One of the many themes we support at The Daily Coin is the constant progress happening across the emerging markets, especially the nations involved the Eastern economic alliances like BRICS, BRI, SCO, EAEU and the like. These nations under the direction of China or Russia or a combination are laying the groundwork to be the driving force of the 21st Century and beyond.
We also continually report on gold moving from Western vaults to all points East. Most recently we discussed Kazakhstan and the importance of this nation both from a geographical position as well as natural resources like gold, rare earths and a wide variety of other elements within the borders of this growing nation.
Gold always has our attention as the rules/laws surrounding gold have not changed. While most people, especially in the West, have forgotten these rules that does not mean they have changed or been overturned.
One law that has stood the test of time is the golden rule – he who has the gold makes the rules. We also like the fact that JPMorgan, the man not the bank, stated in a congressional hearing that “gold is money and everything else is credit”. These two rules/laws working in conjunction with one another make for a formidable alliance. When you have natural rules/laws working together and nations begin forming alliances using these rules/laws as a foundation the rest of the world should take notice, but alias the Western world is more focused on “russia did it” than what Russia is actually doing.
“We (the Central Bank of the Russian Federation and the People’s Bank of China) discussed gold trading. The BRICS countries (Brazil, Russia, India, China and South Africa) are major economies with large reserves of gold and an impressive volume of production and consumption of the precious metal. In China, gold is traded in Shanghai, and in Russia in Moscow. Our idea is to create a link between these cities so as to intensify gold trading between our markets.” Source
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DAILY BUSINESS REPORT - Financial Updates, International Markets and Business News
December 29, 2017
December 28, 2017
China Beige Book Warns Economic Slowdown Has Begun
When it comes to the global economy, few things matter as much as China, the trajectory of its economy and especially the pace and impulse of its credit creation, which is ironic because virtually all data coming out of China is fabricated and manipulated, and thoroughly untrustworthy, either on purpose or "by accident."
The latest example of the former was highlighted over the weekend, when we discussed that a nationwide Chinese audit found some local governments inflated revenue levels and raised debt illegally, once again making a mockery of China's credibility on the global stage. As Bloomberg reported ten cities, counties or districts in the Yunnan, Hunan and Jilin provinces, as well as the southwestern city of Chongqing, inflated fiscal revenues by 1.55 billion yuan, the National Audit Office said in a statement on its website dated Dec. 8.
An even more blatant example of the former was highlighted in October ahead of China's Communist Party Congress, when the local securities watchdog literally "advised" some loss-making companies to avoid publishing quarterly results ahead of the Congress as authorities sought to ensure stock-market stability during the critical gathering of China's political elite. As a result, at least 17 Shenzhen-listed companies announced delays to their earnings reports from Oct. 20 to Oct. 24, up from three during the same period last year.
However, now that the Party Congress is long over, China's recent economic data offer a "warning for 2018" now that Beijing's leaders are less motivated to prop up fake "growth" for purely optical purposes. That is the opinion of China Beige Book, and its president Leland Miller who said that "Incentives to ensure the economy was growing smartly at the time of the Communist Party Congress do not apply as next year wears on," CBB president Leland Miller and chief economist Derek Scissors said in a report released on Wednesday.
Read the entire article
The latest example of the former was highlighted over the weekend, when we discussed that a nationwide Chinese audit found some local governments inflated revenue levels and raised debt illegally, once again making a mockery of China's credibility on the global stage. As Bloomberg reported ten cities, counties or districts in the Yunnan, Hunan and Jilin provinces, as well as the southwestern city of Chongqing, inflated fiscal revenues by 1.55 billion yuan, the National Audit Office said in a statement on its website dated Dec. 8.
An even more blatant example of the former was highlighted in October ahead of China's Communist Party Congress, when the local securities watchdog literally "advised" some loss-making companies to avoid publishing quarterly results ahead of the Congress as authorities sought to ensure stock-market stability during the critical gathering of China's political elite. As a result, at least 17 Shenzhen-listed companies announced delays to their earnings reports from Oct. 20 to Oct. 24, up from three during the same period last year.
However, now that the Party Congress is long over, China's recent economic data offer a "warning for 2018" now that Beijing's leaders are less motivated to prop up fake "growth" for purely optical purposes. That is the opinion of China Beige Book, and its president Leland Miller who said that "Incentives to ensure the economy was growing smartly at the time of the Communist Party Congress do not apply as next year wears on," CBB president Leland Miller and chief economist Derek Scissors said in a report released on Wednesday.
Read the entire article
December 27, 2017
Europe's Runaway Train Towards Full Digitization Of Money & Labor
The other day I was in a shopping mall looking for an ATM to get some cash. There was no ATM. A week ago, there was still a branch office of a local bank – no more, gone. A Starbucks will replace the space left empty by the bank. I asked around – there will be no more cash automats in this mall – and this pattern is repeated over and over throughout Switzerland and throughout western Europe. Cash machines gradually but ever so faster disappear, not only from shopping malls, also from street corners. Will Switzerland become the first country fully running on digital money?
This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large – as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines – your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.
The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest – and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.
When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. ‘We are already closing all bank tellers, and so are most of the other banks’. Which means staff layoffs – which of course makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they have study hundreds of extra hours within a few months to pass a test – usually planned for weekends, so as not to infringe on the banks’ business hours. You got to chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the ‘retraining’ – but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.
Read the entire article
This new cashless money model is progressively but brutally introduced to the Swiss and Europeans at large – as they are not told what’s really happening behind the scene. If anything, the populace is being told that paying will become much easier. You just swipe your card – and bingo. No more signatures, no more looking for cash machines – your bank account is directly charged for whatever small or large amount you are spending. And naturally and gradually a ‘small fee’ will be introduced by the banks. And you are powerless, as a cash alternative will have been wiped out.
