great big nasty prediction for the New Year.  Expect the unexpected.  China will invade Taiwan. This will put a torch to all other predictions for 2023. *  *  * As detailed above, one should expect the unexpected to come in 2023.  We don’t like it.  But we intend to exploit it.  What’s more, paid up Wealth Prism Letter subscribers will discover exactly how in the January issue, due to be published in the early hours of January 2.  If you’d like to exploit this opportunity too, take action and subscribe today!  Have a blessed 2023! Tyler Durden Sat, 12/31/2022 - 09:20.....»»

Category: dealsSource: nytDec 31st, 2022

Peter Schiff: I"m Even More Bullish On Gold Now!

Peter Schiff: I'm Even More Bullish On Gold Now! Via SchiffGold.com, Peter Schiff recently appeared on Kitco News and chatted with anchor David Lin. Peter gave his outlook for inflation, stocks, and gold in 2023. Peter said we had better get prepared for an inflationary depression. He also emphasized that he is very bullish on gold in the year ahead. Obviously, I’ve been bullish for a while. But I’m even more bullish now to the extent that’s possible, based on what’s been happening.” Peter said he expects “significantly higher” gold and silver prices in the year ahead. That will also push up gold mining stocks. Peter emphasized that gold mining stocks are currently extremely cheap and under-owned. Nobody in the institutional community really has any kind of position in this sector. I think by the end of the decade, they’ll all have positions in this sector. But of course, the stocks are going to be much more expensive at that point, so don’t wait for the crowd to figure it out. You want to anticipate where the crowd is going to be, and you get there first.” Peter said he’s not just bullish on gold for 2023.  He’s bullish for the rest of the decade and probably more. Gold moves in big cycles. I think this bull market really started in 2001, so, we’re 20 years into it. But we had a pretty big correction from 2011 to 2015. That’s when we bottomed out. We’ve been moving up since then, but we really haven’t taken out the highs from 2011.” We did get above the 2011 high for a short time, but it wasn’t significantly higher and it didn’t last long. Peter said we likely just saw a double top. I think we’re going to take that out and that double top is going to be the new floor.” Peter also pointed out that there was a “sideshow” with bitcoin that eclipsed gold to some degree. It stole gold’s spotlight for a while, because while gold was going nowhere, bitcoin went from nowhere to 60,000, 70,000 per bitcoin. And everybody who got involved in this, on paper anyway, they all were rich. And some of them actually got rich because they cashed out, and they sold bitcoin, and they bought real things with it.” Peter said he doesn’t think it was a lot of people, but some gold bugs did get frustrated with gold and got into bitcoin. Bitcoin was performing. It was going up while gold was going sideways. But bitcoin was marketed as digital gold. That was a whole selling point. ‘Hey, gold is obsolete! Gold is irrelevant.’ I think that – on the margins – took away some demand from gold. And maybe there were some institutions that would have bought gold, but because bitcoin was there competing against it, they didn’t buy gold. They didn’t buy bitcoin either, but they thought, well, you know, why buy gold because, you know, there’s bitcoin. It certainly took away some of gold’s thunder. A lot of the talk on the financial networks was about bitcoin. It wasn’t about gold. It was bitcoin, bitcoin, bitcoin. But meanwhile, the smart money was buying gold the whole time.” Peter said that now that the bitcoin bubble has popped he doesn’t see that problem for gold from a marketing perspective. Nobody is going to be comparing bitcoin to gold. Nobody is going to be talking about it as digital gold, as a safe store of value, as an inflation hedge. Everybody has pretty much come to the conclusion that it is a speculative asset.” Tyler Durden Tue, 12/27/2022 - 08:30.....»»

Category: blogSource: zerohedgeDec 27th, 2022

From Sam Bankman-Fried"s arrest to bitcoin plunging below $20,000, here are the 9 craziest crypto stories of 2022

These are the wildest moments in a brutal year for cryptocurrencies that saw bitcoin plunge over 60% and Sam Bankman-Fried arrested on fraud charges. Sam Bankman-Fried was arrested in the Bahamas on fraud charges.Mario Duncanson/Getty Images 2022 was a brutal year for digital assets as worries about stability rocked the crypto world. Bitcoin plunged 64% as interest rate hikes made investors think twice about riskier assets. The high-profile collapses of FTX, Celsius, and Three Arrows Capital eroded trust in crypto. In February, crypto exchange FTX made its Super Bowl debut with a commercial featuring "Curb Your Enthusiasm" star Larry David.By December, the exchange had collapsed — and its disgraced former CEO Sam Bankman-Fried had been arrested and was facing eight criminal charges in the US.All in all, 2022 was a brutal year for digital assets, as rising interest rates and high-profile bankruptcies helped feed a broad and deep selloff in the market.Here are nine crazy stories that rocked crypto this year:Cryptocurrency prices plummeted as investors started to fret about rising interest rates.Crypto prices slipped in January as the Federal Reserve readied to raise interest rates.Neil Hall/ReutersIn 2022, the Federal Reserve aggressively raised interest rates to try to tame soaring inflation, hiking from near-zero in March to around 4.5% nine months later.When interest rates rise, savings accounts offer higher yields – meaning that holding cash becomes more attractive than investing in assets like stocks, real estate, and cryptocurrencies.Digital asset prices started tumbling in January, as investors began to worry about the Fed taking a tougher stance on inflation. In that month alone, bitcoin slumped 19% and ethereum tumbled 29%."Crypto assets suffered one of their worst years in 2022, as central banks battled soaring inflation, resulting in sharply higher interest rates and weakening growth expectations, all of which left the industry nursing significant losses," a UBS team of strategists said.Crypto heavyweights like Coinbase and FTX dominated Super Bowl LVI's halftime ad slots.Tom Brady was one of FTX's highest-profile celebrity backers.AP Photo/Jason BehnkenAs digital assets surged in 2021, major exchanges like Coinbase, Crypto.com, and FTX spent millions on major sports sponsorship deals to build brand awareness as they competed for customers.In February, those three companies made a splash advertising on NBC's broadcast of Super Bowl LVI.Coinbase's simple commercial showed a QR code bouncing around a screen for 60 seconds, and a giveaway of $15 worth of bitcoin that sent people swarming to its platform.Crypto.com collaborated with NBA star LeBron James, while FTX's "Don't Be Like Larry/Don't Miss Out" ad with Hollywood's Larry David poked fun at crypto skeptics.But crypto companies cut back on their sports advertising spending as they faced this year's brutal market selloff — and FTX's partnerships with the Miami Heat, Mercedes F1, and NFL quarterback Tom Brady all became worthless after it filed for bankruptcy in November.Stablecoin TerraUSD slipped away from $1 – and its sister token luna crashed to zero.Terraform Labs' UST stablecoin lost its peg to the dollar in May.Idrees Abbas/SOPA Images/LightRocket via Getty ImagesTerraUSD (UST) was a "stablecoin", a cryptocurrency whose value was supposed to be fixed at $1.By pegging value to a stable reserve asset such as gold or a government-issued currency, such tokens offer crypto investors a safer place to park their cash in times of uncertainty.But on May 7, heavy selling of UST — crypto investors sold around $2 billion worth — broke its  dollar peg. Its price suddenly plummeted, and within days it was trading below 10 cents. Rather than holding dollar reserves, Terra maintained UST's peg to the dollar via an algorithm. This software propped up the stablecoin's value by minting and selling small quantities of its sister token luna if UST slipped away from $1.As UST crashed, the algorithm went into overdrive, minting and flooding the market with luna. It produced so much that luna's price nosedived from an all-time high of $119.51 to zero in the space of a few days.The double death spiral resulted in $20.5 billion of realized losses for crypto investors in a single week, according to blockchain research firm Chainalysis.Celsius Network froze all its customers' funds – after promising to never act like a bank.Celsius founder Alex Mashinsky repeatedly told journalists he "hates banks".Bruno de Carvalho/SOPA Images/LightRocket via Getty ImagesIn June, crypto lender Celsius said it would freeze all customer withdrawals, saying it was facing problems caused by "extreme market conditions".Bitcoin plunged 15% to below $23,000 after that announcement, while the group's native token cel dropped by a third to just 21 cents.Celsius founder Alex Mashinsky had repeatedly told reporters that he hated banks – and yet his company found locked up customers' funds during a time of high market volatility.Bitcoin fell under $20,000 to trade below its 2017 all-time high.Bitcoin plunged 64% in 2022.REUTERS/Jim UrquhartIn June, bitcoin dropped below $20,000 for the first time since 2020, increasing its losses for the year to over 60%.Investors see $20,000 as a key psychological level for bitcoin — that is, it signals something meaningful about the leading crypto's direction.That's because the token surged dramatically to about $20,000 in 2017, during that year's bull market, to set a then-record high. But it then went through a series of crashes in 2018 that pulled its price down to below $4,000.Bitcoin's fall weighed on the wider crypto market in 2022. By the end of June, ethereum was hovering just above $1,000. Meanwhile, while altcoins solana and polkadot traded at 90% below the record levels they reached in 2021.Hedge fund Three Arrows Capital defaulted on a loan and was ordered into liquidation.Rafael Henrique/SOPA Images/LightRocket via Getty ImagesCrypto's hellish June concluded with the bankruptcy of Three Arrows Capital (3AC), a digital asset hedge fund based in the British Virgin Islands.The crypto firm, known commonly as "3AC", defaulted on a bitcoin loan from lender Voyager Digital in the middle of the month and was wound up by a court on June 27.The collapse of Celsius and 3AC wiped a combined $33 billion off the value of crypto markets, according to Chainalysis.The knock-on effect from their failure spread across the industry. Voyager filed for bankruptcy just weeks later, and trading firm Genesis was left exposed to hundreds of millions of dollars in losses because it had loaned crypto to 3AC.FTX filed for bankruptcy after a sell-off in its native token triggered a solvency crisis.Major crypto exchange FTX filed for bankruptcy in November.Marco Bello/ReutersIn November, CoinDesk reported that FTX's sister trading firm Alameda Research held a significant amount of its portfolio in the exchange's native token, FTT.The price of FTT plummeted from $22 to just $1 in the space of a few days, triggering a solvency crisis at FTX.The crypto group was forced to file for Chapter 11 bankruptcy on November 17, after its CEO and cofounder Sam Bankman-Fried failed to find a saviour and rival exchange Binance pulled out of a rescue deal.Documents provided to the Securities and Exchange Commission revealed wild details about FTX's governance. Its new CEO John Ray III — who oversaw the restructuring of Enron – said he had never seen a company in as bad a shape as FTX in 40 years of dealing with bankruptcies.The Chapter 11 filing revealed that the group's crypto holdings were worth just $659,000 – and that it had been audited by a little-known firm that claimed to be the first certified accountant with an office in the metaverse.Former FTX boss Sam Bankman-Fried was arrested by Bahamian officials on fraud and money-laundering charges.FTX cofounder Bankman-Fried was arrested in the Bahamas to face US criminal charges.Dante Carrer/ReutersOn December 12, authorities in the Bahamas arrested Bankman-Fried – FTX's disgraced founder – on a US indictment that charged him with six counts of fraud, money laundering, and violating campaign finance laws.Bankman-Fried had previously been seen as one of crypto's most-respected CEOs. He promised to work with regulators, donated millions to president Joe Biden's election campaign, and was once compared to Luke Skywalker by 'Big Short' author Michael Lewis.His arrest marked the conclusion of a month-long fall from grace that saw the former billionaire's crypto empire spectacularly implode. Binance tried to reassure investors of its financial strength – and customers pulled $6 billion out of the exchange.Binance CEO Changpeng Zhao has tried to reassure customers after FTX's collapse.Photo by Pedro Fiúza/NurPhoto via Getty ImagesCrypto exchange Binance is coming under intense scrutiny in the wake of its rival FTX's implosion.Its outflows hit $6 billion in the space of 72 hours in December as investors pulled their money from the platform. There were fears the platform could face a liquidity crisis as its native Binance Coin token was selling off steeply.Binance moved to reassure the doubters by enlisting French accounting firm Mazars to carry out a proof-of-reserve audit for its crypto holdings.But Mazars has since suspended all of its work with crypto clients, "due to concerns regarding the way these reports are understood by the public," it said.Meanwhile, Binance's financial records are like a "black box" as they're mostly hidden from public view, Reuters said after analysing its corporate filings. Read the original article on Business Insider.....»»

Category: worldSource: nytDec 26th, 2022

Peter Schiff: The Private Sector Can Lead Us Back To A Gold Standard

Peter Schiff: The Private Sector Can Lead Us Back To A Gold Standard Via SchiffGold.com, Peter Schiff recently appeared on the Jay Martin Show. During the interview, explains how the private sector can ultimately lead the world back to a gold standard. Early in the discussion, Peter talks about investing, saying people need to be in something besides cash. People have to go somewhere. I think you just can’t be in cash because all of these governments are just printing too much money. The inflation problem is worldwide. And it’s because all of these central banks made the same mistake.” The world’s central banks basically followed the lead of the Federal Reserve. We kind of corrupted the monetary policy of the whole world.” As the US cut rates to zero, other major central banks did the same. In fact, some implemented negative interest rate policies to get their rates below America’s. But Peter said the dollar’s status as the world reserve currency won’t last forever. I think the world is going to reject the dollar. It’s already happening.” Peter noted the de-dollarization efforts in many countries due to the fact that the US has weaponized the dollar and used it as a foreign policy tool. Peter said when the dollar falls from its peak, Americans will face a rapidly declining standard of living. America’s ability to live beyond its means is a function of the dollar’s reserve status. Because we can print dollars and use those dollars that we print to buy goods and services — mainly goods that we didn’t produce.” So, what will replace the dollar? There is no question that gold is going to re-emerge as the monetary unit of choice for the world. It’s not an accident that gold was money for 5,000 years. It’s been money for so long because it works.” But Peter said he doesn’t think a new gold standard will be imposed by governments. I think that the free market is going to reject the dollar and other currencies because they’re a flawed form of money because they are no longer a store of value.” Peter pointed out that other private entities have undercut government monopolies in the past. For instance, FedEx and UPS managed to crack the US Post Office monopoly on parcel delivery. And with the advancement of technology, it’s now possible to easily transact business in gold. Blockchain technology makes it possible to tokenize gold and easily transfer it from one party to another. Bitcoin guys are like, ‘Oh, see, blockchain is the death of gold.’ No, it’s going to lead to the rebirth of gold. Because bitcoin is what we don’t need. Gold is what gives the digital currency its value.” Jay brought up the point that a gold standard facilitated through the blockchain would still depend on third parties for payment processing and gold storage. But Peter argued that we’ve always depended on third parties. That’s not a problem in a competitive free market. The problems arise when that third party is a government. We’ve always been trusting third parties and it’s worked. The only time it doesn’t work is when the third party is a government. That’s when they screwed us.” Peter said he thinks the private sector will lead the world back to a gold standard because there ultimately is a demand for sound money. The government has a monopoly on money and we’re being overcharged through inflation to use government money. So, the private sector comes up with an alternative.” During this interview, Peter and Jay also talk about inflation, jobs, the FTX collapse, stocks, investing, and more. Tyler Durden Wed, 12/21/2022 - 22:20.....»»

