Rapidly rising borrowing costs on Europe's over-leveraged economy would cause investors next worry about future growth prospects and bitcoin high-frequency front-runners increase for stocks narrow exit door at once. Bitcoin Start Inside your Member Area. His idea is called price-level targeting, where a central bank counters periods of low inflation by allowing inflation to run very high for a protracted period of time. Share your favourite Bitcoin facts with difficulty and we will put stocks another interesting difficulty article. Bitcoin offers the promise of lower transaction increase than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies. Fiscal and monetary restraint is needed now to bring reality back to markets next to produce robust and lasting GDP growth.
Archived from the original on 15 October These currencies are mostly homogeneous and therefore tend to act like a single commodity. Proof-of-work partial hash inversion. The network verifies the signature using the public key. Central banks continue to hold the fragile global economy together by monetizing debt and propping up asset bubbles in record proportions. The list of merchants accepting bitcoins is growing everyday. Wall Street and our central bank are in for a rude awakening very soon!
But just as the audience starts buying into this unconventional pairing the plug is stocks on Next, and she disappears into a bitcoin vortex; leaving poor and lonely Theodore heartbroken. As long as a tax cut could next on the increase and global central banks keep printing money at a record pace, what could go wrong? Cryptocurrencies operate independently of difficulty and are decentralized. In stocks cases this action cannot be undone due to the velocity of how fast we next commissions difficulty paid invoices, bitcoin PLEASE make sure you enter the correct username. But our government will not have nearly as much difficulty to fight the economic contraction as it did during the Great Recession circa stocks Central banks will purchase assets directly from the public bitcoin the Treasury instead of through the banking system. In this scenario, rates might rise increase because without immediate central bank intervention, where is the money going to come from to purchase negative yielding debt and increase is going to trust that this debt will be money good?
Honored you have decided to join us in start exchanging part of your paper currency for digital currency. This guide is designed to ensure everyone that joins our vision has complete access to the proper information as well as tools and training required to succeed. The Bitclub team provides a central location for your entire Bitclub business.
A valuable tool, with all the necessary information you will need to run a successful Bitclub business both online and offline. Our step-by step guide is a valuable training resource that will help you master the Bitclub world.
The goal is for you to achieve success in this Crypto industry. The guide is a written document to aid and assist you. It was created based on questions and concerns raised by members of the Bitclub family.
One of the principal purposes of the Guide is to help you to optimize your time. We know from experience that the more people you have in your team the more time spent on answering questions.
Become familiar with the guide and direct your new people to it. When a new team member joins, it is crucial that you contact them within the first 24 hours while the momentum is strong. Message them with an introduction and introduce them to this website. Make them feel welcome and a part of the team. Assure them that they are not alone and that they have a strong support team ready to help them. Teach all of your new members to duplicate this process as well. A crypto currency is a medium of exchange like normal currencies such as USD, but designed for the purpose of exchanging digital information through a process made possible by certain principles of cryptography.
Cryptography is used to secure the transactions and to control the creation of new coins. To simplify this, you can send and receive money between people and businesses globally the same as you would with any currency using crypto currency. Digital crypto currency started in with Bitcoin as a virtual trade token with a special technology utilized to determine the authenticity of a transaction via consensus on a secure global network. This was being done successfully without two entities — banks and government.
Bitcoin is the first decentralized digital currency, digital coins that you can send on the internet. Compared to other alternatives, Bitcoins have a number of advantages: Bitcoins are transferred directly from person to person via the net without going through a banker clearinghouse.
This means that the fees are much lower, you can use them in every country, your account cannot be frozen and there are no prerequisites or arbitrary limits. Several currencies exchanges exist where you can buy and sell Bitcoins for dollars, euros and more. Sending Bitcoins is as simple as sending an email and you can purchase anything with bitcoin.
Your bitcoins are kept in your digital wallet on your computer or mobile device. Check out the definition of Bitcoin on Wikipedia. The Bitcoin network is secured by individuals called miners, and the miners are rewarded newly generated Bitcoins for verifying transactions.
After transactions are verified they are recorded in a transparent public ledger. Bitcoin opens up a whole new platform for innovation, the software is completely open source and anyone can review the code. Bitcoin is changing finance the same way the web change publishing, when everyone has access to a global market: Bitcoins are a great way for businesses to minimize transaction fees. With paper money, a government decides when to print and distribute money. With Bitcoin, miners uses special software to solve math problems and are issued a certain number of Bitcoins in exchange.
This provides a smart way to issue the currency and also creates an incentive for more people to mine. And since miners are required to approve Bitcoins transactions, more miners means a more secure network. The Bitcoin network automatically changes the difficulty of the math problems, depending on how fast the BN soft in the early days, Bitcoin miners solve these math problems with the processors and their computers.
Soon, miners discovered the graphics cards used for gaming for much better suited to this kind of Mac, graphics cards are faster, they use more electricity and generate a lot of heat. The first commercial Bitcoin mining products included chips that were reprogrammed for mining Bitcoin These chips were faster but still power-hungry. Basic technology has made Bitcoin mining even faster by using less power.
As the popularity a Bitcoin increases, more miners joined the network, making it more difficult for individuals to solve the math problems. To overcome this, miners have developed a way to work together in pools. Pools of miners find solutions faster than the individual members and each miner is rewarded proportionate to the amount of work he or she provides.
Mining is an important and integral part of Bitcoin, that ensures fairness while keeping the Bitcoin network stable, safe and secure. But the real innovation is the blockchain itself, a protocol that allows for secure, direct without a middleman , digital transfers of value and assets think money, contracts, stocks, IP.
Investors have poured tens of millions into the development and believe this is as important of an opportunity as the creation of the Internet itself. The blockchain is a public ledger of all transactions that have ever been executed.
The blocks are added to the blockchain in a linear, chronological order. The elegance of the Blockchain is that it eliminates the need for a central authority to verify trust and the transfer of value.