The upwards limit of how much you may charge onto your bank account is mainly set by yourself, as long as it doesn’t exceed the banks tolerance. But the banks’ tolerance is generous. If you exceed your credit, the balance on your account quietly slides into the red and at the end of the month you pay a hefty interest; or interest on unpaid interest – and so on. And that even though interbank interest rates are at a historic low. The Swiss Central Bank’s interest to banks, for example, is even negative; one of the few central banks in the world with negative interest, others include Japan and Denmark.
When I talked recently to the manager of a Geneva bank, he said, it’s getting much worse. ‘We are already closing all bank tellers, and so are most of the other banks’. Which means staff layoffs – which of course makes it only selectively to the news. Bank employees and managers must pass an exam with the Swiss banking commission, for which they have study hundreds of extra hours within a few months to pass a test – usually planned for weekends, so as not to infringe on the banks’ business hours. You got to chances to pass. If you fail you are out, joining the ranks of the unemployed. The trend is similar throughout Europe. The manager didn’t reveal the topic and reason behind the ‘retraining’ – but it became obvious from the ensuing conversation that it had to do with the ‘cashless overtake’ of people by the banks. These are my words, but he, an insider, was as concerned as I, if not more.
Read the entire article
December 26, 2017
Some Are Calling This ‘The Bitcoin Crash’, But Others Believe It Is Just A Bump In The Road On The Way To $40,000
Bitcoin, Ethereum, Litecoin and other major cryptocurrencies have been on a wild ride this year, and over the past 10 days the volatility that we have witnessed in the marketplace has been absolutely breathtaking. On December 17th, Bitcoin shot above $19,800 for a brief moment before it started plummeting dramatically. At one point the price of Bitcoin dipped below $11,000, which represented close to a 45 percent decline from the record high that it had hit just five days earlier. And Bitcoin was far from alone – virtually every other major cryptocurrency was also down between 25 and 50 percent during that five day period. But now almost all of them are bouncing back, and at this moment the price of Bitcoin is $14,219.99.
So where do things go from here?
There are many that believe that in the short-term the price of Bitcoin will fall back toward the actual cost of production. It has been estimated that the cost to produce a new Bitcoin is currently between three and four thousand dollars, and with the price of Bitcoin so high there is a tremendous incentive for Bitcoin miners to produce as many as possible right now.
But there are others that are convinced that Bitcoin could eventually go to zero…
Morgan Stanley analyst James Faucette and his team sent a research note to clients a few days ago suggesting that the real value of bitcoin might be … $0.
That’s zero dollars. (Bitcoin stood at around $14,400 at the time of writing.)
Read the entire article
So where do things go from here?
There are many that believe that in the short-term the price of Bitcoin will fall back toward the actual cost of production. It has been estimated that the cost to produce a new Bitcoin is currently between three and four thousand dollars, and with the price of Bitcoin so high there is a tremendous incentive for Bitcoin miners to produce as many as possible right now.
But there are others that are convinced that Bitcoin could eventually go to zero…
Morgan Stanley analyst James Faucette and his team sent a research note to clients a few days ago suggesting that the real value of bitcoin might be … $0.
That’s zero dollars. (Bitcoin stood at around $14,400 at the time of writing.)
Read the entire article
December 25, 2017
The Dollar's Reign As The Global Reserve Currency Is Running Out - Fast
The dollar’s hegemony over the global financial system can’t last forever. Like all things, it will eventually come to an end.
The only question left, as MacroVoices' Erik Townsend puts it, is whether we’re in the second inning and there’s going to be another hundred years of the dollar serving as the world’s global reserve currency? Or whether we’re in the bottom of the ninth and it’s all about to fall apart? Or maybe somewhere in between.
In an interview with Jeffrey Snider, CIO at Alhambra Partners, Luke Gromen, founder of Forest for the Trees, and Mark Yusko, founder and fund manager for Morgan Creek, Townsend explores the issue in greater detail. For many, the decline of the dollar as the world’s reserve currency is difficult to imagine. But the first blow to the petrodollar system has already been delivered: By refusing to accept oil payments in dollars, Venezuela has demonstrated to the world that an alternative system to the petrodollar is indeed possible. Furthermore, Latin America’s socialist paradise has begun publishing an oil-price index denominated in yuan. We've also highlighted reports that Russia, Venezuela and Iran - three countries that have trouble accumulating dollars because of Treasury Department sanctions - are considering launching a cryptocurrency backed by oil.
Townsend begins his interview with Gromen, who points out that, counterintuitively, the dollar’s rapid appreciation beginning in Q3 2014 has coincided with a drop in the share of global trade settled in dollars. Gromen predicts that this trend will continue to benefit the dollar – until it doesn’t.
Read the entire article
The only question left, as MacroVoices' Erik Townsend puts it, is whether we’re in the second inning and there’s going to be another hundred years of the dollar serving as the world’s global reserve currency? Or whether we’re in the bottom of the ninth and it’s all about to fall apart? Or maybe somewhere in between.
In an interview with Jeffrey Snider, CIO at Alhambra Partners, Luke Gromen, founder of Forest for the Trees, and Mark Yusko, founder and fund manager for Morgan Creek, Townsend explores the issue in greater detail. For many, the decline of the dollar as the world’s reserve currency is difficult to imagine. But the first blow to the petrodollar system has already been delivered: By refusing to accept oil payments in dollars, Venezuela has demonstrated to the world that an alternative system to the petrodollar is indeed possible. Furthermore, Latin America’s socialist paradise has begun publishing an oil-price index denominated in yuan. We've also highlighted reports that Russia, Venezuela and Iran - three countries that have trouble accumulating dollars because of Treasury Department sanctions - are considering launching a cryptocurrency backed by oil.
Townsend begins his interview with Gromen, who points out that, counterintuitively, the dollar’s rapid appreciation beginning in Q3 2014 has coincided with a drop in the share of global trade settled in dollars. Gromen predicts that this trend will continue to benefit the dollar – until it doesn’t.
