Bitcoin Price Today USD 13017.3737 Live Bitcoin Price ...
Bitcoin Price Today USD 13017.3737 Live Bitcoin Price ...
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Sharering (SHR) I believe this one is going to surprise so many. Already generating revenue and doing buybacks every week. Already over 10 000 registered users. Mainnet + app + masternodes and staking before EOY.
I got this stuff from Steve Aitchison, he wrote this review and posted it on Uptrennd. Figured I should put it on here as well since I truly believe this is an incredible moonshot. I'm personally holding SHR myself and am very convinced it will do extremely well. Give a read through it and you will immediatly see why. Enjoy guys. Introduction Imagine for a second the following scenario. You are a 2 car family. One car is used every day going back and forth to work, for shopping, all the little jaunts you and your husband like to go on. Your grown children are at university and come home for the weekends so the other car sits in the driveway all week and doesn’t get used during the week. What a waste of a perfectly good car. You think to yourself we could put that car to good use and actually help to pay for university fees, by renting it out during the week. However, then you think “well it’s only a little Ford Fiesta who’s going to want to rent that.” Well, it turns out a lot of people want to rent it and for a good price: £34 ($40) per day, a possible $800 per month. Peer to peer car sharing has grown massively over the last few years and people are making serious money by letting our vehicles on a daily basis, emulating the Airbnb model. In fact companies like Turo, Getaround and Drivy, which has just been acquired by Getaround for $300 Million, are bringing in serious investors like Toyota, Softbank Vision Fund, Menlo Ventures, and IAC to the tune of over $800 Million. A key difference between rental companies and peer to peer is that they have vastly improved technology with app interfaces that make locating assets and resources, reserving and using them, and making payment convenient and seamless. This, combined with location-specific analytics, allows by-the-minute access to assets and resources (e.g. cars or bicycles) and enables customers to pick up and drop these assets where and when convenient. Car sharing is just one example of an industry that is being disrupted. We have seen, experienced and read about the amazing growth of Airbnb which is now estimated to be valued at $38 Billion. Airbnb has been so successful that companies like booking.com are trying to get in on the act by adopting a similar model when it comes to booking accommodation. There is also the phenomenal rise of bicycle rentals which we see in cities all over the world, not quite the same as peer to peer sharing, but it’s another rental model that is ripe for being disrupted by the new sharing model. With this business model in mind what other areas could it be used in: Transport: Used for the rental of cars, trucks, scooters, trailers, and even heavy vehicles. Delivery Drivers: Facilitate booking and payment for delivery drivers. Agriculture: Garden sharing, seed swap, bee-hive relocation, etc. Finance: Peer to peer lending Food bank, social dining Travel Tours, shared tour groups Real Estate Airbnb, co-housing, co-living, Couchsurfing, shared office space, house swapping. Time: Labour, co-working, freelancing Assets Book swapping, clothes swapping, fractional ownership, freecycling, toy libraries. Transportation Car sharing, ride-sharing, car-pooling, bicycle sharing, delivery company, couriers And so much more! This newly emerging, but highly fragmented sharing industry, is currently worth over $100 billion. It is predicted to grow to at least $335 billion by 2025. As you can see from a few examples above the sharing economy has a lot of room to grow but what it doesn’t have, yet, is a company who can facilitate ALL of the above use cases in one place. That is until now! ShareRing is disrupting the disruptors by bringing everything together in one place and making it easy for you and me to share anything and everything and making it as easy as opening an app on your phone. Business Case The sharing market has exploded over the last several years. This is due, in part, to the digital age we live in, as we now have over 2.82 Billion people with smart phones around the world. It also due to how easy the business model of sharing lends itself to the digital world, and how with the simple installation of an app we can access a plethora of markets to rent almost anything from. Due to this rise of digital platforms and the proliferation of smartphones, revenues coming from sharing economy platforms are only expected to increase. It is estimated to grow to a $335 billion industry in 2025, compared to its $14 billion value in 2014. (PwC UK). The beauty of the sharing economy is that it is a win/win/win situation for the person who wants to rent something for a few days or weeks, the person who is renting out, and the company who facilitates the ease of the transactions between the renter and the person renting out. Typically the renter will save a lot of money whilst renting out someone else’s apartment, car, bicycle, clothes, dog sitting services etc and they can almost be assured of quality due to the social side of the business model with reviews from real people. The person who is renting out can make additional income and will want good reviews and therefore keep the standard of service higher. The company that is facilitating all of this can make a lot of money on transaction fees, as well as from advertising, and partnership deals, and obviously have an exit strategy for possible buyouts. When it comes to looking at the business model, ShareRing fits in to the Commission Based Platform as described in Ritter and Schanz study where they looked at the core difference in difference business models of the sharing economy: Singular Transaction Models, Subscription-Based Models, Commission-Based Platforms and Unlimited Platforms.) Commission Based Platforms are dominated by (at least) triadic relationships amongst providers, intermediaries and consumers with a utility-bound revenue stream. These business models enable their customers to switch between provider and consumer roles by creating and delivering the value proposition. Only a few employees work for the intermediary and the value creation and delivery is externalized. From a consumer perspective, consumers are empowered to collaborate with each other and to design the collaboration terms by negotiating the terms and conditions of the content, creation, distribution and consumption of the value proposition. Depending on the orientation of the value proposition, consumers purchase commodities (Tauschticket, ebay), access commodities in a defined timespan (booking.com, Airbnb) or buy services (uber, turo) from occasional and professional providers found via an intermediary. The intermediary mainly focuses on nurturing a community feeling and reducing exchange insecurity by incorporating rating systems, micro-assurances and standardizations of payment and delivery into the platform. The platform mainly takes commissions for successful matching and executing trade. (Journal of Cleaner Production Volume 213, 10 March 2019, Pages 320-331) The USP of the ShareRing Business Model The USP that ShareRing has is that it brings all of the different forms of sharing together in one app through partnerships and onboarding of users. No other company, to date, is bringing everything together in such a way. However there are other factors that make ShareRing unique, which we will look at. Token Economics SHR is a utility token and will be used to pay for transactions on the network, such as 'new booking', 'add asset', etc. SHR is used by providers to pay for their access to the ShareLedger blockchain, including the addition of assets, renting out of assets, adding attributes, adding smart contracts, and other features. SharePay (SHRP) is used by customers to pay for the rental of assets. Masternodes will also be a main feature of the SHR token. When a transaction fee is incurred, it will be distributed in a way that allows for masternode holders who provide a service to the platform to receive a reward from each transaction. Transaction fees are charged to sharing providers in SHR. The distribution of transaction fees will be as follows: 50% - will be distributed amongst the active masternode holders who host an active node on the blockchain at that point in time (these holders provide a service to the platform). The distribution will be based on a calculation of the Total Amount Staked and the total continuous uptime of the node. 50% - will be provided to ShareRing Ltd (view ShareRing owned masternodes) for various purposes that contribute to working capital and platform growth. Leased Proof of Stake Consensus ShareRing have chosen the Leased Proof-of-Stake protocol as the consensus algorithm for ShareLedger. This choice is based on the practicality and security benefits evident in the Waves platform. It is also much more cost effective than Proof-of-Work (POW), and will not suffer from the current issues Bitcoin and other POW cryptocurrencies are facing such as scalability and electricity consumption. As explained above master nodes will be a main feature but there is the other feature of lightweight nodes. A user with a lightweight node will be able to stake their tokens to a full node of their choosing and participate in reaching consensus. They will also be free to cancel their leasing at any time as there are no contracts or freezing periods. The more tokens that have been staked in a full node, the higher the probability the node will have in producing the next block. Since the reward is given based on the total number of tokens staked in the full node, there will always be a trade-off between the size of the full node and the percentage of the reward. As an average user of the platform, you will not need to have technical knowledge on how to set up a node nor will you have to download the entire blockchain in order to stake your tokens. Only a user who sets up a full node will be required to do this, making it simpler than ever for users to earn a reward for supporting the platform. The return expected for staking is expected to be around 6 - 8% although this has yet to be confirmed. Buybacks ShareRing are currently implementing a series of buybacks which started in the beginning of November: The buyback operation is done at a random time during the week. If there is enough liquidity, SHR tokens will be bought through a single market order at the time of buyback. In case there is not enough liquidity, a limit buy order at last sell order price will be placed on the market, and will remain open until it gets filled. The buyback program was implemented to test the API purchase process for when live transactions occur on ShareLedger The Buyback Program is expected to:
Reduce the supply of ShareTokens available in both public and private markets
Bring New capital and fund inflows into the Shareledger
Substantially magnify value creation for the ShareToken holders
