David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Market Know-How

    Thanks to a subscriber for this report from Goldman Sachs Asset Management which may be of interest. Here is a section:

    Bitcoin Soars as Upgrade Backers Hoist Beers to Armistice

    This article by Yuji Nakamura and Lulu Yilun Chen for Bloomberg may be of interest to subscribers. Here is a section:

    SegWit2x is essentially a compromise between two main competing camps. One proposed a direct approach, seeking to increase the block size. The other, a group of developers known collectively as Core, pushed for a long-term solution by moving some data outside of the main network, a scheme called SegWit that had been resisted by miners because it also could diminish their influence. In the end, the miners agreed to adopt SegWit, but also increase the block size to 2 megabytes.

    The upgrade isn’t final. The BIP91 lock-in has a grace period of about two days, during which miners will prepare to activate the software. It will then take about two weeks for SegWit to be fully adopted. Developers still warn about potential hacker attacks that could disrupt the process.

    Then, three months from now, the community will face another challenge when some of the world’s biggest miners move to adopt the second phase of the proposal, the doubling of the block size. Still, many in the community agrees that the hard part is over, with prices seen stabilizing and strengthening.

    “We do believe it will continue, now that we’ve gotten over this hump,” said Ryan Rabaglia, head trader at digital-trading company Octagon Strategy in Hong Kong.


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    Letter to the Editor of the New York Times from Sunrun's CEO

    I thought this letter by Lynn Jurich may be of interest to subscribers. Here it is in full:

    “After Rapid Growth, Rooftop Solar Programs Dim Under Pressure From Utility Lobbyists” (news article, July 9) got it right that traditional utilities are fighting to undercut competition and customer choice by targeting state solar policies, “particularly net metering, which credits solar customers for the electricity they generate but do not use and send back to the grid.”

    Rooftop solar growth, however, is inevitable. More than one million consumers across the country are already powering their homes with rooftop solar. By 2022, residential solar capacity will more than triple, according to GTM Research estimates.

    The utility lobby is intentionally distracting regulators from focusing on the real threat to affordable energy: billions of dollars of grid expansion proposals with virtually guaranteed profits and requests to subsidize nuclear plants. Rooftop solar competition forces utilities to control their costs.

    Policy leaders who dig into the facts know that rooftop solar, plus home batteries for solar storage, will modernize our grid, provide more affordable clean power to everyone and create more American jobs.


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    Euro Climbs as Draghi Cites Autumn Decision on Bond Purchases

    This article by Stefania Spezzati for Bloomberg may be of interest to subscribers. Here is a section: 

    The common currency broke through $1.16 after Draghi said at a press conference that the euro’s recent re-pricing has received “some attention” without specifically saying he was concerned about its strength. Bonds rose, led by Italy, which has been a key beneficiary of the bank’s asset-buying.
    “Draghi had a chance to talk the euro down and he didn’t,”

    Athanasios Vamvakidis, a strategist at Bank of America Merrill Lynch, said in emailed comments.
    The euro advanced 1 percent to $1.1635 as of 4:00 p.m. in London, after reaching $1.1658, the highest since August 2015.

    The currency has advanced more than 10 percent this year, partly on speculation that a tapering of bond purchases is drawing closer.

    The euro earlier declined as the Governing Council repeated that it expects borrowing costs to stay at present levels for an extended period of time and that it is prepared to increase the size or duration of the asset-purchase program should the economy take a turn for the worse.

    Spanish and Italian bonds outperformed, with yields falling around seven basis points, as they won a summer respite from any ECB discussion on curbing bond-buying. The ECB has favored buying Italian securities in recent months as it combats a shortage in the euro region’s sovereign debt.
    “Draghi seemed to try and downplay the anticipation for September and suggested they may try to drag this decision out,”

    Richard Kelly, Toronto-Dominion’s head of global strategy in London, said in emailed comments. “He also made pretty clear that there is little appetite for any significant tapering at this stage.”


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    Here's Why Yellen's Fed Cares About America's Opioid Epidemic

    This article by Jeanna Smialek for Bloomberg may be of interest to subscribers. Here is a section: 

    An estimated 2.7 million adults over the age of 26 were misusing painkillers as of 2015, while another 236,000 currently used heroin, based on test Substance Abuse and Mental Health Administration data. While opioid abusers account for a tiny sliver in a workforce of 160 million, they probably make up a great share of the 7 million who are unemployed.

    “Our district is the epicenter of this crisis,” said Kyle Fee, regional community development advisor at the Cleveland Fed, which hosted a policy conference in June that included a panel specifically dedicated to opioids. “It was a good way for us to dip our toe into this topic,” he said.

    Most economic research on the effects of the opioid crisis comes from academia, rather than Fed researchers, and it shows a two-way relationship between the drugs and the U.S. economy.
    Labor Opportunities

    Poor labor market opportunities for America’s working and middle class seem to have helped fuel opioid addiction. In turn, pill and heroin use can worsen employment chances for addicts, and can lead to criminal records that dim applicants’ prospects for years to come.

    “I do think it is related to declining labor force participation among prime-age workers,” Yellen told Senators last week, when asked about the crisis. “I don’t know if it’s causal or if it’s a symptom of long-running economic maladies that have affected these communities and particularly affected workers who have seen their job opportunities decline.”


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    Email of the day on genetically modified foods

    Hope you’re hale and hearty.

    You will recall we had a brief chat on GMO foods at lunch during the recent Chart Seminar in Singapore. 

    I recall you disagreed with my views on GMO science.

    Here is a video on the subject. It is very much science based. Hope you can spare some time off your busy schedule to watch it. I think you will appreciate it.


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