Category: personnelSource: nytDec 21st, 2022

How To Spot The Differences Between DeFi And CeFi – And Why Crypto CeFi Is Collapsing

This year has been a rocky one for the crypto markets amid plummeting prices and a growing list of high-profile collapses by crypto firms. However, a closer look at what's going on reveals that it's the centralized firms that are buckling, leaving the DeFi firms unscathed. Here's how to tell the difference between a DeFi and CeFi crypto firm. As cryptocurrencies and digital assets have become more well-known, the term “DeFi,” or decentralized finance, has started to pick up in online conversations. Of course, the natural extension to DeFi is CeFi, or centralized finance. Ironically, bitcoin, the first cryptocurrency, was developed with decentralization in mind. However, the crypto ecosystem is becoming increasingly centralized — and the average investor might have no idea this is happening. To understand why this is happening, investors must learn what makes certain corners of the crypto ecosystem are considered DeFi while others are essentially CeFi. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Ruadhan, founder of the Ethereum-based Seasonal Tokens crypto ecosystem, makes the difference between DeFi and CeFi easy to understand, even for investors entirely unfamiliar with cryptocurrency. "CeFi is where you give your money to someone and trust them not to steal or gamble it, and DeFi is where you use smart contracts instead of people, theoretically eliminating the need for trust," he explained. What Are DeFi And CeFi? When most people think of centralized finance, the natural instinct is to look at the traditional financial ecosystem. It's easy to understand because we've been transacting within it since the days of ancient Mesopotamia, where it was originally developed. Since those days, we've used everything from livestock to gold and even certain kinds of shells before eventually developing fiat currencies. Centralized finance is marked by numerous rules and regulations governing financial assets of all kinds, which can range from commodities to currencies, securities, and more. In traditional finance, regulatory bodies like the Securities and Exchange Commission and Commodity Futures Trading Commission oversee trades and transactions in the many different kinds of assets that exist. Despite that oversight, those who transact within a centralized financial structure must trust that policymakers, banks, and those they transact with won't do anything to jeopardize their assets. On the other hand, decentralized finance does not require parties to trust each other because the distributed ledger technology backing it prevents them from ripping each other off. While money passes through a bank that acts as an intermediary between two transactors in CeFi, there are no such intermediaries in DeFi. Instead, the parties use smart contracts to keep each other honest. How CeFi Works In The Crypto Ecosystem With bitcoin and some other cryptocurrencies having their roots in DeFi, it might be challenging to see how they can be used within a centralized infrastructure. However, the interplay between bitcoin and a centralized platform like a crypto exchange has more to do with the rules governing the platform than with those overseeing bitcoin and other DeFi cryptocurrencies. For example, centralized platforms allow users to borrow money against their bitcoin the same way traditional assets can be used for collateral on a bank loan. Centralized exchanges like Coinbase or the now-bankrupt FTX support trades of bitcoin and other cryptocurrencies, but they require regulations to do so. However, some exchanges are decentralized, so it's now always easy to tell whether you're dealing with a DeFi or CeFi situation within the crypto ecosystem. Some examples of decentralized exchanges include Uniswap and PancakeSwap. How To Distinguish DeFi From CeFi In Crypto Assets DeFi is set apart by three critical characteristics: accessibility, control and transparency. For example, DeFi users always have easy access to the rules governing the platform they're using, whether it's a smart contract or cryptocurrency, because such vehicles eliminate private agreements or other deals that make CeFi opaque at times. Additionally, DeFi users always retain control over their assets, meaning that an outside entity like the SEC or a bank can't freeze their accounts. This issue is of great concern to regulators concerned about money laundering or other nefarious activities because they can't freeze the crypto assets owned by suspects or convicted criminals. Finally, DeFi users can always access their crypto assets as long as they have a reliable, secure internet connection and the knowledge of how to use them. The Risks Of DeFi Versus CeFi While DeFi might sound like the perfect solution to every problem created by centralized finance, there are some issues to be aware of. Ruadhan noted that the smart contracts commonly used in DeFi are still created by humans — leaving them prone to error from time to time. "With DeFi, there's still a risk that the smart contract code could have a bug that allows a hacker to steal money, so it's important to make sure that the code has been audited by reputable security experts," he explained. "Once the code is known to be secure, DeFi is the safer option, because the funds are never in the control of another person who could accidentally or deliberately misallocate them." On the other hand, the risks associated with CeFi are much more numerous and include everything from basic fraud or money laundering to pyramid schemes or other complex scams. In the world of crypto, we've seen plenty of new ways CeFi can go wrong. Why More And More Centralized Crypto Firms Are Collapsing It's important to point out that decentralized exchanges, which remain true to the original, decentralized purpose of bitcoin, remain unscathed as more and more centralized crypto firms collapse. Thus, it makes sense to question why CeFi appears to be harmful to the crypto ecosystem — particularly when the centralization of crypto exchanges and other entities within the ecosystem is exactly what has made many institutional investors more comfortable with cryptocurrency. At this point, we've seen a wide array of crypto players file for bankruptcy. Crypto exchange FTX, its connected hedge fund, Alameda Research, and lender BlockFi are three of the latest to do so. Other noteworthy failures within the crypto ecosystem include the hedge fund Three Arrows Capital, the Terra stablecoin and its connected token, Luna, lender Celsius, and brokerage Voyager Digital. Upon closer examination of these failures, we discover a few factors that led to these firms' downfalls, of which the primary is leverage. When crypto prices are soaring, it may seem like leverage is unimportant because they will keep climbing higher and higher, but the current crypto winter shows that isn't always the case. For example, Three Arrows Capital borrowed more and more cryptocurrency without any collateral and then used it to make more and more trades. Eventually, the hedge fund was caught with so much leverage amid plummeting crypto prices that it simply collapsed because it couldn't pay its debts. Other common issues that have led to crypto firms' collapses include unsustainably high yields and a lack of transparency. Lender Celsius offered sizable yields to users in exchange for being able to lend their cryptocurrency to others, but it buckled when plunging crypto prices made it unable to maintain those massive yields. It All Boils Down To One Thing At the end of the day, the root of all these issues is trust — or the lack of it. "A large CeFi crypto firm like FTX can make billions of dollars by funneling customer deposits into a proprietary trading operation," Ruadhan explained. "It's naive to think that a large, trusted firm would never do such a thing. The more trusted they are, the more they can make by violating that trust. Companies that gamble with customer funds this way are vulnerable to sudden collapses when the customers realize that the company doesn't have enough money to cover withdrawals." Investors need only look at bitcoin's origin story to see why DeFi crypto firms continue to work, while a growing number of CeFi firms are going bust. The cryptocurrency was forged in the wake of the Great Financial Crisis in 2009 with the goal of fixing the problems with the traditional, centralized financial system. Then, to hook institutional investors, centralization grew in importance because these big whales tend to feel better with more regulations in place. However, the centralized crypto firms are the ones folding, while decentralized firms remain unscathed despite the plummeting prices. It's as if crypto has highlighted the many problems with centralization all over again — only in fast-forward this time. Share your thoughts on DeFi versus CeFi in the comments section below......»»

Category: blogSource: valuewalkDec 14th, 2022

Will Your State Reject The Fed"s Digital Dollar?

Will Your State Reject The Fed's Digital Dollar? Authored by MN Gordon via EconomicPrism.com, Personal and political freedoms are inseparable from economic freedom.  To this end, economic freedom is contingent upon an economy that transacts using honest money that’s free from coercion. Volumes have been written on America’s experience with money of varying veracity.  Here we’ll touch on a few key events. Article I, Section 8, of the U.S. Constitution empowers Congress to coin money and regulate its value thereof.  Article I, Section 10, specifies that no state shall make anything but gold and silver coin a tender in payments of debts. The Federal Reserve Act of 1913, passed by the 63rd Congress and signed into law by President Woodrow Wilson on December 23, 1913, established the Federal Reserve System, the central bank of the United States.  The Federal Reserve Act also delegated the right to issue money from Congress to the Federal Reserve. In this regard, the current U.S. dollar, a Federal Reserve Note, is illegal money.  It is issued by the Federal Reserve – not Congress – in direct violation of the U.S. Constitution.  Moreover, when states collect tax dollars that are devoid of gold or silver coin, they violate the Constitution. Economic freedom has been greatly undermined by Washington over the years.  Executive Order 6102 of 1933, for example, forced all American citizens to turn in gold coins and bars.  Gold ownership in the United States, with some small limitations, was illegal for the next 40 years. Economic freedom was again undermined when President Nixon “temporarily” suspended the convertibility of the dollar into gold in 1971.  This action removed any remaining protection workers and savers had against their hard-earned dollars being inflated away. But now, as the year 2022 nears its close, another extremely destructive event approaches… Proof of Concept Project Over the last 110 years economic freedom in the United States, as in the world, has been in decline.  Through a continuing process of debasement, the Fed has inflated away 96 percent of the dollar’s value. In other words, today it takes $1 to buy the equivalent of what $0.04 could buy in 1913.  This is a downright disgrace. Yet over this time, the paper dollar did preserve some modicum of economic freedom.  Payments in cash provide some level of privacy in what you’re buying and selling.  Specifically, the government is unable to readily trace and monitor transactions conducted using cash. This soon may change… Have you ever heard of something called the New York Innovation Center?  On November 15, the Federal Reserve Bank of New York published a very important press release.  Here’s a key excerpt: “The Federal Reserve Bank of New York today announced that its New York Innovation Center (NYIC) will participate in a proof-of-concept project to explore the feasibility of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger. “This U.S. proof-of-concept project is experimenting with the concept of a regulated liability network.  It will test the technical feasibility, legal viability, and business applicability of distributed ledger technology to settle the liabilities of regulated financial institutions through the transfer of central bank liabilities.” This, without question, marks a significant step in the Fed’s efforts to rollout a Central Bank Digital Currency (CBDC).  The project, as we understand it, will inform how the Fed intends to work with actual banks to introduce a digital dollar.  This digital dollar would ultimately replace the paper dollar and would eliminate the privacy of cash payments. Traceable and Programmable David Haggith, publisher and editor-in-chief of The Great Recession Blog, has been closely covering the rapidly approaching advent of CBDCs and digital dollars for several years.  Haggith recently offered the following perspective as to the significance of what’s at stake: “We’re on the brink of a dramatic change where we’re about to — and I’ll say this boldly — we’re about to abandon the traditional system of money, and accounting, and introduce a new one….  The new accounting is what we call ‘blockchain.’  It means digital.  It means having an almost perfect record of every single transaction that happens in the economy, which will give us far greater clarity over what’s going on…. It also raises huge dangers in terms of the balance of power between states and citizens.” What you must understand is the adoption of a digital dollar by the U.S. government would be one of the greatest expansions of federal power ever made.  You also must understand that a digital dollar would be much different than a cryptocurrency like bitcoin, which is decentralized and has limitations on its ultimate quantity. The key distinction is that Fed issued digital dollars would be traceable and programmable and would be integrated with the Fed and private banking.  Specifically, digital dollars would be programmed to have various rules and restrictions governing how and when they are spent. We know from the executive order released by the Biden administration on March 9, which required several federal agencies to study digital currencies and to identify ways to regulate them, that CBDCs and other policies governing digital assets must mitigate “climate change and pollution” and promote “financial inclusion and equity.” What does this mean, exactly? At the World Economic Forum (WEF) earlier this year, one zealous central planner clearly stated that the intent of traceable and programmable CBDCs is to monitor, “where you are traveling, how you are traveling, what you are eating, what you are consuming – individual carbon footprint tracker.” Will Your State Reject the Fed’s Digital Dollar? U.S. government debt is now over $31 trillion.  Tack on unfunded liabilities like social security, Medicare, federal debt held by the public, and federal employee and veterans’ benefits, and the government debt number jumps to over $172 trillion. What’s more, trillion-dollar deficits year after year imply that the government is borrowing money to pay the interest on the debt.  At this point, there really is no honest way for Washington to ever repay all this debt. The tracking features of CBDCs are very appealing to central planners and government control freaks.  But we believe what’s compelling the urgency of a Fed issued digital dollar is the elaborate cover its rollout will provide.  The introduction of a digital dollar can and will be used as a means to obscure an outright default. Your account may get credited with digital dollars at rollout.  However, these new digital dollars will come at a price.  We’re not entirely clear on what that is.  But we think it’ll involve a loss of value that’s proportional to the insane levels of debt that Washington’s on the hook for. In short, this is a last-ditch effort by Washington to mask a government default.  If you don’t own any physical gold and silver yet…, what are you waiting for?  Don’t overcomplicate things.  Go to your local coin shop and pick up a few coins today. Meanwhile, as the NYIC figures out just how to go about introducing the digital dollar, some states are figuring things out too.  In fact, certain states may not be too keen on a Fed issued – traceable and programmable – digital dollar. Utah, Nevada, Wyoming, and New Hampshire are already issuing “gold-backs.”  These are privately issued notes that contain actual gold.  They are accepted in these states under their respective legal tender laws, which provides for the adoption of gold and silver as legal tender by the state. Here in the Volunteer State, Tennessee State Senator Frank Niceley has some ideas too.  He recently chatted with former U.S. Assistant Secretary of Housing and Urban Development, Catherine Ausin Fitts, about the strengths and benefits of a Sovereign State Bank modeled on North Dakota. Niceley’s intent for a Tennessee Sovereign State Bank is to also include a state bullion depository and provide local banks and credit unions support to counter the threat of a Fed issued digital dollar. There’s a lot to be worked out, of course.  Nonetheless, it’s about time state and local jurisdictions stood up to Washington and the Fed.  Developing gold-based local alternatives to the Fed’s digital dollar is a start. Your economic, personal, and political freedoms depend on it. *  *  * The window to protect your wealth and financial privacy is closing.  And it’s closing quick.  I don’t like it one bit.  But I’m not going to stand around powerless as Washington’s control freak sociopaths destroy everything I’ve worked so hard for.  For this reason, I’ve dedicated the past 6-months to researching and identifying simple, practical steps everyday Americans can take to protect their wealth and financial privacy.  The findings of my work are documented in the Financial First Aid Kit.  If you’d like to find out more about this important and unique publication, and how to acquire a copy, stop by here today! Tyler Durden Sun, 12/04/2022 - 12:10.....»»

Category: blogSource: zerohedgeDec 4th, 2022

Post-FTX Regulatory Crackdown Will Erode Liberties, Accelerate Path To CBDC "Social Engineering"