The Token Flow ShareRing will bring in hundreds of merchants to list their rental products, either exclusively or as part of an aggregator system e.g. When you look at the likes of trivago.com they will list the best hotel prices from multiple merchants who are listed on their website. Essentially ShareRing will become part of the aggregator ecosystem and be listed on sites like trivago.com as well as have exclusive agreements with merchants who are listed directly on their app. ShareRing’s USP is that they have everything on one place as well as their OneID module with means buyers can get a hotel, rent a car, rent their ski equipment, book events all through the one app and using the OneID. With that in mind they are going to attract a lot of merchants. This is where it gets exciting so pay attention to this part. When a merchant is part of the ShareRing ecosystem and a buyer rents something from that merchant ShareRing will take a small % commission from that transaction. So say someone books a hotel for $100 for the night, ShareRing might take $0.50 as a commission. What ShareRing will then do is go to one of the exchanges that ShareRing (SHR) is listed on and buy SHR tokens directly using an API system using USDT. Now, the actual commission has not been disclosed yet however if we assume even a 0.25% commission that means for every $100 Million worth of bookings made through the app will net ShareRing $250,000 which means buy backs of $250,000 for the SHR token, which increases the liquidity of SHR on the exchanges. If you think $100 Million of bookings is a lot, booking.com customers book around 1.5 Million rooms per day, if we estimate an average of $50 per room that is $75 million of bookings PER DAY or $2 Billion worth of bookings per month. This revenue coupled with revenue from OneID and eVOA makes ShareRing profitable almost from day one of the app going live. OneID And eVOA Another exciting development from the ShareRing team is the collaboration between ShareRings Self Sovereign Identity protocol and third party providers to bring OneID and eVOA which will utilise OneID With the huge rise in E-commerce and with over 2.82 billion people who now own a smartphone we are entrusting our personal information to more and more centralised entities. These entities are frequently hacked and our information is leaked to outside parties. ShareRing aims to tackle this with their service OneID module. ShareRing’s OneID solution protects users' data by handling Know Your Customer (KYC) information through third parties and ShareRing’s Self Sovereign Identity Protocol. ShareRing does not hold any identifying information anywhere on its servers. It provides the ultimate security for the renter and also the provider, as the Protocol encrypts and stores your data in a secure manner within your device. Essentially, this means that it is near impossible for a hack or data leak to happen, simply because there is no centralized server of data for hackers to exploit. The OneID module is very easy to use. The end-user needs to complete their ID submission only once, with the entire submission process requiring less than two minutes to complete. Once this step has been completed, the customers KYC is destroyed by the 3rd party document verification system and the OneID module allows merchants to verify a customer’s identity via a hashed verification packet, stored on the users device and ShareLedger. This removes the need for merchants to store or see personal information; safeguarding both merchants and users from fraud. To create your ShareRing OneID, simply:
Take a picture of your government ID document
Take a selfie
Confirm and submit your details
This is something I am really excited about for ShareRing and they already have made partnerships for other companies to use this feature which is another income stream for ShareRing. eVOA E-Visa On Arrival allows applicants to apply online and receive a travel authorisation before departure – this eVOA can be shown at dedicated Thailand immigration counters on arrival at major Thailand airports, allowing travellers to pass through in minutes. OneID system is scheduled to become the lynchpin technology in Thailand’s electronic Visa On Arrival (eVOA) system; one of only two companies to partner with Thai authorities to provide this service. The new Visa system eliminates much of the hassle involved in entering the country: This is a strong validation of the OneID system - immigration controls are some of the most scrutinized processes in any branch of government, and if the OneID solution can operate to their standards then it is truly business-ready. As explained by our COO, Rohan Le Page: “We are providing our OneID product for Thailand e-VOA (Visa On Arrival) that allows 5 Million travellers from 20 countries including China and India to complete the visa process on their mobile through our app. This provides a streamlined immigration process that negates the need for an expensive and time-consuming process when you get off the plane. Additionally, fraud is mitigated with several extra layers of security in the back end including our blockchain (ShareLedger) consensus model that makes all data immutable and all but impossible to hack.” Profit Margins on OneID So how does ShareRing make money from OneID and eVOA? With each application for an eVOA using the OneID module ShareRing will make an undisclosed commission. The e-VOA is available to citizens of 21 different countries and is intended for those who will be holidaying in Thailand and not working in the country. This means that each eVOA will last for a period of around 15 days which effectively means that ShareRing will get commission multiple times from each person travelling to one of the 21 countries listed below: Andorra, Bhutan, Bulgaria, China, Ethiopia, Fiji, India, Kazakhstan, Latvia, Lithuania, Maldives, Malta, Mauritius, Papua New Guinea, Republic of Cyprus Romania, San Marino, Saudi Arabia, Taiwan, Ukraine, Uzbekistan The profits on this alone, according to projections, are worth millions of dollars per year to ShareRing, with a healthy growth of about 35% in raw profit over the next 5 years, ultimately netting the company about $1.5 million profit per quarter. The ShareLedger Blockchain Platform ShareRing will utilize the registered intellectual property from the existing KeazACCESS framework (KEAZ: A car sharing company founded by Tim Bos) as well as improving it the blockchain experience in their team. It will consist of fo the primary elements: SharePay (SHRP) – SharePay is the base currency that will allow users of the ShareRing platform to pay for the use of third party assets. ShareToken (SHR) ShareToken (SHR) is the digital utility token that drives sharing transactions to be written to the ShareRing ledger that is managed by the ShareRing platform. Account – This will be a standard account, which such an account being represented by a 24-byte address. The account will contain 4 general fields: SHRP – SharePay token balance SHR – ShareToken balance ASSETS – linked/owned by the account (see below for definition of an Asset) ATTRIBUTES – Any additional attributes that are associated with this account. These attributes may be updated or added by Sharing Economy providers that utilise the ledger such as ID checks by rental companies. These attributes may be ‘global’ (i.e. used by any sharing providers) or ‘local’ (i.e. used by a specific sharing provider). Assets – An asset represents a tangible real-world or digital asset that is being shared, such as a car, a house, industrial machinery, an e-book, and so on. Smart Contracts – Similar to a number of other blockchain platforms, such as Ethereum and NEO, the ShareLedger blockchain will feature highly customisable smart contracts. These Smart Contracts will allow for decentralised autonomous applications that can be attached to an asset and/or account. Every smart contract will be Turing complete, meaning it will have the ability to implement sophisticated logic to manage the sharing of the assets. The smart contracts will be tested and reviewed by ShareRing in a sandbox as well as audited by reputable third-party code auditors prior to implementation. Proof of Stake Consensus ShareRing have chosen the Leased Proof-of-Stake protocol as the consensus algorithm for ShareLedger. This choice is based on the practicality and security benefits evident in the Waves platform. It is also much more cost effective than Proof-of-Work (POW), and will not suffer from the current issues Bitcoin and other POW cryptocurrencies are facing such as scalability and electricity consumption. The ShareRing App At the heart of the ShareRing project lies the ShareRing app: A universal ‘ShareRing’ app is being developed that will allow anyone to easily see and use any sharing services around them. Each partner will have the option of developing a ‘mini’ app within the ShareRing app that will have functionalities specific to that partner. The app will use geolocation-based services to display the ShareRing services that are nearby Social Media Presence Coming from a social media background I feel this is an extremely important area to look into, especially in the crypto world. ShareRing has done an okay job in growing their social media presence however I feel it could be much better. Here is a look at some of the key stats for their online social media presence: Youtube: 191 Subscribers Instagram: 238 Followers Linkedin: 376 Followers Telegram: 6,525 members (very active) Twitter: 2,216 Followers (Fairly regular updates) Facebook: 1,965 Followers Whilst social media may not be a priority just now I feel there has to be a big presence with image-based platforms and video-based platforms. Youtube and Instagram should be made a priority here as it spans all generations: Other News on ShareRing There is a lot of stuff going on at the moment with ShareRing which is what makes it an exciting prospect. Rather than give information on each of them here are some highlights provided by the ShareRing team.: - ShareRing's revolutionary ID management based module OneID. - Worlds first Blockchain based eVOA in place with major Thai company targeting 5 to 10 million travellers from 20 countries. - 2.6 million International Hotels/ Accommodation coming on to the Platform. Lots more to come! - Partnership with HomeAway - 200,000 Activites, Tours and Events added to the ShareRing App - Multi Global Car Sharing Partnerships - 1 Partner Directly Integrating SHR's OneID consisting of 1.2 million Vehicles across 150 Countries - Luxury Car Brand Sharing Platform purely based on SHR - SHR payment system SHRP available in 10% Taxi Terminals in Australia - SHRP available in 10,000 EFTPOS Terminals Australia wide - White Labelling Services incorporating ShareRings revolutionary OneID - 20 Significant Unannounced Partnerships, more to come! - Major Partners include - - BYD (Largest Electric Car Maker in the World) - DJI (Largest Drone Maker in the World) - Keaz (300 locations around the world) - Yogoo EV Car Sharing - MOBI Alliance Member Overview of Positives and Negatives Negatives Social Media and marketing possibly needs to be ramped up in order to bring more awareness to the project. The roadmap and white paper has not been updated recently for 2019/2020 but this I believe is coming soon. Positives With a low market cap project like ShareRing the risk to reward ratio is very good for retail and institutional investors. Technical analysis of current prices, currently at 31 Satoshi, is also very good with resistance levels at 50, 77 and 114 Satoshi which would be nearing its all time high. Referral program will increase the numbers of users that are currently using the site. If ShareRing can capture even a small % of the overall sharing market then success looks assured. There are 20 new announcements coming up and with Tim Bos looking for more partnerships it seems likely that ShareRing will break ATH prices soon. Great long term hold, in my opinion. Realistic Expectations of ROI Short term (4 weeks - 12 weeks) Short term looks great for ShareRing both from a TA point of view and a fundamental point of view. With lots of news still to come out about ShareRing there is not going to be a shortage of fundamentals to drive the price up. From a TA point of view the next line of resistance stands at around the 50 Satoshi level which would complete a massive cup and handle formation from August 24th of this year. After that we are looking at resistances of 77 and 114 to reach near the all time highs which i expect ShareRing to reach going into 2020. Long term (6 Months - 2 Years) If ShareRing can onboard users and keep on making partnerships at the same rate there will be no stopping it. It’s all about onboarding the users and utilising the most powerful marketing tool ever - word of mouth! When a great app is realised with great and useful functionality then it tends to go viral and I am hoping this happens for ShareRing. With a market cap at the moment of just under $6 Million then I don’t think it’s crazy to talk about 1000% increases in the next 2 years and I really believe that is being extremely conservative, given where we think crypto is heading as a whole.