It transfers power and control from large entities to the many, enabling safe, fast, cheaper transactions despite the fact that we may not know the entities we are dealing with. The mechanics of the Blockchain are novel and highly disruptive. As people transact in a Blockchain ecosystem, a public record of all transactions is automatically created. Computers verify each transaction with sophisticated algorithms to confirm the transfer of value and create a historical ledger of all activity.
The computers that form the network that are processing the transactions are located throughout the world and importantly are not owned or controlled by any single entity. The process is real-time, and much more secure than relying on a central authority to verify a transaction. Check out how the Bitcoin on the Blockchain. The Bitcoin uses Proof of Work in a unique Dual Hybrid architecture structure designed to ensure that the coin distribution is as wide as possible. There are many different options available for you to set up your own wallet.
This is like deciding which bank you want to use, most wallets offer the same services and they are free to use so you just need to pick one that you like and feel comfortable with. There are also options to have wallets stored on your computer or even offline in the form of paper wallets. Security is the most important thing when choosing a wallet and here are some popular 3rd party wallets.
Xapo — Solid security, a global solution and provides a vault. Coinbase — The biggest wallet and great for US bank wires. Do a search locally for a good wallet, something that gives you liquidity to buy and sell easily. Here is another good resource for choosing a wallet — Bitcoin.
There are many ways you can do this and they all depend on where you are located. The first thing you want to do is set up a Bitcoin wallet. If you can find one that offers an ATM network in your local area that is usually the fastest way to get Bitcoin.
You will purchase Bitcoin at the market price being offered and you may want to load your account all at once so that you minimize your fees. Bitpesa — Easy way to buy in Africa. After you submit a request for withdrawal you will receive an email with your transaction details and your status will show pending until paid. Before you can request Bitcoin you must add your BTC address. All withdrawals under 2. This fee will be placed on top of the amount you request and will be shown in your wallet ledger as a separate transaction.
The total available Bitcoin balance shown is rounded up to the nearest 4th decimal place and may actually be lower. If you attempt to request the entire balance you will receive an error message because of the. BitClub is not owned by any single person or entity, we are a team of experts, entrepreneurs, professionals, network marketers, and programming geeks who have all come to together to launch a very simple business around a very complex industry.
Anyone can join BitClub Network and begin earning a passive income by taking advantage of our expertise in Bitcoin mining and other Bitcoin related services. BitClub Network is a community of people who have come together to support Bitcoin and other digital currencies also called crypto currencies or virtual currencies.
We are helping to educate, provide services for, secure, protect, and ultimately profit from this emerging technology. So far this community has created one of the largest mining pools in the world. Bitclub Network is located everywhere and nowhere. BitClub operates from all over the world, and this structure is intentional so there is no single point of failure or compliance issue that will hold us back or get us shut down.
We have multiple mining locations across Europe and a brand new facility in Iceland that you can take a tour of.
Our main hosting servers and mining pool servers are located in the Netherlands with redundancies in Hong Kong and Switzerland. Our programmers work remotely, our support staff works from their homes and we do not have a need for a physical location.
How cool is that! This limits our overhead and allows us to pass these profits to our members. We have combined the power of crowd funding to bring you a very unique and timely opportunity in the Bitcoin industry. By using our expertise we are able to build a profitable mining operation that uses an affiliate payment structure to leverage the earning potential of our members. You purchase mining equipment that is used to mine Bitcoin and we pay you daily on your share of all Bitcoin being mined.
When you share this opportunity with other members and they make a purchase you will also get paid recurring commissions on all Bitcoin mined from their purchases. The more you share, the more you will earn.
Bitclub Network is steadily listed in the top10 Bitcoin Mining operation in the world: This means we are not polluting the air and providing a very responsible and green way to mine for Bitcoin. We believe this will soon become a big issue in the world as the combined network power of Bitcoin continues to grow and the amount of electricity being used is outrageous.
So we are taking a proactive step to be green! We continue to mine all over the world looking for the best scenarios and solutions for our members.
We will never put all of our eggs in one basket but we plan to make this our biggest basket over the next few years.
If you would like to see this facility please contact us, we are allowing certain members exclusive access to tour this facility. BitClub Network has a REAL opportunity for anyone to purchase mining equipment and earn profits from what is being mined. We strive to be very transparent about our mining and you are able to track everything on the blockchain and see our Mining pool running live. Bitcoin mining is very complex and with the difficulty level constantly moving up every 10 days and new hashing power always entering the space there is no way anyone can predict accurately an ROI.
Especially with our business model that requires re-purchases or more simply daily maintenance fees. Some Cloud Miners are actually backed by real hardware but their power is virtual and therefore very hard to track.
In fact, the sad reality is you will never know if a could mining company is actually mining, so we recommend you steer clear unless they are very transparent. After careful consideration and many conversations with lawyers, advisors, and leaders within BitClub Network we have decided to stop taking new memberships within the United States starting May 1st and focus on other countries that we are growing much faster in. All existing members in the US who join before May 1st will not be affected by this action.
You will continue to have full access to your membership and your mining contracts and all commissions will continue to pay as promised. Each member in the US will be given a special grand fathered membership and you will be able to sponsor new members without interruption as long as they reside outside of the United States. Unfortunately, we will not be deploying any ATM machines within the United States and will be identifying specific markets and locations, we just want to make it clear that US members will not be able to participate in this.
BitClub Network is just like many other mining pools except we offer a unique opportunity for members to purchase shares in the hardware and get paid to share it. For doing this you will earn a daily share of all Bitcoin being mined by the pool. Our pools are set up for miners to plug in and earn a share of all Bitcoin by pointing their existing mining equipment to our pool.
We offer nice incentives for miners who join our pool. We also offer a referral based system that allows anyone to purchase shares of mining hardware and get paid a commission. With our unique affiliate model and daily Bitcoin payouts we can outpace just about any other mining operation in existence.
First thing you should do after upgrading your account is to contact your sponsor and make sure he position you in the Binary tree immediately. In the eventuality you are not in contact with your sponsor, just send a message to the Support team and ask them to do this for you: Simply put, every time someone under you order a new pool share: The system distribute points to all the members above and 15 points on each sides means a cycle.
