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

    After the Fork: How Competing Bitcoin Cash Blockchains Might Wage War

    This article by Rachel Rose O'Leary for Coindesk may be of interest to subscribers. Here is a section:

    In effect, Wright sees the upcoming split in terms of bitcoin’s longest chain rule – the underlying bitcoin consensus mechanism that defaults to the longest chain in the event of multiple blocks being found simultaneously.

    When applied to a blockchain split, what this means essentially means is a fight to the death between the competing chains, where the last one standing would be considered the “true” bitcoin cash by nodes.

    For example, both implementations have declined to add so-called “replay protection,” or code that allows funds to be safely spent when a split occurs.

    “Neither Bitcoin SV nor Bitcoin ABC have implemented transaction replay protection, as the intention is for only one chain to survive,” nChain, the software company behind Bitcoin SV, wrote in a press release published earlier this month.

    This means that without special precautions, users could lose funds while transacting on a split chain. Similarly, hackers can exploit the vulnerability to extract funds from exchanges.

    “Users potentially stand to lose money because of this decision,” Chris Pacia, a developer for OpenBazaar, told CoinDesk, adding: “Not adding replay protection is a dick move.”

    And there are other ways that the two blockchains could continue to wage war following the fork – especially if one camp continues to dominate the hash power.

    At the time of writing, the prevailing hash rate is showing a preference for the SV side. If the preference continues, there’s a host of ways that Bitcoin SV could try to keep ABC from operating.

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    China's Growth Engines Lose $32 Million a Minute as Markets Sink

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

    Nonstate companies have lost at least $992 billion in market value since mid-June, or about $32 million for every minute of trading, according to data compiled by Bloomberg and WisdomTree Investments Inc. In October their shares tumbled at the fastest pace in more than three years relative to companies with government ownership. Local corporate borrowers, almost all of them privately owned, defaulted on a record $6.6 billion of debt in the third quarter. At least 57 nonstate businesses have accepted government bailouts in 2018. Such a wave of quasi nationalizations would have been unthinkable just a few years ago.

    The pain has been felt at companies large and small—from internet behemoth Tencent Holdings Ltd. to Jiaxing Linglingjiu Electric Lighting, a producer of thermal bulbs whose owner is weighing whether to ditch the business to go farm a plot of land in China’s rural northeast. “When we meet with fellow factory owners, we don’t ask, ‘How’s business?’ like in previous years,” says Xu Xihong, who started Jiaxing Linglingjiu in 2009 after moving into a factory abandoned by a bankrupt state-run manufacturer of electric fans. “Now it’s ‘Do you think you will make it through the year?’ and ‘When are you going to get evicted?’ ”

    Donald Trump’s tariffs and the Federal Reserve’s interest-rate hikes have played a role, but the biggest triggers have been local. By far the most important: the Chinese government’s almost two-year campaign to rein in the country’s $9 trillion shadow banking industry—financial companies that aren’t regulated like traditional lenders. While the clampdown was designed to make China’s financial system safer and more transparent, it’s crimped a key funding channel for private-sector companies that lack access to state-run banks. Faced with a drying up of credit and the country’s weakest economic expansion since 2009, more small businesses are defaulting on debt or liquidating.

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    EU Unveils No-Deal Brexit Plans to Avert Financial-Market Chaos

    This article by Silla Brush and Alexander Weber for Bloomberg may be of interest to subscribers. Here is a section:

    The EU executive also responded to industry warnings about Brexit’s threat to data flows between the EU and the U.K. A “broad toolbox for data transfers to third countries” is available under existing regulations, such as securing explicit consent from clients, so the commission said it’s not planning to issue the kind of “adequacy decision” that British lawmakers have called for.

    No contingency measures will be needed for non-cleared “over-the-counter” derivative contracts or insurance policies, the commission said. U.K. regulators have been warning for more than a year that a disorderly Brexit with no transition period could put such financial contracts at risk.