Latest interview with Jeffrey Gundlach. Transcript of interview.
CNBC Exclusive: CNBC Transcript: DoubleLine Capital CEO Jeffrey Gundlach Speaks with CNBC’s Scott Wapner Today Published Mon, Dec 17 2018 • 4:06 PM EST WHEN: Today, Monday, December 17, 2018 WHERE: CNBC’s “Fast Money Halftime Report ” The following is the unofficial transcript of a CNBC EXCLUSIVE interview with DoubleLine Capital CEO Jeffrey Gundlach and CNBC’s Scott Wapner on CNBC’s “Fast Money Halftime Report” (M-F 12PM – 1PM) today, Monday, December 17th. The following are links to video from the interview on CNBC.com: https://www.cnbc.com/video/2018/12/17/doublelines-jeffery-gundlach-this-is-definitely-a-bear-market-stocks.html, https://www.cnbc.com/video/2018/12/17/doubleline-jeffrey-gundlach-government-dysfunction-negative-world-economy-congress-demorcrat-house.html, https://www.cnbc.com/video/2018/12/17/a-high-quality-bond-portfolio-is-2019s-best-bet-says-doublelines-gundlach.html, https://www.cnbc.com/video/2018/12/17/jeffrey-gundlach-federal-reserve-should-not-raise-interest-rates-december-jay-powell.html, and https://www.cnbc.com/video/2018/12/17/doublelines-gundlach-tariffs-are-only-going-to-get-worse-in-the-trade-war-before-they-get-better.html. All references must be sourced to CNBC. SCOTT WAPNER: Welcome to Los Angeles Jeffrey. Thank you for having us back. JEFFREY GUNDLACH: Welcome to DoubleLine. SCOTT WAPNER: Almost a year to the day we were last with you. JEFFREY GUNDLACH: I think it was December 13th last year. SCOTT WAPNER: That’s right. We’re still volatile in the market. Today is another representation of that. We’re still about 50 points above on the S&P of the February lows. JEFFREY GUNDLACH: Yes. SCOTT WAPNER: Do you think we’re going to go below that? JEFFREY GUNDLACH: Well in the fullness of time, I think absolutely we’ll go below that. I’m pretty sure this is a bear market. People like this definition of 20% down as a bear market, but that’s obviously very arbitrary. I’ve been around over 35 years in the business and have seen a number of bear markets. It’s more about how you lead into it, how it develops and how the sentiment changes, and I think we’ve had pretty much all of the variables that characterize a bear market I remember going -- usually something happens that really doesn’t make any sense at all and I’m kind of amazed how it goes on longer than it should like back in the dotcom days when companies were being IPO’d and had no sales let alone revenues that’s hard to be and they would actually explode to the upside on the IPO. That’s kind of crazy and then we had the subprime lending with pick a pay loans back in ’05 and ’06 and that was kind of crazy and that went on longer than it should have. This time like we talked about a year ago it was crypto, bitcoin which was truly a mania, we talked a year ago it just went up. Maybe in the end it’s a good thing or the block chain technology is a good thing. The way it was being treated and believed in was a mania and then it crashed about a week after we met a year ago and it was at 17,500 when we were speaking right in this spot and of course now it’s down below 3,500 so an 85% decline. And one after another you start to see various sectors of the global financial markets give it up. The global stock market peaked January 26th. And so did the New York Stock Exchange composite, January 26 but the Dow Jones Industrials, the Nasdaq, the S&P 500. All of these things, one by one, started to roll over and come the summertime or later in the summertime you were down to the FAANGs and then you were down to two stocks it was amazon and apple and then amazon gave it up. And then finally when they decided they weren’t going to tell you how many phones they sold anymore apple gave it up. SCOTT WAPNER: That was the last straw. JEFFREY GUNDLACH: That was kind of the last straw. It was October 3rd when the tariffs -- well, it was that USMC -- whatever it’s called, it’s really NAFTA but it was announced we would have this change in NAFTA that would lead to a requirement that a certain fraction of car parts be made in higher costs locales which basically meant not Mexico. A senior executive at ford motor said, well obviously we’re going to have to raise the prices on our cars if input prices are going up. Suddenly the market seemed to wake up to the fact that this was real and the next day the stock market tipped over in fact, on October 3rd, Jay Powell said we’re a long way from neutral. And that was a big problem, too. SCOTT WAPNER: That seemed to be the tipping point. JEFFREY GUNDLACH: Yes that with the USMCA thing and the Ford Motor executive, those things seemed to come together and coalesce into we’ve had enough. And, yeah, the Jay Powell thing was interpreted by the market as a scary thing, the fed was going to keep going a long distance further and then the market dropped over 10% and suddenly the Fed had to massage the rhetoric. And suddenly it was, well, we have a new definition of neutral maybe. We’re actually within the lower bound or close to the lower bound of neutral in an attempt to stabilize the market. So, yeah, it seems like a bear market to me in the way things trade with late day volume being bad and the like the best thing for the near term, I think, is that the most export sensitive stock market, South Korea, the Kospi bottomed October 29 so at least that’s not pushing to new lows and emerging markets broadly are doing better because they’re extremely export driven. Maybe this leg down is getting toward an exhaustion point the sentiment is pretty dark right now. I’d be happier on the short term outlook if the VIX would go above 40 which is usually a sign. SCOTT WAPNER: That would be quite a spike. JEFFREY GUNDLACH: Well, that’s typically what happens when you get to the bottom, there’s so much nervousness and fear but the Vix is a little bit disturbing how it doesn’t go higher. Actually as the market pushes to the down side. But i think this is a bear market and i think we’ll go below the February lows almost with certainty. SCOTT WAPNER: Is it a long lasting bear market or it can be short term as some have suggested on our air and then this secular bull market will resume? JEFFREY GUNDLACH: I don’t think so. I think it’s a bear market. I think we’ve had the first leg down and the second leg down is usually more painful than the first leg down if this is indeed a bear market. Maybe in the short term we’re getting flushed out. I think it’s lasted a long time. It has a lot to do with the fact i believe we’re in a situation that maybe unprecedented was too strong but it is highly unusual that we are increasing the budget deficit so spectacularly so late in the cycle while the fed is hiking interest rates. I know you’ve teased the segment by talking about the suicide mission I’ve been talking about for months. The fed almost seems to be on a suicide mission. What i mean by that the deficit in the United States is extraordinarily high from where we are in the economic cycle and given what the debt level accumulated is already. In the first two months of fiscal ’19 it was just announced last week there’s a funny thing that happened in November where the payments for December ended up being pushed to November because December 1st was on a Saturday if you take that out it’s $44 billion that’s a big number. So if you wake that out and say that’s December and not November. Still, the first two months of fiscal ’19, the budget deficit is going up at an annualized rate of $1.62 trillion. And that’s the official budget deficit. The actual budget deficit is larger than what the report -- for example, for fiscal ’18, which ends September 30th, the deficit was around $800 billion. But the national debt went up by $1.3 trillion almost now. Why? What’s the difference there? There are items that are off budget. So the budget deficit really for fiscal ’18 was $1.3 nearly trillion that’s 6% of GDP and we’re supposedly having a good economy and we’re supposedly having jobs growth and all this other great stuff. In actuality we increase the deficit by 6% of GDP since government deficit change is a significant fraction – a significant variable in the GDP equation it seems to me there’s no real economic growth that’s happening away from the deficit. So what worries me is that as we move into a weaker economy, which will happen at some points and certainly the economy looks weaker now than it did entering 2018, that the deficit will continue to expand at a rate which could be prohibitive for the usual decline in interest rates helping to stimulate the economy. That’s what I think is the real big variable investors need to focus on. And while this is happening with the deficit exploding, the fed is raising interest rates which means the interest expense is going to be increasing year by year as these zero interest rates that we had for a number of years start to roll off and the bonds have to be refloated once they mature, the next five years we have something like $7 trillion of treasuries that are maturing the average coupon on those treasuries is almost as low as 2%, slightly higher, 2.1%. When they roll over, they’re going to be at a higher interest rate because the fed has been on the suicide mission of raising interest rates so the interest expense on that $7 trillion of treasuries is going to be -- maybe the rate will be at 3% like it is now or maybe 4% and you might even see we have an expense that goes up $100, $140 billion. So kind of the … of our government is coming back to haunt us ultimately. In financial markets, these things go on so much longer than they should Ross Perot ran for president running infomercials about we were doomed on the deficit and there was a book written in 1992, that same year, that was somewhat sponsored by the Peterson Foundation called bankruptcy 1994. And the idea behind the book was we have this compounding curve and this debt problem that is going to come back and really cause us problems. Well, he was early. He was early by at least 26 years. But he’s right, you can’t keep going on with the debt finance scheme, and I’m worried when the next recession comes we could be looking at, well heck, we’re supposedly in a good economy and the next two months we’re running $1.6 trillion what if we go into a recession what’s the deficit going to be $3 trillion? And does that mean interest rates don’t go down during the next recession, which is an idea I’ve been noodling around for a long time maybe they go higher with I’ve had a call the next two years that come 2021 the ten-year treasury will be at 6%. I get a lot of pushback a lot of debt deflation is out there in the twitter-sphere absolutely wrong the economy can’t handle higher interest rates. Interest rates might have a life of their own. It might not matter what the market can handle or can’t handle. SCOTT WAPNER: they haven’t to this point. It’s been somewhat surprising that rates have remained where they are you said 3%. They hit 3%. 