Bitcoin On the Brink

Posted On Nov 28, 2017 By Dave Gonigam

  • Bitcoin busts through $10,000 (with an asterisk)
  • A crucial bitcoin update for anyone worried they’ve missed out
  • T-minus 10 days till a partial government shutdown
  • Help on the way to fight antibiotic-resistant bacteria
  • Amazon takes corporate welfare to a whole new level
  • Strong housing numbers… a peculiar pitch for precious-metal proofs… readers fire back in the Great Oxford Comma Debate… and more!

Depending on whom you want to believe, bitcoin has crossed the $10,000 mark. Or not.

On South Korea’s “Bithumb” exchange, bitcoin indeed traded for five figures yesterday. Ditto for the London-based CEX exchange. Here at The 5, we go with a composite figure that incorporates most of the globe’s major cryptocurrency exchanges. So “officially,” bitcoin topped out at $9,939 around 7:00 a.m. EDT and at last check has pulled back to $9,871.

Of course, on a longer-term chart… all that really matters is that bitcoin has become a “10-bagger” within a single calendar year.

Bitcoin chart

Oh, but $10,000 bitcoin isn’t the only bitcoin milestone that’s being reached this week.

  • At $164.9 billion, bitcoin’s market cap is now greater than that of corporate giants like IBM and Pepsi
  • Bitcoin’s market cap is also larger than the GDP of 135 countries; as we write it’s about to surpass Iraq
  • The biggest U.S.-based bitcoin exchange, Coinbase, now has more users than the Charles Schwab brokerage firm — 13.3 million users, according to Altana Digital Currency Fund.

Now, for millions of people, it’s hand-wringing time.

“Did I miss out?”

“Is it too late?”

“Dammit, my loser cousin Gary bought at $4,000 in August and he’s going to spend the holidays sucking down frozen Rum Runners in St. Vincent!”

With those questions in mind, Agora Financial contributor James Altucher has just released a “flash” update on the state of the crypto market. Short story: Making the right moves right now can still deliver you a life free of financial worries. We urge you to give it a look right away.

Granted, the more conventional markets aren’t too shabby this morning. The Dow is in record territory — 23,664 at last check. Ditto the S&P 500 at 2,610. On the strength of holiday sales, Amazon is less than two bucks away from setting its own milestone of $1,200 a share.

Gold’s latest flirtation with $1,300 didn’t pan out yesterday, but at $1,294 it’s not giving up today. Crude has pulled back below $58 after approaching the $59 level both Friday and yesterday.

The big economic number of the day is the Case-Shiller home price index — up 0.5% in September, and a year-over-year increase of 6.2%, the strongest since the spring of 2014. All 20 metro areas surveyed showed strength, with Atlanta, San Francisco and Las Vegas leading the way.

It’s another strong housing number on top of the new-home sales figure released yesterday — up 6.2% in October, to the highest level since the housing market bottomed in 2011.

For the record, it’s now 10 days before a “partial government shutdown.”

Congress and the president have to figure something out with both a budget and the debt ceiling by a week from Friday — even if it’s another “kick the can” solution as they came up with in September.

Jim Rickards is not optimistic about a deal being worked out: “Unlike the tax bill and some other issues,” he says, “you need 60 Senate votes to keep the government running. That means Democrats have to go along.

“The issues on which Democrats and Republicans disagree include funding for Trump’s border wall, Planned Parenthood, Obamacare insurance bailouts, sanctuary cities and ‘Dreamer’ immigration status. You get the point. There’s no middle ground.”

This morning the president is hinting at a scorched-earth approach — perhaps figuring he can deflect any blame for a shutdown onto Democrats…

Trump tweet

With that, Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi decided to pull out of that scheduled meeting with the president.

How Congress and the White House are supposed to get tax reform done in the middle of this mess no one is saying. Yet. But hey, give it another 10 days; we’ll hear plenty then…

[Apropos of nothing: Are we the only ones who think Twitter is going seriously downhill since it doubled the character limit on tweets from 140 to 280?]

In the battle for control over the Consumer Financial Protection Bureau, the score is White House 1, #Resistance 0.

As mentioned here yesterday, the CFPB has competing directors this week following the resignation of Obama appointee Richard Cordray. Cordray said under the law he appoints the interim director, and he chose his deputy Leandra English. But the president also named a temporary replacement — White House budget director Mick Mulvaney. CFPB staff don’t know whom they report to.

This morning it appears Mulvaney has won control of the CFPB’s website…

job tree

A federal judge heard arguments yesterday in a lawsuit filed by English, but he didn’t issue an immediate ruling. To be continued…

How will medical science combat the rising tide of antibiotic-resistant bacteria? The answer might be closer than you think, says our science-and-wealth maven Ray Blanco.

As Ray told us last May, “Unlike other drugs, antibiotics stop working over time. Bacteria evolve resistance, and eventually, even our best drugs can no longer kill them.”

Solution? Bacteriophages, or “phages,” are prolific viruses that live off bacteria present everywhere in the Earth’s atmosphere. While phages were once investigated for medical use, the discovery of antibiotics in the 1920s put the discussion of phages on the backburner.

“Phages could transform our situation,” Ray says, “potentially even changing the calculus of dealing with infectious bacteria.”

Here’s how it works: “Phages can potentially evolve on the spot as bacteria try to defend themselves from infection,” Ray says. “Furthermore, there’s mounting evidence that adapting anti-phage defenses can leave bacteria bereft of their anti-antibiotic protections… making phage therapy a potentially ideal tool to combine with antibiotics.”