Read the entire article
December 22, 2017
Bitcoin Plummets Below $14,000; Peter Schiff Says 'Mark It Zero'
Since CME launched its futures contract, Bitcoin has been under pressure and renowned market watcher Peter Schiff is pretty clear where he thinks this ends up...
As CoinTelegraph reports, speaking to RT this week, renowned analyst Peter Schiff, credited for predicting the 2008 housing market collapse, issued a foreboding warning to investors buying Bitcoin at current prices.
Even with a shaky week, Bitcoin is hovering around the $15,000 mark, after a two-month bull run that saw the price rise by more than 200 percent.
Schiff says those trying to ride the bubble are too late:
“People who got it years ago, even people who got it at the beginning of the year have the opportunity to cash out and make a lot of money. But people who are buying it at these prices or higher prices are going to lose practically everything.”
The old adage, “buy on the rumor and sell on the news,” seems to be the perfect way to sum up Schiff’s sentiments on the current attitude of green investors trying to make a quick buck out of Bitcoin:
“These currencies are going to trade to zero or pretty close to it when the bubble pops. Right now, the only reason why people are buying Bitcoin is because the price is going up. When it turns around, they are not going to sell it for the same reason."
Read the entire article
As CoinTelegraph reports, speaking to RT this week, renowned analyst Peter Schiff, credited for predicting the 2008 housing market collapse, issued a foreboding warning to investors buying Bitcoin at current prices.
Even with a shaky week, Bitcoin is hovering around the $15,000 mark, after a two-month bull run that saw the price rise by more than 200 percent.
Schiff says those trying to ride the bubble are too late:
“People who got it years ago, even people who got it at the beginning of the year have the opportunity to cash out and make a lot of money. But people who are buying it at these prices or higher prices are going to lose practically everything.”
The old adage, “buy on the rumor and sell on the news,” seems to be the perfect way to sum up Schiff’s sentiments on the current attitude of green investors trying to make a quick buck out of Bitcoin:
“These currencies are going to trade to zero or pretty close to it when the bubble pops. Right now, the only reason why people are buying Bitcoin is because the price is going up. When it turns around, they are not going to sell it for the same reason."
Read the entire article
December 21, 2017
Why Wall Street Is Furious At The Trump Tax Plan
Back in October 2016, the "millionaire, billionaire, private jet owners" of America's elitist, liberal mega-cities (A.K.A. New York and San Francisco) celebrated the tax hikes that a Hillary Clinton presidency would have undoubtedly jammed down their throats proclaiming them to be a 'patriotic duty'. Unfortunately, now that Trump has given them exactly what they apparently wanted...an amazing opportunity to 'spread their wealth around"...they're suddenly feeling a lot less patriotic.
Of course, as we've noted numerous times, while most people across the country and across the income spectrum will benefit from the Republican tax reform package, the folks who stand to lose are those living in high-tax states with expensive real estate as their SALT, mortgage interest and property tax deductions will suddenly be capped. And, as Bloomberg points out today, that has a lot of Wall Street Traders in New York drowning their sorrows in expensive vodka and considering a move to Florida.
One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill.
A pair of hedge fund managers said the tax bill is too tilted toward corporations, rather than individuals who should get more relief.
“My clients are hard-working young professionals on Wall Street. I don’t have a lot of good news for them,” said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. “I don’t think anyone is going to be surprised by the economic reality.”
Read the entire article
Of course, as we've noted numerous times, while most people across the country and across the income spectrum will benefit from the Republican tax reform package, the folks who stand to lose are those living in high-tax states with expensive real estate as their SALT, mortgage interest and property tax deductions will suddenly be capped. And, as Bloomberg points out today, that has a lot of Wall Street Traders in New York drowning their sorrows in expensive vodka and considering a move to Florida.
One trader, sipping a Bloody Mary on a morning flight to somewhere more tropical, said he’s going to stop registering as a Republican. En route, he sent more than a dozen text messages ripping the tax bill.
A pair of hedge fund managers said the tax bill is too tilted toward corporations, rather than individuals who should get more relief.
“My clients are hard-working young professionals on Wall Street. I don’t have a lot of good news for them,” said Douglas Boneparth, a financial adviser in lower Manhattan who counsels people throughout the industry. Most are coming to terms with it. “I don’t think anyone is going to be surprised by the economic reality.”
Read the entire article
December 20, 2017
The Washington Post Says That Fedcoin Will Be ‘Bigger’ Than Bitcoin
Fedcoin doesn’t even exist yet, and yet the Washington Post is already hyping it as the primary cryptocurrency that we will be using in the future. Do they know something that they rest of us do not? Just a few days ago I warned that global central banks could eventually try to take control of the cryptocurrency phenomenon, and so I was deeply alarmed to see the Post publish this sort of an article. We want cryptocurrencies to stay completely independent, and we definitely do not want the Federal Reserve and other global central banks to start creating their own versions. Because of course once they create their own versions they will want to start restricting the use of any competitors.
The one thing that could derail the cryptocurrency revolution faster than anything else would be interference by national governments or global central banks. Unfortunately, now that Bitcoin, Litecoin, Ethereum and other cryptocurrencies are getting so much attention, it is inevitable that the powers that be will make a move.
On Monday, the Washington Post published an opinion piece by Professor Campbell R. Harvey of Duke University that was entitled “Bitcoin is big. But fedcoin is bigger.” These days, there is an agenda behind virtually everything that the Washington Post publishes, and so it is not just a coincidence that they have published an article with “fedcoin” in the title. Here is how that article begins…
Over the past few weeks, investors have been flocking to bitcoin, the digital currency whose value has soared by about 2,000 percent in the past year alone. And while many economists are cautioning against excitement about bitcoin — which is caught up in what may be one of the biggest speculative bubbles in history — it’s important to note just how revolutionary the technology may be.