3.25%. Here we are below 2.9% today. JEFFREY GUNDLACH: yes, on the ten year. I was focusing on the three year when it broke above 3.25% that was incredibly important frankly, I didn’t think we’d go back below 3.25 once we broke above because it seemed like such an important level. Here we are back below 3.25. But not impressively not in a way that would be consistent with a big decline in the global stock market. There’s a thing called the death cross. It’s a 50-day moving average goes below 200 a day particularly when they’re both declining. Presently about 80% of the countries in the MSCI World Index are in a death cross 80%. It’s amazing. And there was a chart that got a lot of play put out by deutsche bank about how many risk assets globally are in officially bear market down the arbitrary 20% number that, again, i don’t really ascribe to but so commonly used at that they used it and the highest in the data series going back to 1901. It’s like 90% of the risk assets around the world in dollar terms are in bear markets. So it’s a pretty widespread and coordinated set of weaknesses. SCOTT WAPNER: Are you saying that by embarking on this suicide mission that the fed shouldn’t raise interest rates this week? JEFFREY GUNDLACH: I don’t really think that’s the main thrust of my idea this week, yeah, they shouldn’t raise them this week. SCOTT WAPNER: They shouldn’t? JEFFREY GUNDLACH: No I don’t think they should. The bond market is saying, fed, you’ve got no way you should be raising interest rates look at the 2s, 3s, five-year part of the yield curve which are flat at 270 I guess that corroborative of a hike. But it is basically saying in the year 2019 you’re going to have a cut, this big, but a cut that was priced into the yield curve and in 2020 another cut. The problem, though, isn’t that the fed shouldn’t be raising rates. The problem is the fed shouldn’t have kept them so low for so long. SCOTT WAPNER: Sure. JEFFREY GUNDLACH: The problem we shouldn’t have had negative interest rates like we still have in Europe. We shouldn’t have done quantitative easing which is a circular financing scheme. The problem really is the deficit. The fed is kind of helpless here. The fact that the deficit is so out of control this late in the economic cycle, we have never before had the fed raise interest rates while the budget deficit was expanding it’s never happened. Because usually the budget deficit expands in response to a recession. It’s a way of stimulating to get us out of recession. Instead, we did it as a last gasp of keeping this economic recovery going by making it completely deficit based. SCOTT WAPNER: So this morning, President Trump once again Tweeted about the Fed. Quote, “It’s incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris burning, China way down, that the Fed is even considering another interest rate hike. Take the victory,” he stayed. Stan Druckenmiller, today, Op-Ed “Wall Street Journal”: The Fed should quote “Pause its double-barreled blitz of higher rates and tighter liquidity.” So they’re right, you agree with them? JEFFREY GUNDLACH: I do agree with them. I’ve been saying this pretty much all year, the double-barreled was actually -- he may have borrowed that from me, that’s how I’ve been talking about – it’s how I’ve been phrasing it all year – that we’ve really been tightening interest rates in a way that’s more than people understand. There’s a duo of economists at the Atlanta Fed called Wu and Xia, who did a study a few years back ‘What was the effect of quantitative easing?’ If they hadn’t done the quantitative easing and instead had taken the European model and gone to negative interest rates, how negative would those rates have had to be to have the same stimulative effect as the quantitative easing? And they concluded – and I don’t know if they’re right or not it’s very hypothetical – but their conclusion was that the quantitative easing amounted to 300 basis points of further cuts. So if they hadn’t done quantitative easing, to have the same stimulative effect, the Fed funds would have had been negative 300 basis points. Well let’s just say they’re right. Since they did about 2.5 trillion of quantitative easing and it was 300 basis points, 2.5 trillion divided by 3 is roughly $800 billion. Okay? So $800 billion is -- $800 billion divided by 4 means that’s what quantitative easing is one cut. So 100 basis points is $800 billion. So divided by 4. 25 basis points is $200 billion of quantitative easing. Well so far we’re pushing towards $400 billion -- we’re not there yet but we’re soon to be there -- of quantitative tightening. That means we’ve had would more rate hikes from quantitative tightening if Wu and Xia are right. So the Fed hasn’t just raised rates in that context eight times. They’ve raised them ten times. And the quantitative tightening is stated to be as high as $600 billion over fiscal ’19. So that’s another three rate hikes. So if they were going to follow their dots and raise rates so many times, there’s another three on top of that. So the amount of tightening has been underappreciated, I think, and Stan is right as he often is – he’s one of the greatest investors ever for, him and Chanos, the two titans of the hedge fund industry. They’re right that we are seeing the bond market react in a way that is historically very predictive of the Fed should not be doing this. And yet, we have this strange dynamic that they’ve almost promised a rate hike here in December. And then the President shows up with his Tweets trying to bully them into not doing it and it puts Jay Powell and the team in a very tough position. Because they’re damned if they do and damned if they don’t.
Authored by Dog Kass via RealInvestmentAdvice.com, White House Politics: (When asked what he wanted to give thanks for during a press gaggle Thanksgiving Thursday, Trump responded), “_for having a great family and for having made a tremendous difference in this country. I’ve made a tremendous difference in the country. This country is so much stronger now than it was when I took office that you wouldn’t believe it… And I mean, you see, but so much stronger people can’t even believe it. When I see foreign leaders they say we cannot believe the difference in strength between the United States now and the United States two years ago.” _– President Trump (Comments on Thanksgiving) Policy: _“You only think I guessed wrong! … You fool! You fell victim to one of the classic blunders – the most famous of which is “never get involved in a land war in Asia” – but only slightly less well-known is this: Never go in against a Sicilian when death is on the line!” _– Vizzini,The Princess Bride The Economy: “The missing step in the standard Keynesian theory (is) the explicit consideration of capitalist finance within a cyclical and speculative context… finance sets the pace for the economy. As recovery approaches full employment… soothsayers will proclaim that the business cycle has been banished (and) debts can be taken on. But in truth neither the boom nor the debt deflation… and certainly not a recovery can go on forever. Each state nurtures forces that lead to its own destruction.” _–_ Hyman Minsky The Markets: “Every new beginning comes from some other beginning’s end.” _–_Seneca the Elder Contrary to the expectations of many (including myself), the uncertainties following the surprising Trump presidential election victory, which produced a number of possible outcomes (some of them adverse), was enthusiastically embraced by investors in 2017 and in the first month of this year. A market on steroids was not a conclusion or forecast by any mainstream Wall Street forecaster that year. There was no sell side strategist who expected equities would rise anywhere near the 20%+ gains in the major indices recorded in 2017, nor do I know any who predicted that the S&P Index would make more than 70 individual highs a year ago. As I expected, that enthusiasm continued in and through most of the month of January, 2018. But, after a year of historically low volatility and ever-rising stock prices, the bullish consensus became troubled as the complexion of the market changed throughout most of 2018 . As I noted in last year’s commentary, I thought that the biggest surprise in 2018 would be that extrapolation of the market uptrend didn’t work after many years of working, and that we will witness the emergence of multiple non-consensus developments, including:
A dramatic drop in the price of bitcoin (to under $2,000)- A devastating decline in many bitcoin collateral plays- A much higher oil price- A slowing (not expanding) rate of economic domestic growth as the tax bill “trickles up,” not down- A mean reversion higher in volatility- The bursting of the global short volatility bubble which serves up a 20% drop in equities (aided by both weaker earnings results and lower valuations).- And, of course, I anticipated that there would be an abundance of surprises in the fertile political arena with the incalculable Orange Swan at the helm in Washington, D.C., and in his role as the “Supreme Tweeter.”“Expect the unexpected and, whenever possible, be the unexpected.” – _Kurt Vonnegut, Breakfast of Champions_As we enter 2019, the scent of_ “Group Stink_” is still thick despite a heady list of multiplying uncertainties. Nevertheless, while the _Bull Market in Complacency_ has been pierced in October, 2018, most market forecasts remain optimistic.