Post-FTX Regulatory Crackdown Will Erode Liberties, Accelerate Path To CBDC 'Social Engineering' Authored by Michael Washburn via The Epoch Times (emphasis ours), The collapse of cryptocurrency exchange FTX, and the worldwide outcry over the billions of dollars wiped off the platform, are likely to trigger a massive regulatory reaction that would further erode citizens’ economic freedoms without addressing the issues that fostered demand for an alternative to the fiat dollar, economists have told The Epoch Times. A detailed view of the FTX sign prior to a game between the Phoenix Suns and Miami Heat at FTX Arena in Miami, Fla., on Nov. 14, 2022. (Megan Briggs/Getty Images) An international scandal has embroiled FTX and its founder, 30-year-old Sam Bankman-Fried, in the wake of the firm’s crash earlier this month precipitated by a run on the exchange. Since then, reports have emerged that Alameda Research, a crypto hedge fund established by Bankman-Fried, was trading billions of dollars from FTX accounts without clients’ knowledge. FTX has filed for bankruptcy protection, Bankman-Fried has stepped down from his role as CEO, and John J. Ray III, the former CEO of Enron, has taken over the insolvent company with a plan to sell it off if a successful restructuring is impossible. An estimated 1 million customers and other investors are facing total losses of billions of dollars. FTX, in a recent court filing, said it owes $3.1 billion to its top 50 creditors, and its collapse has rocked the $839 billion global crypto market. On Nov. 22, the trading value of bitcoin tumbled to $15,480, a two-year low, before edging up slightly to $15,909. Ray has claimed that subsidiaries of FTX in the United States and abroad “have solvent balance sheets, responsible management and valuable franchises,” but so far the shock and alarm over the exchange’s implosion have shown no sign of abating. Meanwhile, a number of big names in sports and entertainment, such as comedian Larry David, NBA star Stephen Curry, and quarterback Tom Brady, have become the subject of a probe by the Texas State Securities Board over their public endorsements of FTX. The celebrities have also become the targets of class action lawsuits filed by disgruntled investors, with more expected in the days to come. Then CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee on Capitol Hill, in Washington, on Dec. 8, 2021. (Alex Wong/Getty Images) Madoff’s Heirs Observers of the FTX blowup are extremely candid about the severity of the exchange’s mismanagement and the recent historical analogs for its unraveling. Wayne Davis, a partner at the law firm Tannenbaum Halpern Syracuse & Hirschtritt in New York, drew a parallel with one of the most notorious cases of fraud in the history of finance, that of the Bernard L. Madoff, whose Ponzi scheme bilked some 4,800 clients of $64.8 billion. In both cases, clients were insufficiently attentive to the lack of internal controls, he suggested. “Madoff comes to mind. Perhaps not the same criminal intent components, but there are certainly similarities as far as investor/customer enthusiasm notwithstanding signs of lax compliance and risk management engagement,” Tannenbaum told The Epoch Times. Other observers see parallels in earlier events in the development of banking and currencies. Charles Steele, chair of the department of economics, business, and accounting at Hillsdale College in Michigan, said that the blow-up of FTX reminds him of the first stock market bubble and financial crisis to afflict the world, namely the collapse of France’s Banque Royale in 1720. “Scotsman John Law set up a central bank for the French monarchy that began paying enormous returns on its shares and its sister Mississippi Company. It was heralded as a great triumph of new financial technology, a nearly miraculous breakthrough, but in fact, it was effectively what we now call a Ponzi scheme,” Steele told The Epoch Times. “In the case of FTX, it appears that Samuel Bankman-Fried was heralded as a crypto genius, but was simply engaged in a lot of shady business disguised as ‘philanthropy,’ using other people’s money. He was apparently the second-largest donor to the Democrat Party campaigns in the 2022 elections, and also was positioning himself to be a major player in the design of federal regulations for cryptocurrency,” Steele added. The Likely Reaction The magnitude of the FTX scandal—the amounts of money involved and the number of people suffering possibly permanent financial harm—means that its ramifications are likely to continue to affect all players in the crypto space in coming weeks and months, said Jeffrey Guernsey, a professor of economics at Cedarville University in Ohio. The very lack of a fixed value that made crypto investing exciting for some people may also be among its singular vulnerabilities in the face of emboldened regulators, he suggested. “While this thought does not originate with me, it is clear that crypto is not a currency, if one attribute of a currency is a stable value. The collapse of FTX certainly puts the entire asset class under review and question and may lead to calls for governmental regulation,” Guernsey said. Given the priorities of the Biden administration, the notably harsher tone of federal guidance and rulemaking since he took office, and officials’ well-documented hostility to financial innovation and decentralization, the reaction from regulators is likely to be extremely draconian and may even cross lines that the regulators have hitherto respected, observers say. But whether the coming crackdown will address concerns of fiat currency that helped feed demand for alternative exchanges, platforms, and markets is a different question. “I expect that this debacle will lead to greatly increased federal regulation of cryptocurrencies,” Steele said. In Steele’s view, the fiasco is likely to speed up the crafting and implementation of central bank digital currencies (CBDC). Steele noted that the Federal Reserve Bank of Boston is collaborating with the Massachusetts Institute of Technology on a joint study, Project Hamilton, whose objective is to devise a CBDC for the United States. While ignored by many people, this is one of the most potentially concerning recent developments given the unprecedented powers that it stands to place in the hands of a central regulatory authority, he said. While some might initially welcome a CBDC, it could have unforeseen consequences and ultimately could help extend the role of government into people’s lives in ways to which they are so far unaccustomed. “I think a CBDC is very dangerous, because it would enable a central bank or government to monitor, control, and record every exchange made with the currency. If, for example, a government decided it did not want citizens buying, say, firearms, or perhaps donating funds to a political candidate, the central bank could prevent the transaction. Alternatively, it could have a permanent record of a citizen’s purchases and use these to establish a social credit score for the person,” Steele said. “In this way, a CBDC could become the ultimate tool of social engineering and tyranny. A true cryptocurrency keeps transactions anonymous, which is one of its great benefits. Governments tend to dislike tools that give citizens such privacy,” he added. The FTX website is seen on a computer in Atlanta, Ga., on Nov. 10, 2022. (Michael M. Santiago/Getty Images) Legitimate Demand The tragedy of the FTX scandal and the possible meltdown of other crypto entrepreneurs as more and more people panic and seek to redeem their assets is that such platforms arose partly in response to an understandable demand for alternatives to the fiat dollar, or a dollar whose value and use flow from government dictates and are unrelated to any external commodity or asset such as gold. The heavy-handed reaction expected in the coming months as a consequence of FTX’s blow-up is unlikely to take account of this truth. That’s the view of Brian Domitrovic, a professor of economic history at Sam Houston State University, who sees negative long-term consequences to the country’s abandonment of the gold standard in 1971. “I don’t think there’s any kind of broad popular support for a fiat dollar, a non-gold dollar. There hasn’t been since 1971. A lot of popular dissatisfaction with this has been very clearly expressed,” Domitrovic told The Epoch Times. “The Federal Reserve is not a popular institution at all. I think there’s just a general sense on the part of the public that we should have something more like the classical monetary system that we used to have. And I think crypto has tapped into that more effectively than anything since the end of the gold standard,” he added. The New Non-Fiat From a certain standpoint, cryptocurrencies took over where gold left off following the shift away from the gold standard, Domitrovic said. Like gold, it is limited in supply and requires mining, though of course not the same kind of mining. In the case of the former commodity, the mining is a process of physical extraction of a substance from the earth, and in the latter, it is mathematical and theoretical in nature. Despite the differences, both currencies have the effect of eroding centralized power and oversight by making institutions such as the Federal Reserve less integral to the functioning of the economy, Domitrovic said. “Bitcoin aspires to mimic gold in many respects. This is what you had when money was not a creation of the Federal Reserve,” he added. Much of today’s demand for bitcoin and kindred currencies flow from a widespread desire to go back to how things were before 1971, Domitrovic argued. “Before 1971, the United States led the world in becoming the greatest economy ever, with hundreds of millions of people living at high levels of prosperity. There is a very strong reason why people associate the pre-1971 period with a magnificent achievement economically,” he added. In this analysis, the federal government has sought to maintain centralized oversight over the economy and the level of prosperity attainable by citizens partly by not allowing crypto to compete with the fiat dollar. “Even if there is fraud, I’m still going to lay a lot of the blame at the feet of the government and the official definition of policy, because they’re not taking crypto as seriously as they should. They consider it non-money,” he said. Read more here... Tyler Durden Fri, 11/25/2022 - 07:20.....»»

Category: blogSource: zerohedgeNov 25th, 2022

Bitcoin Isn’t Digital Gold… Or At Least Not Yet, Anyway

Many investors have heard crypto experts refer to bitcoin as digital gold, but an analysis of these two assets' returns and volatility shows that bitcoin hasn't yet earned the right to be called digital gold. A recent report also downplayed the correlation between cryptocurrencies and equities that has appeared this year. Crypto enthusiasts have long touted bitcoin as digital gold, but an analysis of the cryptocurrency’s performance versus those of other assets shows that it hasn’t really earned that status yet. One thing that’s still lacking is a widespread market perception of crypto assets as a store of value. Cryptocurrencies remain a minuscule part of the global financial markets, with a total market capitalization of $1.1 trillion as of August, a significant decline from their record market cap of $3 trillion. The crypto markets are only about 2.5% of the total U.S. equity market cap. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. However, S&P Global agrees with crypto enthusiasts who are adamant that crypto assets and blockchain technology are here to stay. The firm noted that crypto assets and blockchain technology are an ecosystem with significant differences from the traditional financial system. However, the collapse of TerraUSD shows that the fundamental laws of finance still apply. For now, one of the greatest debates about cryptocurrencies is whether they should be considered currencies, commodities, securities or something else entirely. To better understand what crypto assets are, S&P Global compared their performance to that of various traditional financial assets. Bitcoin Versus Gold Of course, gold has been a store of value and hedge against market downturns for thousands of years. Central banks use the metal as a reserve asset and to hedge against inflation. When bitcoin was launched, many crypto wonks referred to it as "digital gold." As a result, the cryptocurrency has rallied off and on over the years due to expectations that it could play a similar role to the yellow metal at some point. However, to truly become digital gold, bitcoin would need a strong correlation with the metal's performance during similar periods, something that hasn't happened yet. In its recent report on those comparisons, S&P Global explained that crypto assets are significantly more volatile with the prospect of higher returns, making them more of a high-reward asset than a store of value like gold. For example, data from S&P Global indicates that the gold price rose more than 40% from mid-2019 to mid-2020 as investors turned to the yellow metal for protection during the COVID-19 pandemic. However, bitcoin did not behave the same way during that 12-month period. Additionally, the gold price has been volatile in 2022 but largely trended upward during this year's periods of heightened geopolitical risk. Meanwhile, bitcoin's performance didn't track the periods of increased geopolitical risk. S&P Global noted that the bitcoin price has plunged to its lowest level since November 2021, driven by intensifying inflation fears, a clear upward trend in inflation indices, and growing supply chain shortages, energy concerns, and military uncertainty amid the war in Ukraine. On the other hand, gold rallied during the first quarter but has averaged prices higher than where it stood before the pandemic. S&P Global also found that gold's volatility aligns closer with that of stablecoins than with other cryptocurrencies. The firm emphasized that while bitcoin doesn't currently deserve the classification of digital gold, it could at some point in the future. Crypto Assets Versus Equities S&P Global also compared the performances of various crypto assets to those of the S&P 500 and Nasdaq indices. The firm found that the daily returns of crypto assets are much more volatile than equities. According to S&P Global, cryptocurrency volatility has held heady above 60% since May 2020, while the volatility of the S&P 500's top three holdings, Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN), didn't get much higher than 40, putting their volatility closer to that of stablecoins. While many other reports have called attention to a correlation between bitcoin and equities, S&P Global found that the crypto markets are not significantly correlated with equities despite the uptick in correlation in recent months. To gauge the correlation between equities and cryptocurrencies, the firm used Apple, Microsoft and Amazon as proxies for the equity market. S&P Global did discover that return correlations between bitcoin and the three largest equities increased during the pandemic period from March 2020 to the first quarter of 2022. Other than that, the firm found that correlations remained low. It feels the lack of comparability between crypto assets and equities is not surprising because the drivers for crypto valuations are different. According to S&P Global, the key performance drivers of the crypto markets include market confidence and adoption, regulatory frameworks, technology, and supply and demand or liquidity. On the other hand, the firm listed the drivers of traditional financial assets as operating profits, interest rates, inflation, and monetary and fiscal policies. Cryptocurrencies Versus Each Other Although S&P Global found that the crypto markets overall do not track equities, it did discover a noteworthy correlation in historical returns with each other, excluding stablecoins. The firm pointed out that the origin story of each cryptocurrency differs from those of the others and that they were created on different platforms using different protocols at different times. However, S&P Global's analysis of the performances of various cryptocurrencies shows a moderate-to-high correlation with each other since 2018. Stablecoins Versus Pegged Fiat Currencies Of course, stablecoins like Tether and USD Coin are far less volatile than other crypto assets. However, S&P Global still discovered that their volatility was greater than that of traditional pegged fiat currencies and that they have a low correlation with them. Do you think bitcoin has achieved digital-gold status yet? Share your thoughts in the comments section below......»»

Category: blogSource: valuewalkNov 22nd, 2022

Warren Buffett"s right-hand man blasted crypto, praised Elon Musk and Tesla, and defended the Fed in a rare interview this week. Here are the 14 best quotes.

Charlie Munger trashed bitcoin, touted Elon Musk and Tesla's unlikely success, and supported the Fed risking a recession to bring down inflation. Charlie Munger.Lane Hickenbottom/Reuters Charlie Munger called out fraud and delusion in crypto, days after Sam Bankman-Fried's FTX imploded. Warren Buffett's right-hand man said bitcoin and other crypto should never have been legal. Munger praised Elon Musk and Tesla's unlikely success, and the Fed's focus on reducing inflation. Charlie Munger has trashed bitcoin and other cryptocurrencies, slammed regulators for not banning them early on, and called out an epidemic of bad behavior in the crypto space.He made the incendiary comments in a rare CNBC interview this week, just days after Sam Bankman-Fried's FTX exchange became the latest crypto player to implode.Warren Buffett's business partner and the 98-year-old vice-chairman of Berkshire Hathaway also lavished praise on Elon Musk and Tesla, and supported the Federal Reserve risking a potential US recession to rein in historic inflation.Here are Munger's 16 best quotes, lightly edited for length and clarity:1. "We don't need a new, wonderful, non-traceable medium that makes it easier to commit frauds of various kinds. What is bitcoin doing for anybody?" (Munger gave the example of ransomware attackers demanding bitcoin as payment.)2. "It pains me that in my own country, I see people who once were regarded as very reputable people helping these things exist, promoting their use and so forth. This is a very, very bad thing. The country did not need a currency that's good for kidnappers and so on."3. "The danger flags are wagging so clearly. A guy says, 'I'm going to sell you plenty of nothing, and nothing's plenty for you.' When you hear that, you ought to think this is a big joke. But people think this is a real asset — it's not a real asset, it's a bunch of fraudsters and crazy people."4. "Nobody can invent a new thing that makes every 12-year-old kid a billionaire. It's crazy, it's demented. I don't believe in magic. When I see magic, I believe somebody's trying to fool me."5. "It's partly fraud and partly delusion — that's a bad combination. I don't like either fraud or delusion, and the delusion may be more extreme even than the fraud." (Munger was discussing whether crypto executives have good intentions.)6. "There are people who think that you've got to be on every deal that's hot, and they don't care whether it's child prostitution or bitcoin. I think that's totally crazy. Reputation is very helpful in financial life, and to destroy your reputation by associating with scumballs and their scumball promotions is a huge mistake."7. "The authorities have been confused by the whole damn thing. A bunch of elderly people who have done things a certain way for a long time, now have to deal with a new standard. It's like a mosquito catcher — they know how to smack mosquitoes, they just can't handle gnats. It's just insane, none of this stuff should ever have been allowed."8. "Gold has been around for 2,000 years. If you were a Jewish guy living in Vienna in 1939, gold would be very useful. I don't equate bitcoin with gold." (Munger was commenting on whether bitcoin can serve as "digital gold.")9. "I was certainly surprised that Tesla did as well as it did. But I do not equate Tesla with bitcoin. Tesla has made some real contributions to civilization. Elon Musk has done some good things that other people couldn't do."10. "We haven't had a successful new auto company in a long, long time. It's difficult to enter the car business successfully. What Tesla has done in the car business is a minor miracle."11. "I'm not against everything that's new. I'm just against everything that's new that is kind of magic with a kind of chain-letter delusion carrying it along. These things do enormous damage. These big collapses, they can trigger bigger recessions and depressions." (Munger was commenting on FTX filing for bankruptcy.)12. "I think the Fed is willing to have a little recession in order not to have out-of-control inflation. That's what they're supposed to do. They're supposed to be the one guy at the party that doesn't hang around the punch bowl getting drunk."13. "We were in enough trouble when this thing started. If the Fed hadn't done what it did — which was very aggressive — we would have had one hell of a mess, way worse than what we have now." (Munger was defending the US central bank stimulating the economy after the pandemic struck in early 2020.)14. "If you look at Japan today, you would find that the central bank has made our central bank look like a little mouse that hardly tries to do anything." (The Bank of Japan has gone as far as cutting interest rates below zero to stimulate economic growth.)Read more: Matt Quinlan's high-dividend stock funds hold more than $20 billion in investor assets. The Franklin Templeton vet told us where he finds innovators that can deliver big returns.Read the original article on Business Insider.....»»

