Category: zerohedge

Over the past two weeks, Bloomberg anchor Matt Miller has been on a crusade to popularize Bitcoin, which intuitively makes sense: having risen ten-fold in the past year, the mainstream financial media is now paying attention and furthermore, is providing its audience the desired information about the hot meme du jour. To be sure, it is quite possible that his interest is sincere instead of merely the latest pageview-generating gimmick used by a majority of the other Series X preferred stock round media outlets.

Which is why it was ironic (and humorous) that in his quest to demonstrate just how “accessible” Bitcoin is on live TV, the anchor was “robbed” in broad daylight by an enterprising Reddit hacker named “milkywaymasta” who screengrabbed the QR code shown by Miller and promptly confiscated the $20 equivalent.

Later, said user was kind enough to offer it back, noting that a “segment on Bitcoin security and the importance of NOT showing the private key and also BIP0038 (Password Encrypted Private keys) will be more than enough compensation.”

The Blockchain confirmation of the Bitcoin wealth redistribution in question can be found here.

And the Public key of where the Bitcoin was sent:

In short: when pitching the utility of Bitcoin, do not show its QR code in HDTV.

Below is a clip of what not to do when presenting the functionality (and security) of Bitcoin:

And here is Miller explaining what happened afterward:

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/T258FQBvrW8/story01.htm Tyler Durden

The US economy is stabilizing, but it’s not truly recovering. That’s the view of Saxo Bank’s Chief Investment Officer, Steen Jakobsen. Following the Fed’s tapering news, Steen says the risk is that we trade on perception and not reality. Clearly, the outgoing Fed Chairman, Ben Bernanke, wanted to send a signal to the markets.

Global equity markets, notably in the States, have been hitting record highs for weeks; but Steen warns “we’re coming to the end of that cycle.” Actual growth in America is well below the average rate of the past 60 years and job creation too is lagging. People may be starting to feel more confident but that’s still not translating into significantly higher employment or wages.  

“We’re at the end of asset inflation,” he says, and that “will dawn on the market very soon.”

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aNLbRUEUK0Q/story01.htm Tyler Durden

Submitted by Peter Schiff of Euro Pacific Capital,

There can be little doubt that last week’s Fed announcement was an epic attempt at rhetorical audacity. The message they hope to convey is that they are tightening monetary policy by loosening it. Based on the market reactions, the trick has seemed to work. 
 
I believe the Fed was forced into this exercise in rabbit pulling because it understands far better than the cheerleaders on Wall Street that the economy, despite the soaring gains in stocks and real estate, remains dependent on continued stimulus. In my opinion the seemingly positive economic signs of the past few months are simply the statistical signature of the QE itself. There is little evidence to suggest that the trends are self-sustainable. But seemingly strong data had made the arguments in favor of continued QE increasingly untenable. As they could no longer stay the course the Fed had to do something. Ultimately they decided to play it both ways.
 
As far as the headline grabbing taper decision, the Fed’s hands were essentially tied by widely held expectations. Perhaps spurred by a desire to initiate the end of QE before he leaves the chairmanship, Ben Bernanke did surprise some by announcing the taper now instead of allowing Janet Yellen to do so in March. The $10 billion reduction has convinced many that the QE program will soon become a thing of the past. At his press conference Bernanke affirmed that he expects QE to be fully wound down by the end of 2014. Look for those forecasts to change rapidly.
 
Without QE to support the markets, in my opinion, the economy will likely slow significantly and the stock and real estate markets will most likely turn sharply downward. As a result, I expect the Fed will do its utmost to keep the markets convinced that the QE program is in its final chapters. But these “Open Mouth Operations” likely represent the full inventory of the Fed’s policy options. I suspect that when the economic data begins to disappoint, the Fed will quickly reverse course and increase the size of its monthly purchases. In fact, the Fed statement was careful to avoid any commitments to additional tapering in the future. It merely said that further changes in the amount of purchases will be dependent on the data. This means that QE could go in either direction.
 
But more important than the taper “surprise” was the unusually dovish language in which the Fed decided to wrap its seemingly bitter pill. The statement went significantly farther than any prior communications in assuring that interest policy, its main monetary tool, will remain far more accommodative, for far longer, than anyone previously predicted. In fact, they have now committed themselves to keep rates at zero until “well after” the unemployment rate has fallen below 6.5%. On this score the Fed is not simply moving the goalposts, they are running away with them. With such amorphous language in place the FOMC appears to be hoping that it will never have to face a day of reckoning in which they will be forced to actually raise rates. On that score they are similar to the legislators on Capitol Hill who want to pretend that America will never have to pay down its debt. 
 