Warren Buffett once observed that a bull market_ “is like sex. It feels best just before it ends.'” _While some of us in the ursine crowd debate whether the investment orgasm has already passed, in the extreme it finally may be Minsky’s Moment and year after nine years of recovery and prosperity following _The Great Recession._This year I have decided to publish my _“Surprise List”_ a bit earlier than usual. As you all know, my Surprises are what I term to be _Probable Improbables_ – events that have a greater possibility of occurring than are seen by the consensus. I try to make you think apart from that diabolically dangerous_ “Group Stink”_ and, particularly as it relates to politics (but with other subjects as well), I feel that I should offend you at least once, or I am not doing my job. But, any offense is meant in the spirit of the great Romantic poet William Blake who taught us that “_Opposition is true friendship._” My Surprises are shorter in length than in previous years. _(I want to quickly get to the important points of the Surprise List – available on one or two pages – rather than deliver a more flowery prose and bunch of stories that I have commonly done in the past)._We will start the new investment year about one month from now with a completely different _“feeling”_ of previous years – as I mentioned previously, the complexion of Mr. Market seems to have changed:
Investors (retail and institutional), previously comfortable being among the herd of optimism, are beginning to panic.- The dominant investors of the decade – Exchange Traded Funds and Quantitative Strategies and Products (e.g. risk parity) – are selling into weakness (just as they bought into strength) – serving to overwhelm active investors.- Hedge funds are completing another unfavorable year in which their investment performance is poor. Against a backdrop of a high fee structure (at a time in which passive management fees are “moving to zero” ) – redemptions are growing and even some of the most competent managers are hanging up their spikes and closing down.- Public companies, in some measure to increase the value of their stock options) who have gone on a massive buying streak of their own securities (propping up stocks and nominal EPS at the expense of building their businesses and improving productivity) may begin to get second thoughts as stocks founder and interest rates have risen.- The two “shiny objects” crypto currency and FANG – revered and hyped by the many – is likely having a more profound impact on the herd’s newly found negative sentiment than many realize.- Global economic growth prospects continue to grow more ambiguous – with the schmeissing of the price of crude oil another warning and conspicuous signpost of a broadening slowdown.- The Federal Reserve has made a profoundly important change from easing to restraint._“In ambiguous situations, it’s a good bet that the crowd will generally stick together — and be wrong.” _– Doug Sherman and William Hendricks
The core themes and roadmap for 2019 is that a standard run-of-the-mill Bear Market may run into something bigger in a year enveloped in unprecedented political turmoil (and electorate disgust and anger), an escalating trade (and cold) war with China and continuing global economic disappointments — dragging down a mature, an extended and fully exploited economic growth and market cycle. Not surprisingly, my Surprise is that a slightly down year of performance for the S&P Index in 2018 may turn out to be something worse in 2019. But the biggest and most provocative surprise is the decline and fall of President Trump in 2019 – in which an anti-imperial rebalancing is successfully mounted by a more assertive Congress, bringing the country back into constitutional equilibrium. Without further fuss, here are my outside of consensus 15 Surprises for 2019: 1) A U.S. Recession in 2019 Followed by Stagflation: We learn, in 2019, the extent to which economic activity was pulled forward by the protracted period of historically low interest rates – as capital spending, retail sales, housing and autos founder further. With U.S. Real GDP growth dropping to +1% to +2% in the first half of 2019, inflation remaining stubbornly high (especially of a wage-kind as the labor market remains tight) and with cost pressures unable to be passed on, the threat of recession intensifies. By the third quarter of 2019 U.S. Real GDP turns negative. Tax collections collapse as government spending continues to rise. The budget deficit forecasts are lifted to over $2 trillion. The U.S. falls into a recession in the last half of 2019 – followed by a lengthy period of stagnating economic growth and higher inflation (stagflation). A dysfunctional, non-unified and discombobulated Europe also falls into a recession in 2019 – with significant ramifications for U.S. multinationals that populate the S&P Index. U.S./Chinese trade tensions push the global economy down the hill as the year progresses and GDP growth in China comes in below +5.0%. The IMF reduces it’s global economic growth forecast three times next year. S&P per share earnings fall by over -10% in 2019. 2) The Federal Reserve Pauses and Then Cuts as Currencies and Interest Rates Swing Wildly: It’s a wild year for fixed income and currency volatility. The Fed cuts rates in 3Q2019 and by year-end announces that QE4 will commence in January, 2020. The 2018 tantrum in Italian bonds is just a precursor for hissy fits throughout the European bond market as the ECB is no longer expanding its balance sheet and tries to get out of NIRP. The BoJ throws in the towel on their drive for higher inflation. The Japanese bond market sees sharp selloff. During 2019 the yield on the ten year U.S. note falls to 2.25% before ending the year at over 3.50% as the selloff in European and Japanese bonds and the announcement of QE4 drive our yields higher. Gold falls to $1050 before ending the year at over $1700. 3) Stocks Sink: Though the third year of a Presidential cycle is usually bullish – _it’s different this time._Trump confusing _brains with a bull market_ can’t fathom the emerging Bear Market. At first he blames it on Steve Mnuchin, his Secretary of Treasury (who leaves the Administration in the middle of the year). Then he blames a lower stock market on the mid-term election which turned the House. Then he blames the market correction on the Chinese. The S&P Index hits a yearly low of 2200 in the first half of the year as the market worries about slowing economic and profit growth and a burgeoning deficit/monetization. The announcement of QE4 results in a year end rally in December, 2019. In a continued regime of volatility (and in a market dominated by ETFs and machines/algos), daily swings of 1%-3% become more commonplace. Investor sentiment slumps as redemptions from exchange traded funds grow to record levels. The absence of correlation between ETFs and the underlying component investments causes regulatory concerns throughout the year. Congress holds hearings on the changing market structure and the weak foundation those changes delivered during the year. Short sellers provide the best returns in the hedge fund space as the S&P Index records a second consecutive yearly loss (which is much deeper than in 2018). As the Fed cuts interest rates the US dollar falls and emerging markets outperform the US in 2019. I, like many, are concerned about corporate credit (See Surprise #8) and though credit is not unscathed, it is equities that bear the brunt of the Bear since they are below credit in the company capitalization structure. Bottom line, after a steep drop in the first six months of the year, the markets rise off of the lows late in the year in response to this shifting political scene (the decline of Trump) and a reversal to a more expansive Fed policy – ending the year with a -10% loss. 4) Despite the Appearance of the Bear, FANG Stocks Surprisingly Prosper (Both Absolutely and Relatively) as Investors Seek Growth (at any cost) In a Slowing Economy – Facebook’s Shares Rebound Dramatically: While there is a growing consensus that FANG will lead a Bear Market lower – that is not the case as growth, in a general sense, is dear and cherished by market participants next year. Among FANG, Facebook‘s shares have a reversal of fortune (and is the best performing FANG stock) as the company announces aggressive management changes and moves to remedy the misinformation trap. As more previously unrevealed information reduces her valuation, Sheryl Sandburg’s special status as a female leader (in a seascape of men at Facebook and in industry) is questioned. In the first half of 2019, Sandberg becomes a sacrificial lamb and is sacked – and is forced to lean out after leaning in. At the suggestion of Warren Buffett (who has accumulated a sizable stake in the company), former Board Member Donald Graham is named as the new, independent and Non-Executive Board Chairman of Facebook. This unexpected move encourages FB investors to believe that the company is quickly moving to fix its multiple data and privacy issues. Fewer (than feared) Facebook members opt out and growth in usage resumes in the back half of 2019. FB’s stock popularity (and market capitalization) increases as it becomes a more dominant holding in “value investors” portfolios – the shares trade above $200/share late in the year. 5) “Peak Trump” – the President Bows Out in His Pursuit of a Second Term: The President’s dismissal of the murder of Washington Post reporter Jamal Khashoggi is seen as delivering tacit support to Saudi Arabia’s MBS – it is a pivotal turning point in Trump’s popularity and ultimate reputational decline in 2019. _“Pay enough and you can get away with murder”_ becomes the mantra of the Progressive Left. Trump acceptance by his Republican party peers quickly diminishes as they are further worried about his motivation to side against the findings of his own intelligence department. After Trump’s personal dealings with authoritarian and autocratic countries are revealed in the Mueller probe (along with possible emoluments violations), Trump’s popularity fades further as Lindsay Graham and other prominent Republicans repeal their support and denounce the President. An anti-imperial rebalancing is mounted, in which a more assertive Congress brings the country back into constitutional equilibrium. Though the public and political leaders (even on the right)_ increasingly reject the President, there are no impeachment efforts by the Democrats. Instead (and surprisingly), House Speaker Pelosi (recognizing that constructive steps are the recipe for a Democratic 2020 Presidential win) exacts discretion and stops the Democrats from moving on an impeachment in the House. Democratic leadership turns to reforms and a torrent of new legislation in the areas of improving the environment and climate control (and the halt of growth in fossil fuel by the development of alternative energy programs), the opioid crisis, education, crime, voting rights, healthcare and prescription drug prices, immigration, etc.