Indeed, the technology underlying bitcoin could fundamentally change the way we think of money.
Read the entire article
The one thing that could derail the cryptocurrency revolution faster than anything else would be interference by national governments or global central banks. Unfortunately, now that Bitcoin, Litecoin, Ethereum and other cryptocurrencies are getting so much attention, it is inevitable that the powers that be will make a move.
On Monday, the Washington Post published an opinion piece by Professor Campbell R. Harvey of Duke University that was entitled “Bitcoin is big. But fedcoin is bigger.” These days, there is an agenda behind virtually everything that the Washington Post publishes, and so it is not just a coincidence that they have published an article with “fedcoin” in the title. Here is how that article begins…
Over the past few weeks, investors have been flocking to bitcoin, the digital currency whose value has soared by about 2,000 percent in the past year alone. And while many economists are cautioning against excitement about bitcoin — which is caught up in what may be one of the biggest speculative bubbles in history — it’s important to note just how revolutionary the technology may be.
Indeed, the technology underlying bitcoin could fundamentally change the way we think of money.
Read the entire article
December 19, 2017
Yuan-Priced Crude Futures Could Arrive Before Christmas
After years of setbacks and delays, China may be days away from launching a yuan-priced crude oil futures contract to make its currency more international and challenge the dominance of the petrodollar.
Many Chinese investors eagerly anticipate the start of yuan oil futures trading on the Shanghai International Energy Exchange, with hope it will come just in time for Christmas, when western markets will be either closed or calmer than usual.
Although local investors can’t wait to pour yuan into another commodity contract, international investors may not be as eager because it is not clear yet how much freedom China would allow in that trade. International traders may have to swallow Chinese intervention on the markets or rigid capital controls, Bloomberg reported last week.
In July, the Shanghai International Energy Exchange, INE, completed a four-step trial in crude oil futures denominated in yuan and said that it would carry preparatory works for the listing of crude oil futures, and would try to launch the contract by the end of this year.
The launch of the yuan oil futures contract will be a wake-up call for traders and investors who haven’t been paying attention to Chinese plans to create the so-called petroyuan and shift oil trade out of petrodollars, Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), said in October.
Read the entire article
Many Chinese investors eagerly anticipate the start of yuan oil futures trading on the Shanghai International Energy Exchange, with hope it will come just in time for Christmas, when western markets will be either closed or calmer than usual.
Although local investors can’t wait to pour yuan into another commodity contract, international investors may not be as eager because it is not clear yet how much freedom China would allow in that trade. International traders may have to swallow Chinese intervention on the markets or rigid capital controls, Bloomberg reported last week.
In July, the Shanghai International Energy Exchange, INE, completed a four-step trial in crude oil futures denominated in yuan and said that it would carry preparatory works for the listing of crude oil futures, and would try to launch the contract by the end of this year.
The launch of the yuan oil futures contract will be a wake-up call for traders and investors who haven’t been paying attention to Chinese plans to create the so-called petroyuan and shift oil trade out of petrodollars, Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), said in October.
Read the entire article
December 18, 2017
Bitcoin Is Now Worth More Than Wal-Mart (The Entire Company)
Would you rather own 100% of Wal-Mart or every Bitcoin in existence? At one point such a question would have been completely absurd, but now things have changed. As I write this article, Wal-Mart has a market cap of 287.68 billion dollars. Wal-Mart is the king of the retail industry in America, and nobody else is even close. Bitcoin, on the other hand, is an entirely digital creation that did not even exist until 2009. No government or central bank in the entire world recognizes it as a legitimate currency, and there are very, very few retail establishments that are willing to accept Bitcoin as a form of payment. And yet at this moment, Bitcoin has a market cap of 310 billion dollars.
When the year began, Bitcoin had just crossed the $1,000 threshold, and now it is selling for more than $18,000. Of course other cryptocurrencies have been rising at an even faster pace. We have never seen anything quite like this before, and some are warning that this is a giant bubble that is about to burst…
Axel Weber, the board chairman of big bank UBS, has warned of a possible Bitcoin currency crash. With increasing numbers of small investors jumping on the cryptocurrency bandwagon, it is time for regulators to intervene, he says.
Bitcoin has surged from $1,000 (CHF990) at the start of the year to above $16,000.
The risks are due to a design fault, which leads to huge currency swings in both directions, Weber said in an interview with the NZZ am Sonntagexternal link. “We as a bank have very consciously warned against this product, because we do not consider it valid and sustainable,” said Weber.
Read the entire article
When the year began, Bitcoin had just crossed the $1,000 threshold, and now it is selling for more than $18,000. Of course other cryptocurrencies have been rising at an even faster pace. We have never seen anything quite like this before, and some are warning that this is a giant bubble that is about to burst…
Axel Weber, the board chairman of big bank UBS, has warned of a possible Bitcoin currency crash. With increasing numbers of small investors jumping on the cryptocurrency bandwagon, it is time for regulators to intervene, he says.
Bitcoin has surged from $1,000 (CHF990) at the start of the year to above $16,000.
The risks are due to a design fault, which leads to huge currency swings in both directions, Weber said in an interview with the NZZ am Sonntagexternal link. “We as a bank have very consciously warned against this product, because we do not consider it valid and sustainable,” said Weber.
Read the entire article
December 15, 2017
Is The Oil Glut Set To Return?
For the second month in a row, the IEA has poured cold water onto the oil market, publishing an analysis that suggests 2018 could hold some bearish surprises for crude.
The IEA’s December Oil Market Report dramatically revises up the expected growth of U.S. shale, which goes a long way to torpedoing the excitement around the OPEC extension.
Late last month, when OPEC agreed to extend its production cuts through the end of 2018, the U.S. EIA came out with data – on the same day as the OPEC announcement – that showed an explosive increase in shale output for the month of September, up 290,000 bpd from the month before.