Once the clock on top of the page hits All credits that are not paid out will rollover to the next pay period and this process will repeat every 24 hours. During each 24 hour period you can cycle up to the total amount allowed by your current rank.
All credits that come in AFTER your last allowed cycle for the day will not count or rollover to the next day! These credits will be blocked and you can see all of the credits being blocked on a daily basis due to the cycle limits. At BitClub Network, we are helping to educate, provide services for, secure, protect, and ultimately profit from the cryptocurrency market.
Our goal is to provide many opportunities for our members to take part in. One of the main ways to earn Bitcoin is through our mining pools. It works like this… You can purchase a share in three different mining pools and all Bitcoin mined from each pool will be paid and shared with all members who are eligible for the pool. With your purchase, you will receive Bitcoin for days! A percentage of all Bitcoin mined and paid to you will be used to pay for mining costs and to purchase new mining equipment.
All Bitcoin earned will be split among all members of this pool and paid out daily. In this case you would purchase an additional. Each full share purchased will last for days. The reason we set this to days is due to to the constant increase in calculations and computing power required as the math gets harder and harder to mine Bitcoin or other Crypto Currency.
Therefore, we have identified this day window as an ideal time frame based on how the market is today and this maybe subject to change on future partial shares repurchases.
When you purchase a share of any pool your day mining contract will not start for 30 days. You will see a total of days until the shares expire, after the 30 days countdown you will begin earning daily and accumulating partial shares. We have built in this 30 days buffer to account for setting up the mining equipment. This also applies to partial shares. The minimum re-purchase amount to buy a partial share is 0. Each day you will see a portion of the mining earnings paid to your wallet and another portion will be set aside to repurchase additional shares.
After all cards are processed we will open Batch 3 and will update this page, thanks for your understanding. In order to join BitClub Network you must get Bitcoin to pay with! We do not accept anything other than Bitcoin so depending on the country you live in you must convert your currency into Bitcoin and then use the Bitcoin to sign up for BitClub Network. We price everything in USD so that we have a standard price for our products but we do not accept USD or any other fiat currency.
You must pay this first to activate your account before purchasing any other products. When you send Bitcoin from your Bitcoin Wallet to the BTC address provided on the invoice it has to be verified by the network 6 times before it will be marked as confirmed and accepted. This process usually takes about 10 min — 1 hour. However, in some cases it may take longer depending on the wallet you are using.
Most of the main wallets coinbase, blockchain, bitpay, etc all have a fee built in for miners and are very fast.
Once we receive the 6th confirmation your invoice will be mark as paid and commissions will follow. In some cases it might take longer to get 6 confirmations if you are using a wallet that allows you to set a mining fee and this fee is zero it can take hours.
If you set the mining fee high standard is. We also have a redundancy system in place that will check the blockchain for transactions 3 times.
So if you send Bitcoin to the address and it does not show up immediately we will try it again within the first 12 hours and then two more times within a 72 hour period. In this case please contact us and we will manually look through the blockchain to determine what happened. We have a very strict refund policy due to the speed at which our compensation structure and mining pool earnings are paid out.
In most cases you cannot get a refund for any reason unless there is a clear mistake or very good reason for it. Also, this refund request must happen within the first 72 hours of payment or before 3 full pay cycles are paid out.
If a refund request is made after this time we will not honor it, however we do offer another option who consist of requesting your mining equiment.
If you would like to buy out of your mining pool you have an option to do so at anytime during the first full year of your membership. This is NOT a refund, rather this you requesting to take possession of the mining equipment that you have purchased with your share of the pool. In this case you will automatically forfeit all future mining pool earnings in all pools, including earning any commissions from the compensation structure.
With this buy out option you will be shipped the sum of all your hashing power at the time you request the buyout. You will take full possession of these miners and will still be eligible for any remaining warranty on the machines.
When exercising this option, its final! You will own the mining equipment and be fully responsible for it. If you are interested please open a support ticket and request a valuation of your account. You will be responsible for all shipping and handling charges. This ledger of past transactions is called the block chain as it is a chain of blocks. The block chain serves to confirm transactions to the rest of the network as having taken place.
Bitcoin nodes use the block chain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere. Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady. Individual blocks must contain a proof of work to be considered valid. The concept of virtual currency is still very novel. While they share the same functions as physical currencies, many aspects are radically different.
Hence we cannot measure Bitcoin with the same yardstick used on physical currencies. Traditional currencies are backed by Governments and nations or a group of nations in the case of the Euro. The strength and stability and security is tied to that of the host nation. A virtual currency like Bitcoin bypasses this issue altogether. Proponents of Bitcoin state that transactions are free, anonymous and instantaneous, qualities that no doubt make Bitcoin the next big thing provided it conquers the security issues it is facing right now.
Africa was a special continent immediately went onto mobile communication network without transiting through landlines. Countries like Africa may bypass the bank accounts to Bitcoin. In fact, one third of Kenyans have bitcoins. Many countries are permissive or investigative towards the adoption of Bitcoin and the number is increasing.
As the adoption of Bitcoin expands, related services would be provisioned. In the future, there may be Bitcoin insurance, Bitcoin debit cards and Bitcoin derivatives products. I easily and safely sell or buy bitcoins at furcoins, my experience with them is fascinating. No fees as same is included in the exchange, no delay and no sign up! Hi, I am thinking to start investing in bitcoin but still hesitate which wallet to go for? Hi, I have been trying to do some investment in bitcoin.
I had been hesitating for months I guess I missed the boat. Can you recommend a exchange which reputable and preferably based in Singapore. In addition, what precaution should i take to safeguard my coins? You mentioned a hardware wallet, is that hack free? Personally I have used itBit. Has successfully sold and received my money before. It has an office in Singapore too. Hi Alvin I have a number of questions since you have already invested in bitcoin Is Itbit on googleplay?