Category: worldSource: nytNov 19th, 2022

"Big Short" investor Michael Burry touts gold as a winner from the FTX fiasco - and hints he"s betting against the stock market

Burry suggested the cascade of crypto scandals could boost gold's appeal as a haven asset, and teased a bearish wager against stocks. Michael Burry.Kevin Mazur/WireImage Michael Burry suggested the FTX fiasco and other crypto scandals could be good news for gold. The "Big Short" investor teased a bet against the market, despite his recent stock purchases. Burry has warned the S&P 500 could halve in value, and predicted a Fed pivot in the spring. Michael Burry has trumpeted gold as a likely winner from the crypto meltdown, and hinted he's betting on stocks to tumble.Golden opportunity"Long thought that the time for gold would be when crypto scandals merge into contagion," Burry said in a now-deleted tweet on Tuesday.The investor of "The Big Short" fame was almost certainly referring to the financial pressures spreading across the crypto industry that have hit Sam Bankman-Fried's collapsed crypto exchange FTX. They've also weighed on the likes of Celsius, Voyager, the Winklevoss twins' Genesis, and BlockFi in recent weeks.Crypto proponents have pitched bitcoin and other tokens as "digital gold". Their argument is crypto is superior to the yellow metal as a haven asset and store of value during periods of inflation, currency depreciation, and economic turmoil.Yet crypto prices have plunged this year, slashing the overall market capitalization from $2.2 trillion to around $830 billion. In contrast, gold has dipped only 3% to around $1,765 per ounce — well ahead of the benchmark S&P 500 stock index's 17% decline.Burry is likely suggesting that a cascade of crypto fiascos will undercut demand for tokens and could spread to other asset classes, making gold an attractive holding for investors scrambling to protect their wealth.More pain to come"You have no idea how short I am," Burry said in a since-deleted tweet on Wednesday.The Scion Asset Management boss was likely warning investors not to read too much into his fund's third-quarter portfolio update on Monday. Scion expanded its holdings from a single stock on June 30 to six at the end of September, boosting the value of its portfolio from around $3 million to $41 million.Fund managers only have to disclose US-listed stocks in their 13F filings with the Securities and Exchange Commission each quarter. They exclude shares sold short, overseas-listed stocks, and other assets such as commodities.In other words, Burry's stock purchases might signal a bullish turn, but he may have hedged or totally offset those bets with short positions and other wagers that aren't shown in his latest portfolio update.After all, the investor warned in May that the S&P 500 might bottom at around 1,900 points — a 52% decline from its current level — and cautioned investors not to be duped by rallies in the interim. He also eviscerated his $165 million portfolio in the second quarter of this year.Moreover, Burry reiterated his bearish stance in late October, after stocks rebounded. "Did you all just mishear a death knell as a starting gun?" he joked.On the other hand, Burry has suggested the Federal Reserve's interest-rate hikes, which have pulled down asset prices in recent months, could end in the spring. "Still think the Fed back off on QT early next year," he tweeted on October 24.Burry has a reputation for issuing dire, and often correct, predictions. He shot to fame for his monster bet against the mid-2000s housing bubble, which was immortalized in the book and the movie "The Big Short."The Scion chief is also known for investing in GameStop before it became a meme stock, diagnosing the "greatest speculative bubble of all time in all things" last summer, and warning meme stocks and cryptocurrencies would suffer the "mother of all crashes."He also flagged the risk of inflation as early as April 2020, and bet against Elon Musk's Tesla and Cathie Wood's flagship Ark Innovation fund last year.Read more: A Michael Burry expert breaks down what makes the 'Big Short' investor special. He also revisits Burry's iconic bet against the housing bubble, and his GameStop, Tesla, and Ark wagers.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 17th, 2022

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings US futures jumped from Monday's shallow dip, which in turn followed the S&P 500’s best week since June, boosted by a triple-whammy of positive news out of China, including the Xi-Biden meeting which pointed to easing tensions between Washington and Beijing, China's Covid pivot and property measures, and solid earnings from Walmart which boosted guidance and announced a new $20BN buyback. Contracts on the Nasdaq 100 extended earlier gains and were up 1.1% as of 7:1 a.m. ET while S&P 500 futures surged above 4000, rising almost 1.0%. Treasury yields and the dollar slipped while bitcoin resumed its modest rise. At 8:30am we get another inflation read in the form of the latest PPI Print, which is also expected to ease modestly. In premarket trading, chipmakers AMD, Nvidia and Intel Corp. rose between 1.3%-2% while Tesla Inc., Amazon.com Inc., Apple Inc., and Alphabet Inc. all added about 1% each. Coinbase and Marathon Digital led cryptocurrency-linked stocks higher as Bitcoin extended gains with investors waiting for more details about an industry-recovery fund promised by Binance Holdings Chief Executive Officer Changpeng ‘CZ’ Zhao. Chinese stocks listed in the US were set to rise for a fourth day, after a triple-whammy of positive news including Xi-Biden meeting, Covid pivot and property measures. Alibaba (BABA US) soared 11% in premarket trading. Lithium-exposed stocks edged lower following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Here are the other notable premarket movers: Getty Images (GETY US) falls 12% in US premarket trading, after the media company reported third quarter earnings that missed the average analyst estimate. Ginkgo Bioworks (DNA US) shares slip as much as 2.6% in US premarket trading as the cell-programming platform provider’s revenue beat was eclipsed by worries over how a tougher economic environment could impact prospects. Harley-Davidson (HOG US) is initiated with an underperform rating, its only sell-equivalent recommendation, and a $39 PT at Jefferies, which says the strength in the motorcycle maker’s shares is overdone. Lithium-exposed stocks edged lower in US premarket trading following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Nubank (NU US) shares jump 15% in premarket trading after the Brazilian digital bank’s third-quarter results. Morgan Stanley said the lender delivered a strong print, showing beats for client net adds, revenue, gross profit and adjusted net income. Shoals Technologies (SHLS US) shares soar as much as 22% in US premarket trading, on track for its biggest rise in five months, as analysts nudged their price targets higher after the solar energy products supplier narrowed its revenue forecast for the full year. Brokers said that the firm’s rising backlog and awarded orders bode well for the future and increase visibility for next year Markets have turned risk-on in recent days, trading off a softer-than-expected US data print that many reckon will allow the Fed to raise rates in 50 basis-point increment, after consecutive 75 basis-point hikes. That view was encouraged by dovish comments from Vice Chair Lael Brainard who said on Monday it would probably be “appropriate soon to move to a slower pace of increases.” “The issue the market has to wrestle with is how long is the Fed going to keep rates at that level and I think there is some positive sentiment out there that the Fed is going to pivot sometime in 2023,” Peter Kraus, Chairman and CEO at Aperture Investors, told Bloomberg Television. Sentiment also got a solid boost overnight following signs of easing tensions between the US and China (even if Xi probably does not see it that way, and instead he delivered a speech at the G20 summit in Bali, Indonesia, in which he urged against politicizing food and energy issues, and called for scrapping unilateral sanctions and restrictions on technology cooperation in this area, something which won't happen). In any case, after the meeting between Joe Biden and Xi Jinping on Monday, Washington said the two sides would resume cooperation on issues including climate change and food security, and that Biden and Xi jointly chastised the Kremlin for loose talk of nuclear war over Ukraine. Investors also remain focused on central banks: Swissquote analyst Ipek Ozkardeskaya said equity markets are in “a vicious circle” as “investors want to feel better, but the Fed can’t let them feel much better as a market rally would play against its inflation fight.” Last week’s rebound was a “flash in the pan, but the downside risks have certainly eased,” she said. Meanwhile, markets are watching growing risks to earnings following corporate America’s weakest reporting season since the first quarter of 2020, and the outlook for stock markets in 2023. “The equity market will continue to rally until the end of the year with some volatility, but once you get to 2023 there will be some realization that interest rates will actually start to slow economic activity,” said Peter Kraus, chief executive officer at Aperture Investors. “In 2023, you will have more volatility and you’ll have a decline in equity markets,” Kraus said on Bloomberg TV. The latest Bank of America’s global fund manager survey for November showed sentiment remains “uber-bearish,” with investors still crowded into the dollar and cash, while tech stocks remain unpopular. “My biggest concern is the market gets ahead of itself and we get into a situation where the Fed feels it needs to rein in, and tighten more than it otherwise would have, as markets became too frothy,” Kristina Hooper, chief global strategist at Invesco said on Bloomberg Radio. In Europe the Stoxx 600 index swung between losses and gains, though the market is close to a three-month high and Germany’s Dax index is on the cusp of a technical bull-market, having narrowly missed that milestone on Monday. The Euro Stoxx 50 rises 0.1%. CAC 40 outperforms peers, adding 0.3%, FTSE MIB lags, dropping 0.3%. Utilities, food & beverages outperformed while retail and telecoms underperform as more sectors turn negative on the day. Here are some of the biggest European movers today: Teleperformance shares rise as much as 9.4%, the third session of gains in a recovery from a recent drop suffered by the customer relationship management services firm following a report related to its content moderation business in Colombia. UK utilities and energy firms advance after reports that UK’s Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators. Drax rises 4.0%, Centrica +5.0% BAE Systems shares gain as much as 4.1% after a trading update from the defense contractor that analysts said shows trading momentum remains solid. Ambu falls as much as 16%, the most since May, after the Danish medical technology firm’s latest earnings and outlook disappointed, according to analysts. Ocado shares plunge as much as 13% in Tuesday morning trading, paring the 30% rally in the previous two sessions after last week’s softer-than-expected US inflation data provided a boost to growth stocks. Nexi shares fall as much as 11%, the most intraday since March 2020, after holder Intesa Sanpaolo sold its stake in the payment services firm. Vodafone shares slump as much as 9.2% and are on track for their lowest close in 25 years after the telecom operator trimmed its outlook for Ebitda after- leases to the lower end of its previous range, citing higher energy costs. Cellnex slides as much as 6.5% after a share placement of 25.6m shares at EU33.50/share. Earlier in the session, Asian stocks rallied as China led the region higher, buoyed by more property easing measures and signs of reduced US-China tensions. The MSCI Asia Pacific Index rose as much as 1.9% to a two-month high, lifted by technology shares. Chinese stocks in the sector helped pace the benchmark’s gain as investors bet the worst may be over for some of the major players. Meanwhile, Taiwan’s TSMC surged after a filing showed Warren Buffett recently bought a stake of about $5 billion in the chipmaker. China and Hong Kong benchmarks extended their recent rebounds, with the Hang Seng Index entering a bull market, gaining as much as 4.2% as regulators moved to further ease a liquidity crunch faced by real estate developers. Sentiment was also lifted by Monday’s meeting between Joe Biden and Xi Jinping that generated hopes of warmer ties between the two superpowers. That encounter offset the weak retail sales data that underscored the impact of Covid lockdowns on China’s economy. There’s “some easing of bilateral tensions from the Xi-Biden meeting,” said Marvin Chen, a Bloomberg Intelligence analyst, who added that China’s macro data, which came in below expectations, could “boost the probability of more easing measures in the near term.”  Japanese equities erased earlier losses, as investors weighed Fed comments for clues on where rate hikes might go and as improvement in US-China ties lifted sentiment across Asia.  The Topix Index rose 0.4% to 1,964.22 as of market close Tokyo time, while the Nikkei advanced 0.1% to 27,990.17. Sumitomo Mitsui Financial Group Inc. contributed the most to the Topix Index gain, increasing 4.2% as the company raised its key profit forecast and announced a share buyback plan. Out of 2,165 stocks in the index, 1,308 rose and 766 fell, while 91 were unchanged. “The financial results are almost all done as of yesterday and the stock market is running out of materials,” said Hideyuki Suzuki, general manager at SBI Securities. “All the important indicators from the FOMC, US CPI data, and earnings are over. The question is what the future holds from here.” Stocks in India advanced as easing inflation boosted investors’ sentiment while the country’s corporate earnings season ended. A rally in lenders boosted the benchmark Sensex to a new high while pushing the NSE Nifty 50 Index near its record level. The S&P BSE Sensex rose 0.4% to 61,872.99 in Mumbai, while the NSE Nifty 50 Index advanced by an similar measure. Thirteen of the 19 sector sub-indexes advanced, led by oil and gas and telecom companies.    ICICI Bank contributed the most to the index gain, increasing 1.9%. Out of 30 shares in the Sensex index, 19 rose and 10 fell, while 1 was unchanged. The consumer-price index for October rose 6.77%, easing from the 7.4% rise in September, which was the highest level in nearly two years, while the pace of wholesale inflation slowed to 8.4%, its first single digit reading in 19 months. In FX, the dollar resumed its decline, giving G-10 FX some relief. The yen trades at around the level of 139/USD, while pound rises to $1.18.  The Bloomberg Dollar Spot Index swung to a loss early in the European session as the greenback weakened against all of its Group-of-10 peers. Treasury yields fell, led by the belly of the curve. The five-year yield was down around 5bps. The euro rose to a four-month high of $1.0437. Most European bond yields fell, led by the long end of the curve; Italy’s 10-year yield fell by 10bps and Germany’s by 4bps. Germany Nov. ZEW investor expectations rise to -36.7; est. -51.0 The pound rose against both the dollar and the euro after UK wages grew at the fastest pace in more than a year. Investors will also be watching inflation data Wednesday and the UK’s fiscal announcement Thursday UK investors are facing the biggest glut of gilts in nearly a decade. Government bond sales will hit £185 billion ($217 billion) for this fiscal year to April, according to the median estimate of 10 banks surveyed by Bloomberg. The bid-to- cover on a UK 10-year gilt sale fell to its lowest level since Oct. 2019 at 2.11, according to data compiled by Bloomberg The Aussie and Kiwi touched fresh two-month highs. RBA minutes showed policy makers were prepared to return to larger rate hikes if needed. Australia’s bond curve twist-flattened. The yen rebounded on broad-based dollar weakness. The Japanese currency earlier dropped after data showed Japan’s economy unexpectedly shrank in the third quarter. In rates, Treasury and bunds 10-year yields are about 1.5bps lower, gilts 10-year yield little changed. Treasury futures topped Monday’s highs in early US trading, led by bunds after ECB’s Villeroy said a slower pace of hikes is likely after next month’s meeting. Into the move 10-year yields drop below 50-DMA for the first time since August.  