Despite the slight decrease in the pace of asset accumulation, I believe that the Fed’s balance sheet will continue to swell at a pace that would have shocked Wall Street even a few years ago. As the amount of bonds on their books surpass the $4 trillion threshold, market watchers need to dispel illusions that the Fed has any intention to actually shrink its balance sheet, or even stop its growth. Already fears of such moves have pushed up yields on 10-year Treasuries to multi-year highs. Any actual tightening could push them significantly higher. But we are still seeing much higher leverage than what would be expected in a healthy economy, and as a result, the gains in stocks, bonds and real estate markets are highly susceptible to rate spikes. If yields move much higher I feel that the Fed will have to intervene to bring them back down. In other words, the Fed will find it much harder to exit QE than it was to enter.
 
As he left the stage from his final press conference, Ben Bernanke should have left a giant bottle of aspirin on the podium for his successor Janet Yellen. She’s going to need it.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_AHwBZg2jlU/story01.htm Tyler Durden

Submitted by Peter Schiff of Euro Pacific Capital,

There can be little doubt that last week’s Fed announcement was an epic attempt at rhetorical audacity. The message they hope to convey is that they are tightening monetary policy by loosening it. Based on the market reactions, the trick has seemed to work. 
 
I believe the Fed was forced into this exercise in rabbit pulling because it understands far better than the cheerleaders on Wall Street that the economy, despite the soaring gains in stocks and real estate, remains dependent on continued stimulus. In my opinion the seemingly positive economic signs of the past few months are simply the statistical signature of the QE itself. There is little evidence to suggest that the trends are self-sustainable. But seemingly strong data had made the arguments in favor of continued QE increasingly untenable. As they could no longer stay the course the Fed had to do something. Ultimately they decided to play it both ways.
 
As far as the headline grabbing taper decision, the Fed’s hands were essentially tied by widely held expectations. Perhaps spurred by a desire to initiate the end of QE before he leaves the chairmanship, Ben Bernanke did surprise some by announcing the taper now instead of allowing Janet Yellen to do so in March. The $10 billion reduction has convinced many that the QE program will soon become a thing of the past. At his press conference Bernanke affirmed that he expects QE to be fully wound down by the end of 2014. Look for those forecasts to change rapidly.
 
Without QE to support the markets, in my opinion, the economy will likely slow significantly and the stock and real estate markets will most likely turn sharply downward. As a result, I expect the Fed will do its utmost to keep the markets convinced that the QE program is in its final chapters. But these “Open Mouth Operations” likely represent the full inventory of the Fed’s policy options. I suspect that when the economic data begins to disappoint, the Fed will quickly reverse course and increase the size of its monthly purchases. In fact, the Fed statement was careful to avoid any commitments to additional tapering in the future. It merely said that further changes in the amount of purchases will be dependent on the data. This means that QE could go in either direction.
 
But more important than the taper “surprise” was the unusually dovish language in which the Fed decided to wrap its seemingly bitter pill. The statement went significantly farther than any prior communications in assuring that interest policy, its main monetary tool, will remain far more accommodative, for far longer, than anyone previously predicted. In fact, they have now committed themselves to keep rates at zero until “well after” the unemployment rate has fallen below 6.5%. On this score the Fed is not simply moving the goalposts, they are running away with them. With such amorphous language in place the FOMC appears to be hoping that it will never have to face a day of reckoning in which they will be forced to actually raise rates. On that score they are similar to the legislators on Capitol Hill who want to pretend that America will never have to pay down its debt. 
 
Despite the slight decrease in the pace of asset accumulation, I believe that the Fed’s balance sheet will continue to swell at a pace that would have shocked Wall Street even a few years ago. As the amount of bonds on their books surpass the $4 trillion threshold, market watchers need to dispel illusions that the Fed has any intention to actually shrink its balance sheet, or even stop its growth. Already fears of such moves have pushed up yields on 10-year Treasuries to multi-year highs. Any actual tightening could push them significantly higher. But we are still seeing much higher leverage than what would be expected in a healthy economy, and as a result, the gains in stocks, bonds and real estate markets are highly susceptible to rate spikes. If yields move much higher I feel that the Fed will have to intervene to bring them back down. In other words, the Fed will find it much harder to exit QE than it was to enter.
 