Although there is a time lag on publishing production data, the huge jump in output in September, plus the spike in rig count activity over the past few weeks, points to strength in the U.S. shale sector. Against that backdrop, the IEA predicted that non-OPEC supply would grow by 1.6 million barrels per day (mb/d) in 2018, a rather significant upward revision of 0.2 mb/d compared to last month’s report.
Adding insult to injury for OPEC, the IEA sees oil demand growing by just 1.3 mb/d. In other words, supply will grow at a faster pace than demand next year, opening up a global surplus once again. “So, on our current outlook 2018 may not necessarily be a happy New Year for those who would like to see a tighter market,” the IEA said. The surplus will be front-loaded – the first half of the year will see a glut of about 200,000 bpd.
Read the entire article
The IEA’s December Oil Market Report dramatically revises up the expected growth of U.S. shale, which goes a long way to torpedoing the excitement around the OPEC extension.
Late last month, when OPEC agreed to extend its production cuts through the end of 2018, the U.S. EIA came out with data – on the same day as the OPEC announcement – that showed an explosive increase in shale output for the month of September, up 290,000 bpd from the month before.
Although there is a time lag on publishing production data, the huge jump in output in September, plus the spike in rig count activity over the past few weeks, points to strength in the U.S. shale sector. Against that backdrop, the IEA predicted that non-OPEC supply would grow by 1.6 million barrels per day (mb/d) in 2018, a rather significant upward revision of 0.2 mb/d compared to last month’s report.
Adding insult to injury for OPEC, the IEA sees oil demand growing by just 1.3 mb/d. In other words, supply will grow at a faster pace than demand next year, opening up a global surplus once again. “So, on our current outlook 2018 may not necessarily be a happy New Year for those who would like to see a tighter market,” the IEA said. The surplus will be front-loaded – the first half of the year will see a glut of about 200,000 bpd.
Read the entire article
December 14, 2017
Global Negative Yielding Debt Surges To $9.7 Trillion Despite ECB's QE Taper
As we noted a few months ago, ever since the ECB launched its sovereign debt QE, initially known as PSPP, in March 2015 and later expanded to include corporate debt, or CSPP, in June 2016, the world's biggest hedge fund central bank has created enough money out of thin air to purchase bonds with no consideration for price to grow its balance sheet, i.e. investment portfolio, by nearly €2 trillion.
Not surprisingly, that massive buying spree triggered a multi-year plunge in sovereign yields. But, with the Fed now raising rates on expectations of higher inflation and promises from the ECB to cut their QE targets in half for 2018 to a measely €30 billion a month "from January 2018 until the end of September 2018," you might expect global yields to be slowly normalizing as well...but you would be wrong.
As Fitch noted recently, despite moves by the Fed and ECB to "normalize" their various stimulus programs, the amount of negative-yielding debt around the world has actually increased YoY from $9.3 trillion last year to $9.7 trillion today.
The total amount of global negative-yielding sovereign debt remains at elevated levels despite the European Central Bank's (ECB) plan to reduce monthly asset purchases amid improving economic fundamentals in the Eurozone, according to Fitch Ratings. As of Dec. 4, 2017, there was $9.7 trillion of negative-yielding sovereign debt outstanding, up from $9.5 trillion on May 31, 2017 and $9.3 trillion one year ago.
Eurozone GDP growth in 2017 has exceeded Fitch's initial expectations and momentum is expected to continue into 2018. Improving growth has led the ECB to plan to slow the pace of asset purchases to EUR30 billion per month beginning in January 2018. Fitch currently forecasts 2.3% and 2.2% GDP growth in 2017 and 2018, respectively. However, these changes have not led to materially higher yields on government debt for short or long-term maturities in the Eurozone.
Read the entire article
Not surprisingly, that massive buying spree triggered a multi-year plunge in sovereign yields. But, with the Fed now raising rates on expectations of higher inflation and promises from the ECB to cut their QE targets in half for 2018 to a measely €30 billion a month "from January 2018 until the end of September 2018," you might expect global yields to be slowly normalizing as well...but you would be wrong.
As Fitch noted recently, despite moves by the Fed and ECB to "normalize" their various stimulus programs, the amount of negative-yielding debt around the world has actually increased YoY from $9.3 trillion last year to $9.7 trillion today.
The total amount of global negative-yielding sovereign debt remains at elevated levels despite the European Central Bank's (ECB) plan to reduce monthly asset purchases amid improving economic fundamentals in the Eurozone, according to Fitch Ratings. As of Dec. 4, 2017, there was $9.7 trillion of negative-yielding sovereign debt outstanding, up from $9.5 trillion on May 31, 2017 and $9.3 trillion one year ago.
Eurozone GDP growth in 2017 has exceeded Fitch's initial expectations and momentum is expected to continue into 2018. Improving growth has led the ECB to plan to slow the pace of asset purchases to EUR30 billion per month beginning in January 2018. Fitch currently forecasts 2.3% and 2.2% GDP growth in 2017 and 2018, respectively. However, these changes have not led to materially higher yields on government debt for short or long-term maturities in the Eurozone.
Read the entire article
December 13, 2017
It's Official: Bitcoin Surpasses "Tulip Mania", Is Now The Biggest Bubble In World History
One month ago, a chart from Convoy Investments went viral for showing that among all of the world's most famous asset bubbles, bitcoin was only lagging the infamous 17th century "Tulip Mania."
One month later, the price of bitcoin has exploded even higher, and so it is time to refresh where in the global bubble race bitcoin now stands, and also whether it has finally surpassed "Tulips."
Conveniently, overnight the former Bridgewater analysts Howard Wang and Robert Wu who make up Convoy, released the answer in the form of an updated version of their asset bubble chart. In the new commentary, Wang writes that the Bitcoin prices have again more than doubled since the last update, and "its price has now gone up over 17 times this year, 64 times over the last three years and superseded that of the Dutch Tulip’s climb over the same time frame."