- showing the electorate that their Party can demonstrate the framework for a positive agenda, a vision and a social contract (and can rule instead of obstruct).But, most importantly… With real GDP turning negative in 2019’s second half, Democrats attempt to replace Republicans’ supply-side economics with a smarter theory of growth. Recognizing just as inflation and other ills opened the door for criticism of Keynesian economics in the 1970s, so have inequality and disinvestment done the same for critiques of supply side today. In 2019, the Democrats turn the table on the supply-siders and give a voice through thoughtful proposed legislation (making the affirmative case for the Democratic theory of growth geared to raising wages and putting more money in the hands in working- and middle-class people’s pocket and investing in their needs). Americans enthusiastically embrace this alternative (of how the economy works and grows and spreads prosperity) and reject and defeat the long standing Republican economic narrative – seeing it as a better way to spur on the economy_ (than giving rich people more tax cuts)._ Asking the question _“has it worked for you?_” and given the fairy tale of added revenue from growth (and the widening hole in the deficit),_ rampant inequality, the fear of being bankrupted by medical catastrophe and massive student debt obligations Democrats provide a practical alternative to cutting taxes for the rich and decreasing regulation which has failed to unleash as much innovation and economic activity that was promised by the Administration. The legislation, which puts more money in middle class pockets, defends and supports the notion that the public sector can make better decisions than the private sector. Referred to as the _“middle – in economic bill,”_ is cosponsored by a leading, conservative and respected Republican member of Congress and begins to gain bipartisan support in Congress, driving a stake through the supply-side’s heart. Despite his loss of popularity (which plummets to 25%)_ and the push back from the Republican establishment, Trump declares he is still planning to run for President. Nevertheless, a challenge from Senator Mitt Romney (who’s motto is “Make Republicans Great Again”_) gains steam as McConnell, Graham, Kennedy Et al. throw their support for the Senator. As Trump’s problems multiply, Romney becomes the heavy favorite to defeat Trump in the Republican primary. Recognizing a sure election defeat, by year-end the President announces that his medical team has disclosed a health issue and he is advised not to run for office. _Reluctantly, _Trump agrees and bows out of the 2020 Presidential race late in the year. The Trump mantra of “Make America Great Again” i_s replaced by _“Make Economic Uncertainty and Market Volatility Great Again.”#MAGA/#MUVGA 6) The Year of the Woman: With a Trump withdrawal from 2020 the election is wide open. The arc of history influences the Democratic Presidential nomination march and the leading candidates that emerge for 2020 are mostly women. The potential contenders include progressive firebrands like Elizabeth Warren, Stacey Abrams, Kristen Gillibrand and Kamala Harris, and moderates like Senator Amy Klobuchar and Rhode Island Governor Gina Raimondo. Michael Bloomberg, Howard Schultz and Joe Biden bowout from the race by year end 2019 By year-end, Klobucher, Harris and Warren surface as the three leading Democratic Presidential candidates. It appears that an all women Democratic ticket (President/Vice President) is increasingly likely. Nationally, several high profile sexual harassment suits are disclosed. Allegations against a number of well known television, other entertainment and political icons/leaders serve to reinforce the candidacy of the above women who aspire to gain the Democratic Presidential nomination. After Congressional hearings, non partisan and strict harassment legislation are introduced forcing several well known male politicians to resign from office. 7) A New (But Old) Shiny Object Appears As A Stock Market Winner in 2019: Bitcoin trades close to $3,000 in December, 2018 and spends most of 2019 under $5,000 (as numerous trading irregularities, thefts and more frauds are exposed). England’s Financial Conduct Authority (FCA) takes the lead, in instituting a comprehensive regulatory response to regulating the crypto currency markets. The U.S. follows by imposing broad-based crypto currency regulation in 2019. A leading business network (who’s bitcoin “bug” has become the new cover of magazine contrary indicator!) faces a class action suit for their seeming encouragement in buying into the asset class in their too frequent broadcasts during 2018. Several crypto currency guests who were prominent on the network’s coverage are indicted for fraud. In an agreement with regulatory authorities, the biz network’s programming is reconstituted. Marijuana stocks, after a weak final few months in 2018 (are down by over 50% from their highs), explode back to the upside reflecting a quickened pace of alternative health applications. (MJ) is the single best performing exchange traded fund and (TLRY) makes another move to $300/share. 8) Private Equity, High Yield Debt and Leveraged Loan Problems (Which Have Doubled in Size Over the Last Ten Years) Emerge as the Resurgence of Leveraged Finance Comes to An End: Private equity, in particular, the biggest winner in the decade long cycle since _The Great Decession of 2007-09,_ suffers – and so do the endowments at several prestigious universities. Covenant- lite financings in junk and leveraged loans – often in opaque and complex structures – topple under the weight of loan defaults. (HYG) (last sale: $83.17) trades $75-$80 as redemptions spike. Publicly-held private equity shops (KKR) and Blackstone (BX) are among the largest percentages losers in 2019, High yield bonds fulfill their characterization as “junk,” and are among the worst performing asset classes. The spread between junk bonds and Treasuries more than doubles – widening dramatically during the summer months. 9) The China/U.S.Rift Intensifies as Trump’s Anger Shifts Towards That Region: The trade war with China goes into full effect with 25% tariffs. Walmart (WMT) is adversely impacted and its shares fall by -20% from the recent highs. The Chinese retaliate against major American brands like Apple (AAPL) . _(“Peak Apple” actually happens and its shares fall below $125/share)._Peter Navarro resigns. A major cyber-attack against the U.S. financial system, who’s source is initially not diagnosed, is ultimately reportedly to have been delivered by China. The U.S. enters a cold war with China that resembles the emergence of the cold war with Russia in 1948 – it becomes clear it will be lengthy, nasty and unfriendly to the trajectory of worldwide economic growth. 10) Bank Stocks Are Surprising Winners in 2019: Despite some pressure in net interest margins (and income), sluggish loan demand and a pickup in loan losses – bank stocks (and EPS) are surprisingly resilient and manage to have a positive return next year as better relative EPS growth is supported by aggressive buybacks and (starting) low valuations. Investors look forward to a recovery in economic growth in 2020-21 and bank stocks (flat for most of the year) have a vigorous move in the last few months of the year and are one of the few sectors to advance in 2019. Oil stocks, depressed from the late 2018 crude oil price fall also recovery mightily in the later months of 2019 as the price of oil advances coincident with dovish turn in monetary policy. 11) Tesla’s Problems Shift From Production to Demand to Financial: Tesla (TSLA) loses its tax subsidy in the U.S. and in the Netherlands (a large market for them). European competition grows. Europe doesn’t allow the Tesla Model 3 due to safety reasons. The Chinese won’t let an American company have video data over millions of miles of roads and bans Tesla. Lenders balk and access to the public debt market evaporates. The company’s financial position deteriorates and its credit default swaps widen dramatically. An accounting “issue” surfaces – and it morphs into an accounting fraud. Elon Musk, who has leveraged his TSLA equity holdings, faces margin calls and is forced to sell Tesla shares. After being rushed to the hospital after an overdose, Musk leaves his CEO post to enter drug rehab. 12) Berkshire Hathaway (BRK.A) (BRK.B) Announces the Largest Takeover in History – The Transformational Acquisition of 3M for $150 billion. 13) Amazon (AMZN) Makes a Bid for Square (SQ) but Alphabet/Google (GOOGL) Eventually Acquires Both Square SQ and Twitter (TWTR) 14) With its Share Price Consistently Trading Under Its Book Value During the First Few Months of 2019, Goldman Sachs’ (GS) Partners Take the Brokerage Private in a Leveraged Buyout at $238/share. 15) Brexit Happens: The world continues and the pound is the best global currency.
Here Are 5-“Also Eligible” Surprises:
AE1) Ford (F) defaults on its loans. Steve Rattner again becomes the “car czar.”- AE2) A major and unexpected global event judged to be impacted by climate issues causes a massive amount of health problems and deaths. Demand for a reversal of Trump policy on climate change comes from his within his own Party and represents another fissure between the White House and the legislative branch.- AE3) Warren Buffett announces his successor. The name, however, is no surprise.- AE4) Angela Merkel doesn’t make it thru the year and Germany has a new leader. - AE5) As is typical with maturing economic cycles, two large accounting frauds of S&PIndex constituents are uncovered late in the year. A previously “sainted” and revered CEO does a prep walk.
