Category Archives: Finance

Volatility Bitcoin Captivates Investors

The Volatility of Bitcoin Captivates Investors

When a commodity or currency have no historical fundamentals for support in trading markets, the volatility of said commodities or currencies can be downright scary. Take the recent trading activity surrounding the world’s most popular crypto-currency, Bitcoin.

Since its introduction in 2009, Bitcoin has shown the ability to sustain explosive growth. It has also come under the kind of scrutiny that leads to periods of massive drops.

As recently as June 12 of this year, Bitcoin had cracked the $3,000 mark in valuation, settling near $3,100. It represented an increase of over 200% from where it sat in the earlier part of the year. Without the necessary fundamentals to support this kind of movement, an investor’s bubble was created.

That bubble popped in recent weeks with Bitcoin retreating as far down as $1,758 this past weekend. What bothered most analyst was the fact this crypto-current broke major support at about $1,860. The farther it falls below support, the more volatility there will be in the market within the next few weeks and months.

Fortunately for some investors, Bitcoin has had a bit of a rebound after reaching an oversold position. It has rallied back into the $2,200 range on strong volume as investors continue to set aside concerns over further weakness.

According to Sheba Jafari, the head of technical strategy at Goldman Sach: Bitcoin is “still in a corrective 4th wave.” That implies that a fifth wave of buying is on the horizon. Based on Jafari’s analysis, “There’s potential (for Bitcoin) to extend as far as 3,915 (if 1.618 times the length of wave I). It just might take time to get there.”

It’s worth noting that the investment world currently has access to trade up to 800 different crypto-currencies. This should be considered highly speculative trading with tremendous upside and an equally dangerous downside.

Bitcoin surging

Bitcoin is Surging

For anyone who is unaware of exactly what Bitcoin is and how it is traded, it might be a good time to seek a quick education into the nuances of the world’s top crypto-currency. Compared to bullish stock markets in the US, London and parts of Asia, nothing could possibly compare to the 200% increase Bitcoin has experienced in just the last five months.

Currently, Bitcoin is trading at just over $3,000 per coin. The price continues rising to record levels on a daily basis. In the process of this meteoric rise, the valuations for other crypto-currencies are also experiencing substantial growth as investors seek to find the ones that will be able to compete with Bitcoin as a viable means for exchange.

According to Brian Kelly, CEO and founder of BKCM and a CNBC contributor, crypto-currency is “in the first years of what is likely to be a multi-year bull market. Of course there will be corrections and even crashes along the way, but bitcoin is here to stay.”

This shouldn’t come a surprise to investors that have seen Bitcoin increase in popularity throughout many portions of Asia. The primary reason for the currency’s increase in price over the past few months in because the Chinese government formally approved it as a form of legal tender for goods and services. This is further complimented by the fact Japanese lawmakers are looking to make similar moves.

Many folks are waiting to see how quickly financial markets and merchants in the US are going to begin accepting Bitcoin and other digital currencies as a legitimate form of currency. To date, the Federal Reserve and many banking organizations have Bitcoin under close examination. Should the US Federal reserve decide to recommend acceptance of any digital currencies, one can expect to see a massive explosion in the valuation of any digital currency deemed to be legitimate.

millenials debt

Millennials and Debt

The United States is very much a debtor nation. From the country’s governmental debt to personal debt, the numbers are sitting at staggering levels. According to a report released by the organization UBS, the nation’s consumer debt currently sits at around $3.6 trillion, that’s trillion. Even more alarming is the fact it continues to rise month after month, year after year.

At that level, the US debt sits at 20% of GNP, which is reaching levels that are unsustainable. A closer look at the number indicates that millennials (21 years old to 34 years old) are responsible for $1.1 trillion of the total consumer debt amount. The causes of millennial debt reaching such limits are two-fold, college debt and an inability to or unwillingness to live within their means.

