World stocks hits fresh highs, as bitcoin keeps climbing – business live

October 13, 2017
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World stocks hits fresh highs, as bitcoin keeps climbing – business live

All the day’s economic and financial news,

as new Chinese trade figures beat expectations

  • Bitcoin hit $5,800
  • Chinese imports surge by 18.7%, suggesting strong demand
  • US surplus hits record high, but trade with North Korea tumbles
  • MSCI World Index hits new peak
  • FTSE 100 hit new closing high last night
  • Coming up: US inflation; IMF meeting

A worker processes panda soft toys for export to American and European markets at a factory in Lianyungang, Jiangsu province,

China, this week.

…The cryptocurrency community is aware of the sheer energy consumption issue. Therefore, it is looking for alternative solutions to the Mad Max problem.

One alternative may be Proof of Stake. Miners are not asked to show they put in work (computing power) in validating but to commit valuable resources beforehand, indicating they have a stake in the proper outcome. For example, miners may have to put an amount of cryptocurrency in escrow which is only released if no fraud is detected, otherwise forfeited.

That sounds like a smart idea. However, it implies that only those wealthy enough to be able to put resources in escrow can join the mining process. This creates a plutocracy, which sits uncomfortably with cryptocurrency’s anarchistic and libertarian roots.

My conclusion is that finding a sustainable and fair solution to the Mad Max Problem is one of the biggest challenges for the cryptocurrency community today.

The US inflation figure was the main focus in the day’s data, says Connor Campbell, financial analyst at Spreadex,

and it came in below expectations:

The dollar didn’t get the hawkish data delivery it wished for this Friday – well, not quite anyway – leaving (an admittedly tiny) slither of doubt surrounding the potential December rate hike.

The afternoon’s figures weren’t bad by any means. Retail sales saw a huge bounce from -0.1 to 1.6% month-on-month while consumer confidence hit its highest level since 2004. Yet those readings didn’t really matter to investors, who instead focused on the fact inflation rose from 0.4% to 0.5%, not the 0.6% forecast.

With a the Fed constantly mentioning their concerns about weak US inflation – and how it imperils the chances of an interest rate rise before the end of the year – it was a miss the dollar wasn’t willing to indulge. Instead the greenback shed 0.2% against both the pound and the euro, while dropping 0.3% against the yen. This allowed the Dow Jones to continue its seemingly unstoppable march to daily all-time highs, with the index lurking just below 22900 following a 50 point rise.

As for sterling, it’s had a pretty inconsistent day. The currency’s managed to hold onto last night’s sharp rebound while struggling to maintain a steady grip on this Friday’s more modest growth. The inflation situation in the US allowed cable to keep above $1.33; against the euro, however, it’s seen €1.1265-crossing 9 day highs and sub-$1.12 lows, eventually settling just above that latter level with a 0.1% rise.

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US consumer confidence hits highest level since 2004

More US data, and it looks like the country’s consumers are in confident mood (see also the retail sales figures.) The monthly University of Michigan consumer sentiment index climbed from 95.1 in September to a preliminary reading of 101.1 for October. This is better than the dip to 95 which had been expected, and is the highest level since the start of 2004.

The survey’s chief economist Richard Curtin said:

The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800’s.

While the early October surge indicates greater optimism about the future course of the economy, it also reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected. This “as good as it gets” outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times.

…Nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon – which contrarians may consider a clear warning sign of trouble ahead. Nonetheless, consumers anticipate low unemployment, low inflation, small increases in interest rates, and most importantly, modest income gains in the year ahead. It is this acceptance of lackluster growth rates in personal income and in the overall economy that signifies that consumers have accepted, however reluctantly, limits on the pace of improving prospects for living standards.

Wall Street opens higher

The stronger US retail sales and hopes for positive company results have pushed US markets higher once more. The Dow Jones Industrial Average is up 28 points or 0.12% while the S&P 500 opened 0.16% higher to reach a new peak while the Nasdaq Composite added 0.3% to a record high. Not everyone believes a December US rate rise is a certainty, especially after this latest data. John Dolan, senior dealer at

FEXCO Corporate Payments, said:

In the space of just a week, all bets on a December rate rise are off and the US is further than ever from solving its inflationary puzzle. While a December rate hike had seemed a strong probability after last Friday’s solid wage growth data, the picture now looks much more finely balanced.

As this week’s FOMC minutes revealed, the Fed remains deeply concerned about America’s inflation, or rather, the lack of it. Even though US wages are rising at a reasonable clip, consumer prices are still rising too slowly to require an immediate rate rise.

Any December hike would therefore be driven by the Fed’s desire to move rates back to more normal levels rather than by any inflationary imperative. While a final hike in 2017 remains a distinct possibility it’s far from a done deal – and this uncertainty has weighed heavily on the Dollar, dragging it down against both the Euro and sterling.