Ethereum as a Security, ICO Market Reopening in South Korea and Rat Poison: Hodler’s Digest, Apr 30-May 6
This article contained the ‘Prediction of the week’, now it’s deleted. Fortune has reported that Alexis Ohanian misspoke during the interview and meant to say that Ethereum will reach $1,500, not $15,000. https://preview.redd.it/4orh3k5vygw01.jpg?width=725&format=pjpg&auto=webp&s=f7ced35ba9fcb37f54fe383b00aa6d2b5a0e66ec Top Stories this week Ethereum — Security Or Not? In what could be some earth shattering news for Ethereum — the world’s second largest cryptocurrency — US regulators will apparently be discussing whether or not it should be classified as security next week on May 7. If yes — it should have registered with the SEC back in 2014. South Korea Considers Reopening ICO Market Last year, South Korea banned any new Initial Coin Offerings (ICO) from being held in the country, but a new bill introduced by South Korean lawmakers could open the ICO market back up, albeit one now strictly supervised by government regulators. The passage of the bill could signal the start of a less FUD-y crypto stance coming from the country. Goldman Sachs Opens Crypto Trading Desk Investment banking giant Goldman Sachs will be opening a crypto trading desk after being “inundated” with requests from clients desperate to get their fingers in the crypto pie. This decision means that the company has officially decided that “Bitcoin is not a fraud.” Four Car Manufacturing Giants Launch Joint Blockchain Initiative BMW, GM, Ford, Renault, along with a total of thirty participants ranging from IBM to IOTA, have partnered to launch the Mobility Open Blockchain Initiative (MOBI) that aims to make transportation “safer, greener, and more affordable.” Less Crypto Purchases With Mastercard Credit Card Lead To Drop In Quarterly Growth Mastercard’s fourth quarter growth is down by two percentage points, a drop attributed to a decrease in credit card purchases of cryptocurrencies. Mastercard’s CEO hypothesizes that uncertainty in Asia could be the reason for the crypto spending contraction. Best Quotes “[Bitcoin] is probably rat poison squared,” — Warren Buffett, billionaire investor and CEO of Berkshire Hathaway “Someone else is trading turds and you decide I can’t be left out,” — Charlie Munger, Berkshire Hathaway VP “All that it takes to make a credible idea into a fad is people just switch off their brains and stop thinking. Over 20 years in and around the banking industry — blockchain is a fad, but I have seen many fads in my career. If 10 percent of what I’ve heard in my career had come true, we would have these amazing banks that run for £1 a week,” — Martin Walker, director of the Center for Evidence-Based Management “I would not describe myself as a true believer who wakes up thinking Bitcoin will take over the world,” — Rana Yared, Goldman Sachs executive working on opening their crypto desk “All this talk of decentralization is just bulls**t […] You’re just making stuff up,” — economist Nouriel Roubini aka Dr. Doom, predictor of the 2008 financial crisis Laws And Taxes Crypto-Friendly Legislation In Belarus May Get KYC Update A March decree in Belarus, designed to bring in crypto innovation to the country with the creation of a High Tech Park (HTP) meant to rival that of the US’s Silicon Valley, may be getting an update with some more stringent KYC requirements. Local sources says that companies that want to open a crypto exchange in Belarus’s HTP will be required to provide info on their management structure and customer data and communications, which must be stored for five years. This may not be the news that will attract those anonymity-loving crypto exchanges to the country. Australian Financial Regulator Promises To Protect Its Citizens From Crypto Down under in Australia, their Securities and Investments Commission (ASIC) has reported it will be “taking action” to protect consumers in the ICO space, meaning that all Australian ICOs need to confirm that they are not in fact misleading investors and engaging in unlicensed conduct, or face being halted by this government regulator. Colorado Regulators Crack Down On Two ‘Unlawful’ ICOs The Colorado Department of Regulatory Agencies announced that it is investigating two ICOs — a “LindaHealthCoin” for purchasing health insurance and a token advertised by Broad Investment as an equity token that represents shares in the company — due to a failure to provide info on the risks of crypto investments and ICOs. The two companies now need to prove why their tokens don’t fall under the Colorado Securities Act, or stop token sales. Arizona’s Crypto Tax Bill Passes With Amendment The Arizona House of Representatives has passed a bill that originally would have allowed its state’s citizens to pay their taxes with cryptocurrencies, but amendments to the bill mean that the Department of Revenue now just has to consider the possibility of alternative forms of payment. Adoption Blockchain Tech Reaches Governments, Scientists In The US, Banks In South Korea Subcommittees of the US House of Representatives will be meeting next week for a hearing on how blockchain tech could help streamline supply chain management as well as prevent the production of counterfeit goods; a major science research marketplace has unveiled plans to track and validate research data on a blockchain platform; Berkeley’s city council has voted yes on a pilot program to sell municipal bonds with blockchain tech; and South Korea’s central bank is considering blockchain and crypto as possible ways to help it achieve a “cashless society.” Australian Branch Of UNICEF Announces Crypto Mining Donation Program UNICEF Australia has hopped on the crypto wave with the innovative idea of asking for donations via the borrowing of a user’s computer processing power to mine for crypto — almost 8,000 people have donated so far. Iran Says Their Experimental Cryptocurrency Model Is Ready Iran — a country whose central bank banned banks from dealing with crypto a mere two weeks ago — has announced that their “experimental model” of a domestic cryptocurrency is now ready. It’s as of yet unclear whether this digital currency will be made available to the public, and in that case, whether the majority-government owned Post Bank, or another financial entity would be the one to issue it. JP Morgan Files Blockchain P2P Platform Patent Banking giant JP Morgan Chase has filed a patent for a peer-to-peer payments network that would use distributed ledger technology like blockchain for both intra- and inter-bank settlements (sounding a bit like RippleNet to us). The P2P platform would use blockchain to process payments in real time, not relying on a trusted third party for holding the audit trail. Mergers And Acquisitions Dubai, IBM Partner For Blockchain Business Registry Dubai, in yet another step in its 2020 Blockchain Strategy, has announced a partnership with IBM to launch a blockchain business registry. The partnership will be helped by Smart Dubai, the Dubai Silicon Oasis Authority, and Dubai’s Department of Economic Development. Analysts Quit BlackRock To Form Blockchain Project VC Fund As part of the seemingly endless exodus of Wall Street execs to the crypto sphere, three analysts at BlackRock have quit in order to found a $20 mln venture capital fund, Eterna Capital, which will focus on blockchain projects. Goldman Sachs Exec Joins Maltese Crypto Fintech Startup Yet another Goldman Sachs executive has joined a crypto startup, this time a Malta-based fintech platform for a financial marketplace allowing crypto investors to get instant cash against crypto collateral. Users will get a cash advance on their Mastercard or Visa credit cards without a bank-like credit check, and can then choose to sell their crypto whenever they feel the price is favorable. Ethiopia Partners With Cardano For Blockchain Agriculture Tech Ethiopia’s government signed a memorandum of understanding (MOU) with altcoin Cardano with the intent to begin using an agritech platform based on Cardano’s blockchain platform by the end of the year. Gainers and losers The end of the week has seen the crypto market mostly in the green, with BTC and ETH back over their psychological price points of $9,000 and $700 respectively. Total market cap is at around $450 bln. Top three altcoin gainers of the week: All Sports (17.44%) Elastos (9.21%) DigixDAO (6.80%) Top three altcoin losers of the week: Maker (-16.95%) Veritaseum (-14.74%) Fusion (-14.63%) For more info on crypto prices, make sure to read Cointelegraph’s market analysis. FUD Of The Week University College London Breaks Ties With IOTA Foundation In more IOTA news — not a smear campaign, just reporting facts, please believe us, IOTA twitter trolls! — University College London has cut ties with the IOTA Foundation, citing that it is “inappropriate for security researchers to be subject to threats of legal action for disclosing their results.” UCL seems to be referencing the resurfaced allegations against some specific IOTA Foundation members of not responding too well an articles critiquing the cryptocurrency last fall. Vertcoin’s Twitter Hacked, Scammers Advertise Fake BTC Giveaway In another story of overeager Twitter users succumbing to too-good-to-be-true crypto giveaways, cryptocurrency Vertcoin’s Twitter was hacked this week, with the scammers promising a possible prize of 10 BTC if you participated by sending them 0.005 BTC first. Since not everyone can change their name like “Vitalik ‘Not giving away ETH’ Buterin,” it’s better for all Twitter users to assume every crypto giveaway is fake from here on out. Director Of British Think Tank Compares Blockchain To Magic The director of a British think tank, the Center for Evidence-Based Management, told Parliament that blockchain is “pixie dust” and “magic wands.” We have no response to this magical malarkey. Bitcoin Cash Adversaries Cite Lack Of Cash, Cancel Lawsuit Plans Bitcoin Cash opponents have dropped the idea of a lawsuit against Bitcoin.com, citing a lack of cash to get the suit started. Their beef with the site is that it allegedly blurs the distinction between Bitcoin Cash — a Bitcoin fork from August 2017 — and Bitcoin, which they view as the “core” Bitcoin blockchain. Best Features Is EOS Worth The Hype? As altcoin EOS’s price has risen this month by around 70 percent, and its market cap is now more than Litecoin and Cardano combined, two crypto thinkers have weighed in as to whether or not EOS is worth “the hype.” Managing editor at Crypto Chat Matt Leibowitz thinks it isn’t — EOS: Don’t Believe The Hype — while Daniel Jeffries takes radically diametric point of view, putting EOS on a pedestal as the Goddess of the Crypto Dawn. Blockchain Could Be The Answer To The US Opioid Crisis Intel and the pharmaceutical industry come up with an innovative way to combat America’s rising opioid crisis — blockchain tech. How Cryptocurrencies Compare To Traditional Assets Bloomberg put together a comprehensive 16 month analysis of just how cryptocurrencies shape up in comparison with traditional asset classes. The main takeaway? Crypto’s future is unknown (which we already knew) but the article is full of colorful graphs and charts that tell you why we can’t predict the future. Source