That's right: as of this moment it is official that bitcoin is now the biggest bubble in history, having surpassed the Tulip Mania of 1634-1637.
And with that we can say that crypto pioneer Mike Novogratz was right once again when he said that "This is going to be the biggest bubble of our lifetimes." Which, of course, does not stop him from investing hundreds of millions in the space: when conceding that cryptos are the biggest bubble ever, "Novo" also said he expects bitcoin to hit $40,000 and ethereum to triple to $1,500.
Read the entire article
One month later, the price of bitcoin has exploded even higher, and so it is time to refresh where in the global bubble race bitcoin now stands, and also whether it has finally surpassed "Tulips."
Conveniently, overnight the former Bridgewater analysts Howard Wang and Robert Wu who make up Convoy, released the answer in the form of an updated version of their asset bubble chart. In the new commentary, Wang writes that the Bitcoin prices have again more than doubled since the last update, and "its price has now gone up over 17 times this year, 64 times over the last three years and superseded that of the Dutch Tulip’s climb over the same time frame."
That's right: as of this moment it is official that bitcoin is now the biggest bubble in history, having surpassed the Tulip Mania of 1634-1637.
And with that we can say that crypto pioneer Mike Novogratz was right once again when he said that "This is going to be the biggest bubble of our lifetimes." Which, of course, does not stop him from investing hundreds of millions in the space: when conceding that cryptos are the biggest bubble ever, "Novo" also said he expects bitcoin to hit $40,000 and ethereum to triple to $1,500.
Read the entire article
December 12, 2017
Oil Producers Turning To Crypto To Solve Sanctions Problems
Last week, Venezuela announced it would develop a national cryptocurrency backed by its oil reserves, the Petro. Now there is a report that Russia is considering the same thing. Iran will likely follow suit.
As of right now this is just a rumor, but it makes some sense. So, let’s treat this rumor as fact for the sake of argument and see where it leads us.
The U.S. continues to sanction and threaten all of these countries for daring to challenge the global status quo. There is no denying this. And so much of what we see in the geopolitical headlines are knock-on effects of this challenge.
The Geopolitical “Why”
From the Middle East to North Korea, the Dutch changing their laws to block Nordstream 2 to the Saudis breaking off relations with Qatar, everything you read about in the news is a move on the geopolitical “Go” board.
Because at the heart of this is the petrodollar. Contrary to what many believe, the petrodollar is not the source of the U.S. dollar’s power around the world, but rather the U.S.’s main fulcrum by which to keep competition out of the markets.
Read the entire article
As of right now this is just a rumor, but it makes some sense. So, let’s treat this rumor as fact for the sake of argument and see where it leads us.
The U.S. continues to sanction and threaten all of these countries for daring to challenge the global status quo. There is no denying this. And so much of what we see in the geopolitical headlines are knock-on effects of this challenge.
The Geopolitical “Why”
From the Middle East to North Korea, the Dutch changing their laws to block Nordstream 2 to the Saudis breaking off relations with Qatar, everything you read about in the news is a move on the geopolitical “Go” board.
Because at the heart of this is the petrodollar. Contrary to what many believe, the petrodollar is not the source of the U.S. dollar’s power around the world, but rather the U.S.’s main fulcrum by which to keep competition out of the markets.
Read the entire article
December 11, 2017
Bitcoin Futures Begin Trading – Let The Madness Commence!
One of the things that I love about Bitcoin is that the fun never seems to end. On Sunday, Bitcoin futures began trading on the Chicago Board Options Exchange for the first time ever, and within minutes the CBOE’s website crashed. What a perfect metaphor. Bitcoin and other cryptocurrencies are completely and utterly disrupting the global financial system, and the financial establishment is still groping for a cohesive response to this growing phenomenon.
For a long time the financial establishment seemed to think that if they just kept publicly trashing Bitcoin and other cryptocurrencies that they would eventually just go away. In fact, earlier today I came across a story that talked about how Deutsche Bank is warning of a “Bitcoin crash” in 2018. But what they don’t realize is that we have reached a tipping point, and the world will never go back to the way it was before.
And even though other global financial institutions are dragging their feet, an enormous threshold was crossed when Bitcoin futures were launched on the Chicago Board Options Exchange just a few hours ago…
On Sunday, the Cboe will finally launch its long-awaited bitcoin futures contract; the CME Group will launch its futures contract later this month.
This will surely add a new element to bitcoin, shifting it from a buy-side-only trade to introducing the ability to go long — or short. This should bring new, larger and institutional participants into the market.
Read the entire article
For a long time the financial establishment seemed to think that if they just kept publicly trashing Bitcoin and other cryptocurrencies that they would eventually just go away. In fact, earlier today I came across a story that talked about how Deutsche Bank is warning of a “Bitcoin crash” in 2018. But what they don’t realize is that we have reached a tipping point, and the world will never go back to the way it was before.
And even though other global financial institutions are dragging their feet, an enormous threshold was crossed when Bitcoin futures were launched on the Chicago Board Options Exchange just a few hours ago…
On Sunday, the Cboe will finally launch its long-awaited bitcoin futures contract; the CME Group will launch its futures contract later this month.
This will surely add a new element to bitcoin, shifting it from a buy-side-only trade to introducing the ability to go long — or short. This should bring new, larger and institutional participants into the market.
Read the entire article
December 8, 2017
Bitcoin Bubble: Is Bitcoin Going To $1 Million Or Is it Going To Zero?
The price of Bitcoin continues to rise at an exponential rate, and the financial world is in a complete state of shock. Just yesterday, I marveled that the price of Bitcoin had surged past the $13,000 mark for the first time ever, but then on Thursday it actually was selling for more than $19,000 at one point. As I write this, Bitcoin is sitting at $16,877.42, but a few hours from now it could be a couple of thousand dollars higher or lower than that. Those that got in early on “the Bitcoin revolution” have made extraordinary amounts of money, and many believe that this is just the beginning.
