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

    ECB Restarting QE Will Need More Purchase of Private Debt

    This note by David Powell for Bloomberg may be of interest.

    The European Central Bank is running low on sovereign bonds to buy -- that undermines the credibility of its pledge to keep going until inflation picks up. If inflation takes two years to firm, the ECB could face a shortage of about 60 billion euros ($67 billion) in debt during the next phase of its asset-purchase program. At the present pace, the central bank could run out of bonds in little over a year, according to calculations by Bloomberg Economics. The best way out is to shift the composition of purchases: BE estimates the markets for corporate and covered bonds could easily bridge the gap.

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    Nanoparticle tech reverses celiac disease in promising human trials

    This article by Rich Hardy for newatlas.com may be of interest to subscribers. Here is a section:

    This Phase 2 trial is small, involving only 34 patients, but it offers the first evidence of efficacy in human subjects. The prospective treatment involves two intravenous administrations of the nanoparticles, one week apart. Seven days after the second treatment the subjects were challenged with 12 grams (0.4 oz) of gluten per day for three days, and then six grams (0.2 oz) of gluten each day for the next 11 days. The majority of the subjects tolerated the gluten challenge following the nanoparticle treatment, showing an impressive 90 percent reduction in inflammatory markers compared to an untreated control group.

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    Email of the day on Cryptocurrencies and quantum computing from one of Iain Little's clients:

    Yep very well thanks, I'd say the Google quantum computing is all FUD, i.e. see here:

    Even if quantum came anywhere close to being able to break SHA256's cryptographic hash function, which actually “can’t” happen without a mathematical insight that makes it possible (because it requires too much work or too much luck), then the majority of those running the nodes would just vote for a hard fork by the devs to a stronger format like SHA-3  there would be consequences for old coins that weren't moved but bitcoin would adapt and survive. Also, all current banking, military etc. use this same SHA256 as far as I know so the world would have way more to worry about than bitcoin if it was ever broken.

    Here's some more stuff going on if reasons for the current drop in bitcoin's price were needed:

    But it could just as easily be normal market volatility, the price is still about double that of the start of the year and bitcoin likes to have these big corrections after making huge and rapid gains.

    I'd expect it's a combination of things but still normal market movements and nothing has fundamentally changed that would prevent bitcoin becoming gold2 as it is just better than gold and as people see this it's volatility will decrease as it's market cap increases, I'd imagine.

    Though I very much like both asset classes and feel much relieved to have taken so much off the table and into property, art & collectables etc.

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    Pence Criticizes China But Seeks Balance as Trade Talks Continue

    This article by Jenny Leonard and Justin Sink for Bloomberg may be of interest to subscribers. Here is a section:

    Pence’s speech comes at a crucial time in the U.S.-China relationship as the two countries remain locked in a trade war and jostle for military and commercial dominance in the Pacific. White House officials have debated for weeks how critical Pence should be, underscoring the stakes of his remarks, which come just a day before negotiators talk about progress toward agreeing on a phase one agreement over trade.

    The vice president was careful to balance his criticism with an olive branch. Rather than “decoupling” the two countries, the U.S. “seeks engagement with China and China’s engagement with the wider world,” he said. “Despite the great power competition that is underway and America’s growing strength, we want better for China.”

    Pence’s most stinging criticism of China was indirect, in remarks targeting Nike Inc. and the NBA.

    “Nike promotes itself as a so-called ‘social-justice champion,’ but when it comes to Hong Kong, it prefers checking its social conscience at the door,” Pence said.

    He accused the NBA of “siding with the Chinese Communist Party and silencing free speech.” The league apologized after an executive of the Houston Rocketsissued a tweet supportive of Hong Kong protesters, outraging Chinese authorities and many NBA fans in the country.

    “The NBA is acting like a wholly owned subsidiary of the authoritarian regime,” Pence said.

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    Tesla's Surprise Looks Strangely Familiar

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

    Tesla’s free cash flow, meanwhile, was positive for the second quarter in a row, at $371 million. Again, that is positive. Again, the number was flattered by Tesla underspending on its capex budget. Guidance for the year was $1.5 billion to $2 billion. Based on the low spending in the first half, the mid-point of Tesla’s range implied it spending an average of $610 million in the third and fourth quarters. Capex came in $225 million below that level, equivalent to 61% of the free cash flow. Tesla’s capex continues to come in lower than its depreciation expense, which is striking for a company with such expansive ambitions. The company puts this down to rising efficiency.

    There is something ludicrous about the stock of a company already priced at $46 billion, or 422 times the 2020 GAAP earnings forecast, surging because it reported a small net profit rather than a small net loss (the consensus estimate was a negative $234 million). Ditto for a few hundred million of free cash flow largely explained by below-guidance capex. Tesla’s own forecast points to positive profits and free cash flow continuing, but which may suffer “temporary exceptions, particularly around the launch and ramp of new products.”

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    Google Says Quantum Computer Beat 10,000-Year Task in Minutes

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

    Alphabet Inc.’s Google said it’s built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years.

    The results of Google’s tests, which were conducted using a quantum chip it developed in-house, were published Wednesday in the scientific journal Nature.

    “This achievement is the result of years of research and the dedication of many people,” Google engineering director Hartmut Neven said in a blogpost. “It’s also the beginning of a new journey: figuring out how to put this technology to work. We’re working with the research community and have open-sourced tools to enable others to work alongside us to identify new applications.”

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    California's Gasoline Panic

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

    But about 95% of gas stations with convenience stores are independently owned, which includes mom-and-pops that license brand names. Some consumers will pay more for brand-name gas as they will for Prada purses or Starbucks lattes. As gas prices rise, consumers may also burn more money than they save driving in search of the cheapest stations.

    Notably, the commission ignores that retail margins include labor costs, utilities, rent and taxes. In 2012 the state increased taxes on high earners, which hit many small businesses. California’s minimum wage has increased by 50% since 2013. According to the Bureau of Labor Statistics, worker wages at California gas stations over the last five years have increased 50% more than nationwide.

    Mr. Newsom has threatened legal action against oil companies to “protect the public.” But liberals have long wanted higher gas prices so folks will ditch gas-powered cars. The Governor last month ordered revenue to be redirected from the last gas tax hike, which was supposed to fund highway construction, to projects that “reverse the trend of increased fuel consumption and reduce greenhouse gas emissions.”

    So Californians in the future can look forward to paying more to drive on deteriorating roads as they head to homes without electricity due to blackouts. How long will it take California voters to figure out that these are problems made in Sacramento by politicians?

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    Bitcoin Tumbles to 5-Month Low as Libra Hit by U.S. Backlash

    This article by Claire Ballentine and Olga Kharif for Bloomberg may be of interest to subscribers. Here is a section:

    “The biggest thing behind this is that volumes have been very very low,” said Josh Lim, head of trading strategy at Galaxy Digital in New York. “On the sentiment side of things, the fact that the Libra coalition has faced some major challenges and the Telegram launch was halted by the SEC, it really curtailed investor appetite for crypto broadly.”

    Potentially adding to concern is the news that Alphabet Inc.’s Google has built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years. Skeptics of cryptocurrencies have noted that advances in computing could make the slower proof of work system used by Bitcoin and other tokens obsolete.

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