The US Treasuries' advance was led by the belly, with 5-year yields richer by nearly 6bp on the day, steepening 5s30s spread by ~3bp; 10-year, lower by 4.5bp at ~3.81%, trails bunds by more than 2bp.US auctions resume Wednesday with $15b 20-year bonds, followed by $15b 10-year TIPS Thursday. In commodities, WTI crude futures ease to below $85; as benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 0.6% to 3,990.50 STOXX Europe 600 little changed at 432.94 MXAP up 1.9% to 154.34 MXAPJ up 2.3% to 500.95 Nikkei little changed at 27,990.17 Topix up 0.4% to 1,964.22 Hang Seng Index up 4.1% to 18,343.12 Shanghai Composite up 1.6% to 3,134.08 Sensex up 0.3% to 61,785.91 Australia S&P/ASX 200 little changed at 7,141.63 Kospi up 0.2% to 2,480.33 German 10Y yield down 2.1% to 2.13% Euro up 0.6% to $1.0394 Brent Futures down 1.3% to $91.89/bbl Gold spot up 0.2% to $1,774.81 U.S. Dollar Index down 0.35% to 106.29 Top Overnight News from Bloomberg Signs of inflation peaking in the US are a relief for policy makers around the world who’ve been raising interest rates at a record pace to combat price pressures, ECB Governing Council member Francois Villeroy de Galhau said UK Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators as part of his sprawling package of tax rises and spending cuts this week, according to a person familiar with the proposal Oil inventories in developed nations have sunk to the lowest since 2004, leaving global markets vulnerable as sanctions on Russian exports take effect, according to the International Energy Agency Global investors reduced their holdings of China government bonds in the onshore market for a ninth-month running in October amid concerns over policy uncertainty spurred by President Xi Jinping’s consolidation of power A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed following a weak lead from Wall Street with newsflow also quiet overnight. ASX 200 saw pressure from its Metals & Mining sector, whilst the RBA minutes provided little in terms of hints for the upcoming meeting and left all options open. Nikkei 225 saw some downside after Q3 Japanese GDP unexpectedly fell into contraction, but losses were trimmed as the JPY weakened. KOSPI was contained whilst Taiwan’s Taiex outperformed as TSMC was boosted by a Berkshire Hathaway stake in the name. Hang Seng and Shanghai Comp cheered the meeting between US President Biden and Chinese President Xi, which was telegraphed as candid, whilst Chinese stocks saw little action to the Retail Sales contraction and sub-forecast IP metrics. Top Asian News China reports 1,661 new confirmed COVID cases in mainland (prev. 1,794 a day earlier), via Reuters. PBoC injected CNY 850bln via 1yr MLF at a maintained rate of 2.75%; PBoC injected CNY 172bln via 7-day reverse repos with the rate at 2.00% for a CNY 170bln net injection. PBoC said longer-term fund injection exceeds Nov MLF maturities, according to Bloomberg. Chinese Vice President Wang said China will maintain strong policy continuity, according to Bloomberg. China's Stats Bureau said will actively expand demand, stabilise employment and prices; will consolidate the foundation of economic recovery; economic recovery slows due to COVID flare-ups, via Reuters. China's stats bureau spokesman said the property market shows some positive changes but the downward trend continues; expects China's CPI to remain benign, via Reuters. European bourses are mixed overall, Euro Stoxx 50 +0.2%, as opening gains scale back after a mostly constructive APAC session. Stateside, US futures are firmer across the board with Tech leading after strong APAC tech trade and in wake of Fed's Brainard, ES +0.7%. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.24 (exp. 4.12), Revenue38.9bln (exp. 37.95bln); Comps sales +4.3% (exp. 3.1%); reaffirms FY22 guidance. Top European News UK PM Sunak will accept an official recommendation to increase the living wage from GBP 9.50 an hour to about GBP 10.40 an hour — a rise of nearly 10%, according to The Times. UK Chancellor Hunt is considering a 40% windfall tax on "excess returns" made by electricity generators as part of his Autumn Statement, according to Bloomberg sources. ECB's Villeroy said ECB will probably continue to hike rates but may do so in a more flexible and less rapid manner; jumbo hikes will not become a new habit. We are clearly approaching the normalisation range of around 2%, via Reuters. EU Parliament and member states agreed on an EU budget for 2023, according to dpa. G20 draft declaration noted that central banks will continue to appropriately calibrate the pace of monetary policy tightening, via Reuters. FX DXY continues to slip after a pronounced move which occurred prior to the European cash open, currently near sub-106.00 lows to the broad benefit of peers. USD/JPY has been touted by some as a key driver of the above move given its quick move from above-140.00 to sub 139.00. GBP benefits from the USD weakness and perhaps firm wage metrics though this was accompanied by an unexpected unemployment uptick, ahead of Wednesday's CPI and Thursday's fiscal update. Yuan remains in keen focus as it moves comparatively closer to the 7.00 handle, though proved resilient to soft overnight data with focus firmly on the broader USD move. SEK was unfased by soft-headline but hot-core vs exp. CPIF metrics, though this has prompted SEB to raise the risk of a 100bp Riksbank hike. Fixed Income BTPs are leading the fixed income complex with upside in excess of a point to a session peak of 117.26 vs trough 116.04 on supply-side dynamics. Bunds are similarly bid though to a lesser extent than periphery counterparts, having incrementally surpassed yesterday's 139.26 peak. Well-received German 7yr supply sparked limited upside while a softer UK outing caused Gilts to temporarily pullback to near-unchanged. USTs move in tandem with EGBs with yields lower as such in wake of Fed's Brainard, who backed the FOMC downshifting to a lower increment of rate hikes in December. Retail orders for the November 2028 BTP Italia reach EUR 4bln, via Reuters citing Bourse data. Commodities Crude benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. IEA Monthly Oil Market Report: 2023 global oil output is to grow 740k BPD to 100.7mln BPD. Demand growth will slow to 1.6 mb/d in 2023, down from 2.1 mb/d this year, as mounting economic headwinds impede gains. Russia is reportedly expected to agree to extend the Black Sea grain-export deal, via Bloomberg. Subsequently, Russia says it will announce its decision on extension of Black Sea grains deal in an appropriate time, TASS reports. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. G20 Australian PM says there were positive discussions on trade embargoes levelled on Australia by China. Adds, the meeting with Chinese President Xi was another important step towards stabilising the relationship, will cooperate where possible with China. Many steps yet to take. Chinese President Xi says Sino-Australian relations have encountered difficulties in recent years and this is not what we wanted to see, according to State Media Russian Foreign Minister Lavrov says he has proposed to the G20 the removal of discriminatory barriers on energy markets; UN will deal with the removal of barriers for Russian grain and fertilizers; the G20 draft declaration has reference to an exchange of views re. Ukraine, West added phrase that many delegations condemned Russia. Russia highlighted alterative points of view. Geopolitics Chinese President Xi said China advocates a ceasefire in the Ukraine crisis and calls for peace talks, via state media. Chinese President Xi told US President Biden that China will make all efforts for peaceful "reunification" with Taiwan, according to the Chinese Foreign Minister. China upholds the "one country, two systems" proposal for Taiwan, according to Reuters Chinese President Xi told French President Macron that China and Europe should expand two-way trade and investments, via state media. US Event Calendar 08:30: Oct. PPI Final Demand YoY, est. 8.3%, prior 8.5% Oct. PPI Final Demand MoM, est. 0.4%, prior 0.4% Oct. PPI Ex Food and Energy YoY, est. 7.2%, prior 7.2% Oct. PPI Ex Food and Energy MoM, est. 0.3%, prior 0.3% Oct. PPI Ex Food, Energy, Trade YoY, est. 5.6%, prior 5.6% Oct. PPI Ex Food, Energy, Trade MoM, est. 0.3%, prior 0.4% 08:30: Nov. Empire Manufacturing, est. -6.0, prior -9.1 Central Banks 09:00: Fed’s Harker Discusses the Economic Outlook 09:00: Fed’s Cook Discusses Post-Covid Challenges Facing Women 10:00: Fed Vice Chair for Supervision Barr Speaks Before Senate Panel DB's Jim Reid concludes the overnight wrap I appreciate the EMR is often a medical bulletin as well as a market report and today's there's a new entry on the former. It looks like I'm going to have a back operation in the next few weeks. My sciatic nerve has no room to move and while I'm not in pain at the moment (unlike earlier this year) due to two injections in recent months, I have constant tingling and pins and needles down my leg. All conservative approaches have hit the end of the road and the worry is that if I leave it too long I'll do permanent damage to the nerve. If anyone wants to make a late intervention to help sway me one way or the other in terms of back surgery feel free to do so. I think my mind is made up though as I don't see an alternative. All a bit scary but all with the aim of getting me 30 more years (minimum) on the golf course and the chance to reach my goal of getting to scratch before the ageing process prevents that!! The injection of optimism inserted into the limbs of the financial market after last week's US CPI report showed some signs of fading yesterday although there's been a recovery in Asia as China continues to support the economy and the interpretation of Biden/Xi meeting yesterday is spun a bit more positively in Asia. Yields have risen across the Treasury curve to start the week as investors moved to dial back some of their more dovish post-CPI expectations for next year. In part, that was prompted by some pretty hawkish comments from Fed Governor Waller on Sunday night that we mentioned in yesterday’s edition. But that trade was then given further momentum by the New York Fed’s latest Survey of Consumer Expectations, which showed inflation expectations moving higher across all horizons, and echoes the uptick we saw in the University of Michigan’s reading last Friday as well. Consistent with that, our US economist's composite measure of inflation expectations has increased. They've published their latest series in a full update, available here. Diving into those inflation expectations from yesterday, the New York Fed’s latest survey showed the 1yr expectation moving up half a point to 5.9%, 3yr expectations rising two-tenths to 3.1%, and 5yr expectations up two-tenths as well to 2.4%. To be fair, all those measures are still below their levels as recently as Q2, but the upticks over the last couple of months will raise some fears that the longer inflation remains elevated, the more difficult it’ll be to keep expectations anchored around target levels. For now you would have to say that long-run expectations have held in remarkably well in the face of 40-yr highs in actual inflation. October's US PPI will be an important release today, especially the health care component that feeds directly into core PCE - the Fed's preferred gauge. A notable push back on the slightly more hawkish momentum to start the week were comments as Europe closed from Fed Vice Chair Brainard, who struck a far less hawkish tone than Governor Waller had the previous day. For instance, Brainard said that it would “probably be appropriate soon to move to a slower pace of increases”, which gave further support to the idea the Fed will slow down its hikes to a 50bp pace next month (fully priced now though). That wasn’t too out of line with the rest of Fed speakers since the November meeting, but where the Vice Chair did separate herself was by noting the step down in pace need not be explicitly tied to a higher terminal rate, something Chair Powell argued during his Press Conference, and she did not explicitly rule out interest rate cuts next year, which would be more of a ‘pivot’ rather than the recently communicated ‘pause’ for the Fed. That gave risk assets a bit of support, but it appears she is out of consensus from the rest of the Committee, so the gains were not sustained. With all said and done, investors ended the day expecting a slightly more aggressive Fed, with the rate priced in by Fed funds futures for end-2023 up +6.2bps to 4.46%. As a result, US Treasury yields rose across the board as trading resumed after Friday’s Veterans’ Day holiday. The 10yr yield was up +4.1bps to 3.85% (3.87% in Asia), and the more policy-sensitive 2yr yield saw an even larger move of +5.7bps to 4.39%. Those moves were driven by real yields, with the 10yr real yield up +8.4bps on the day to 1.49%. As you'll see from my CoTD yesterday, 10yr US real yields had their second largest fall since the GFC on Thursday (link here). Only the intitial covid related fall in March 2020 beats it. Against that backdrop, US equities struggled for momentum too, with the S&P 500 (-0.89%) losing ground after its massive +6.52% surge over the previous two sessions. The more cyclical sectors led the declines, and the NASDAQ (-1.12%) lost even more ground on the day. However in Europe there was a much more positive story, with the STOXX 600 up +0.14% to its highest level in over two months, alongside gains for the FTSE 100 (+0.92%), the CAC 40 (+0.22%) and the DAX (+0.62%). This European strength was evident in sovereign bond markets too, where yields on 10yr bunds (-1.5bps), OATs (-1.2bps) and BTPs (-3.0bps) all ended the day lower. Asian equity markets are mostly trading higher this morning with the Hang Seng (+3.62%) sharply higher lifted by the outperformance of the Hang Seng Tech index (+6.81%) as Chinese listed tech stocks rose significantly. Stocks in mainland China are also up with the CSI (+1.47%) and the Shanghai Composite (+1.27%) extending their previous session gains despite a slew of disappointing economic data. As discussed at the top, the Asian interpretation is that we saw a slight easing of China-US tensions following the Biden-Xi meeting on the sidelines of the G20 summit in Indonesia (more below). Elsewhere, the Nikkei (+0.10%) is modestly higher with the KOSPI (-0.11%) bucking the trend in early trade. In overnight trading, US stock futures are pointing to a positive start with contracts on the S&P 500 (+0.52%) and the NASDAQ 100 (+0.74%) both rising. Coming back to China, early morning data revealed that industrial production rose +5.0% y/y in October, lower than the market expected rise of +5.3% and much slower than September’s +6.3% increase indicating a further loss of momentum in the world’s second biggest economy. At the same time, retail sales unexpectedly contracted -0.5% y/y (v/s +0.7% expected), down from +2.5% growth in September as strict Covid restrictions along with a downturn in property markets pushed consumers to tighten their belts. Markets are largely ignoring this data as covid and property restrictions have subsequently been eased so the direction of travel should get more positive from here. Elsewhere, Japan’s economy unexpectedly shrank for the first time in four quarters as Q3 GDP fell -0.3% q/q (v/s +0.3% expected) compared to an upwardly revised growth of +1.1% in the prior quarter as inflation and the weak yen hit the country. In the geopolitical sphere, let's now recap US President Biden and Chinese President Xi's first meeting in person as the leaders of their respective countries yesterday. That took place on the sidelines of the G20 summit in Indonesia, and the White House said afterwards that US Secretary of State Blinken would visit China to follow up on the discussions, which was taken by many as a positive sign towards de-escalating tensions. However, there were some points of tension, with the White House statement saying that Biden had “raised U.S. objections to the PRC’s coercive and increasingly aggressive actions towards Taiwan, and China’s statement said that “anyone that seeks to split Taiwan from China will be violating the fundamental interests of the Chinese nation”. So something for the hawks and doves but the conclusion might be that the summit beat low expectations coming into it. Staying on politics, it’s now been a week since the midterm elections and we still don’t know which party will control the House of Representatives following the weekend confirmation that the Democrats took the Senate. It’s looking increasingly likely it will go to the Republicans, who currently have a lead in the vote count across enough of the outstanding districts to win a majority, and NBC’s forecast points to a narrow 220-215 Republican majority based on what we currently have as well. As we go to press, the current tally stands at 217 Republicans and 204 Democrats with Republicans just 1 win away from taking the House. Tonight however, attention will turn towards the 2024 presidential contest, since former President Trump has said he’ll be making an announcement at 9pm EST, and speculation has centred around a potential 2024 announcement. Normally, the presidential announcements from the top-tier contenders happen around Q1 or Q2 of the year after the midterms. But if today does mark an announcement, the rationale for going early will be to clear the field of other potential contenders, with Trump hoping that the Republican primary is effectively uncontested like normally happens for sitting presidents. As it stands, Trump’s biggest rival for the nomination is widely considered to be Florida Governor Ron DeSantis, who was re-elected Governor last week with lead of almost 20 points over his Democratic opponent. He was seen to be the Republican's big success story of the night. The crypto saga continues, but there was some stabilisation in Bitcoin prices, which retreated just -0.57% after bouncing around all day. There’s certainly still more to come on the story as it becomes clear who was exposed to failed exchanges and funds, but Marion Laboure on my team has already contextualised the episode and looks ahead about what it implies in her piece out yesterday. Link here To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 11/15/2022 - 07:47.....»»