    The commission promised to issue an equivalence decision covering U.K. central security depositories, which settle trades in equities. Ireland has relied on a U.K.-based firm called Crest to settle trades since the 1990s.

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    Email of the day on tobacco stocks and accelerating trends:

    As you rightly point out defensive stocks tend to outperform towards the end of the cycle, especially those that consistently pay a high dividend. I, like I suspect others in the collective hold BATs shares. Yesterday the price got hammered on a rumour that the FDA is proposing to ban menthol cigarettes. Wonder if you have any thoughts on what has happened ? Any crumbs of comfort to be had ?

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    GE Surges on $4 Billion Plan to Speed Cut to Baker Hughes Stake

    This article by Brendan Case and David Wethe for Bloomberg may be of interest to subscribers. Here is a section:

    “We like seeing GE’s new CEO Larry Culp hasten the pace of the company’s portfolio breakup to generate sale proceeds to de-lever the balance sheet,” Deane Dray, an analyst at RBC Capital Markets, said in a note to clients. “This is consistent with GE’s messaging that it has roughly $60 billion of potential sources of liquidity.”

    Culp took over six weeks ago from John Flannery, who succeeded Immelt in August 2017.

    GE was among Bridgewater’s new buys in the third quarter

    GE advanced 7.8 percent to $8.61 at the close in New York, the biggest gain in more than four months. The shares had tumbled 54 percent this year through Monday, the third-biggest drop on the S&P 500 Index.

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    Biogen CEO Sees Room to Pursue Two Similar Alzheimer's Hopefuls

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

    Both compounds target beta amyloid, a protein consistently found in clumps in the brains of people with Alzheimer’s disease. Both are being tested in patients with very early signs of the disease, following a hypothesis that drugs might work best before Alzheimer’s advances. The companies are still talking with regulators about how to proceed, the CEO said.

    Vounatsos, like others researching ways to fight the disease, said it may become necessary to combine different treatments, or give one after the other. “Alzheimer’s disease is so complex that a single silver
    bullet will not solve the complexity of the disease for all patient types during the continuum of the evolution of the disease,” he said.

    Before companies can engineer combinations, they need to find one that works. Biogen won’t disclose when it expects the final-stage study for its potential blockbuster aducanumab to finish, but it enrolled the last patient over the summer. The trial is planned to be about 18 months long.

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    US Equity Strategy

    Thanks to a subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

    The Rolling Bear Market took out the last holdouts - Tech, Discretionary, and Growth Stocks - in October. The Rolling Bear Market has morphed into a Chopping Bear Market and we think the rest of 2018 will be a bumpy ride.

    We prefer Value over Growth; Value outperformed Growth in October’s sell off. We think that was the beginning of a longer lasting leadership change. 

    Third quarter earnings results have been strong; we think this quarter will likely represent a peak in year over year earnings growth. The fourth quarter will get much harder as we lap numbers that received a boost from hurricane and tax reform related spending.

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    Midterm Results Point to a New Divide in Politics: Education

    This article from the Wall Street Journal may be of interest to subscribers. Here is a section:

    When Bill Clinton entered the White House a quarter-century ago, the parties evenly divided the top 30 districts. Republicans since then have gained in working-class and rural areas, and among white voters without bachelor’s degrees.

    The result is an America divided in a new way. “The new cultural divide is education,” says Bill McInturff, a Republican pollster.

    Education helps explain some of Tuesday’s results that might seem like outliers in solid-Republican states.

    In South Carolina, voters last sent a Democrat to Congress from the Charleston, S.C., area in 1979. In Georgia, a Democrat raised $30 million last year to compete in an Atlanta-area district—and lost. On Tuesday, the party carried both seats.

    Both those districts—South Carolina’s 1st and Georgia’s 6th—are in the top half among all House districts for educational attainment. Both also have some of the largest shares of college-educated adults in their states.

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