As he left the stage from his final press conference, Ben Bernanke should have left a giant bottle of aspirin on the podium for his successor Janet Yellen. She’s going to need it.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_AHwBZg2jlU/story01.htm Tyler Durden

In the “west”, the higher the price of gold rose, the more demand there seemingly was by momentum-chasing gamblers investors, if only for paper certificates claiming to represent gold, or GLD as the case may be. Conversely, once the momentum turned, the same investors couldn’t be bothered with gld (sic) even at 30% lower. At the same time, in the “east” the higher the price of gold rose, the lower the demand was for physical, which for that extinct breed of deranged gambler known as “value investor” is a familiar concept.”  And now that gold’s price is not only back to early 2011 levels, but is essentially below production costs, demand out of China is off the charts. Demand in India – traditionally the greatest in the world – continues to also at unprecedented levels, although now that official purchases of gold are regulated and limited through capital controls, it is forcing the local population to smuggle in gold through the most innovative of schemes.

But while the west is the west, and the east is the east, and no amount of adaptive behavioral modifications can change that, much to central bankers’ chagrin, what lies in-between? Courtesy of the Saudi Gazette we learn that the uber-rich middle eastern kingdom, which floats on a sea of oil has picked its side… and it has chosen to take advantage of the ongoing paper-driven price collapse and load up on as much gold as possible.

From the Saudi Gazette:

The gold shops in Jeddah are now flourishing as more customers are buying various gold types thanks to the international drop of gold prices.

 

Saleh who works in Al-Amari gold shop said that more people are now buying various gold jewelries and others are buying gold bullions to store their money after staying away from gold for quite sometime.

 

According to him various nationalities are approaching them including Saudis, Africans and Indians. The prices he said range from SR165 to SR140 per gram based on the item being sold. The price is set based on any additional work or jewelries being added. The country where the gold comes from also determent the price, “We have Italian Indian, Bahraini, Korean and local gold creations each with a distinct price,” said Saleh.

 

Speaking to the Saudi Gazette, Ali Batarfi,  deputy chief of gold in Jeddah, said that they anticipate that the gold prices will continue to drop towards this month to reach $1150 per once, however the prices are likely to increase during the first quarter of 2014.

 

Batarfi said “the gold market is now witnessing an increase in sales thinks to the drop in gold prices, however not only that but also the school break that will start very soon will also drag more consumers into the market who will buy gold for their special occasions especially weddings.”

 

The gold has marked a drop this year from $1,920 per once to $1,193.3, which crated a difference in the costumer attitude in buying and storing gold, said Batarfi and added, “we anticipate that more gold will be sold both with jewelries and pure bullions.”

Experts in the field believe that the international move towards investing in various sectors and the stabilization of these moves have decreased the investment in gold with China and India lessening their investment in gold. The demand on gold from central banks has also lessened. Consumer demand for gold jewelry worldwide grew by 20 percent for the year ending September 2013, reaching 3,757 tons and valued at $183.9 billion.

 

According to a report released lately by The World Gold Council’s Gold Demand Trends, regional consumer demand for gold jewelry has grown by 25 percent, reaching 225.8 tons and valued at $10.9 billion, with the UAE and Saudi Arabia featuring prominently.

So while the rest of the world celebrates the anti-Giffen good nature of gold, a function of sophisticated US investors for whom only momentum and 200 DMA lines matter, and is buying it up at an unprecedented pace, these same sophisticated investors in the US are dumping the certificates representing to be backed by the yellow metal in droves and are BTFATHing stock certificates exchangeable for a currency that is being diluted at a pace of $85 $75 billion per month, even as more and more gold miners are set to go out of business if the price of gold continues to drop below production cost.

