Bitcoin Hits All-time High (Market Cap Almost As Big As Goldman Sachs)

The crypto currency Bitcoin just hit another all-time high, reaching 5,606.

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Here is Bitcoin relative to gold.

Bitcoin’s market cap is now $93.5 billion.

Making Bitcon almost as large as Goldman Sachs in terms of market capitalization.

While not quite bigger than Goldman Sachs, Bitcoin is on its way.

But unlike Goldman Sachs, Bitcoin is NOT Too-big-to-fail (TBTF).

Here is Lloyd Blankfein, Goldman Sach’s CEO, doing his best Hyman Roth impression from The Godfather 2.

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Venezuela’s 10Y Sovereign Yield Hits 34.1% (6 Mo CDS Hits 15,500)

Venezuela’s 10 year sovereign yield just hit 34.1%, the highest in the world.

Venezuela’s sovereign yield curve (green line, denominated in US Dollars) is steeply inverted. Venezuela’s SR CDS (and Petróleos de Venezuela SR CDS) are both showing extrememly high levels for the next 6 months (right-hand axis).

Socialism sounds wonderful (to politicians) when crude oil is selling at over $100 a barrell. But not so much when oil is under $50 a barrell.

With annual inflation running at over 2,000%, you know you’ve got trouble in oil city. 

Well, at least some Venezuelans have toilet paper and food.

Unlike these shoppers. And you wonder why annual inflation is over 2,000%?

 

The Hysteria Curve: US Treasury 10Y-2Y Curve Slope Declines To 78.6 BPs As 10 Year Soveriegn Yields Decline In Americas and Europe

Choose your hysteria to explain the Treasury market: 1) debt ceiling crisis, 2) hurricane (Global Warming) crisis, 3) North Korean nuclear attack crisis, 4) Trump’s Russian collusion investigation crisis, 5) the DACA (“Dreamer”) crisis, 6) Brexit crisis, 7) NAFTA crisis or 8) fill-in-the-blank crisis dejure. Please tune to CNN or MSNBC (and even Bloomberg) for the latest in hysteria.

Which ever portfolio of crises you select, we watching the US Treasury 10Y-2Y curve slope fall below 80 to the lowest slope since September 2016.

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10 year sovereign yields in the Americas and Europe can down with the US falling around 10.1 BPS and Argentina down almost 40 BPS.1010

Gold prices are up since the 2016 election while the US dollar basket is down.

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We are seeing a jump in equity and Treasury volatility, but not much.

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Tune into MSNBC’s Rachel Maddow and Lawrence O’Donnel for particularly entertaining hysterical rants (like about Trump’s 2005 tax return).

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US Dollar Falls To Lowest Level Since January 2015 On Depressing Jackson Hole Speakers (10Y-2Y Slope Declines To 82.82 BPS)

The monetary retreat at Jackson Hole, Wyoming today was a dovefest. ECB’s Draghi and Bank of Japan’s Kuroda both said that accomodative monetary policy will continue.

And Yellen said very little of substance with no hint of tightening.

The reaction? The US Dollar fell to its lowest level since January 2015.

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And the US Treasury 10 year – 2 year curve slope fell to 82.82 basis points.

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Yes, optimism at Jackson Hole was in short supply, but hot air was everywhere.

Here are Janet Yellen and Mario Draghi singing “My Kuroda” with the Bank of Japan President. 

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Whip It! Univ of Michigan Inflation Remains Unchanged at 2.6% (But Declines To 2.5% For 5-10 Yr Ahead)

The University of Michigan survey of consumers just released their montly update on inflation expectations. If only The Fed’s Janet Yellen was watching consumer inflation expectations because consumers expect more inflation than The Fed’s inflation target of 2%. Apparently, The Fed is having trouble whipping inflation above 2%.

Consumer inflation expectations remained at 2.6% for August, but the expectations for inflation down the road fell to 2.5%.

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Of course, 2.6% inflation is higher than The Fed’s target inflation rate of 2%. All inflation measures of core prices (excluding home prices, education, healthcare, etc) are under 2%.

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As I mentioned, home prices are left out of the core inflation calculation. But if home prices WERE included, for example, we could have substantially greater inflation since YoY home price growth ranges from 5.7% to 6.9%. Wage growth is only about 2.36 – 2.5%. This indicates that home prices are growing around 2.5x wage growth.

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It is clear that consumers are pricing in non-core inflation into their forecasts, such as home prices, rent, food, healthcare, tuition, textbooks, childcare, etc.

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Whip it (inflation) good, Janet!

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Negative European 2Yr Sovereign Rates Hit 19 Countries As ECB Expands Balance Sheet

Despite all the hoopla about Europe’s improving economic condition, the European Central Bank (ECB) is once again increasing their assets purchases (balance sheet) despite their already 0% main refinancing rate.

And now the number of “European” countries with negative 2 year sovereign yields just increased to 19.

At the 5 year maturity, 11 European countries plus the European Financial Stability Facility (EFSF) are carrying negative yields.

Of course, Japan also has negative sovereign yields at all maturities less than 9 years.