Saudi ‘reverse coup’ bolsters bitcoin, while dollar forex, crude may crater

Bitcoin soared past $7,600 in early Sunday trading as news came out of a Saudi Arabian crackdown on the royal princes in a consolidation of power for the new king.

Among the 50 royals detained on Saturday evening was Prince Al-Waleed bin Talal, the billionaire investor behind Twitter, News Corp. and Citigroup. Continue reading

Advertisements

Hate to be crude, but Maduro may be gassed

Venezuelan President Maduro has officially stopped accepting US dollars as payment for its crude oil exports following the recent US sanctions levied on the country.

The White House leveled financial sanctions against Venezuela’s government last month for jailing political opponents and creating a pro-government legislative body with the power to supersede existing laws.

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro told the new legislative assembly, last week.

Venezuela is but the latest oil-producing country to attempt to disrupt the petro-dollar agreement hammered out in 1971 after the US went off the gold standard. Previous moves by other leaders have not proven to be successful.

Both Saddam Hussein and Moammar Khadafy in Iraq and Libya respectfully also attempted to sell crude oil for something other than the dollar and both men were killed and their governments toppled.

Although the move not officially announced by Maduro, has begun to be implemented with crude oil traders told to convert from dollar to the euro in the short-term.

My guess is that the Europeans will join the sanctions forcing Maduro into the hands of the Chinese and Russians and their newly formed oil trading system based on the yuan and gold.

Should this occur, I would not be booking trips to Aruba, since the likelihood of military operations will be filling the horizon off the southern beaches there.

History does have a way of repeating itself and anytime you hear the Monroe Doctrine raised the US Marines are not far behind.

It's early for stocks, bonds and bitcoin

While the US equity market appears to be buoyed by the second day run up in European stocks, I am looking at a big sell off in government bonds.

Yields on US treasuries — especially on the long end — are soaring this morning as China overnight attempted to strengthen the yuan by pulling currency from markets through short-term repo operations. Nearly 350 billion yuan have been yanked out of the Chinese markets in the last three weeks, which coincides perfectly with the run up to more than $1,000 in bitcoin pricing.

As I wrote late last year, 2017 will be fought in the forex markets, with currency devaluations and manipulations to keep the status quo as the dollar goes on a tear over the Trump election. It’s not only the yuan that is taking it on the chin versus the dollar, the euro is at 1.03 level and moving toward parity with the greenback.

The rotation, if that’s what is the driver, of bond sales going into stocks will be short-lived as we move into the month. A strong dollar with a hint of inflation will not bode well for US equities in the longer term, especially with the new administration coming in with a new agenda.

So stocks will open higher, but let’s see where they close after the initial enthusiasm has a chance to dissipate.

 

It's Capitulation Day. Throw-up Friday for marts

At 7 AM Friday morning all markets began to have a panic attack.

Dow futures down 150, WTI oil heading to $35 barrel, US 10-year nearing 2.01%, and the US dollar spiking higher.

Directionally that’s a full-blown retreat across the board for the upcoming US rate hike.

The question is why now? Did markets just come to grips with the move?

Well as I wrote yesterday, the BRICS currencies and economies are in trouble and we are in the midst of a currency war.

China lowered its dollar peg to the renminbi last night, despite it wishing to be in the SDR basket.

This latest move shows me that the yuan is not ready for prime time just yet. Loose the dollar peg and have a free float and get back to us in a year to see what its worth.

In any case, take a look at Europe equities and the US markets have at least another 180 Dow points down to equal the losses across the pond.

It appears to be capitulation day, throw up on the market and see what the weekend brings.

 

Bitcoin is used in Chinese takeout

The price of a bitcoin has jumped $150 so far this month and it’s only the 4th of Nov.

Bitcoin is the digital crypto-currency I wrote about last year, which I thought had great promise, but was not ready for prime time as the value soared to nearly $1,200, before crashing under the weight of fraud and manipulation charges.

This time seems different, but still scary for different reasons. Bitcoin is a much widely known commodity, with many retail and banking options. Although the wallets used to hold bitcoins are not up to being consumer friendly just yet.

So why is bitcoin jumping?

Well the Chinese government has put restrictions on their currency and capital controls on its yuan leaving the country at the end of October. Since then the value of bitcoin in yuan has risen Y900.

So doing the math, I would say the upper-class Chinese are bidding up the price as they convert their yuan holdings to bitcoins in order to get their wealth out of the country and into real estate and tangible assets here in the states and abroad.

So to call bitcoin a currency is a little disingenuous, bitcoin right now for the Chinese is a cheaper version of Western Union, without all the government reporting.

Once this operation is squashed by the Chinese government, which will probably be very soon, the price will more than likely fall back in the $400-$500 range, where it has been for most of this year.