We are confident that we know how this latest “conflict” between “east” and “west” will end…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/dA3t2HgCi8c/story01.htm Tyler Durden

Submitted by Lance Roberts of STA Wealth Management,

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/rULHyJu90Wk/story01.htm Tyler Durden

Since the President’s Obamacare legislation became law, it has never had such widespread opposition according to CNN’s latest poll with 62% of those polled “opposed” the law and only 35% were in favor. Results also indicated most Americans predict their medical care costs will increase under the ironically-titled “Affordable Care Act”. As UPI reports, “opposition to Obamacare rose 6 [percentage] points among women, from 54% in November to 60% now, while opinion of the new law remained virtually unchanged among men,” CNN Polling Director Keating Holland said. “That’s bad news for an administration that is reaching out to moms across the country in an effort to make Obamacare a success.” Maybe Americans just need another day to decide?

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/6gj9tYl_6Is/story01.htm Tyler Durden

Following David Woo's initial $1300 fair-value price target for Bitcoin, the BofAML strategist has had to suffer through some significant changes; not the least of which is China's increasingly strict Bitcoin regulation. The shifts, he notes, raise key questions about the future of Bitcoin as he asks "is this the end of Bitcoin?"

 

Via BofAML's David Woo,

Although this has yet to be officially confirmed, there are reports that the People’s Bank of China (PBOC) has banned third-party Bitcoin payment companies from making renminbi deposits to Bitcoin exchanges. The news follows a move by PBOC two weeks ago preventing Chinese traditional financial institutions from handling Bitcoin transactions noting the risks Bitcoin posed because of its volatility, ease of use for money laundering, and risks that it can be used by criminal organizations.

What does this mean?

Two largest Bitcoin exchanges in China, BTC China and OkCoin have stated they cannot accept new yuan deposits, though current balances may still be exchanged for BTC or withdrawn. Bitcoin prices have fallen significantly on the back of the news and the CNY’s share of overall transactions has fallen from the high of 78% on 12/15 to 33% on 12/18 (see chart below).

 

The last time CNY's share of transactions was below 40% on two consecutive days (Nov 6-7), Bitcoin was trading at $313 in USD terms, below current prices of $670. The government appears to be looking to hamper Bitcoin speculation with this move effectively preventing new inflows to the Bitcoin ecosystem in China. New yuan-based investors will have no ability to purchase Bitcoins on the mainland.

The easiest way to understand this latest development is that China is adopting the same tougher regulatory stance as the US. This tough stance is the reason there are very few Bitcoin exchanges in the US. China’s relatively lax regulation, until recently, in this regard explains the strong growth of Bitcoin exchanges there. Unlike the US, Chinese exchanges are not required to gain regulatory approval as money services businesses (MSBs) prior to opening. In the US, with a few exceptions, all states require Bitcoin exchanges to obtain MSB approval. If the China story turns out to be correct, the success or failure of Bitcoin exchanges in their quest to acquire licenses as money transmitters in the US over the next 2-3 months becomes even more crucial.

Given China is now taking a tougher regulatory stance with regard to Bitcoin, the regulatory arbitrage between CNY and USD exchanges will likely be minimized. Indeed, the premium of BTCCNY premium has turned negative recently in response to these tougher regulations (see chart below). In the past, China was seen as an easier place to set up operations because of the lower regulatory thresholds.

Switzerland is another important country to watch in this regard. The Swiss federal government is currently writing a report assessing Bitcoin opportunities for the Swiss financial sector. Additionally, they are assessing if Bitcoin can be considered a legal foreign currency and regulated under their existing laws which would potentially provide a legal way forward for institutional Bitcoin investors.

Is this the end of Bitcoin?

These reports raise key questions about the future of Bitcoin. The outcome of Bitcoin exchanges currently applying for money services businesses licenses in the U.S over the next 2-3 months becomes even more important should the China news turn out to be correct.

There are three sources of uncertainty over the licensing process.

First, it is not clear whether the states will coordinate to set common requirements for granting licenses (this will take more time) or that they will act independently of each other.

 

Second, how onerous will the requirements on anti-money laundering provisions be? It is easy to see how this is a non-trivial challenge for the would-be exchanges. While it is likely that people setting up Bitcoin accounts will have to disclose their identity and transactions as a first step, it is unclear whether regulation would also require disclosure of transactions within their Bitcoin-denominated account.

 

In addition to uncertainty with regard to licensing, Bitcoin's tax treatment is also an important issue. The General Accounting Office has asked the IRS to draft regulation to clarify the taxation of Bitcoin transactions and capital gains.