Of course many of the most respected names in the financial world were convinced that this would never happen. For example, back in 2014 Warren Buffett encouraged investors to “stay away” because he believed that Bitcoin was a “mirage”. And not too long ago JPMorgan Chase CEO Jamie Dimon said that “if you’re stupid enough to buy it, you’ll pay the price for it one day”.
But for now, it is Bitcoin investors that are having the last laugh. If you would have gotten into Bitcoin back at the beginning of this year, your investment would be worth 16 times as much today. The following comes from CNN…
Bitcoin cracked $1,000 on the first day of 2017. By this week, it was up to $12,000, and then it really took off: The price topped $16,000 on some exchanges Thursday, and $18,000 on at least one. Other cryptocurrencies have seen similar spikes, though they trade for much less than bitcoin.
There’s a long list of factors people may point to in an attempt to explain this. Regulators have taken a hands-off approach to bitcoin in certain markets. Dozens of new hedge funds have launched this year to trade cryptocurrencies like bitcoin. The Nasdaq and Chicago Mercantile Exchange plan to let investors trade bitcoin futures, which may attract more professional investors.
Read the entire article
Of course many of the most respected names in the financial world were convinced that this would never happen. For example, back in 2014 Warren Buffett encouraged investors to “stay away” because he believed that Bitcoin was a “mirage”. And not too long ago JPMorgan Chase CEO Jamie Dimon said that “if you’re stupid enough to buy it, you’ll pay the price for it one day”.
But for now, it is Bitcoin investors that are having the last laugh. If you would have gotten into Bitcoin back at the beginning of this year, your investment would be worth 16 times as much today. The following comes from CNN…
Bitcoin cracked $1,000 on the first day of 2017. By this week, it was up to $12,000, and then it really took off: The price topped $16,000 on some exchanges Thursday, and $18,000 on at least one. Other cryptocurrencies have seen similar spikes, though they trade for much less than bitcoin.
There’s a long list of factors people may point to in an attempt to explain this. Regulators have taken a hands-off approach to bitcoin in certain markets. Dozens of new hedge funds have launched this year to trade cryptocurrencies like bitcoin. The Nasdaq and Chicago Mercantile Exchange plan to let investors trade bitcoin futures, which may attract more professional investors.
Read the entire article
December 7, 2017
Largest Crypto-Mining Exchange Confirms It Was Hacked, $62 Million In Bitcoin Stolen
Unfortunately, there has been a security breach involving NiceHash website. We are currently investigating the nature of the incident and, as a result, we are stopping all operations for the next 24 hours.
Importantly, our payment system was compromised and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken.
Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.
We are fully committed to restoring the NiceHash service with the highest security measures at the earliest opportunity.
We would not exist without our devoted buyers and miners all around the globe. We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service. We will endeavour to update you at regular intervals.
Read the entire article
Importantly, our payment system was compromised and the contents of the NiceHash Bitcoin wallet have been stolen. We are working to verify the precise number of BTC taken.
Clearly, this is a matter of deep concern and we are working hard to rectify the matter in the coming days. In addition to undertaking our own investigation, the incident has been reported to the relevant authorities and law enforcement and we are co-operating with them as a matter of urgency.
We are fully committed to restoring the NiceHash service with the highest security measures at the earliest opportunity.
We would not exist without our devoted buyers and miners all around the globe. We understand that you will have a lot of questions, and we ask for patience and understanding while we investigate the causes and find the appropriate solutions for the future of the service. We will endeavour to update you at regular intervals.
Read the entire article
December 6, 2017
How "Ghost Collateral" And "Yin-Yang" Property Deals Will Collapse China's Credit Bubble
One lesson from the 2007-08 crisis was that the vast majority of financial market participants, never mind the general public, were unfamiliar with subprime mortgages until the crisis was underway. Even now, we doubt many have much understanding of repo, the divergence between LIBOR and Fed Funds from 9 August 2007 and Eurodollar liquidity. In a similar way, when China’s bubble bursts, we doubt the majority will be that familiar with “ghost collateral” and “yin-yang” property contracts either.
A second lesson from the 2007-08 crisis was that as the value of the collateral underpinning the vast amount of leverage declined, the surge in margin calls led to cascading waves of selling in a downward spiral.
A third lesson was that the practice of re-hypothecating the same subprime mortgage bonds more than once, meant collateral supporting the most vulnerable part of the credit bubble was non-existent. It only became apparent with the falling prices and margin calls. Few people realised the bull market was built on such flimsy foundations, as long as prices kept rising.
A fourth lesson was that in order for the bubble to reach truly epic proportions, key financial institutions, especially banks, needed to conduct themselves in a negligent fashion and totally ignore increasing risks.
Each of these warning signs from the 2007-08 crisis exists in China’s property market now – and other parts of its financial system - bar one…falling prices leading to cascading waves of selling. However, as we’ll explain, we think it’s only a matter of months away now.
Read the entire article
A second lesson from the 2007-08 crisis was that as the value of the collateral underpinning the vast amount of leverage declined, the surge in margin calls led to cascading waves of selling in a downward spiral.
A third lesson was that the practice of re-hypothecating the same subprime mortgage bonds more than once, meant collateral supporting the most vulnerable part of the credit bubble was non-existent. It only became apparent with the falling prices and margin calls. Few people realised the bull market was built on such flimsy foundations, as long as prices kept rising.
A fourth lesson was that in order for the bubble to reach truly epic proportions, key financial institutions, especially banks, needed to conduct themselves in a negligent fashion and totally ignore increasing risks.
Each of these warning signs from the 2007-08 crisis exists in China’s property market now – and other parts of its financial system - bar one…falling prices leading to cascading waves of selling. However, as we’ll explain, we think it’s only a matter of months away now.