The college debt issue is not new, yet is still threatens to undermine the stability of the US economy if not addressed in the immediate future. According to New York Fed President William Dudley, “continued increase in college costs and debt burdens could inhibit higher education’s ability to serve as an important engine of upward income mobility.”

As for consumer debt, recent improvement in the situation is becoming more apparent. As millennials find themselves facing unmanageable debt issues, they are beginning to address the root causes of their problems. While they tend to still want to overspend on big ticket items, they are learning the benefits related to frugality and waiting for the lowest and best prices.

One trend that warrants monitoring relates to auto leasing. According to the UBS report 32% of millennial are foregoing car purchases in favor of leasing. While it certainly offers a lower priced option for transportation, they are having to walk away from leases without a meaningful asset to show for their efforts. With student debt so high, something has to give.

Card skimming rise

Card Skimming is on the Rise

If any of the recent data is truly indicative of the degree of the problem, it would seem thieves are gaining an edge on the security used to detect skimmers. Skimmers are small devices inserted into the slot of an ATM machine. They are used to record data off a credit card or debit card’s magnetic strip. By also using a tiny, strategically placed camera to record a customer’s pin number as they enter it, thieves can duplicate the card and start using it for purchases and ATM withdrawals.

Some recent data released by FICO Card Alert Services indicates there was a 70% increase in the number of cards compromised by skimmers in 2016. Furthermore, there was a 30% increase in the number of cards that were hacked. These increases are attributed to technological advancements that are making it more difficult to detect skimming devices.

Even more alarming was this comment by T.J. Horan, FICO’s vice president of fraud solutions: “As the last few years have proven, skimming technology and know-how have improved and are more accessible to the general population. So we will continue to see increases in compromises and the speed at which they occur.”

As consumers, there are a few steps we can take to prevent a collective loss of billions of dollars to criminals.

1. Don’t use remote ATMs and point-of-sale terminals in poorly lit, low traffic areas. It’s better to stick with machines at major banks or with major department stores.

2. Try to shake the slot area of a ATM machine before using it. If it wiggles or is lose, tampering may be possible.

3. Use your other hand to protect your pin number from cameras as you enter it.

4. Only use credit and debit cards made with chip technology.

5. Check your card or bank statement frequently. The sooner you catch issues, the sooner you can stop cards and minimize your exposure.

Surge equity market officials weigh

Officials Weigh in on Reasons for the Surge in the Equity Markets

As the U.S. stock market continues its surge, pundits and politicians are trying to hand out explanations for the market’s longest winning streak since the late 1990s. Of course, U.S. President Donald Trump would like to take credit for the recent rally, citing his impending fiscal policies and tax cuts as the primary reason for investor confidence.

While President Trump might in fact be due some level of credit, there are other possible reasons why the Dow currently sits at 20,624 and the NASDAQ is currently flirting with the 6,000 level. One such reason was recently laid out by current Fed Chairman Janet Yellen.

In her recent testimony in front of the House Financial Services Committee, Yellen was asked to discuss the latest trends in the financial markets, which have been coined as the Trump rally. According to Yellen, the answer is quite simple. She stated, “I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings.”

Since Trump took office, the economy has continued to improve in many areas. While some of the credit should go to the Obama administration, Trump and his people have done nothing to decrease fiscal confidence across the nation. With all the recent improvements expected to continue, Yellen has made clear the Feds may be poised to increase rates as soon as its next meeting in March.

In the past, such an announcement would send some investors into profit taking mode. Such has not been the case up to this point in time. Investors and consumers remain confident that any changes brought about by Trump’s administration will only serve to make the U.S. economy even stronger.

Indeed, the corporate outlook looks very good in most sectors. With impending tax reforms and an emphasis on home grown products, the U.S. economy looks to be in full recovery mode after too many years stagnation.

Taleo Reporting ECON against PRIIPS RTS

ECON voted against PRIIPs RTS

ECON (European Parliament Economic and Monetary Affairs Committee) has voted 55 / 0 against the PRIIPS RTS (level 2) adopted and published on July 1st 2016.