Together these factors will likely mean that Bitcoin users make a small sacrifice by ceding some of the anonymity Bitcoin provides. However, we view such sacrifices as a necessary part of legitimizing Bitcoin within the regulatory framework and potentially paving the way for more wide-scale use.
 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/W4ddeZqhDUo/story01.htm Tyler Durden

Following David Woo's initial $1300 fair-value price target for Bitcoin, the BofAML strategist has had to suffer through some significant changes; not the least of which is China's increasingly strict Bitcoin regulation. The shifts, he notes, raise key questions about the future of Bitcoin as he asks "is this the end of Bitcoin?"

 

Via BofAML's David Woo,

Although this has yet to be officially confirmed, there are reports that the People’s Bank of China (PBOC) has banned third-party Bitcoin payment companies from making renminbi deposits to Bitcoin exchanges. The news follows a move by PBOC two weeks ago preventing Chinese traditional financial institutions from handling Bitcoin transactions noting the risks Bitcoin posed because of its volatility, ease of use for money laundering, and risks that it can be used by criminal organizations.

What does this mean?

Two largest Bitcoin exchanges in China, BTC China and OkCoin have stated they cannot accept new yuan deposits, though current balances may still be exchanged for BTC or withdrawn. Bitcoin prices have fallen significantly on the back of the news and the CNY’s share of overall transactions has fallen from the high of 78% on 12/15 to 33% on 12/18 (see chart below).

 

The last time CNY's share of transactions was below 40% on two consecutive days (Nov 6-7), Bitcoin was trading at $313 in USD terms, below current prices of $670. The government appears to be looking to hamper Bitcoin speculation with this move effectively preventing new inflows to the Bitcoin ecosystem in China. New yuan-based investors will have no ability to purchase Bitcoins on the mainland.

The easiest way to understand this latest development is that China is adopting the same tougher regulatory stance as the US. This tough stance is the reason there are very few Bitcoin exchanges in the US. China’s relatively lax regulation, until recently, in this regard explains the strong growth of Bitcoin exchanges there. Unlike the US, Chinese exchanges are not required to gain regulatory approval as money services businesses (MSBs) prior to opening. In the US, with a few exceptions, all states require Bitcoin exchanges to obtain MSB approval. If the China story turns out to be correct, the success or failure of Bitcoin exchanges in their quest to acquire licenses as money transmitters in the US over the next 2-3 months becomes even more crucial.

Given China is now taking a tougher regulatory stance with regard to Bitcoin, the regulatory arbitrage between CNY and USD exchanges will likely be minimized. Indeed, the premium of BTCCNY premium has turned negative recently in response to these tougher regulations (see chart below). In the past, China was seen as an easier place to set up operations because of the lower regulatory thresholds.

Switzerland is another important country to watch in this regard. The Swiss federal government is currently writing a report assessing Bitcoin opportunities for the Swiss financial sector. Additionally, they are assessing if Bitcoin can be considered a legal foreign currency and regulated under their existing laws which would potentially provide a legal way forward for institutional Bitcoin investors.

Is this the end of Bitcoin?

These reports raise key questions about the future of Bitcoin. The outcome of Bitcoin exchanges currently applying for money services businesses licenses in the U.S over the next 2-3 months becomes even more important should the China news turn out to be correct.

There are three sources of uncertainty over the licensing process.

First, it is not clear whether the states will coordinate to set common requirements for granting licenses (this will take more time) or that they will act independently of each other.

 

Second, how onerous will the requirements on anti-money laundering provisions be? It is easy to see how this is a non-trivial challenge for the would-be exchanges. While it is likely that people setting up Bitcoin accounts will have to disclose their identity and transactions as a first step, it is unclear whether regulation would also require disclosure of transactions within their Bitcoin-denominated account.

 

In addition to uncertainty with regard to licensing, Bitcoin's tax treatment is also an important issue. The General Accounting Office has asked the IRS to draft regulation to clarify the taxation of Bitcoin transactions and capital gains.

Together these factors will likely mean that Bitcoin users make a small sacrifice by ceding some of the anonymity Bitcoin provides. However, we view such sacrifices as a necessary part of legitimizing Bitcoin within the regulatory framework and potentially paving the way for more wide-scale use.
 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/W4ddeZqhDUo/story01.htm Tyler Durden

We all know Apple’s greatest hits, but which products and services would Apple’s leaders rather forget?

 

Source: Masters-in-Finance.org

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NzgJlqT0oRU/story01.htm Tyler Durden