Bitcoin Without Tears

  • Is this Bitcoin’s moment? Even if it’s not, here’s how you can profit
  • Uh, about that pickup in consumer spending the mainstream touts…
  • The newest craptastic IPO Wall Street’s trying to foist on you
  • The amazing shrinking universe of stocks
  • The investment angle to the Trump-Putin meeting next week
  • Reader demands to know why we won’t answer him… so now we will

Maybe Bitcoin has finally “arrived.”

We ease into the weekend with a financial curiosity, courtesy of the BBC: “The head of two Montessori schools in New York won’t let parents pay by credit card — but he is accepting Bitcoin.”

Earlier this month, Marco Ciocca of the Montessori Schools in Flatiron & Soho responded to parent demand — and added Bitcoin as a payment option. Of his schools’ 300 students, parents of about 10 have already ponied up in the most popular form of “cryptocurrency.”

Bitcoin trades this morning just under $2,500. If they’d bought 12 bitcoins a year ago at this time for $660 — total purchase price $7,920 — they’d be able to cover nearly all of the coming year’s $31,000 tuition. Not bad.

Compared with credit cards, Ciocca says Bitcoin is “a much more seamless transaction.”

If you’re still not sure what to make of Bitcoin, well, for the longest time we weren’t either.

A revolutionary new way to transact everyday commerce? A flash in the pan that would never truly catch on? A massive, unstoppable profit opportunity?

About the only thing we were certain of was this: The promise that Bitcoin — and the “blockchain” technology underlying it — would liberate humanity from the chokehold of politicians and central bankers was overblown. Sure enough, Wall Street is spending billions figuring out how to harness the blockchain for its own nefarious purposes.

Remarkably, our research team recently came upon a way to get rich from Bitcoin that doesn’t hinge on having the answers to any of those questions.

Seriously, you don’t have to know the first thing about Bitcoin to make this work. All you need is $20 and the willingness to try something new. Follow this link and you’ll learn exactly what we’re talking about.

The “rising consumer spending” narrative took another severe blow this morning.

The Commerce Department is out with its monthly income-and-spend report. Americans were positively parsimonious last month — with personal incomes rising 0.4% and consumer spending rising only 0.1%. The savings rate is up to 5.5% — the highest since last fall.

As the first half of the year draws to a close, the wonks at Econoday aren’t even trying to put a happy face on it: “The second leg of the second quarter did not turn out well for the consumer nor for GDP. But the weakness in price data is a more strategic concern for monetary policymakers who may be removing stimulus into inflationary head winds.”

Actually, we think they meant “disinflationary head winds” — a falling inflation rate.

Which brings us to the latest reading on “core PCE” — the Federal Reserve’s favorite measure of inflation.

When the Fed refers to its 2% inflation target, it’s core PCE they’re talking about. Unfortunately for the Fed, this figure just registered its third straight month of precipitous decline…


We’re a month out from the next meeting of the Fed’s Open Market Committee. No one expects the FOMC to raise interest rates again — too soon after the June 14 increase. But with this number today, the question now is whether the Fed might engage in a little “forward guidance” and jawbone the markets about maybe dialing back on the Fed’s rate-raising plans.

After a sell-off yesterday in nearly every asset class, the few traders who haven’t already knocked off for an extra-long weekend are sitting on their hands.

The Dow is up barely a quarter percent at 21,347. The 10-year Treasury yield is a skootch higher at 2.28%. Gold sits stationary at $1,243. The dollar index rests around where it did 24 hours ago, at 95.8.

“Market hucksters are trying to force-feed us another useless stock,” writes Greg Guenthner in today’s Rude Awakening.

This time it’s Blue Apron Holdings (APRN). “The company is one of a few prominent ‘meal in a box’ subscription services that sends subscribers ingredients and recipes for healthy food they can cook from scratch. Just a few weeks ago, the company planned to debut on the New York Stock Exchange at a hefty $3 billion valuation, or $15–17 per share.”

Then Amazon went and bought Whole Foods — a jolt to the grocery industry and “a Molotov cocktail through Blue Apron’s kitchen window,” says Greg.

One of the most innovative companies in the world instantly became a potential Blue Apron competitor. What’s to stop Amazon from starting a copycat meal-in-a-box program on the cheap? Nothing.

Blue Apron cut its IPO range to $10–11 before it started trading yesterday. It opened yesterday at $10 on the dot. This morning it’s down to $9.58. Heh…

Shades of Snapchat parent Snap Inc. which debuted four months ago. Anyone who bought before, oh, two weeks ago is in the red.

Three years after we pointed out a scarcity of stocks… the supply is even tighter.

“Back in 1997,” points out Louis Basenese, “there were nearly 7,500 publicly traded stocks. Nowadays, there are fewer than 3,600, according to data from the Center for Research in Security Prices.”


That fact goes a long way to explain the stock market rally these last eight years. Simple supply and demand. And as we mentioned in 2014… it’s not just the number of stocks that’s falling, but also the number of shares of stock.

When there are fewer stocks to choose from, it makes the job of picking winners that much harder. Fewer stocks means fewer opportunities to find names that truly outperform.

Which is what makes Louis’ newest project so exciting: “We just put the finishing touches on a six-year beta test to identify the small-cap and microcap stocks poised to surge by 1,000% or more.”

“Marked” stocks, he calls them. They can make those rocket moves in a single day. And we’re talking plain-vanilla stocks. Not options or anything fancy.