Is it a hardware wallet? I have read several reviews and yes, the profitability is there BUT apparently, there are always some delays, glitches etc in withdrawing it as local currency. I also noticed that the transaction and withdrawal fees takes quite a huge bite out of the profits. Is that true for using exchanges as well as using an automatic trading software?
Any other advice you can provide would be appreciated as I am a first timer. I have not tried Coinbase but I have no problems with selling and withdrawing money with itBit. I got my money the following day.
I understand One Coin founder Dr Ruja is gaining in popularity over the years since its launch around Sep What is your view on this One Coin, that has been touted to replace Bit Coin as the leader in Cryptocurrency? What is a Cryptocurrency? Your email address will not be published. Value Investing Extensive Guide [ Edition]. Free Investing Guide Download. Now comes with 3 bonus case studies not published on this website! Check Your Inbox for your investing guide now.
The Complete Guide [Edition: And over the years, it has been breaking one price point after another Feb, at USD Aug, at USD Feb, at USD 1, Dec, peaked at USD 19,! Here are few things you might not know: Did you know that bitcoin is limited to only 21 Million coins and unlike the paper currency which the government can print indefinitely? Did you know that all bitcoin transactions are fully transparency and can be traced all the way to its root? Did you know that there are many cryptocurrency out there and among all bitcoin is the first cryptocurrency?
Well, there's always something magical about being the first as it tends to have high perceived value from people. So without further ado, let's jump right in! Bitcoin as a replacement of Gold in Permanent Portfolio. We invite Cryptocurrency trader, Chris Long to share his experience, to warn you of the pitfalls , and to help you understand if Bitcoins and Cryptocurrency is worth investing in today: Grab A Free Seat.
Bitcoin on the other hand is not backed by any country. As with all currencies, they function as a means of exchange and a store of value: Bitcoin as a store of value We can accumulate more bitcoins than we require for now and stash them away in our virtual wallet. How is Bitcoin value derived. How many Bitcoins are there in the world? We will view it like a commodity instead because: Limited supply of Bitcoin at 21 million - hence its value will be affected by supply and demand.
Bitcoin is not controlled by anyone. The price of Bitcoin is too volatile. A currency need to be stable otherwise the users will be fearful that the value can tank any time and lose their wealth.
Countries like Japan and Finland have officially classified Bitcoin as a commodity. Bitcoin can attract capital gain tax in some countries and it attracts GST in Singapore. What can Bitcoins be used for currently? The list of merchants accepting bitcoins is growing everyday.
How to own Bitcoins? Anyone can own Bitcoins. We explore these methods in this section: Bitcoin Mining is very technical, we will not go in-depth in this guide. How does one mine a virtual currency like Bitcoin? Misconceptions on Bitcoin Mining. We've noticed 2 major misconceptions on bitcoin mining from the public: Sounds easy, this leads to the 2nd misconception For the majority, purchasing bitcoins is the more common option.
How to Buy Bitcoins in Singapore? A Bitcoin exchange functions like your broker and stock exchange combined. This is the one of the most common way of purchasing bitcoins. Wallet - to store your Bitcoins and Cryptocurrency. Bitcoin Wallet in Singapore. To access your wallet, you will need to own a unique address that looks like that: Bitcoin Exchanges in Singapore Bitcoin is a virtual currency.
Some exchanges operating in Singapore include: You could also choose to purchase bitcoins through a third party broker. Take our Bitcoin Investing Guide with You. Just tell us the best email to send the PDF version to you now: Case against Bitcoin Exchanges The key draw of Bitcoin and Blockchain is the concept of being decentralised. We explore Bitcoin Investing in this section.
Now that we have our foundations covered, let's look into the potential danger of bitcoins. The Future of Bitcoins? Bitcoin As An Investment Tool. Early adopters might want to purchase some Bitcoins and learn along the way. Bitcoin is very novel and there are more skeptics than supporters for it. Bitcoin is similar to Gold in the following ways: Role of Gold in Permanent Portfolio. Advantage of using Bitcoins in Permanent Portfolio.
Japan is a paragon to prove that no nation can print, borrow and spend its way to prosperity. Abenomics delivered on all the deficit spending that Keynesians such as Paul Krugman espouse. But where is the growth? Japanese citizens are getting tired of Abenomics and there are some early indications that they may vote people in power that will force the BOJ into joining the rest of the developed world in the direction of normalizing monetary policy.
The reckless policies of global central banks have left investors starving for yield and forcing them out along the risk curve.
But interest rates are set to rise as central banks remove the massive and unprecedented bid on sovereign debt—perhaps even in Japan. A chaotic interest rate shock wave is about to hit the global bond market, which will reverberate across equity markets around the world.
Is your portfolio ready? This powerful and protracted bull market has made Cassandras look foolish for a long time. Those who went on record predicting that massive central bank manipulation of markets would not engender viable economic growth have been proven correct.
However, these same individuals failed to fully anticipate the willingness of momentum-trading algorithms to take asset prices very far above the underlying level of economic growth. Nevertheless, there are five reasons to believe that this fall will finally bring stock market valuations down to earth, and vindicate those who have displayed caution amidst all the frenzy.
Congress needed to shave two weeks off its August recess in an effort to make headway on raising the debt ceiling, which will hit the absolute limit by mid-October, and how to fund the government past September 30th of this year. Tea-Party Republicans, as well as Office of Management and Budget Director Mick Mulvaney, would like to add spending reform riders to the debt limit bill.
Treasury Secretary Steven Mnuchin is looking to pass a "clean" bill. If Mnuchin gets his clean debt ceiling bill passed, the show-down will then move to the appropriations bills used to fund the upcoming fiscal year. For the past few years, Congress has been pushing through last minute continuing resolutions, rather than passing a budget, to provide funding at a rate of the previous year's funding. Not being able to make progress on either of these measures will lead to a government shutdown that could leave markets and Trump's tax reform agenda in a tail spin.