The White House will roll out a long-awaited infrastructure plan today, which already faces hurdles in Congress because it doesn't offer as much new federal funding as Democrats want, or directly address how to pay for the effort. President Trump will propose spending $200B over 10 years, mostly in the form of grants designed to encourage states and cities to raise their own money for infrastructure projects, hoping to spark $1.5T in new investment. Economy Following last week's roller coaster ride, U.S. stock index futures are up by 1.2%, but with yields on U.S. 10-year Treasury paper touching a four-year top of 2.885%, it's too early to sound an all-clear on volatility. Another upcoming challenge will be the release of U.S. consumer price data on Wednesday - given that it was fears of faster inflation, and thus more aggressive rate rises, that triggered the global rout in the first place. "There is a clear path forward [on NAFTA] and we're working very hard together on that path," said Canada's Justin Trudeau, capping a U.S. tour Saturday in Los Angeles. "Let's not step back from the progress our countries have made... A generation later, it can be morning in North America." He also identified several tough issues - including Chapter 11 investor-state dispute panels, U.S. proposals for the auto sector, and a U.S. demand for a sunset clause. Longest blackout in U.S. history... An explosion at an electric substation threw much of northern Puerto Rico into darkness late Sunday in a setback to fully restore power to the territory more than five months after Hurricane Maria. Just last week, Fluor (NYSE:FLR) confirmed that its crews supporting the U.S. Army Corps of Engineers have helped to restore power to more than 232K customers throughout the island since arriving in October. North Korean leader Kim Jong Un has invited South Korean President Moon Jae-in to Pyongyang "at an early date", potentially setting up the first meeting of Korean leaders in more than a decade. Moon steered clear of any immediate commitments in response to the North's offer, saying he hoped to "create the environment" for such a summit to take place. The development extends a thaw in cross-border relations that saw the two Koreas' athletes march together under a unified flag at the Pyeongchang Winter Olympics. Stocks Comcast is considering a new offer for Twenty-First Century Fox's (NASDAQ:FOXA) assets despite an agreement in December to sell them to Walt Disney (NYSE:DIS) for $52.4B, WSJ reports. Its original bid was reportedly around $60B, but there were concerns that a deal could face antitrust challenges. Comcast (NASDAQ:CMCSA) might even be prepared to remove certain assets from the deal, or zero in on something in particular, such as European pay TV giant Sky (OTCQX:SKYAY). Walt Disney is also changing the admission price for its U.S. theme parks, raising the cost of some single-day tickets by almost 9%. Theme parks are Disney's (DIS) second-largest division, bringing in $18.4B in revenue and $3.8B in operating income for the fiscal year that ended in September. In other news, Alibaba (NYSE:BABA) has signed a deal to offer Disney shows on its Youku video streaming platform. Broadcom has secured as much as $100B of debt financing for its attempted takeover of Qualcomm (NASDAQ:QCOM), WSJ reports. Locking down funding for the deal would remove a major question mark over the hostile bid, which if successful would be the biggest technology takeover ever. Qualcomm and Broadcom (NASDAQ:AVGO) intend to meet Wednesday to discuss the potential deal. In a sale overseen by the Chinese government, Blackstone (NYSE:BX) may be reacquiring some assets from Anbang, including New York's Waldorf Astoria hotel and Strategic Hotels & Resorts, Bloomberg reports. Blackstone scored big in 2016 when a company it owned - Hilton Worldwide - sold the Waldorf for a record $1.95B. Less than two years later, Blackstone sold its stake in Hilton to China's HNA Group. 1 of every 13 visits to the doctor last week was for fever, cough and other symptoms of the flu, tying the highest level of the virus seen in the U.S. since the swine flu of 2009. "This is a difficult season, and we can't predict how much longer the severe season will last," said Dr. Anne Schuchat, acting director of the CDC. Deaths from influenza and pneumonia, which are closely tied to each other in the winter months, were also responsible for 1 of every 10 deaths last week, and that's "likely to rise." OxyContin maker Purdue Pharma is stopping to promote the drug and other opioids to doctors amid a series of state and municipal lawsuits that blame the company for contributing to the opioid epidemic. It will also cut its U.S. sales force by more than 50%, to about 200 people, while remaining representatives "will no longer be visiting offices to engage in discussions about opioid products." Related tickers: JNJ, ENDP, TEVA, ABC, MCK, INSY, DEPO, AGN, ALKS, MNK, AMPH, PFE, TTNP, BDSI, DRRX, CARA, COLL, EGLT, PTIE, ACUR, PTX, ACRX,IPCI, KMPH, TRVN, CXW, BDSI, OPNT Citigroup is setting up an innovation center in London in one of the first investments by a big U.S. bank since Brexit, FT reports. The location will house 60 technologists, as well as the EMEA unit of Citi ventures and employees from across the company's businesses. Despite the move, Citi (NYSE:C) has picked Frankfurt for its new post-Brexit EU headquarters. One of the final fines for banks involved in the financial crisis looks to be nearing resolution. The U.K. Treasury has held secret talks with U.S. officials aimed at accelerating a multibillion dollar fine for Royal Bank of Scotland (NYSE:RBS) that would finally draw a line under its pre-bailout misconduct, Sky News reports. While RBS has already set aside £2.4B to cover the DOJ penalty, some analysts predict a fine could be higher than £5B. Credit Suisse faces a U.S. class action lawsuit over $1B in writedowns it took in 2015 and 2016 linked to its trading division, leading to a drop in share price and costing investors millions, SonntagsZeitung reports. The plaintiffs in the case include the pension funds of fire departments and police departments in the U.S. city of Birmingham. According to Credit Suisse (NYSE:CS), the case is "without merit." Warren Buffett's footprint is expanding to Dubai. Berkshire Hathaway Specialty Insurance (BRK.A, BRK.B) has established an office in the Dubai International Financial Center after gaining a license from the regulator. The insurer also has Asian regional hubs in Hong Kong, Singapore, Malaysia and Macau as it seeks to win over new clients in the region. Unilever is threatening to pull back its advertising from popular tech platforms, including YouTube (GOOG, GOOGL) and Facebook (NASDAQ:FB), if they don’t do more to combat the spread of fake news, hate speech and divisive content. According to Unilever's (NYSE:UL) annual report, the consumer-products giant is one of the world's largest advertisers, spending more than $9B last year to market its brands such as Lipton, Dove and Knorr. Amazon paid about $90M to buy the maker of Blink home security cameras late last year, in a bet on the startup's energy-efficient chips, sources told Reuters. Analysts had thought the deal related to smart delivery program Amazon Key, but it may have centered on lowering production costs and lengthening the battery life of the Amazon (NASDAQ:AMZN) Cloud Cam and Echo speaker. Blink says its cameras can last two years on a single pair of AA lithium batteries. Takata's U.S. unit has reached a settlement with representatives of those fatally injured by defective air bags, paving the way for the company to exit Chapter 11 bankruptcy and move forward with a reorganization plan. At least 16 people have died and more than 180 have been injured due to Takata's (OTCPK:TKTDQ) inflators, which touched off the largest series of automotive recalls in U.S. history. "The response from our customers regarding our new full-size SUVs has been exceptional," said Joe Hinrichs, president of global operations for Ford (NYSE:F). As a result, the automaker will expand production of the Expedition and Lincoln Navigator by approximately 25%. According to research firm AutoData, Navigator sales surged 88.6% in January. Emirates has firmed up an order to buy as many as 36 Airbus (OTCPK:EADSY) A380 aircraft worth as much as $16B at list prices, ensuring production of the world’s biggest passenger jet for at least the next decade. The order, for 20 of the double-decker planes with an option for 16 more, was originally announced on a provisional basis in mid-January. Deliveries are due to begin in 2020. Airbus has also halted all deliveries of its Pratt & Whitney-powered (NYSE:UTX) A320neo after the latest disclosure in a series of flaws with the next-generation engine, according to IndiGo, the company's biggest customer for the aircraft. EASA has warned of a new issue on the troubled engine program that may be connected to several in-flight shut downs, Bloomberg reports, and as many as 11 of the 113 delivered Pratt-powered A320neos (OTCPK:EADSY) have been grounded. Space station privatization? The White House plans to stop funding the ISS after 2024 and is working on a transition plan that could turn the station over to the private sector, The Washington Post reports. NASA already subcontracts certain ISS support operations, such as supply flights carried out by SpaceX (Private:SPACE) and Orbital ATK (NYSE:OA), while Boeing (NYSE:BA) operates the station for NASA, which costs the agency $3B-$4B per year. Weekend Reads PRO+ Weekly Digest: Focusing On Stocks To Buy On A Pullback Marketplace Roundtable: Don’t Get So Emotional, Baby: Fear & Greed Trader On Tackling Market Turbulence Today's Markets In Asia, Japan -2.3%. Hong Kong -0.2%. China +0.8%. India +0.9%. In Europe, at midday, London +1.1%. Paris +1.3%. Frankfurt +1.5%. Futures at 6:20, Dow +1.2%. S&P +1.2%. Nasdaq +1.2%. Crude +1.7% to $60.20. Gold +0.5% to $1322.10. Bitcoin +7.2% to $8651. Ten-year Treasury Yield +5 bps to 2.88% Today's Economic Calendar 2:00 PM Treasury Budget
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