Read the entire article
December 5, 2017
China's Central Bank Warns "Bitcoin Will Die" - Here's How
On the heels of a weekend full of threats and promises from governments, bankers, and the mainstream media, Bitcoin was lambasted once again overnight, this time by The People's Bank of China.
For a brief 6 months or so, China was the dominant region for Bitcoin in the world, but then - as capital flows accelerated - the government and central bank began to 'crackdown' on crypto, first by banning ICOs and then shutting down local exchanges. Volume disappeared...
Looking back at the crackdowns, QZ reports that Pan Gongsheng, a deputy governor of the People’s Bank of China, believes Beijing made the right decisions.
"If we had not shut down bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80% of the world’s bitcoin trading and ICO fundraising, everyone, what would happen today? Thinking of this question makes me scared."
QZ further notes that Pan went on to share a recent column by economist Éric Pichet in the French newspaper La Tribune (link in French). In it, Pichet, a professor at the Kedge Business School in France, makes a familiar argument that bitcoin is a bubble waiting to burst, just like the tulip mania in the 1600s and the Internet bubble of 2000.
He predicts that bitcoin will die of a grand theft, a hack into the blockchain technology behind the cryptocurrency (which actually is unlikely), or a collective ban by global governments.
Read the entire article
For a brief 6 months or so, China was the dominant region for Bitcoin in the world, but then - as capital flows accelerated - the government and central bank began to 'crackdown' on crypto, first by banning ICOs and then shutting down local exchanges. Volume disappeared...
Looking back at the crackdowns, QZ reports that Pan Gongsheng, a deputy governor of the People’s Bank of China, believes Beijing made the right decisions.
"If we had not shut down bitcoin exchanges and cracked down on ICOs several months ago, if China still accounted for more than 80% of the world’s bitcoin trading and ICO fundraising, everyone, what would happen today? Thinking of this question makes me scared."
QZ further notes that Pan went on to share a recent column by economist Éric Pichet in the French newspaper La Tribune (link in French). In it, Pichet, a professor at the Kedge Business School in France, makes a familiar argument that bitcoin is a bubble waiting to burst, just like the tulip mania in the 1600s and the Internet bubble of 2000.
He predicts that bitcoin will die of a grand theft, a hack into the blockchain technology behind the cryptocurrency (which actually is unlikely), or a collective ban by global governments.
Read the entire article
December 4, 2017
Crypto Surge Sparks Establishment Panic: Bans, Crackdowns, & Fatwas As Bitcoin "Undermines Governments, Destabilizes Economies"
Then - as the price soared and the market cap of Bitcoin topped that of General Electric and Goldman sachs - the world's central bankers began to take notice... but in their standard manner, played down any risks, explaining that any systemic fragility "was contained" since cryptocurrencies were not big enough (this group included various Fed presidents, Bank of Canada, Bank of France, Bank of Japan, Bank of Korea, and so on all echoing similar phrases)... even though Bitcoin is now the 6th largest currency in circulation...
But this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies - urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)...
India
India's finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government's plans to regulate the cryptocurrency, Jaitley told reporters, "recommendations are being worked at." He continued:
"The government's position is clear, we don't recognize this as legal currency as of now."
Concerned over bitcoin's anonymity and its potential illicit uses, justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated.
Read the entire article
But this week has seen a new group of establishmentarians jump on to the offensive against anti-decentralization, de-control, pro-freedom cryptocurrencies - urging bans, crackdowns, fatwas, taxation, creating their own cryptocurrencies, demanding citizens sell, and outright confiscation (this group includes governments world wide and their mainstream media mouthpieces)...
India
India's finance minister, Arun Jaitley, has clarified that the government does not recognize bitcoin as legal tender. According to the Economic Times, when asked about the government's plans to regulate the cryptocurrency, Jaitley told reporters, "recommendations are being worked at." He continued:
"The government's position is clear, we don't recognize this as legal currency as of now."
Concerned over bitcoin's anonymity and its potential illicit uses, justices issued a notice to the central bank and other agencies asking them to answer a petition on the matter, reports indicated.
Read the entire article
December 1, 2017
Bitcoin Soars After CFTC Approves Futures Trading: First Trade To Take Place Dec.18
Bitcoin is back over $10,000 after the the CFTC confirmed what had been previously reported, namely that it would allow bitcoin futures to trade on two exchanges, the CME and CBOE Futures Exchange, also granting the Cantor Exchange permission to trade a contract for bitcoin binary options.
The CFTC announced that through a process known as "self-certification," CME and Cboe stated that their contracts comply with U.S. law and CFTC regulations. The US commodity regulator also said that the it held “rigorous discussions” with the exchanges that resulted in improvements to the contracts’ designs and settlement.
As to when the first bitcoin futures will cross the tape, the CME said it has self-certified the initial listing of its bitcoin futures to launch Monday, December 18, 2017.
“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” said CFTC Chairman J. Christopher Giancarlo. “As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.”
In response to the news, Bitcoin has surged back over $10,000...
Read the entire article
The CFTC announced that through a process known as "self-certification," CME and Cboe stated that their contracts comply with U.S. law and CFTC regulations. The US commodity regulator also said that the it held “rigorous discussions” with the exchanges that resulted in improvements to the contracts’ designs and settlement.
As to when the first bitcoin futures will cross the tape, the CME said it has self-certified the initial listing of its bitcoin futures to launch Monday, December 18, 2017.
“Bitcoin, a virtual currency, is a commodity unlike any the Commission has dealt with in the past,” said CFTC Chairman J. Christopher Giancarlo. “As a result, we have had extensive discussions with the exchanges regarding the proposed contracts, and CME, CFE and Cantor have agreed to significant enhancements to protect customers and maintain orderly markets. In working with the Commission, CME, CFE and Cantor have set an appropriate standard for oversight over these bitcoin contracts given the CFTC’s limited statutory ability to oversee the cash market for bitcoin.”
In response to the news, Bitcoin has surged back over $10,000...
Read the entire article
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