Same Narratives. Also, Bitcoin!

A largely unchanged narrative greeted traders and investors Thursday as lawmakers in Washington pressed ahead with laborious negotiations aimed at cementing a lame duck virus relief bill.

Ultimately, the package of measures may not be cleared until the weekend, technically beyond the “deadline.” But as we’ve learned time and again, the word “deadline” has virtually no meaning, unless it’s in the literal context of the people suffering both economically and otherwise from the virus. In their case, there was a timeline for stimulus delivery beyond which they’d be dead. Now that’s a deadline. And it expired months ago for many Americans.

Europe, meanwhile, is moving ahead with its €750 billion relief package financed by jointly-guaranteed debt. The quest down the road to fiscal burden-sharing began over the summer and the deal was finalized Wednesday in The European Parliament. The euro rose again Thursday after pushing through 1.22 for the first time since 2018 Wednesday.

Read more: EUR-phoria

With Brexit talks ongoing (another farce featuring four years of false “deadlines”) the Bank of England was spared the drama of having to immediately put out a kitchen fire. The BOE kept it all unchanged. The bank’s economic projections still assume there’s a free trade agreement ready when the calendar flips. Last month, the BOE upped its QE program by more than expected and on Thursday extended an emergency loan facility for businesses to October of 2021.

“The MPC’s central projections in the November Monetary Policy Report assumed that the pandemic would weigh on near-term spending to a greater extent than projected in the August Report, given new restrictions announced in October in response to rising virus cases,” the bank reminded folks.

“UK GDP was projected to decline in 2020 Q4, and then pick up as restrictions were assumed to loosen,” the December statement went on to say, adding that “recent global activity has been affected by the increase in COVID cases and associated re-imposition of restrictions [and] UK-weighted global GDP growth in 2020 Q4 is likely to be a little weaker than expected at the time of the November Report.” As a reminder, the figure (below) illustrates what was “expected” as of early last month.

The language around Brexit discussions Thursday sounded quite a bit like the soundbites out of D.C., with Michel Barnier talking up the likelihood of a deal while warning on “last stumbling blocks.” Parliament went into recess Thursday, but that’s no obstacle, Boris Johnson assures you.

“Parliament has long shown it can move at pace and the country would expect nothing less,” Downing Street remarked, in a statement. The pound hit a two-and-a-half-year high.

Equities looked to move higher and the dollar fell hard following the Fed meeting. Bitcoin, meanwhile, touched $23,256.92.

The correlation with gold has collapsed. All you can do is laugh.

Oh, and Emmanuel Macron has COVID-19. (How’s that for a non sequitur?)


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5 thoughts on “Same Narratives. Also, Bitcoin!

  1. The way I see this craziness with bitcoin/cryptos is this: Every day one or two more narcissistic hedge fund managers use other people’s money to go to the casino with “dollar signs (note- not crypto’s)”, in their eyes. GLTA

  2. Is there a chance that bitcoin will ever be anything more than a computer algorithm. It’s seems to just be a speculative bubble at the moment, but I see more mainstream financial companies committing to buy in. Are they just trying to boost returns via market timing or is there some possible explanation for how it could become an actual store of wealth. In the last week I’ve heard so called financial professionals claim they’ve calculated it’s will go to $400k. $23k still seems idiotic to me, but maybe I’m missing something.

    1. It just is what it is… I don’t know why anyone obsesses over it. It’s a gamble. If people want to gamble, that’s great. Go gamble. I hope they all get rich. But personally, I would never introduce something like that into my own accounts because it’s just too much trouble on multiple levels. The volatility means the returns need to be huge to make it worthwhile, and nobody ever seems to want to mention the fact that if you’re running any kind of business and you have a sizable income, it’s a potential accounting nightmare. I cannot even fathom the headache involved in trying to incorporate something like that into my books. In my opinion, it’s just asking for tax scrutiny. If you’ve got unlimited accounting resources and can just throw it all to them and pay whatever you’ve gotta pay to get it all straight, then that’s fine. But it ain’t for me. My accountant would freak out if I tried to invest in that.

      1. Add to that the IRS announcement of a new question about bitcoin holdings and/or transactions on the 1040, p1 this year and it’s clear the tax man wants your gains, sooner rather than later.

    2. I mean there is a lot to be said about how it’s all crazy but imagine for a second you have family in say Africa and live in the US. You want to transfer money home to your family. Most money transfer services charge 15-20% in service fees or are extremely unreliable and tedious. You could imagine using something like Stellar Lumens at $0.20 a coin to transfer money for 0.5% in fees in seconds instead of 2-3 days. All it would take is regulatory adoption in African nations which is in the works in some currently. Many use cell phones for banking already. Now imagine this technology whichever coin becomes most useful manages to allow an entire continent to rapidly gain banking services on par with first world countries with access to funding from overseas. What kind of economic development would that allow?

      Technology is often about what you can do that you couldn’t before and a trustless ledger is something we couldn’t do before and we are generally spoiled by the idea that trustworthy institutions are readily available. That’s not a historic nor global given.

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