- Stock market volatility at another record low…
- … while Bitcoin is up, down, all around
- A crash course in cryptocurrencies (including the most lucrative ones)
- Trump puts Amazon on notice, market yawns
- Rural economy back in a world of hurt
- IMF talks about departing U.S. for China… lemonade legalities, U.K. edition… Canadian health care from someone who knows… and more!
The stock market is its most mellow this morning since at least 1993.
Volatility as measured by the VIX has sunk to 9.2, eclipsing the previous record set on Friday. For perspective, the VIX popped above 80 during the Panic of 2008…
In contrast, the price of Bitcoin has swung between $2,516 and $2,774 — just in the last 24 hours.
Nor do the thrills ’n’ chills end there: Since a peak near $3,000 six weeks ago, the price has tumbled below $2,000… only to recover much of that drop in the last 10 days…
Many people are understandably scared off of Bitcoin and other cryptocurrencies when they see a chart like that. Plus the fact that it’s just, well, complicated.
“Hopefully, I can clear up some of that mystery,” says our Louis Basenese, “because this is a market in which you can potentially amass a quick fortune.”
For starters, forget Bitcoin.
“Some lesser-known cryptocurrencies,” Louis tells us, “have skyrocketed between 12,000% and 56,000% over the past few weeks. Just think of how even a small investment in some of these cryptocurrencies could do for you.
“And the good news is that you don’t need to know anything about Bitcoin or any other cryptocurrencies to take part in the bonanza. And you can get started with as little as $20.
“In fact, what I call ‘penny’ cryptocurrencies are one of the last legal ways for small investors to grow rich, starting with just a few dollars in your pocket.”
So here are the basics of cryptocurrencies — and if you’re already familiar, feel free to jump ahead to 01:45 on the clock.
“Essentially,” Louis explains, “a cryptocurrency is a digital currency that operates outside of any government control. That means these currencies cannot be manipulated by central banks like our own Federal Reserve or other central banks around the world.”
Count us in!
“In the past,” he goes on, “all transactions took place with an intermediary — like a bank — overseeing the process. The bank would verify the transaction, adding a certain level of trust.
“But cryptocurrencies are completely revolutionizing the old system — cutting out the middleman entirely. Instead, digital transactions are made peer to peer, without the middleman.”
Ditch the banks? Count us in more!
“The new system is regulated by ‘blockchain’ — a decentralized database that records each transaction,” says Louis.
“Blockchain is essentially the trusted backbone of all cryptocurrency transactions. Within the blockchain, transaction records and payment details are spread across a massive public database open to all bitcoin ‘miners’ in the network. These ‘miners’ are people with superpowerful computers — each competing to confirm and authenticate each transaction in the network.
“They’re not doing this for free, mind you. If a miner’s computer program validates the transaction first, he or she is rewarded in bitcoins. At that point, the verified transactions are added to the blockchain database. So the next round of money transfers can be authenticated by miners — and so on.
“That immediately makes the process transparent and verifiable. In addition, miners’ computer programs confirm transactions and reset every 10 minutes. And each 10-minute group is called a ‘block.’ Each proceeding block is also verified by the mining software and then linked to the last block — creating a chain.”
There’s no centralized location where transactions occur. Result? Airtight security. Louis’ analogy: “Think of it as millions of locks that would need to be picked in a rapid amount of time rather than hacking into just one place.”
Here’s the most exciting part: “This summer, some 260,000 businesses are predicted to accept some alternative currencies as payment for goods and services,” says Louis. “And that number will only grow in the years to come.
That means Louis’ “penny” cryptocurrencies have the same potential now that Bitcoin did when it came on the scene in 2010, trading for less than one cent. A mere $20 stake in Bitcoin then is worth $15.1 million today. (See why we say forget Bitcoin?)
“There are now over 831 cryptocurrencies exchanging hands on the ‘open markets,’” he explains. “The vast majority trade for just pennies, just like Bitcoin did back in 2010. That means there’s a chance to strap yourself to the next cryptocurrency rocket before it launches into the stratosphere.”
How to choose among 831? Louis has run every single one through a rigorous five-step filtering system. “Based on my assessment, I’ve pinpointed five cryptocurrencies I believe investors should get into immediately.”
All you need is $20… and the willingness to try something new. You can get started by clicking here. For maximum profit potential, you’ll want to have your cryptocurrency position by this Friday — for reasons you’ll see at the link.
The mellow market we mentioned off the top today has sent the Dow up more than 100 points as we write, to 21,632. Not a record, but close.
Earnings season is in full swing, with General Motors and Caterpillar both beating expectations comfortably.
Bonds are selling off, the 10-year Treasury yield now 2.32%. Gold has pulled back a few bucks, but for the moment, it’s still holding onto the $1,250 level.
Has the president lost the ability to move a stock with his Twitter account?
Remember a few months ago how industrial and pharma shares swung wildly with every tweet? Not now: Amazon — parent firm of The Washington Post in addition to online retail behemoth — is down less than a tenth of a percent at last check.
We’re not sure what he’s getting at with “no-tax.” As we noted earlier this year, Amazon now charges sales tax even in states where it doesn’t have a warehouse or other physical location.
But it’s the “monopoly” part that caught our eye, as we recall a Trump tweet last fall saying AMZN had a “huge antitrust problem.”