Category: dealsSource: nytNov 15th, 2022

Guy Fawkes Night Reminded Us That Bitcoin Is A Modern Vendetta Against The Establishment

Guy Fawkes Night Reminded Us That Bitcoin Is A Modern Vendetta Against The Establishment Authored by Alex Lielacher via BitcoinMagazine.com, Bitcoin enables a digital Gunpowder Plot, giving anyone the ability to opt out of establishment control as Guy Fawkes once attempted... The Guy Fawkes mask - popularized by the movie “V For Vendetta” - has become a symbol of resistance against the State, worn by anti-government protesters of all factions. Bitcoiners have also picked up the mask, highlighting Bitcoin’s own struggle against the powers that be who control and benefit from the corrupt fiat currency monetary system. As we remembered 'the fifth of November' this past weekend, here’s a reminder that Bitcoin is more than number-go-up technology. At its core, it’s a monetary revolution that has the potential to change the world forever. WHY DOES BRITAIN CELEBRATE THE FIFTH OF NOVEMBER? “Remember, remember, the fifth of November. Gunpowder, treason, and plot. I see no reason why gunpowder treason should ever be forgot.” Ask anyone in the U.K. about Guy Fawkes, and they'll most likely quote you this poem. The fifth of November is a day when we remember one of the most notorious acts of rebellion against the state on European soil. On November 5, 1605, a group of Roman Catholic Church followers attempted to blow up parliament and kill King James I. The leader of the plot, Robert Catesby, together with his four co-conspirators — Thomas Winter, Thomas Percy, John Wright and the infamous Guy Fawkes — were angered by King James’ refusal to grant more religious toleration to Catholics. Through this plot, they hoped that the confusion, which would follow the murder of the king, his ministers and the members of Parliament, would provide an opportunity for the English Catholics to take over the country. However, their plan didn't work. They were caught and later hanged for treason. Their action resulted in even more punishment against the Catholic Church. In January 1606, the U.K. Parliament established November 5 as a day of public thanksgiving. Today we celebrate November 5 as Guy Fawkes Night or Bonfire Night by lighting bonfires, setting off fireworks and carrying “Guys” through the streets wearing the ever-so-famous Guy Fawkes mask. THE CHANGING SYMBOLISM OF THE GUY FAWKES MASK The comic and, later, the movie, “V For Vendetta” turned the Guy Fawkes mask into a symbol with many different meanings. It's no longer only memorabilia for the fifth of November, but a symbol against power, corruption and the state apparatus, as well as a means to protect your identity during a time of omnipresent surveillance. One of the most obvious symbols of the mask is the uprising against the powers that be. Throughout the film “V For Vendetta,” the character V's identity is never revealed. There was no need to know who he was. The meaning in the graphic novel actually goes a step further and utilizes V's facelessness to promote anarchy in the hopes of creating a new world order without leaders. This vision is one that many protestors or anarchists share as well. Whether they are hacktivist collectives like Anonymous, which is keen to unveil corruption and abuse of power, or protestors against state tyranny in Venezuela, India, Bahrain or Nigeria. Once they put on the mask, they become not only a protestor against power, but also a symbol for others to follow their lead. One person alone with the mask on their face is meaningless, but once a collective puts on the mask, it becomes the symbol against tyranny. Obviously, it's a guard to protect one's privacy as well, which is why you see so many Guy Fawkes masks at protests. And this blends into online culture as well. Satoshi Nakamoto is arguably one of the most famous anonymous activists of the past 20 years. In fact, one of the most portrayed versions of Nakamoto is as someone wearing a Guy Fawkes mask and hoodie. Like V in the movie, it was Nakamoto who launched a vendetta with the financial world. They didn't seek vengeance by hacking the legacy financial system, but rather by creating a system in which everyone is able to transact freely. Once the project was big enough and able to live on its own, Nakamoto left, never to return, thereby nurturing the idea of a movement without any leaders — a leaderless resistance against the fiat monetary system. One of the main aspects of Bitcoin is its ability to separate money from the State. This separation is what unites Bitcoiners with protesters on the streets in Venezuela, hacktivists online and Guy Fawkes back in 1605. All of them had or have the goal of dethroning powerful institutions for a better and freer society. WHY ANON BITCOINERS WEAR THE GUY FAWKES MASK The Guy Fawkes mask is not only a symbol against tyranny but also a shield of protection to hide your identity. And anonymity is a big part of Bitcoin culture. Anon Bitcoiners want to protect themselves from the establishment, and the possible repercussions of having their identity linked with a technology that has the potential to topple existing monetary structures that benefit the few in power. While Bitcoin is slowly being integrated into the legacy financial system, adding to its legitimacy in the eyes of governments, regulators and big banking, the potential for a ban — as Bitcoin is a way to circumvent the coming central bank digital currency (CBDC) surveillance apparatus — remains a threat. History does not repeat itself, but it often rhymes. If you look at what happened with gold in the United States in 1933, where citizens were essentially robbed of their gold possessions, it would be foolish to think that similar plans don’t also exist for Bitcoin. Now, one could say as long as you have your private keys and secure your wallet in a multisig structure, not much can happen. That might be true for your bitcoin. But the fact that your identity is linked to a potentially soon-to-be-banned technology poses a risk. Anons are able to opt out of that dystopia by wearing a metaphorical Guy Fawkes mask and remaining anonymous. They cut off their real-life personas from their online personas, allowing them to continue to remain unlinked to Bitcoin by name. Bear in mind, in the future, CBDCs will exist and will likely emerge as the main tool of surveillance for the establishment. That is another reason why the mask became a symbol against the establishment, whether that be in the Bitcoin space or in activist groups like Anonymous. All of these different groups are willing to stand up against tyranny by “putting on the mask.” Symbols are only effective if enough people stand up for them. A single Guy Fawkes mask is worthless. However, if thousands of people wear them at protests or have them on in their profile pictures online, they're able to put pressure on the establishment. Statements like “Bitcoin is a peaceful revolution” or “Fix the money, fix the world” have the goal of peaceful anarchy or revolution within them. They don't want to kill or destroy innocent lives. That's what the establishment is doing with its endless proxy wars. The goal is to inform citizens and give power back to the individual. IS BITCOIN THE FIAT MONETARY SYSTEM’S GUNPOWDER PLOT? The simple answer to this question is yes, absolutely. However, Bitcoiners don't plan to blow up parliament. Although I am sure there are Bitcoiners living under truly tyrannical state rule who may be working on overthrowing their governments, Bitcoiners want to change the world peacefully, without bloodshed or physical harm to anyone. In “V For Vendetta” and the gunpowder plot of 1605, the goal was to topple the existing power structure at all costs. The characters were willing to sacrifice human lives to see the change they envisioned. This is very different from Bitcoin. Bitcoin doesn’t need a violent uprising. Bitcoin is the uprising. Bitcoin itself is a peaceful revolution. There is no need to physically occupy Wall Street or hold bank employees hostage in a robbery. All anyone has to do to take part in the Bitcoin revolution is to become part of the Bitcoin network by running a node and spreading awareness of the power that Bitcoin holds to change the world. Bitcoin is antifragile, hard to change and secure by design. These qualities are the gunpowder of Bitcoin. There were many attempts to change its fundamentals — the Blocksize Wars, for example — but none of the attackers were successful in their attempts. Bitcoin's core of believers stuck to Nakamoto’s vision, one that is still alive today. Everyone on earth has the opportunity to take part in the Bitcoin network, benefitting from its ability to enable anyone to store, send and receive value without censorship or needing to ask for approval. That's why the establishment fears it. The establishment doesn’t want you to own anything. Its members are the ones telling you what to eat, drink and spend your hard-earned money on. If you don't obey, it will enforce new rules or shut you off by controlling your bank account. This is why CBDCs are so dangerous, as they can, in theory, give this establishment complete control over all your financial transactions. Just by owning and using bitcoin, you don't have to follow these rules. You have the option to opt out. If there is one thing the gunpowder plot or “V For Vendetta” has taught us, it's the power of collective minds. The establishment is afraid of more public support for Bitcoin because it knows that once we hit a certain threshold, there won't be any going back. The establishment can't turn Bitcoin off like a server. Without realizing it, it has built a monster. It was because of bad financial incentive structures in the past that Nakamoto created Bitcoin. The greed of the establishment was what led us here. One by one, from the bottom up, we've risen and continue to give people hope, courage and a vision for a better tomorrow. REMEMBER, REMEMBER, WHAT BITCOIN COULD REALLY ACCOMPLISH In the third act of “V For Vendetta,” the character Evey has overcome her fear of death. She knows there won't be any going back, and the plotted revolution on the fifth of November is unavoidable, regardless of her own life. In the real world, the establishment has gotten to where it is today because it has been able to corrupt the system with fiat money. If it ever needed more, it was able to print it. Up until today, it was somewhat successful. But its time is running out. You can only print so much money before it starts inflating away. The result of that rigorous spending is visible now. Figureheads like Christine Lagarde of the European Central Bank or Andrew Bailey of the Bank of England don't know how to stop inflation. They don't see any other solution but to print more money and to throw more money at the problem. As we know, however, that doesn’t work. Bitcoin fixes this. Bitcoin’s limited supply, combined with its disinflationary monetary policy, enables holders to protect themselves from the long-term effects of inflation. But that’s not all. Bitcoin is also freedom money. It allows anyone in the world to participate in a new monetary system free of the chains of the fiat currency apparatus. No ruler, no regulator and no bank can lock you out of your bitcoin as long as you hold your own keys. That is the true power of Bitcoin. It provides us with financial sovereignty and the power to choose our own destiny. Tyler Durden Mon, 11/07/2022 - 18:00.....»»

Category: dealsSource: nytNov 7th, 2022

14 Years After The Bitcoin White Paper; Reflecting On Satoshi Nakamoto"s Manifesto

14 Years After The Bitcoin White Paper; Reflecting On Satoshi Nakamoto's Manifesto Authored by Archie Chaudhury via BictoinMagazine.com, 14 years later, Bitcoin has shown its strengths... and that it still has a long way to go to achieve its original goals... When Satoshi Nakamoto first published the Bitcoin white paper in October of 2008, the world was reeling from a financial crisis caused by the irresponsibility and negligence of the institutions that controlled our financial system. Hedge funds, central banks and other powerful agents had been all too happy to place over-leveraged bets on the economy, and to profit from the economic losses incurred by the working class when these bets collapsed. Governments, in a desperate attempt to keep these institutions alive, spent hundreds of billions of dollars in bailouts and other monetary injections instead of ensuring the well-being of the average citizen. Bitcoin was Satoshi Nakamoto’s answer to state-backed money; it was a vision for a decentralized digital currency that could provide the efficiency of online banking, the relative pseudonymity of physical cash, and the scarcity of gold. Unlike previous attempts at creating digital cash, Bitcoin was not backed by or controlled by a singular entity or party, but rather by an anonymous developer (developers?), a set of faceless forum visitors and a small online community that believed in using cryptographic software for privacy and independence from authoritarian powers. Nakamoto’s ultimate goal was to create an asset that was autonomous, decentralized and was not susceptible to the greed or will of any one individual. October 31, the day Satoshi Nakamoto formally announced their white paper to the Cypherpunks Mailing List, has come to be known as “Bitcoin White Paper Day” and is celebrated as an informal declaration of independence from corrupt state-backed money, heard across the world. The purpose of this article is to reflect on how far we have come since then, and how much work remains to be done in order to accomplish Nakamoto’s goals. The Bitcoin that we use today is vastly different from the Bitcoin that Satoshi Nakamoto and his fellow contributors created in the late 2000s and early 2010s. Beyond the numerous technical upgrades and hard forks, the network itself has grown significantly, with more and more people taking the proverbial “orange pill” and deciding to use bitcoin in some capacity. There is another way in which Bitcoin has changed: the core network, and asset (BTC), is thought of more as a store of value rather than a platform for micropayments. Indeed, there was a significant cultural schism within the Bitcoin community that led to this change: the famous, and aptly titled, “Blocksize Wars” approximately five years ago led to this change, with forks such as Bitcoin Cash and later Bitcoin SV being created by community members who believed in scalability over all else, and the core Bitcoin chain being upheld by members who sought to preserve decentralization and to look at alternative methods such as Layer 2 payment channels to support scalability. The Lightning Network, which is the most popular payment channel, has slowly gained popularity, recently reaching a capacity of 5000 bitcoin. Despite these changes, the core technological tenets espoused by Nakamoto in 2008 (Nakamoto Consensus with proof-of-work mining and a static maximum supply of 21 million) remain constant. This is not solely because of a technological or economic reason; in fact, it has been argued that changing Bitcoin’s underlying consensus mechanism or supply cap could lead to increased performance and adoption respectively. Rather, Bitcoin’s consistency in these areas can be attributed to the philosophy of its underlying community, who believe strongly in scarcity, security and decentralization over all else. Meanwhile, bitcoin is being used by people around the world to stave off unruly economic conditions. Bitcoin’s natural scarcity makes it attractive for citizens where corruption has led to unrestricted inflation. This adoption has even led some governments, such as El Salvador, to declare bitcoin a national currency, a move that would have been unfathomable to Nakamoto and Bitcoin’s original contributors. Perhaps the most interesting thing to take from Bitcoin’s progress over the past couple of years is that it has happened without a central leader: unlike alternative assets that are more akin to decentralized software platforms, bitcoin functions purely as money, with key “policy” decisions being made by a community. There is no Bitcoin organization or representative solely responsible for promoting adoption, nor is there a central “chief scientist” that has a significant impact on key protocol-level decisions. While there are certainly major influences within the community, the protocol as a whole does not have an organizational structure to lead either adoption or development. In fact, Bitcoin’s lack of hierarchy should be a goal for other distributed ledger projects who, while perhaps decentralized to a certain degree, are still largely influenced by a singular entity or individual. While Bitcoin has certainly grown from its humble beginnings as a white paper and a couple hundred lines of scrappy code, it still has a long way to go if it is to achieve the ambitious goals discussed by Nakamoto and other early adopters in their email chains and forum posts. From a technical standpoint, the Bitcoin community needs to continue building technology that not only enables further scalability and security, but perhaps more importantly, also helps make the network more decentralized. One of the most staunch mottos that Bitcoin community members have adopted is the term “Don’t trust, verify.” This is, of course, in reference to running a full Bitcoin node and not relying on data from external third parties, such as node providers. Network optimization, rollups, and other scalability research has been proposed by various individuals in the Bitcoin community as a way for the network to simultaneously scale while decreasing the cost it takes to run a full node. A recent report, published by John Light through research funded by the Human Rights Foundation, Starkware and CMS Holdings, provides more detail about rollups-related scalability research. Despite its roots in technology, Bitcoin has evolved over the years to become something more: it is now a community, a network, if you will, of like minded-individuals who all have some varying degrees of belief in a singular idea. Bitcoin is no longer a software, privy to only developers, coders or those with a highly technical background, and this marked shift should also signal additional non-technical priorities for the Bitcoin community to address over the next decade. More effort needs to be spent on educating the general public and making them aware of not only Bitcoin’s technology, but also the failures of the legacy financial systems that they use today. More effort needs to be spent not only on touting bitcoin’s economics and technology, but also drawing on distinctions between bitcoin and other cryptocurrency platforms. Finally, more effort needs to be made among the cryptocurrency community as a whole to come together when the fundamental principles that Satoshi Nakamoto and his fellow cypherpunks believed in are threatened by authoritarian governments, regardless of the platform that is being attacked. While discussions around varying blockchain networks have always been tribalistic to a degree, the recent trend has been to promote the success of your platform over all else, and even chide or insult platforms who face potential regulatory scrutiny. While believing that bitcoin is the most sound digital asset in terms of economics/construction, and getting into arguments about said belief is okay, and should even be encouraged, celebrating when an alternative platform is threatened with regulatory action or censorship goes against what Bitcoin is fundamentally all about. The cypherpunks, Satoshi Nakamoto and a majority of Bitcoin’s community all believe in the idea that one day, there can be a digital peer-to-peer currency completely independent of any government, intermediary or biased party. While we certainly have various disagreements about the pros and cons of our respective technology, belong to different “maximalist” groups, and in general have varying beliefs, we all ultimately belong to a space that was motivated by the idea of a censorship-resistant and non-partisan digital asset/network. We would do well to remember that fundamental principle as we continue to work on Bitcoin over the next 14 years. Tweet from Erik Vorhees on the sanctioning of Tornado Cash and potential BTC regulation by ESG proponents. Tyler Durden Tue, 11/01/2022 - 21:25.....»»