As superbugs develop immunities to the antibiotics used to fight them, Ray notes phages “could one day be of great commercial importance. Hundreds of millions of years of adaptation have turned them into the perfect bacteria killers. We need what they can do.” Ray is already tracking the early-stage profit opportunities. Stay tuned…

While Wall Street obsesses over Amazon’s holiday sales, our mind wanders toward the staggering sellout many local governments are willing to do on Amazon’s behalf.

As you might be aware, the company is looking to build a second headquarters to complement the existing one in Seattle, employing 50,000 people. Last month, Amazon said it got 238 offers for tax breaks and other special favors.

Only about 30 of those offers are a matter of public record so far — but they’ve flabbergasted Seattle Times columnist Danny Westneat. “Coming from the home of the largest corporate tax-break package in U.S. history, which our state gave to Boeing, I figured I was well acquainted with the dark arts of economic-incentive deals.”

But no: Perhaps the most eye-popping offer comes from Chicago — a scheme called an “income-tax diversion.” The estimated $1.32 billion in income taxes that would be paid by Amazon employees would go not to the state but rather to… Amazon. “The result is that workers are, in effect, paying taxes to their boss,” says a report from the think tank Good Jobs First.

On second thought, maybe Fresno, California, takes the proverbial cake: “Fresno promises to funnel 85% of all taxes and fees generated by Amazon into a special fund,” Westneat writes. “That money would be overseen by a board, half made up of Amazon officers, half from the city. They’re supposed to spend the money on housing, roads and parks in and around Amazon.”

park

Actual artist’s rendering pulled from Fresno’s 51-page proposal to Amazon. Woodward Park, by the way, is a real park that currently exists.

Brings new meaning to the old phrase “company town,” huh?

“In response to your appropriate caution regarding investing IRA funds in ‘proof’ bullion,” a reader writes, “I can share the sales pitch given to me by [name of firm redacted] that suggests to invest in ‘semibullion’ coins like the Canadian Bear & Cub.

“They accurately state that your custodian will value these at spot price. Then offer that upon withdrawal from your IRA during retirement you will only have to claim the bullion value for income tax purposes, not the market value or its bullion-beating value growth over the prescribed hold period!

“This opportunity comes with a 42% premium over Gold Eagles upon purchase… Seems they are offering a way to launder your IRA holding through a temporary ‘value-shrinking machine’ using overpriced gold coins that ‘re-inflate’ after clearing the tax accountant’s office.”

The 5: Uhhh… All we’re going to say is that we’re not tax professionals and we urge readers to consult with one if tempted by any such pitch…

OK, now for our email backlog on the “Oxford comma” that time did not allow for yesterday…

First entry: “The context of ‘Comma Junkie’s’ sentence last week (‘We invited two strippers, Kennedy and Stalin.’) would make it clear that Kennedy and Stalin were the spectators, not the strippers.

“I have always followed the rule that a comma should not precede the ‘and’ separating the last item from the rest of the list:

a) Correct: “X, Y and Z”.

b) Wrong: “X, Y, and Z”.

“b) is wrong because the comma (i.e. a pause) confers a different status on item Z: either Z is special (‘lastly but not least’) or it is not quite like X and Y but is being included nonetheless, almost as an afterthought.

“At times, the “when in doubt, ‘over-comma'” rule serves well, e.g.:

1) Correct: “The company owes the popularity of its product to its low price, and quality craftsmanship”.

2) Wrong: “The company owes the popularity of its product to its low price and quality craftsmanship”.

2) is wrong because without the comma, the ‘low’ applies both to price and quality.”

“Thank you for speaking and writing English,” says our final correspondent. “In a list, the use of a comma before the and is a modern redundancy. My 1959, 6th grade grammar class was clear and simple.

“In a list of items, the comma takes the place of the conjunction and. The full sentence is: 1 and 3 and 5 and 7 and 9 are odd digits. To save ink, paper and type setting, the American standard has been to replace the first three ands with a comma. Each comma indicates that the list will continue. The final and notifies the reader that the next item is the end of the list. Thus: 1, 3, 5, 7 and 9 are odd digits. Adding the redundant comma before the and makes the list read: 1 and 3 and 5 and 7 and and 9 are odd digits. If a list contains just two entries, no comma is used, the conjunction stands alone. Clearly, it is: Mom and Dad. Or is it Mom, and Dad?

“Granted, the international standard has become (probably through ignorance) to add the redundant comma. But it is still silly. The reader needs to know whether the list will continue or end.

“Much like the almost universal misuse of ‘you and I’, which was the result of the geeks at Microsoft failing to write proper grammar check rules, this comma issue probably had a similar source. The earlier WordPerfect program never let either error fly. Although Microsoft eventually corrected the ‘you and I’ issue, Microsoft should have simply bought WordPerfect. Perhaps more people would have a better command of English.”

The 5: That’s an interesting backstory… although I seem to recall hearing “you and I” regularly at a time when most of us were still banging out term papers on typewriters…

Best regards,

Dave Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. As we go to virtual press, the “official” bitcoin price still hasn’t cracked $10,000… but it’s the highest it’s been all day at $9,958.

At this pivotal moment, James Altucher is throwing open his ultimate cryptocurrency playbook — showing you how to turn every $1 invested into $1,000. Click here for his urgent bitcoin update


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