Amazon, meanwhile, will submit revised paperwork to the Federal Trade Commission this week on its proposed acquisition of Whole Foods. As we noted here yesterday, the FTC is looking into AMZN’s pricing practices. For its part, WFM is telling shareholders the timetable for a completed deal is being pushed back into next year. Hmmm…
So much for America’s rural comeback.
Two months ago, we took note that the Rural Mainstreet Index had finally climbed out of a 21-month funk. The index, a creation of Creighton University economist Ernie Goss, is based on a monthly survey of bank CEOs in rural areas of 10 states stretching from Illinois to Wyoming.
Numbers below 50 indicate a shrinking rural economy — and that’s where the index had been stuck from August 2015 through last May.
The July number is out… and not only is it back below 50, but it collapsed to 40.7. Goss says that’s the steepest one-month drop since November 2008, in the teeth of the “Great Recession.”
Blame it on an improbable combination — drought in the Great Plains and weak grain prices. The drought has given a lift to wheat prices during 2017, but corn and soybeans remain near multiyear lows.
Sign of the changing times: International Monetary Fund chief Christine Lagarde envisions a time when the IMF will move its headquarters from Washington to Beijing.
Speaking at an event in Washington yesterday, Lagarde pointed out that under IMF bylaws, the main office must be located in the largest member economy. Since the IMF’s founding in 1945, that’s been the United States… but Lagarde anticipates a shift by the late 2020s.
“Which might very well mean that if we have this conversation in 10 years’ time… we might not be sitting in Washington, D.C. We’ll do it in our Beijing head office.”
As a reminder, Jim Rickards says the IMF will be the major decision-making body during the next global financial crisis because it will be the go-to source of liquidity.
As an additional reminder, Jim believes that crisis will come much sooner than another 10 years — maybe even next year, when the IMF will consider revising its voting structure to give China and other emerging economies a bigger seat at the table.
Another day, another lemonade stand outrage — this time from across the pond.
“My daughter clung to me screaming, ‘Daddy, Daddy, I’ve done a bad thing.’ She’s 5.”
So recalls Andre Spicer, a business school professor whose daughter set up a lemonade stand outside the recent Lovebox music festival in London.
The girl was accosted by four — four! — enforcement agents informing her she didn’t have a license. She and dad were fined $200.
The Tower Hamlets Council has since rescinded the fine. “We are very sorry that this has happened,” says a spokesman. “We expect our enforcement officers to show common sense and to use their powers sensibly.”
The girl, meanwhile, has been flooded with offers to set up a lemonade stand at other festivals, markets and businesses.
Dad is heartened. “We should be encouraging our kids to get out there and give things a go,” he says. “To try out things like making a stand or show short films they’ve made. Something rather than just having them indoors all the time.”
[Thanks to the alert British reader who tipped us off.]
“Lemonade stands, entrepreneurs and health care,” says the subject line of the first item in our virtual mailbag today. We love it when readers mash up multiple topics explored in The 5.
“I think we’ve finally discovered what’s killed the growth of small business. It’s ‘rule enforcer idiots’ combined with the constant fear of going out on a limb to start a business and have no health coverage. It’s stopped many people, myself included.
“My motto is, ‘Life is a pre-existing condition.’ We all enjoy it, but for how long without health care? It’s a human right, and we need to fix this for all people. As for the rule enforcer, he should pick on someone his own size.”
The 5: We said 18 months ago that if you can fix health care and the self-employment tax, we’d end up with a Renaissance of innovation and entrepreneurship.
Hasn’t happened, but we can dream…
“I have lived half my life under the Canadian health care system, half under the U.S.,” writes one of our regulars. “I can only wish I had 15 minutes with the ‘Medicare for all’ savant who wrote in yesterday.
“When I left Ottawa, there was a year wait for noncritical MRIs. Having just moved to the U.S., my wife had a breast lump which was biopsied, examined and given a clean bill of health in just over 24 hours (the Canadian system stiffed us on the bill). A close friend, exact same age, had the exact same issue, and it took her three months to get a report back. Both were benign, thank God, but if not? Imagine cancer metastasizing for three months before the report came back? How is that ‘compassionate?’
“Even more to the point, in June 2005 even the leftist Supreme Court of Canada (for whose staff I have done computer training) ruled that bans on private health insurance are unconstitutional, viz. ‘The prohibition on obtaining private health insurance…. is not constitutional where the public system fails to deliver reasonable service.’
“In fact, private clinics started opening up all over after this ruling. There’s a reason this ruling occurred: The system is failing the people (and is bankrupt). So… our interlocutor wants Medicare for all… while those who have it are moving the system the other direction. What’s next? Him advocating for a Venezuelan-style economy?”
“I agree with The 5’s opinion that a free market health system is preferable IF we could have a free market.
“How do you propose to convince the Deep State to relinquish control? They thrive on the inefficiencies of the current system.”
The 5: Won’t happen. The only “politically feasible” way for such a system to come about is for the current one to collapse of its own weight and we start over.
That’s not a next-year proposition. But given the trajectory of health care costs as a percentage of the federal budget, it’s not a 20-years-down-the-line proposition, either…
Best regards,
Dave Gonigam
The 5 Min. Forecast
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