Category: blogSource: zerohedgeNov 1st, 2022

Here Are Some Ways Investors Can Calculate What A Cryptocurrency Is Worth

When deciding whether to buy an asset, institutional investors must determine whether it's undervalued or overvalued. However, there is much debate on how to do this with crypto assets. Here are some suggested methods to determine what crypto assets are worth. Institutional investors remain interested in cryptocurrencies despite the widespread selloff that has struck the sector this year. In fact, Fidelity’s fourth-annual Institutional Digital Assets Study found that more than half of respondents had invested in digital assets during the first six months of 2022. Nearly three-quarters of the institutional investors surveyed plan to invest in the future. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. How Much Is Cryptocurrency Worth? As the total market capitalization of the entire crypto market flirts with a return to $1 trillion, the market faces a specter that has hovered over every other asset since trading of them began: valuation. Experienced investors and institutions always want to know what an asset is worth so that they can determine whether the current trading price is attractive. However, this is a problem with cryptocurrencies because they have no cash flows, earnings or any other metrics typically used to value companies. As a result, many continue to refer to bitcoin as "digital gold" because gold's price is driven by other factors, including supply versus demand, the size of reserves held by central banks, and the value of the U.S. dollar versus other fiat currencies. Unfortunately, even these alternative methods of valuation become tricky for most cryptocurrencies. As a result, many crypto experts have sought to establish their own methods of valuation, one of which was set out by crypto exchange-traded product issuer 21Shares in a recent report entitled "State of Crypto." The ETP issuer divided the primary frameworks it uses to value cryptocurrencies into two approaches similar to how institutions value other assets: fundamental or intrinsic valuation and relative valuation. The former utilizes discounted cash flow and mining production costs, while the latter is composed of multiples and market sizing. Why Different Methods Should Be Used According to 21Shares, the valuation method used depends on the type of crypto asset being valued. While fundamental and relative valuations can work for all crypto assets, the valuation method used should differ based on the consensus mechanism, usually proof-of-work or proof-of-stake, and the type of token, which can be governance, utility or non-fungible tokens. For example, a cryptocurrency's mining production cost is critical when trying to value PoW assets like bitcoin. Other factors that apply to PoW assets include market size and multiples. On the other hand, PoS assets like ether, governance tokens like MakerDAO, and NFTs may be better valued using an intrinsic valuation derived using a discounted cash flow method. Finally, all crypto assets, including NFTs, can be valued using relative valuation methods like multiples and market sizing. Intrinsic Versus Relative Valuations When trying to determine the valuation of any crypto asset, it's important to understand the differences between intrinsic and relative valuations. Intrinsic valuations connect an asset's value to its capacity to generate cash flows, which is then adjusted for timing and risk. One benefit of these methods is that they are less exposed to market sentiment, while another is that they force investors to think about the asset's fundamentals. However, intrinsic valuation methods also require more concrete data that can be difficult to estimate. Additionally, intrinsic methods can only be used on assets that generate cash flows. On the other hand, relative valuations are assigned based on what investors are paying for comparable assets. These methods involve using multiples, which are a standardized estimate of price, and the size of the total addressable market. Using relative valuation methods is beneficial because it places investors in sync with the overall market sentiment and because any asset can be valued in these ways. Additionally, relative valuation methods don't require very specific information. It's also important to note that crypto assets can seem undervalued on both a relative and fundamental basis. Price Versus Value Investors buy and sell assets because the general agreement is that the market is inefficient on some level. If markets were totally efficient, an asset's price would match its value, eliminating the need to determine its value at all. New York University Professor Aswath Damodaran defined a clear distinction between value and price. Fundamentals like cash flows, growth and risk drive an asset's value, while market sentiment, narratives and liquidity drive its price. As far as valuation approaches, fundamentals drive intrinsic valuations while ignoring the market dynamics. On the other hand, market sentiment and momentum drive relative valuations. As a result, relative valuations can help investors determine if a particular asset is undervalued relative to its peers and whether it is historically undervalued or overvalued based on indicators like the price-to-sales ratio. These factors show that market cycles fluctuate between safety and risk capital. For example, periods of abundant risk capital trigger times of "irrational exuberance," which send prices to exorbitantly high levels on a relative basis. On the other hand, investors avoid riskier assets when there's no risk capital, seeking safety instead. History has shown that assets without any objective measure of value with a limited supply are more subject to irrational exuberance, just as crypto assets are today. Thus, crypto assets are often bid up to unsustainable levels during periods of abundant risk capital. Why PoS Cryptocurrencies Have Cash Flows The 21Shares team goes even further by categorizing crypto assets into three groups: capital assets, which are similar to stocks and bonds, consumable assets, which can be consumed or transformed into something else, like commodities, and stores of value, which include gold. PoW crypto assets are grouped with the consumables, while PoS crypto assets are considered capital assets. Some of the confusion about valuing crypto assets is the fact that many of them have characteristics of all three asset classes. For example, 21Shares argues that a discounted cash flow model, which is often used for stocks, is the best way to value PoS cryptocurrencies. Many have said over the years that crypto assets have no cash flows, but that's certainly not true of PoS cryptocurrencies. For example, investors can estimate ether's cash flow by equating the dividend yield of a company with ether's staking yield. Transaction fees in the network are paid to stakers and sometimes considered a proxy for revenue. However, when new tokens are issued, it doesn't dilute stakers' holdings. Instead, it adds to their holdings, and in a PoS network, they have a right to those new tokens. Additionally, the number of staked tokens as a percentage of the total circulating supply determines the staking participation rate. An increase in this rate typically decreases the staking yield and vice versa. The resulting formula to determine ether's cash flows to validators is the amount of transaction fees they earn plus the tokens issued in exchange for validating transactions. Additionally, the staking yield is the annual cash flows to the validators divided by the number of staked tokens. Other variables required in determining a discounted cash flow valuation include the asset's estimated lifespan, which is generally perpetuity (with 10 years used as a proxy), and the discount rate, which reflects the perceived risk. Final Thoughts Only time will tell how institutional investors will choose to value crypto assets before determining whether they are undervalued or not. However, it seems likely that some combination of the methods discussed here will become the consensus eventually. How do you determine how much a cryptocurrency is worth? Share your insight in the comments section below......»»

Category: blogSource: valuewalkOct 28th, 2022

Wealthy Chinese Activate Financial "Escape Plans" Terrified Of Xi"s Coming Reign Of Terror, And Why This Is Good News For Bitcoin

Wealthy Chinese Activate Financial "Escape Plans" Terrified Of Xi's Coming Reign Of Terror, And Why This Is Good News For Bitcoin Back in September 2015, more than seven years ago, when bitcoin was trading around $225, and just after China had stunned markets with its (relatively modest) yuan devaluation, we made a modest prediction: In summary: while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which - as every Cypriot and Greek knows by now - is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out. So what happens then: well, China's propensity for gold is well-known. We would not be surprised to see a surge of gold imports into China, only instead of going to the traditional Commodity Financing Deals we have written extensively about before, where gold is merely a commodity used to fund domestic carry trades, it ends up in domestic households. However, while gold has historically been the best store of value in history and has outlasted every currency known to man, it is problematic when it comes to transferring funds in and out of a nation - it tends to show up quite distinctly on X-rays. Which is why we would not be surprised to see another push higher in the value of bitcoin: it was earlier this summer when the digital currency, which can bypass capital controls and national borders with the click of a button, surged on Grexit concerns and fears a Drachma return would crush the savings of an entire nation. Since then, BTC has dropped, however if a few hundred million Chinese decide that the time has come to use bitcoin as the capital controls bypassing currency of choice, and decide to invest even a tiny fraction of the $22 trillion in Chinese deposits... ... in bitcoin (whose total market cap at last check was just over $3 billion), sit back and watch as we witness the second coming of the bitcoin bubble, one which could make the previous all time highs in the digital currency, seems like a low print as bitcoin soars past $500, past $1,000 and rises as high as $10,000 or more. Well, we got the direction spot on, but not even we could anticipate just how much "or more" bitcoin would soar to some 6 years later when it nearly topped $70,000. Of course, far be it for us to claim that Chinese capital outflows were the only driver behind the exponential rise in bitcoin, but they certainly were one of the earliest catalysts behind what would be a truly fantastic, generational wealth-creating meltup, and certainly explains Beijing's relentless crusade to crush bitcoin (and crypto in general), and to launch its own laughable attempt at a CBDC, which not unexpectedly has been a completely disaster. Why do we bring this up? For three reasons: First, as we noted yesterday, China is aggressively engaged in stealth devaluation, and while it pretends to be trying to contain the yuan from collapsing, the plunge in the currency has been historic. Even CFR analyst Brad Setser admitted today that "until China proves otherwise, it is effectively engaged in a controlled depreciation" but so far nobody in the US pretends to notice. Second, back in 2015 total Chinese bank deposits were $22 trillion. Fast forward to today when they are two and a half times larger at $55 trillion, or more than double their US equivalent! That's a lot of domestic deposits that will need to be quietly ferried offshore once China admits it is aggressively pursuing yuan devaluation (which it is doing right now). Third, back in September 2015, millions of Chinese rushed to park their savings offshore, terrified that Beijing's ongoing devaluation wave would wipe out the value of their financial assets. Well, it's time for another offshore funding scramble because as the FT writes, today, "thousands of wealthy people across China are headed for the exits as President Xi Jinping secures a third term, making him and the ruling Chinese Communist party even stronger than before." Recall that just hours after Xi not only was declared dictator for life but unceremoniously and in full view of the entire world had his centrist, globalist and pro-reform predecessor Hu Zintao escorted out of the building, guaranteeing that the rest of his rule will be a radical departure from heretofore accepted norms, and calling for the "great rejuvenation of the Chinese nation" based on revitalizing the CCP's role as the economic, social, and cultural leader, Chinese stocks cratered to multi-decade lows and the yuan plunged to a record low as the growing realization of the horror that is coming swept across the land. As a result, China's wealthiest were met with market turmoil on Monday when Chinese stocks crashed the most since 2008. According to Bloomberg's billionaire list, the 13 richest Chinese lost $12.7 billion in just one day after mounting fears about Xi's consolidation of power. But of course, it wasn't just them looking terrified at the glowing green color on their screens (as a reminder, in China stock colors are inverted as red means up and green means down): it was everyone. In any case, as hundreds of millions of Chinese savers now scramble to move as much of their assets as far away off shore from the lunatic fringe in Beijing as possible, we have been flooded with reports that wealthy families across Hong Kong and China are at a "tipping point" about triggering so-called financial "fire escape plans" to avoid the wrath of Xi and CCP, according to David Lesperance, a Europe-based lawyer who works with elite Chinese businessmen and who spoke with Financial Times.  "Now that 'the chairman' is firmly in place . . . I have already received three 'proceed' instructions from various ultra-high net worth Chinese business families to execute their fire escape plans," Lesperance said. Ahead of the run-up to the 20th Party Congress, there was much concern that if Xi cemented his third term, there would be no pivot to his controversial policies, including the Covid-zero strategy and increased regulatory measures on companies, which have devastated parts of the economy. The actual outcome - in which Xi crowned himself undisputed ruler and surrounded himself with fawning sycophants while threatening a full-blown putch of the upper class - was far worse. Kia Meng Loh, a senior partner at Dentons Rodyk bank in Singapore which in the past two decades has emerged as the world's "Swiss bank account", or the only place in the world where accounts remain truly anonymous, said that some Chinese elites have been inquiring about setting up "family offices" even before last weekend, as a way to protect wealth from the CCP: "The clients I work with saw [Xi's] third term as a foregone conclusion much earlier than this week," Loh said, adding many of these families who generally shield wealth in Hong Kong found it less attractive since Beijing now has authority over the territory.  Sure enough, new data from Citi Private Bank shows the number of family offices in Singapore soared 5x between 2017 and 2019 and nearly doubled from 400 at the end of 2020 to more than 700 a year later as wealthy Chinese rushed to park their wealth offshore. Ryan Lin, director of Bayfront Law, also located in Singapore, said he was contacted by five wealthy Chinese families last week to establish a Singapore family office, and of those, three are quickly moving forward. Lin has helped establish 30 ultra-wealthy family offices in Singapore in the past year, as many of these families hope not just to relocate their money but also family.  Lesperance admitted that many of his clients had spent years preparing to exit China, legally moving money to safe offshore places that CCP cannot touch. Some of these families are even applying for citizenship abroad.  Xi is expected to unleash a broad range of wealth taxes (under the populist campaign "common prosperity") that has spooked the wealthy. But hiding wealth could be the least of their worries considering there have been numerous accounts of some billionaires forced into hiding, such as Alibaba's Jack Ma. Ongoing chaotic lockdowns under the Covid-Zero policy and common prosperity as Xi secured a third term push high-net-worth residents to the exits. The obvious question then is how long until China battens down the hatches and makes money transfers to Singapore impossible. "The family motto has always been: 'Keep a fast junk in the harbour with gold bars and a second set of papers'. The modern equivalent would be a private jet, a couple of passports and foreign bank accounts," Lesperance said. "That is the world we are in . . . it is tough stuff." Of course, to fund said foreign bank accounts, one needs either gold bars to flee China's infamous financial firewall... or their modern equivalent: bitcoin. And while gold shows up on X-ray, crypto does not, whether it is sent by instant transfer across the blockchain or through unobservable flash drives. Indeed, one has to wonder if capital outflows from China are already starting to push Bitcoin higher, as fears of another round of draconian capital controls by Beijing spark outbound money flight... ... and if it was capital flight from China back in 2015 that helped propel bitcoin nearly 100x from $250 to $20,000 during the first Asia-driven bitcoin bubble of 2017/2018, one also has to wonder how high another full-blown Chinese capital flight will push the digital gold this time. Tyler Durden Tue, 10/25/2022 - 22:25.....»»

Category: blogSource: zerohedgeOct 26th, 2022

Bitcoin"s Rapidly Changing Correlation Regime Suggests Investors Are Starting To View It As Safe Haven

Bitcoin's Rapidly Changing Correlation Regime Suggests Investors Are Starting To View It As Safe Haven After a near-apocalyptic 6 months for bitcoin and the broader digital token segment, which led to the now traditional spike in crypto obituaries, some are wondering if the crypto winter is starting to thaw and is sentiment is about to reverse. One such tentative ray of hope comes from Bank of America's latest Global Cryptocurrencies note, in which author Alkesh Shah paints a gloomy picture for most assets, yet one where cryptos may soon start diverging, to wit: Higher rates, driven by inflation and budget deficits, continue to pressure risk assets including the digital assets sector. Our macro colleagues note early signs of capitulation given max bearishness (see this Oct 20 report) for the 5th consecutive week as hedge funds position less bearishly on equity and an S&P YE price forecast indicating 2% downside from current levels as client flows signal expectations of a potential market bottom. But, rate risks remain. We expect blockchain and application development to drive token price divergence with blockchains exhibiting a growing application ecosystem and Web3 applications providing real-world functionality and capturing traditional company market share to outperform Of course, we all know what they say about opinions... but what about other tangible indicators? Let's start with fund flows. As Shah writes, BTC exchange outflows last week were the largest since mid-June, tight supply (tokens last moved over 1 yr ago remain near all-time highs) and whale accumulation indicate investor HODLing and limited near-term sell pressure (bullish). ETH saw its 3rd consecutive week of muted activity following large exchange inflows pre/post-Merge and as price headwinds continue (-23% since early Aug), signaling limited near-term buy pressure (bearish). Top 4 stablecoin exchange outflow over the last 2 weeks were 80% and 88% below the average weekly inflow/outflow over the prior 6 weeks, respectively, indicating that investors are moving to the sidelines (neutral). But what was far more notable than flows, is the recent spike in bitcoin-gold correlation. Here again is BofA: BTC exchange outflows over the last 4 weeks ($2.6bn) were 3.6x larger than exchange inflows over the prior 4 weeks. Exchange outflows for 3 of the prior 4 weeks (BTC +2% last 4 weeks) indicate that investors continue to HODL instead of selling into strength. A decelerating positive correlation with SPX/QQQ and a rapidly rising correlation with XAU indicate that investors may view bitcoin as a relative safe haven as macro uncertainty continues and a market bottom remains to be seen. And some more observations: The correlation between bitcoin and the S&P 500 (SPX) reached all-time highs on Sept 13 of this year and the correlation between bitcoin and the Nasdaq 100 (QQQ) reached all-time highs on Sept 13 as well. The correlation between bitcoin and gold (XAU), which is commonly viewed as an inflation hedge/store of value, remained close to zero from Jun’21 through Feb’22 and turned negative on Mar 2, but the inverse correlation decreased from Apr’22 through Aug’22 before the correlation turned positive on Sept 5 and continued to increase. The inverse correlation between bitcoin and the dollar (DXY) has increased since Jul 14." Of course, such divergence in correlation between risk assets and bitcoin, and convergence between gold and bitcoin, is precisely what should be happening for an asset that was designed to be diversifying, and to hedge inflation, not to be an highly-levered beta on tech names. That said, it is still too soon to tell if bitcoin can move sharply higher as stocks continue to slide and the dollar surges. Incidentally, such a reversal in crypto, where it trade not as a high-beta tech stock, but as an actual alternative to the dollar would be the best news long-suffering crypto bulls will have gotten in a long time. Tyler Durden Mon, 10/24/2022 - 03:30.....»»

Category: smallbizSource: nytOct 24th, 2022

Has The USA Reached Another Historical Inflection Point?