The dollar has weakened following the US data, in particular the inflation figures. But – barring political ructions – the Federal Reserve is still on track for a rate rise in February, says James Knightley,

chief international economist at ING Bank:

Inflation pressures are grinding higher and domestic activity is strong, suggesting that the main barrier to a higher Fed funds rate is political rather than economic.

The US CPI report shows inflation pressures are rising, but this is primarily an energy story reflecting higher oil prices and refinery shutdowns relating to Hurricane Harvey. At the headline level it rose 0.5% month on month/2.2% year on year (a tenth of a percentage point below what was expected). Energy prices rose 6.1% month on month, but excluding food and energy inflationary pressures were more muted, rising just 0.1% month on month/1.7% year on year (again a tenth of a percentage point below expectations).

In terms of core inflationary pressures, we are starting to see a bit more upward movement in the housing component, but medical care, apparel and education prices are very soft. Nonetheless, with the economy growing quite strongly, the jobs market looking tight with wage growth starting to show some signs of life we would expect inflation rates to creep higher….

September retail sales [data] has also been released and is strong, rising 1.6%MoM with small upward revisions to August’s data. Hurricane effects are clearly visible – higher gasoline prices boosted gasoline station sales 5.8%MoM while the fact unit car sales rose to a 12 year high helped boost the value of sales with a 3.6%MoM rise. Strength can also be seen in other components and it is likely that there was some uplift as households start to replace lost items following the recent hurricanes. This has come on top of what is already a strong story for the consumer with employment, wages and confidence all looking healthy.

We expect the positive story to continue into next week with industrial production rebounding following storm disruption. After all, the ISM manufacturing index is at a 13 year high, the dollar is making exports more competitive and we are seeing stronger global growth.

With overall economic growth looking good, inflation pressures gradually increasing and the Fed’s worries about asset valuations and financial stability becoming more prominent in speeches, a December rate hike is looking likely. The main risk remains the potential for an economically/market destabilising government shutdown.

Meanwhile US retail sales have bounced back in September, albeit just shy of expectations:

Newsflash: inflation across America rose last month, but by less than expected.

Consumer prices increased by 0.5% in September, below the 0.6% which Wall Street expected. On an annual basis, US CPI rose by 2.2%, up from 1.9% a month ago. That puts it over the Federal Reserve’s target of a 2% inflation rate. Core inflation, which strips out volatile factors like food and fuel, was flat at 1.7%.

Danske Bank Research (@Danske_Research)

🇺🇸#US CPI core #inflation lower than expected – #Fed still likely to hike in December due to strong labour market $EURUSD #Yellen pic.twitter.com/9pCaFnEIFq

So, is bitcoin a sensible investment at today’s record levels, or should you keep well away?

Cryptocurrency’s many supporters will argue that City institutions are waking up to bitcoin’s potential (such as the ability to transfer money safely, securely, and cheaply worldwide). Two weeks ago, it emerged that Goldman Sachs has been considering whether to launch a new trading operation dedicated to bitcoin and other digital currencies. If that happens, it would arguably be the biggest endorsement yet from Wall Street.

The moment bitcoin hit a new all-time high over $5,800 today Photograph: Bloomberg But critics argue that the recent rally is a bubble, that could burst if there is a rush to the exits. Lee Wild, head of equity strategy at Interactive Investors, says anyone considering investing in

digital currencies needs to be cautious:

“The value of bitcoin has almost doubled in less than a month which is clearly attracting further interest from speculators. There’s evidence of growing institutional activity, too, and if China reopens cryptocurrency exchanges after the Communist Party Congress which starts next week, some believe the price could reach $10,000 by the end of the year.

“However, there could be near-term turbulence around changes to the code the bitcoin network runs on, due to be implemented in mid-November. “It is crucial that retail investors understand the many risks involved in cryptocurrency trading, not least the volatility – bitcoin has lost more than a third of its value on two occasions since June. It is clearly not for the faint-hearted.”

The pace of bitcoin’s rally in recent weeks is quite remarkable.As this chart from Bloomberg shows, it’s quadrupled in value this year, despite faltering last month when China announced a crackdown on bitcoin exchanges.Our economics editor, Larry Elliott, has been holding the World Bank to account at their

Annual Meeting with the IMF in Washington:

Ben Phillips

Great question from Guardian to @WorldBank boss Jim Kim on the gap between what the international financial institutions say on inequality and what they do. And a very weak answer from Jim Kim. You are what you do.

Chuck Reynolds


Marketing Dept
Contributor
Please click either Link to Learn more about -Bitcoin.
Interested or have Questions. Call me 559-474-4614

David Http://markethive.com/david-ogden

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