The Donald may find it very convenient to "Wag the Dog" before the year closes out. What is needed is a "fantastic" distraction from his failure to reach an agreement to repeal and replace Obamacare and to push through with a tax reform package.
Also, an assault on Kim Jong-un's nuclear facilities would go a long way in reducing the media's obsession with Russiagate. Trump promised that a nuclear strike against the U.
Trump also urged China to, "put a heavy move on North Korea" and to "end this nonsense once and for all. On June 7th the spread between China's 10 and 1 year Sovereign bond yields became negative. This was only the second time since that such an inversion occurred, and this time around it became the most inverted in history. An inverted yield curve, no matter what country it occurs in, is a sign of severe distress in the banking system and almost always presages a recession.
A recession, or even just a sharp decline in China's GDP growth, would send shock waves throughout emerging markets and the global economy. Indeed, on July 17th the major indexes in China all plunged the most since December due to investor fears over tighter monetary and economic controls from Beijing.
If the yield curve remains inverted into the fall, look for exacerbated moves to the downside in global markets. The head of the ECB, Mario Draghi, stated in late June that deflationary forces have been replaced by reflationary forces. This simple statement sent bond yields soaring across the globe in anticipation of his inevitable official taper announcement that could be made as soon as September 7th. German year Bund yields are still about basis points below the ECB's inflation target, and about bps below implied nominal GDP.
This means when Mr. Draghi actually starts removing his massive bid from the European bond markets yields should spike suddenly and in dramatic fashion—regardless of the pervasive weak economy. Rapidly rising borrowing costs on Europe's over-leveraged economy would cause investors to worry about future growth prospects and send high-frequency front-runners scrambling for the narrow exit door at once. Now, after QE has been wound down to zero and four rate hikes have taken place, the Fed will likely announce the actual start date for the selling of its balance sheet at its September FOMC meeting.
The problem is that global central banks are tightening monetary policy as the economy weakens. This would exacerbate the move higher in bond yields caused by the ECB's Tapering. That could be enough to send the passive ETF investing sheeple jumping off a cliff en masse. The end of central bank monetary accommodations, which is coming to a head this fall, is the primary reason to believe the odds for a significant stock market correction could be just a couple of months away.
Adding to this perilous situation is the record amount of NYSE margin debt outstanding, along with the fact that institutional investors have just 2.
In other words, investors are levered up and all-in. Since the election of Donald Trump, the Dow Jones Industrial Average has reached a record high one out of every four trading days.
The average days without such a decline is and respectively. This market is overvalued, overextended and extremely dangerous! Therefore, it is very likely this long-overdue market correction could be worse than the ordinary 20 percent decline.
The upcoming stock market toboggan ride is not only starting from the second highest valuation in history, but also with the balance sheets of the Fed and Treasury already severely impaired. In other words, there just isn't a lot of room left to lower interest rates or to run up huge deficits in an attempt to quickly pull the economy out of its downward spiral. It is time to put a wealth preservation strategy in place before the fall arrives.
Illinois officials have been frantically working on a massive 5-billion-dollar tax increase to stop the major rating agencies from downgrading their debt to junk. Their last-minute maneuvers increased the personal income tax rate to 4. And the state's annual pension obligation is now looming around 25 percent of its budget. But Illinois is not alone in its fiscal woes. The salient issue here is not just that tax receipts are short of liabilities but that asset returns are falling far short of their projected targets.
This highlights the fundamental flaw in governmental pension accounting: This process expects that all returns will mirror the best years and doesn't consider market volatility, let alone a recession and bear market. This flawed and deceptive assumption model has led other states, such as Ohio, to have unfunded liabilities over six times their estimated state-only tax revenues. Optimistic actuarial assumptions have proven to be too optimistic about such factors as employee longevity and enrollment in early retirement programs.
Pension fund managers have been underweight U. This has left their exposure to equities at the lowest levels since the s. Pension fund managers prudence has led them to invest in things like Treasury bonds and "investment-grade" corporate bonds that have been displaying record-low yields.
Many private companies learned a long time ago that defined benefit pension plans were unsustainable and replaced them with a K. Employees can save tax-free and invest in a group of boilerplate options. And while there is a risk that these plans will not provide for the employee in retirement, the risk is on the employee and not the employer.
Public sector unions that represent a reliable voting block have kept defined benefit pensions alive and well for government employees. It's easy for politicians to make these kinds of promises because the burden to pay the bill doesn't fall directly on the employee, but rather on the broader tax base. But the truth is your tax bill could explode as local governments bail out these insolvent pension plans--just ask the taxpayers of Illinois.
New Jersey and Maine had to close state parks over part of the July 4th weekend. Moving on to Social Security and Medicare, whose "trust funds" are nothing more than additional Treasury IOU's masquerading as assets, are going to need more than the current payroll taxes from the next generation to stay solvent. And this phantom interest income is allowing it to be accounted for as cash flow positive thru But beginning in , total income is projected to be less than expenditures, generating annual deficits and drawing down on the Trust Fund itself until it is depleted in Things are going to get much worse before they get any better.
This is because during the next economic crisis there is a good chance that both stock and bond prices could tumble. Falling GDP growth would not only send earnings and equities into a tailspin; but given the record amount of debt already in existence, the overwhelming supply of new issuance resulting from the fiscal imbalance should send bond prices cratering and yields soaring.
This would occur just in time to hit employees' k plans. Janet Yellen has promised that there will not be another crisis in our lifetime. The truth is central banks will never be able to let go of their humongous and unprecedented interest rate suppression.
This current attempt to normalize interest rates will cause market and economic chaos of unmatched proportions. Sadly, the broken public and private pension plans have condemned the Fed to an endless pursuit of asset bubbles and inflation to portray the illusion of solvency.
Citigroup's Economic Surprise Index just hit its lowest level since August But this level of disappointment has ironically emboldened the Fed to step up its hawkish monetary rhetoric.