The vote has been motivated by the use of future performances rather than past ones, the treatment of Multi-Options Products and legal uncertainty.

PRIIPS level 1 still valid.

Indeed, PRIIPS performances scenarios in the current RTS could lead to positive performances even in the unfavorable scenarios. The opposite can happen in the favorable scenario. These situations reflect the observed average returns from the time series used for the computations.

Multi-Options Products could lead to the production of high volume of KIDS and push the investors to confusion.

Finally, computed indicators across different manufacturers of the same product could introduce legal uncertainty.

TALEO Reporting, key provider believes that there still is a real possibility for PRIIPS to go live on January 1st, 2017. However, a 6 months minimum delay is expected for the authorities concerned to redraft and agree on new RTS.

Fed signals rat increases Asia stock market reacts

Fed Signals Rate Increases – Asia’s Stock Markets React

No one needs to look any further than Asian markets to get an idea of how much influence the U.S. Federal Reserve exudes over the rest of the world. As the U.S.’s economic environment continues to improve with increases in job development and consumer confidence, the Fed’s chairperson, Janet Yellen, has made clear that at least one and maybe two interest rate increases are on the table over the rest of the year.

At this past weekend’s monetary policy conference in Jackson Hole, Wyoming, Yellen failed to disclose the Fed’s specific economic targets, but she did indicate that things are moving in the right direction and nearing a point when the Fed will need to react with rate increases to stave off any possible issues related to inflation.

In reaction to Yellen’s comments made during the conference, AMP Capital’s Shane Oliver, Head of Investment Strategy in Australia, had this to say: “It’s clear from the Fed’s actions this year that it is aware of global risks, the impact of its own actions on those risks and any potential blow back to the U.S. economy and of the impact of a rising U.S. dollar in doing some of its work for it.”

Around Asia, traders showed caution as stock indexes fell after Yellen’s comment hit the wires. On China’s CSI 300 and Shanghai Composite, the drop was a modest .3% while Japan’s Nikkei went against the grain and actually gained 2.3% amid good economic news in Japan. After discounting the effect of these two indices, the MSCI’s broadest index of Asia-Pacific shares fell 1%. In America, the market also fell amid concerns over a strengthening dollar.

Among economists surveyed over the likelihood of an increase in September, the number rose from 21% to 33% following Yellen’s comment. Related to the possibility of an increase in December, the number came back at 59.1% compared to 51.8 from an earlier survey.

Bull Market

Is the End of the Bull Market on the Horizon?

For 2,610+ days, the US stock market has been entrenched in a bull market. Anyone with any level of knowledge about the financial markets has to be aware that bull markets don’t run forever. There is going to come a time and place when the bears are going to come out of hibernation and have their day. But When?

According to successful UBS strategist Julian Emanuel, that day may be coming sooner rather than later. After studying market trends around other bull markets, Emanuel was able to identify several key indicators that led to the end of most bull markets throughout history, especially in 2000 and 2007. For the record, the 1990-2000-bull market was the longest in history, followed by the current bull market that started around the beginning of 2009.

The two key indicators identified by Emanuel relate to merger and acquisition activity and a widespread rotation away from utilities and consumer based stocks in the financial services industry. In 2000 and 2007, both of these factors were very evident as the business community saw mergers decrease to a crawl while financial stocks received a big boost as interest rates started ascending.

Here in 2016, the Fed is beginning to consider raising interest rates, which would most likely start in the next few months based on current market conditions. As interest rates go up, financing costs go up, which puts a significant burden on manufacturers and distributors that are particularly sensitive to interest rates. As profitability shrinks for these business concerns, investors move investments into the financial sector, which usually benefits the most from rate increases. High interest rates are also found to a key reason why many companies put off acquisitions in favor of creating cash reserves as a hedge against inflation and higher borrowing costs.

While Emanuel believes the market will continue surging through the end of the year, he also believes the end of the bull markets is near. The catalyst into an extended bear market figures to be interest rates, which are about to start climbing. So say Emanuel.