How can you spot them in advance? The stunning answer is here. (No long video to watch.)

“These meetings are never impromptu,” says Jim Rickards, teasing out the investment implications of President Trump meeting face-to-face with Russian president Vladimir Putin next week.

“Both of them will be in Hamburg, Germany, a week from today for a meeting of G-20 leaders. Weeks of preparation will have gone into what looks like an ‘informal’ encounter. The nonpublic agenda will include coordination in Syria, U.S. anti-missile deployments, Western sanctions on Russia and Russian countersanctions, among other critical matters.”

What about “Russiagate,” you wonder? “The Washington political circus has not left town, but it’s getting old. The Trump ‘collusion’ story has completely died. Even liberals such as David Brooks and Rachel Maddow have said they doubt there’s any evidence Trump colluded with the Russians to interfere with the 2016 election.

“Americans are tuning out and the media are proving themselves to be biased, strident and increasingly irrelevant. Trump will get the degree of freedom he needs to deal sensibly with Russia because the stakes are too high to do otherwise.”

A smoothing-over of U.S.-Russia relations will be a plus for Russian stocks, says Jim. “The Russian economy has weathered the storm of lower oil prices and has proved more resilient than U.S. policymakers expected. The upcoming G-20 leaders’ summit in Hamburg should be one of many catalysts for growth in trade and investment in Russia.”

“I agree with the reader who wrote in questioning Jim Rickards’ ‘market timing,’” a reader writes.

“Maybe you promote Jim as a global macro strategist, but there was and is no question that Gold Speculator was promoted with a sense of urgency and timing. Jim’s timing is way, way off. It’s been over a year since I subscribed and I am in the red. Paper loss.

“Still holding but not sure how much more I continue to tie up precious capital with no dividends and a negative return.”

Counters another reader: “The complaints by some that Jim Rickards’ predictions about gold have not come to pass can be seen from another perspective.

“The ridiculous environment created by easy money and low interest rates has also created a phalanx of investors who believe that anything they buy should start going up the next day and provide at least 10% per month. These people seem immune to examining their own process.

“As I have listened to Rickards’ arguments, I have found that they coincide with others that I trust and see no rational mechanism by which the Fed’s predictions can come to pass.

“I’ll simply wait it out, as I did in 1999 and 2007, being prepared by people who try to be honest about the nature of reality. So I thank you for Jim Rickards. He’s first-class.”

“If a question from an Agora Financial customer serves the interest of whatever you’re peddling on a particular day,” writes our next correspondent, “you write ‘a reader inquires,’ characterizing the reader as being agreeable and sensible.

“However, if a legitimate question from an Agora Financial customer does not serve the interest of whatever ‘act now to get rich quick before it’s too late’ scheme you’re peddling on a particular day, you describe the customer’s question as petty (‘carping’) and paint the questioner as disagreeable.

“You really detract from yourself and your company by being so blatantly defensive and rude to customers that are forking over the big bucks depending on a little accuracy in your exaggerated claims. Why?

“I’ve written many emails, and you’ve never answered one. You cherry-pick emails and then present them in a way to bolster your narrative. You think it works; however, you are wrong. No, I don’t expect you to ever answer why you keep belittling customers of Agora Financial in this way.

“I guess you’re fast becoming what is known as ‘fake news.’”

The 5: [Sigh]

Long before I became the “chief cheerleader” for the research of the Agora Financial editors and analysts, I was a newsletter subscriber just like you. Not a day goes by that I don’t think about the reader experience. And not a week goes by that I’m not offering feedback to our publishers and editors about how either we’re doing it well or we could do it better.

“Cherry-picking”? How many critical emails do we publish in the course of a typical month here in The 5? I don’t keep count, but I bet you could count them on more than one hand. Some of them are thoughtful and well-founded. Others are indeed just carping — and I don’t mind pointing that out as a way to affirm the astuteness of the thoughtful ones.

By the way, I review all the reader emails myself. There’s no associate editor separating the wheat from the chaff. I personally look at the inbox because that’s how I get the most complete picture of what’s on our readership’s minds.

So if you write a critical email and I don’t publish it, it’s probably because I judge it’s not interesting enough to a wide readership. To that end, you’ve written not “many” emails but the same one twice about a promotion we ran when launching a trading service last year. It touted the six-month performance of a particular ticker symbol, and you wrote in to say you happened to invest in it and there was no way to achieve the level of performance described in the sales copy. That’s because we were talking about the performance of an option, not the stock.

Now, you’re welcome to think that explanation is of interest to a wide readership, but I felt otherwise. If other people had written in with the same complaint (even on a different ticker), I’d have addressed it. But that’s not how it worked out.

And no, I can’t respond to the reader emails other than here in The 5. Even if I did have time to respond in person, our legal eagles would give me a stern look, worried I might lapse into the “personalized investment advice” none of us can give…

Have a good weekend,

Dave Gonigam
The 5 Min. Forecast

P.S. We’re back tomorrow as usual with our Saturday wrap-up/countdown edition 5 Things You Need to Know. Then we’re going on a brief Independence Day hiatus.

U.S. markets will close early on Monday the 3rd and stay closed on Tuesday the 4th. So the weekday edition of The 5 returns next Wednesday. Happy Independence Day. (We prefer to call the holiday by what it stands for, and not the generic “Fourth of July.”) And to our Canadian readers, good wishes for your sesquicentennial tomorrow.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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