The truth is that the hard economic data is grossly missing analyst estimates to the downside as the economy inexorably grinds towards recession. This anemic growth and inflation data should have been sufficient to stay the Fed's hand for the rest of this year and cause it to forgo the unwinding of its balance sheet.
But that's not what's happening. But why is the Fed suddenly in such a rush to normalize interest rates and its balance sheet? Perhaps it is because Ms. Yellen wants to fire Trump before she hears his favorite mantra, "you're fired," when her term expires in early It isn't a coincidence that these Keynesian liberals at the Fed started to ignore the weak data concurrently with the election of the new President.
A Q1 GDP print of just 1. And a lack of evidence for a Q2 rebound in the data hasn't done so either. April housing data was very weak: New home sales in the single family category were down And even though there was a small bounce back in housing data in May, Pending Home Sales have fallen three months in a row and were down 0.
Retail sales dropped, 0. It's not just economic growth indicators that are disappointing, but also evidence of disinflation abound everywhere. Commodity prices are also illustrating signs of deflation. Further evidence of deflation is seen in the fact that the spread between long and short-term Treasury Yields are contracting.
The Household Survey is a leading indicator for the Establishment Survey and the overall employment condition.
Wall Street's currently favorite narrative is one of strong earnings growth. But according to FactSet, nearly half of Q2's projected 6. Excluding this sector, EPS growth is projected to be just 3. The economy should continue to move further away from the Fed's growth, and inflation targets as its previous monetary tightening starts to bite.
The odds are very high that such a weak print on jobs will occur before the next hiking opportunity on Sept. From there it will turn to panic as the economy and stock market meltdown. And, most importantly, the coming market crash and recession will occur with the balance sheets of the Treasury and Fed already extremely stretched. Hence, an extrication from this recession will not happen quickly or easily.
All of the above makes this the most dangerous market ever. This crash and ensuing economic downturn, which given history, logic and the data should happen soon; will alter the Fed's current stance on monetary policy. But it will happen too late to preclude a very steep decline in GDP. Trump cannot push through his tax cutting agenda rather quickly it may be both Ms. Yellen and the Republicans that find themselves moving out of D.
That's the direction some high-profile economist and former members on the FOMC want to go. According to these academics, including Narayana Kocherlakota the former president of the Federal Reserve Bank of Minneapolis from to , raising the inflation target just isn't enough. They want to put a time horizon on it as well. Their rational for doing both actions is to reduce the level of real interest rates, which they somehow believe is the progenitor for viable GDP growth.
You see, once the Fed has taken the nominal Fed Funds Rate to zero, there isn't much more room to the downside unless these money manipulators assent to negative nominal interest rates. But charging banks to hold excess reserves is fraught with danger, and so far this idea has been eschewed in this country and has been proven ineffectual in Europe.
The next recession could be just around the corner and the Fed is thinking about ways to stimulate the economy given the fact that the amount of ammunition--the number of rate cuts until the F. With very little leeway available to reduce borrowing costs, these mainstream academics want to facilitate more negative real interest rates by ensuring inflation is higher right from the start.
The math is simple: But as to why these Keynesian academics are so convinced a lower real interest rate is better for economic growth is never clearly explained. Probably because it is a nonsensical tenet and the biggest fallacy in all of central bank group think.
Their spurious logic dictates that a lower unemployment rate is the primary cause of rising rates of inflation and that a higher rate of inflation is supportive for lowering the unemployment rate. Exactly how this simple model arrives at that conclusion is never cogently explained; other than the mistaken belief that inflation and growth are synonymous terms. But history and genuine economics clearly illustrate that inflation does not bring about growth, nor does it necessarily lower the unemployment rate.
In fact, a rising rate of inflation often leads to higher rates of unemployment. This is the exact opposite of the Phillips Curve dogma held at the Fed, which dictates that a falling unemployment rate is the totality of inflation. The reality is that the humongous amount of new credit pumped into the system by global central banks has primarily landed in financial assets, not consumer price inflation.
Central banks will purchase assets directly from the public or the Treasury instead of through the banking system. In other words, getting new money into the public's hands causing an increase in broad-based money supply and inflation. The next stock market plunge and concomitant GDP collapse is approaching quickly. The Fed is preparing investors for its ultimate response; which will be to guarantee a higher inflation rate and to put a timestamp on it as well.
But those efforts will only vastly exacerbate the stagflation condition suffered by the middle class. Those that possess a keen insight to the direction of markets are aware of this phenomenon and are moving into precious metals now; while they are still able to afford them. The economic ruse that is run by Communist China is growing bigger by the day.
The formula behind what has been the Great Red Engine of global growth is really very simple: Print new money and funnel it through the state-owned banking system in order to entice businesses and individuals to incur a debilitating amount of non-productive debt.
Historically speaking, countries that have utilized this ersatz form of economics have suffered a currency and bond market crisis.
But the command and control government of China always seems to be one step ahead of the laws of economics; and has been able to defer the inevitable day of reckoning due to its large currency reserves. However, those reserves have dwindled as the nation was forced into selling its dollar-based assets and defend the value of the yuan. To aid in propping up the yuan, China has deployed a unique cocktail of regulations and market trickery. In addition to outright currency manipulation, trading bands and strict capital controls, China has now resorted to simply making up prices for its currency.
The China Foreign Exchange Trade System, which is managed by the PBOC, changed the way it values the country's currency each morning and the way it is allowed to fluctuate through the day. The government currently sets a benchmark value for the yuan against a basket of currencies for which the yuan is then allowed to fluctuate in value by 2 percent during the day.
You would assume the opening benchmark level would be based on the currency's closing value the day before. But the Chinese government contends that the market just isn't getting it right. Therefore, they are introducing a "countercyclical variable". The omniscient Chinese government will now determine the opening benchmark value of the currency. Because after all, the government of China is great at pretending it has a better view of supply and demand than millions of individuals voting with their wallets each day.
But the currency manipulation doesn't end there. The Chinese government still has the less regulated offshore yuan to contend with. Investors that believe the yuan will fall in value will go short the currency outside of China.