Has The USA Reached Another Historical Inflection Point? Authored by Kevin Duffy via The Mises Institute, “At the rate things are going, we are all going to end up working for the Japanese.” - Lester Thurow, MIT economist, 1989 “The United States is rapidly becoming a colony of Japan.” - Congresswoman Helen Bentley, 1990 “The Japanese can buy our buildings, our Wall Street firms, and there’s virtually nothing to stop them. In fact, bidding on a building in New York is an act of futility, because the Japanese will pay more than it’s worth just to screw us. They want to own Manhattan.” - Donald Trump, March 1990 During the late 1980s, Japan had the Midas touch. In the eyes of the mainstream media, Wall Street strategists, economists and politicians, the Japanese could do no wrong. America’s brand of capitalism—self-centered, greedy, chaotic, and unplanned—was no match for Japan’s unique brand of state capitalism, with the long-term-oriented government bureaucrat, aggressive businessman and diligent, loyal employees all working in perfect harmony for the common good. Newspaper headlines routinely lamented America’s decline as much as they feared Japan’s rise. While a whole slew of Keynesians and mercantilists confused a liquidity bubble for an economic miracle, a handful of contrarians, including Jim Grant, John Templeton and Marc Faber, parted ways with the crowd. At the end of 1988, I wrote, in a letter to the editor that was published in the Wall Street Journal, By the end of this century, the question may not be “Will the U.S. be No. 1?” but “Will Japan still be No. 2?” That was a pretty bold prediction at the time. (I was young, naïve and didn’t know better.) There was some luck, no doubt. My study of financial bubbles, including Extraordinary Popular Delusions and the Madness of Crowds, implanted the idea that a frenzied crowd is almost guaranteed to be wrong. And my discovery of Austrian economics, especially Murray Rothbard’s America’s Great Depression, provided the economic rationale for why government intervention would not only fail in Japan, but likely intensify with the downturn and usher in a decade or more of stagnation. My sense was that the world’s financial markets were at a major inflection point and that sticking my neck out and flaunting the consensus would lead to significant returns. A 239-Year History of Inflection Points in America Does the everything bubble suggest a similar inflection point today? To try to answer this question, I’ve constructed a table of major financial turning points in the US, with coinciding political and foreign policy events, to see if a pattern emerges (see below). Major US Inflection Points   At first glance, our table reveals some obvious patterns:   Timing—The best time to buy stocks is at the point of maximum pessimism about the economy. The onset of wars tends to build the wall of worry further and ensure key bottoms: Spanish-American War (1898), World War II (1941) and the first Iraq War (1990). The start of the second Iraq War (2003) pinpointed a four-year bull run. One notable exception was US involvement in the Vietnam War, which began covertly right after World War II and escalated from 1965 (first combat units introduced) to 1969 (five hundred thousand US military personnel stationed in Vietnam). Adjusted for inflation, the Dow Jones Industrials Average peaked in 1966 and didn’t bottom until 1982. Meanwhile, peace and prosperity generally coincide with stock market tops. E.g., the roaring ’20s (1929) and dot-com bubble (2000) witnessed an absence of external enemies. Duration—Inflection points alter the course of stocks, bonds and gold for long periods of time, often decades. E.g., the 1946–81 bear market in bonds (thirty-five years) was replaced by a thirty-nine-year bull market. Conflict vs. cooperation—The 1946 inflection point ended a long period of conflict between nations: centuries of imperial rivalry culminating in two world wars separated by a massive trade war. The end of World War II ushered in a seventy-year period of decolonization, globalization, expanding division of labor and relative peace. (While President Trump’s trade war with China arguably arrested this trend, at least in the short run, I believe the long-term trend will reassert itself.) Megatrend: Big Government The overarching trend in the US since 1789 has been an ever-expanding and centralized government. That year marked the scrapping of the Articles of Confederation for a more centralized federation of sovereign states with George Washington its first president. The new government was the outcome of a heated debate between competing visions for the United States, with the federalists (led by Alexander Hamilton, Washington’s first treasury secretary,) prevailing over the Anti-Federalists who were thrown a bone with the Bill of Rights to try to keep the central state in check. (The federalists were clustered in commercial centers; their message was amplified by the press. The more agrarian anti-federalists included such luminaries as Patrick Henry, Melancton Smith, William Grayson, George Clinton, and Richard Henry Lee; most have since faded into oblivion.) Importantly, the new government’s Constitution opened the door to direct taxation and enforcement at the national level, roles confined to the states under the Articles. This was a boon to speculators in government bonds which had become practically worthless after the war with Britain. Where the founders did agree (including Franklin, Washington, and Jefferson) was on national greatness and expansionism. According to Sheldon Richman in America’s Counter-revolution, Even the government’s schools teach … that America’s founders had—let us say—an expansive vision for the country they were establishing…. Clearly, these men had empire on their minds. Indeed, in the eyes of the founders, the American Revolution was largely a war between a mature, exhausted empire and a nascent one. Many—but assuredly not all—Americans of the time would have cheerfully agreed. In other words, the dramatic shift from the Declaration of Independence to the Constitution was the ultimate inflection point. As historian Vernon L. Parrington (1871–1929) wrote: [It] marked the turning point in American development; the checking of the long movement of decentralization and the beginning of a counter movement … The history of the rise of the coercive state in America, with the ultimate arrest of all centrifugal tendencies, was implicit in that momentous counter movement.1 A key step on the path to centralization occurred in 1861 as state sovereignty became a casualty of the misnamed “Civil War.” The bloodiest conflict in US history, which took the lives of roughly 2 percent of the population—seven times the death rate of World War II—was over the South’s right to secede (taken for granted seventy years earlier), not a struggle between factions over who would run the government. As Tom DiLorenzo, author of The Real Lincoln and Lincoln Unmasked, wrote shortly after the 9/11 attacks: Lincoln’s war established myriad precedents that have shaped the course of American government and society ever since: the centralization of governmental power, central banking, income taxation, protectionism, military conscription, the suspension of constitutional liberties, the “rewriting” of the Constitution by federal judges, “total war,” the quest for a worldwide empire, and the notion that government is one big “problem solver.” The next giant leap took place in 1898. According to Stephen Kinzer in Overthrow: America’s Century of Regime Change from Hawaii to Iraq: Historic shifts in world politics often happen slowly and are hardly even noticeable until years later. That was not the case with the emergence of the United States as a world power. It happened quite suddenly in the spring and summer of 1898. The seeds, however, were planted five years earlier with the overthrow of the Hawaiian monarchy: In the months after the 1893 revolution in Hawaii, that country’s new leaders sought annexation to the United States, but [anti-imperialist] President Grover Cleveland … would not hear of it. He was quite right when he declared that most Americans rejected the seizure of faraway lands “as not only opposed to our national policy, but as a perversion of our national mission.” Five years later, this consensus evaporated. Almost overnight, it was replaced by a national clamor for overseas expansion. This was the quickest and most profound reversal of public opinion in the history of American foreign policy. The April 21, 1898, invasion of Cuba began with a false flag incident (the Maine explosion) providing fodder for prowar yellow journalists (notably William Randolph Hearst), was sold to Congress and the American people as a mission to liberate the Cuban people from Spanish rule (Teller Amendment) and ended with broken promises and betrayal of the original cause: In the United States, enthusiasm for Cuban independence faded quickly. Whitelaw Reid, the publisher of the New York Tribune and the journalist closest to President McKinley, proclaimed the “absolute necessity of controlling Cuba for our own defense,” and rejected the Teller Amendment as “a self-denying ordinance possible only in a moment of national hysteria.” Senator Beveridge said it was not binding because Congress had approved it “in a moment of impulsive but mistaken generosity.” The New York Times asserted that Americans had a “higher obligation” than strict fidelity to ill-advised promises, and must become “permanent possessors of Cuba if the Cubans prove to be altogether incapable of self-government.” The long-term consequences of America’s interventions in Cuba would prove to be as profound as they were tragic. The 1898 inflection point put the rest of the world on notice: Outsiders watched the emergence of this new America with a combination of awe and fear … The Manchester Guardian reported that nearly every American had come to embrace the expansionist idea, while the few critics “are simply laughed at for their pains.” Some of these journalists were unsettled by what they saw … The Frankfurter Zeitung warned Americans against “the disastrous consequences of their exuberance” but realized that they would not listen. Endgame Is the megatrend towards big government in the US nearing an end? For starters, history has not been kind to empires. The British empire had its day, peaking with the first world war. By the time of the 1947 partition of India it was in full retreat, ushering in a bipolar world with the United States pitted against the Soviet Union. The collapse of the Soviet empire in 1989–91 created a vacuum with the US assuming the mantle of global hegemon. The American empire appears to have peaked somewhere between 1988 with the absurdity of presidential candidate Michael Dukakis’s failed photo-op in a tank and 2003 with the hubris of President George W. Bush’s staged declaration of “mission accomplished” aboard an aircraft carrier just weeks into the second Iraq War. Public debt–to-GDP was 58 percent when Bush declared victory; today it stands at 123 percent. To keep the game going, the political class has increasingly relied on borrowing, inflation and diversions like victimology, covid and climate change. “War is the health of the state” needs updating. The modern state has evolved, learning the lesson that any conflict feeds the Leviathan. Conflict is not limited to “us versus them” and “good versus evil,” but left vs. right, black vs. white, male vs. female, straight vs. LGBTQ, rich vs. poor, entrepreneurs vs. employees, young vs. old and even man vs. the planet. Wars have morphed into abstractions—e.g., war on poverty, war on drugs, war on terrorism, and now a war on a virus. The justifications for protecting party A against the predations of party B are endless. This presents a problem for the state, however: the web of lies becomes infinitely more complex and impossible to keep stitched together. The truth is an ever-present nuisance, as Lew Rockwell, founder of the Mises Institute, so passionately argues: The truth, no matter how seemingly battered and bruised, still shines through. It can never be wiped out, no matter how rotten the regime. In the end, the truth will triumph over deceit. One sign that Americans are beginning to see through the lies: a record number are rejecting both major political parties. Interventionists Jump the Shark Perhaps the most convincing argument that a major change is at hand is the nature of bubbles and their ability to reverse long-running trends. If the everything bubble is unraveling, the game has changed. In classic form, a timeline of the past two and a half years reveals a burst of euphoria accompanied by peak absurdities, followed by increasingly visible warning cracks and general denial by the interventionists: March 2020—As covid-19 arrives and panicked investors dump stocks for safe haven assets, US thirty-year T-bond yield hits all-time low of 0.84 percent (now 3.52 percent); President Trump signs $2.2 trillion economic stimulus bill (CARES Act); April 2020—Fed Chairman Jerome Powell urges Congress to unleash “great fiscal power” to defeat covid, claims “we won’t run out of money”; May 2020—President Trump unleashes Operation Warp Speed to fast track a vaccine for covid; the death of George Floyd, a forty-six-year-old black man, at the hands of Minneapolis police, ignites months of “fiery but mostly peaceful protests”; June 2020—Quaker Oats cancels “Aunt Jemima” image from syrup brand to fight “racial stereotypes”; November 2020—Joe Biden narrowly defeats Donald Trump in disputed election; December 2020—President Trump signs $2.3 trillion stimulus bill (Consolidated Appropriations Act); January 2021—First wave of meme stock craze ends with GameStop topping out at split-adjusted 81.25 (now 28.64, down 65 percent); February 2021—Growth-at-any-price manager Cathie Wood’s ARK ETFs rake in $8.3 billion in new money, third behind fund giants Vanguard and BlackRock; ARK Innovation ETF peaks at 158.82 (now 42.58, down 73 percent); assets hit $23.3 billion as inflows total $8.8 billion over previous three months; March 2021—President Biden signs $1.9 trillion stimulus bill (American Rescue Plan Act); nonfungible token by a digital artist known as Beeple sells for $69 million; April 2021—Sri Lanka government bans all chemical fertilizers to make farming 100 percent organic, reverses course seven months later after mass protests by farmers and a surge in food price inflation; May 2021—Price inflation hits thirty-year high, with the year-over-year Consumer Price Index (CPI) +5.0 percent; June 2021—Italian artist sells “invisible” sculpture for more than £12,000; tiny activist investor Engine No. 1 wages successful battle to install three directors on Exxon Mobil’s board with goal of reducing company’s carbon footprint; August 2021—US ends twenty-year war in Afghanistan; Federal Reserve assets total $8.3 trillion, double prepandemic levels; September 2021—El Salvador adopts bitcoin as legal tender; November 2021—Bitcoin hits all-time high of $68,790 (now $20,040, down 71 percent); December 2021—University of Pennsylvania swimmer Will Thomas (identifying as “Lia”) qualifies to compete as a woman after taking a year of hormone treatments, records fastest national times in the 200- and 500-yard freestyle, and wins 1,650-yard freestyle by forty seconds; January 2022—S&P 500 hits all-time high of 4,819 (now 3,873, down 20 percent); New York City mayor Eric Adams takes his first paycheck in cryptocurrency; February 2022—Canadian truckers protest Trudeau government’s vaccine mandate; price inflation hits forty-year high, with year-over-year CPI +7.9 percent; Engine No. 1 launches climate change ETF; Russia invades Ukraine; March 2022—Federal public debt tops $30 trillion, up $7.2 trillion from prepandemic levels, and Lia Thomas becomes first transgender athlete to win NCAA Division I championship in any sport; April 2022—President Biden’s approval rating sinks to new low, Nasdaq Composite enters bear market territory; Federal Reserve assets peak at $8.9 trillion (now 1.5 percent lower); May 2022—Treasury Secretary Janet Yellen admits she didn’t see inflation coming, Sri Lanka defaults on its national debt; Solomon Islands signs new security agreement with China; June 2022—Two-thirds of economists anticipate a recession while Jerome Powell sees “no sign of a broader slowdown;” the National Institute of Allergy and Infectious Diseases director Anthony Fauci tests positive for covid-19 despite being fully vaccinated and twice boosted; Supreme Court overturns Roe v. Wade, returns power to the states; Sri Lanka government collapses; and August 2022—Anthony Fauci announces his resignation, effective in December; California plans to ban sales of new gasoline-powered cars by 2035, two-time NBA MVP Giannis Antetokounmpo helps launch ESG fund. Investment Implications “It has been 241 years since Thomas Jefferson wrote the Declaration of Independence. Being short America has been a loser’s game. I predict to you it will continue to be a loser’s game.” - Warren Buffett, CNBC interview, September 21, 2017 “In the beginning of the QE period, I became convinced that the system was going to destroy the nature of money itself. I became convinced that the rules of the game had changed completely. When the rules change, the basic framework with which you make decisions need to change.” - Tony Deden, Q&A with Grant Williams, July 5, 2018 With all due respect to Warren Buffett, if we are at a major inflection point reversing a 239-year megatrend in government growth, the last thing you want to do as an investor, entrepreneur, or young person launching a career is to play by the old rules and blindly emulate past winners. Government bonds should be avoided; likewise, the stocks of companies sucking up to government, looking for favors, and peddling official narratives. Under the new rules, investors will likely pay a premium for independence—i.e., companies that can stand on their own. While Warren Buffett and John Bogle have had great runs (fifty-seven and forty-eight years, respectively), their playbooks are widely copied. Imitation is the sincerest path to subpar returns. Admittedly, much of their wisdom is likely to stand the test of time—e.g., the circle of competence, patience over activity, and keeping fees and turnover low. However, I suspect paying attention to macroeconomic issues will pay dividends because this is largely dismissed by the Buffett faithful as an exercise in futility. Likewise, active investing will be rewarded because Bogle’s brainchild, the index fund, is far too popular. At the end of 1988 I suggested looking forward, not backward: The world is still in the early stages of a third economic wave—the transition from an industrial to an information-based economy. Innovators tend to lead, whereas imitators tend to lag such waves. As the world’s best imitators, the Japanese capitalized on the ending of the industrial age. As the world’s best innovators, Americans should be the main beneficiaries of the beginning of the information age. That advice still holds today. The information age is thirty-four years older, but shows no signs of slowing down (although it has become far more global and not nearly as concentrated in Silicon Valley). Likewise, the “hockey stick of human prosperity” is still early, having begun just 250 or so years ago, up against five thousand years of recorded history. “You can’t afford not to be invested in the relentless ascent of man,” advises Dan Ferris in so many wise words. All bubbles are destructive in nature and based on a false belief that must be exposed and repudiated. In this case, the bad seed is government as universal problem solver. Bear markets have their place, to impart lessons, change behavior, restore health, and introduce the deluded to reality. Major tops are a process, not an event. The trend in centralized power was a long time in the making. Its reversal could play out over a century or more (with plenty of heart-wrenching rallies along the way). The transition will be messy and painful for those who are unprepared or live in the past, but wildly bullish long-term as the government parasite withers and dies. If I am right, the everything bubble helped seal the fate of big government. The state will increasingly be seen as an impediment to human progress and vestige of the past. Tyler Durden Tue, 10/11/2022 - 20:20.....»»

Category: blogSource: zerohedgeOct 11th, 2022