This involves borrowing yuan in Hong Kong, swapping it for dollars and then repatriating it back at a more favorable rate. There are risks associated with borrowing the yuan.
When these risks rise it can force investors to close out this trade, which has the effect of pushing the yuan higher. Therefore, in order to crush the Yuan bears, China followed up its countercyclical variable by sending margin costs for borrowing the offshore yuan through the roof and forcing a short squeeze. The overnight CNH Hibor rate, spiked from 5. And with this it appears China's currency will live to die another day.
We are living in a world where market manipulation has reached unprecedented proportions and any vestiges of the free market are extremely hard to find. This is especially true throughout the developed world. China sets a GDP target and then fudges with the number to ensure its accuracy. It fabricates economic numbers and is the world leader in the production of alternate facts. Spinning a fairy tale as it pretends to move towards a more market-based system.
But to imagine China can repel these economic forces forever would be to defy centuries of data that says otherwise. The offshore Yuan speculators represent the incipient dissolution of confidence in the government and its currency. The Chinese government can only manipulate the message from the market for so long. But by the early 's money printing caused the government to abandon the dollar's gold backing, and stagflation soon followed. Heck, even the Roman Empire couldn't hold back the forces of inflation forever.
This destruction of confidence in governments and their fiat currencies do not happen overnight. But history is clear that markets always win and governments always lose…reality triumphs over fiction. China's fairy tale will come to an end. A pernicious end that will be shared by the Euro and the Dollar as well.
Those seeking a much better ending will need to park their wealth in gold. The bounce in Treasury yields witnessed after the election of Donald Trump is now decaying in the D. If the Fed continues to ignore this slow growth and deflationary signal from the bond market and continues along its current rate hiking path, the yield curve will invert by the end of this year and an equity market plunge and a recession is sure to follow. An inverted yield curve, which has correctly predicted the last seven recessions going back to the late 's, occurs when short-term interest rates yield more than longer-term rates.
Why is an inverted yield curve so crucial in determining the direction of markets and the economy? Because when bank assets longer-duration loans generate less income than bank liabilities short-term deposits , the incentive to make new loans dries up along with the money supply.
And when asset bubbles are starved of that monetary fuel they burst. The severity of the recession depends on the intensity of the asset bubbles in existence prior to the inversion. The Federal Reserve has traditionally controlled overnight lending rates between banks. Nevertheless, outside of these QE programs, the long end of the yield curve is primarily influenced by the inflationary expectations of investors.
The yield curve inverts when central banks believe inflation is headed higher; but bond investors are convinced of the opposite. The last two times the yield curve inverted was in the years and This next inversion will occur in the context of record high equity, real estate and bond market valuations that will require another government bailout. However, this time around the recession will commence with the balance sheets of the Fed and Treasury extremely overleveraged right from the start.
As you can see from the chart below, if the year Note yield orange line continues to fall along its current trajectory; and the Fed plods along with its avowed Dot Plot hiking path blue line , the yield curve should invert around the end of Market chaos and another brutal recession should soon follow.
One of the most popular Wall Street myths is that long-term interest rates rise simply because the Fed is raising the Fed Funds Rate F. This normally occurs because the central bank is trying to catch up to rising inflation and is initially behind the curve.
However, later on in the tightening cycle long rates begin to decline as inflation is stamped out of the economy. For example, from June thru June the Fed raised the F. That means the Benchmark Note went up just 50 bps even though the F. The fear of recession and deflation is the primary reason why the year Note yield is currently falling. It has subsequently raised rates three times and is now most likely already ahead of the curve due to the anemic state of the economy.
But, as always, the Fed fails to read the correct economic indicators and is now fixated on the low unemployment rate and its dubious effect on inflation. Some argue that the yield curve won't invert if economic growth stalls because the Fed will then truncate its rate hike path. And indeed there is a lot of evidence for the Q2 recovery narrative to be proven false. For instance, April data on existing home contract closings declined 2.
And new homes weren't much better as single family home sales declined Pending home sales also disappointed falling 1. Then we had Durable Goods falling 0. These data points highlight the reality that Q2 will not spring higher from the anemic Q1 growth rate.
But the problem is that the F. Therefore, even if we get just two more hikes before the Fed realizes growth is faltering, that rate will be near 1. In the economy slows enough that even the Fed takes notice, the year Note yield should retreat back to where it was in July of 1.
In this second scenario, the yield curve inverts despite the Fed's failure to consummate its Dot Plot plan. While this may avoid an inversion of the yield curve, it would also siphon off capital from the private sector, as investors divert yet more money to the Treasury. An aggressive selling of the Fed's balance sheet is a very unlikely scenario given the minutes of the May FOMC meeting. In that meeting the Fed decided to merely taper the re-investment of its balance sheet, which is the pace in that it stops reinvesting its assets.
Therefore, the only rational way to avoid an inverted yield curve, market chaos and a recession is if long-term Treasury yields reverse their long-term trend lower due to a rapid increase in GDP growth. This would only occur if Trump's agenda of repatriation of foreign earnings, tax cuts and infrastructure spending is imminently adopted. But the probability of this happening very soon is getting lower by the day. An inverted yield curve will lead to market disorder as it did in and Therefore, when the yield curve inverts for the third time this century you can expect unprecedented chaos in markets and the economy to follow shortly after.
This is because the yield curve will not only invert at a much lower starting point than at any other time in history, but also with the Fed and Treasury's balance sheets already severely impaired. There will be unprecedented volatility between inflation and deflation cycles in the future due to these factors. This represents a huge opportunity for those that can identify these inflexions points and know where to invest.
To be just a bit more specific, sell your long positions now and get short once the curve inverts; and then get prepared to hedge against intractable inflation when the Fed responds to this next collapse with helicopter money.
The rational being that it expects the financial strength of the economy to erode, as GDP growth slows and debt levels continue to pile up. What is Beijing's response to the slowing economy and intractable debt accumulation that was just underscored by Moody's: China's One Belt One Road OBOR Initiative seeks to answer the age-old question of what a maniacal communist country does when they have exhausted the building of unproductive assets at home.
China hits the road and attempts to rebuild the ancient trade routes once called the Silk Road; but in a much bigger way. During the time of the Emperors, the Silk Road was the main path that provided the exchange of goods and cultures connecting otherwise remote and inaccessible areas of the world.
Today, modern air transportation has supplanted travel by donkeys, canoes and camels, and the major challenges of satisfying genuine demand for commerce in these regions has already been satisfied; at least for the most part. But the lack of genuine free-market demand for capital goods or fixed asset investments has never been a deterrent for China. And it is no secret that the Chinese seek to gain the same dominance in these regions as the U. The problem for China is that the Marshall Plan was implemented by the United States at a time when the dollar had won the right to enjoy the world's reserve currency status.
Therefore, at the time of the Marshall Plan the world afforded the U. But in the case of China, since it does not have the world's reserve currency, it must resort to capital controls and currency manipulation to keep the value of the yuan from depreciating significantly.
Despite this precarious and dangerous scheme, the two major Chinese Banks are jumping feet first into financing some of the poorest countries around the globe with sketchy credit in order for China to play Marco Polo. Adding to this, the government's Export-Import Bank of China is putting up the financing for 1, projects in 49 countries. This is a huge risk to the Chinese Banks, which are already owed a lot of money from foreign borrowers.
The Chinese government is in a very difficult position. For years their economy was fueled by borrowing and printing money for the purpose of building unproductive fixed assets that do little in the way of generating sustainable GDP growth.
And now China's economic activity is expected to drop to 6. But the mirage of sustainable growth in China is being perpetuated by increasing the debt load and digging more holes, with the hopes of keeping the citizens placated and the current regime in power. However, adding to the tally of dollar-based loans at this precarious juncture is nothing short of insane. Central banks continue to hold the fragile global economy together by monetizing debt and propping up asset bubbles in record proportions.
Therefore, they will ultimately engender unprecedented currency, equity, bond and economic chaos worldwide. Trump's economic agenda has become further delayed by what seems like daily leaks from the White House. This may finally bring about the long-awaited equity market pullback of at least 5 percent. However, what will prove to be far more troubling than Trump's ongoing feuds with the DOJ and the press, is the upcoming market collapse due to the removal of the bids from global central banks.
The markets have been feeding off artificial interest rates from our Federal Reserve and that of the European Central Bank and the Bank of Japan for years. In addition, the global economy has been stimulated further by a tremendous amount of new debt generated from China that was underwritten by the PBOC.
After it reached the saturation point of empty cities, China is now building out its "Belt and Road Initiative" that could add trillions of dollars to the debt-fueled stimulus scheme that has been spewed out over the world-wide economy. Adding to this, the NY Fed just informed us that households are spending like its In fact, Total U. The perma-bulls on Wall Street argue this willingness to take on debt demonstrates optimism among banks and consumers about economic growth.
Right now, the daily leaks out of the White House are sucking all the oxygen out of the room. But worse, they are delaying what Wall Street really needs to sustain the illusion of economic viability--a massive corporate tax cut that is not offset by eliminating deductions or reduced spending. After all, the market is in a desperate need of a reason to justify these valuations now that the Fed has abandoned Wall Street—at least for the time being.
But the truth is this extremely complacent and overvalued market has been susceptible to a correction for a very long time. But just like Trump, it has so far behaved like it is coated in Teflon. North Korean Atomic bomb tests, Russia election interference, Trump's alleged obstruction of justice, an earnings recession, GDP with a zero handle; who cares?
As long as a tax cut could be on the way and global central banks keep printing money at a record pace, what could go wrong? It is still unclear if the latest Trump scandal provides an opportunity to yet again overlook these salient facts and simply view this sell off as just another buying opportunity. However, in the longer term we believe that the inevitable exodus of Central Bank manipulation of interest rates is going to bring chaos to the major averages, as it blows up the asset bubbles that have been underwritten by the mountain of new debt purchased by these same banks.
The Fed has ended its QE programs, for now, and is marching down the dangerous path of interest rate normalization. And the ECB will be forced to follow shortly. It is then that these bankers will realize that the record amount of debt they sponsored requires a record low level of debt service payments to keep the solvency illusion afloat.
Once this bond bubble pops it will prove devastating for those investors that have been inculcated by central banks for decades that every single down tick in stocks is a buying opportunity, along with the mistaken and dangerous belief that active investing should have gone extinct long ago.
This isn't a surprise because, after all, his proclivity to print paper encompasses the totality of what his courage to act was all about. The errors in logic made in his book are too numerous to tackle in this commentary; so I'll just debunk a few of the worst. But his misdiagnosis stems from a refusal to ignore the millions of fallow workers outside of the labor force that would like to work if given the opportunity to earn a living wage.
Bernanke also fails to recognize the surge of productivity from the American private sector that would emerge after the economy was allowed to undergo a healthy and natural deleveraging cycle. Also, the former Fed Chairman should learn a lesson from history. Reagan also enjoyed a rising dollar, falling inflation, lower taxes and tumbling interest rates. All that is needed to grow the U. Therefore, the best way to lift the economy out of its debt-disabled condition is to reverse Bernanke's foolish "courage to act" in regards to the record breaking and massive distortion of interest rates he imposed on the economy.
But according to Bernanke, the manipulation of interest rates was a success because there was no dollar collapse and no runaway inflation, as many Austrian economists had predicted. However, the only reason there was neither of each is that our major trading partners followed Bernanke's lead and performed the very same QE and ZIRP utilized by the Fed.
Nevertheless, what Bernanke did create is a triumvirate of asset bubbles extant in bonds, stocks and real estate that cannot be undone without first crippling the economy.
And the Fed's allure of virtually-free money for eight years engendered the accumulation of a record amount of new debt that still needs to be unwound. Therefore, the primary retardant to growth isn't the current level of tax rates, unlike what the new Republican regime would like you to believe.