My favorite way to buy bitcoin instantly is in OTCBB ticker GBTC and I hold it in my personal trading account.
I’ve probably responded to at least a dozen questions recently on if I think bitcoin is in a bubble. My answer is no, bitcoin is not in a bubble.
Just today we have more news coming out that shows growing demand for the cryptocurrency.
BITPoint Japan Co. is planning to give hundreds of thousands of Japanese retail outlets the ability to accept the digital currency according to a report by Bloomberg. I have linked to the Bloomberg article above.
Think about what is happening with this digital currency. In just the last few months we have Japan being the first country to recognize bitcoin as legal tender. We now have a yen bitcoin carry trade where as the Japanese government prints and devalues the yen, Japanese citizens can buy bitcoin to preserve their wealth. We will have more and more retailers in Japan accepting the cryptocurrency. We will be seeing lots of new reports coming out of Japan about how bitcoin is taking an expanded role in the monetary system. I would not be surprised to see bitcoin banks opening up in Japan like the kind we have in Austria. Bitcoin can’t be in a bubble because the catalyst is massive growing demand for the digital currency.
The best way to buy bitcoin instantly is to use your online brokerage trading account and to buy OTCBB stock GBTC. You don’t need to deal with any risky currency exchange service with a third-party provider that has the right to shut down your account at any time and you don’t have to wait days for a bank transfer to show up in your account from so remote bank in Latvia or somewhere. You can buy bitcoin instantly in your own currency using Etrade or whatever online brokerage firm you use.
Everyone wants to know how high can bitcoin will go in 2017 after the internet bubble like appreciation over the last few months. The search phrase how high bitcoin go 2017 has exploded higher over the last week.
So many people are still bashing bitcoin (BTC) today. I use to be a basher. I was proven wrong.
How High Bitcoin Go 2017
Bitcoin (BTC) can go a lot higher by the end of 2017. Most people I talk with our still in a pre-2016 mindset about BTC. You know, BTC is crazy and it’s not real money. My favorite is: it’s the currency of malware developers and so that makes me too afraid to buy it. With so many people still bearish on BTC, the market can’t possibly be in an irrational bubble.
I think BTC will hit $10,000 but not by the end of 2017. I prefer a more conservative guestimate of $4,000 by the end of 2017. My main reason for predicting that BTC will be higher at the end of the year than it is today is that the BTC boom from the mainstream media running stories last week about how $100 turned into $75 million in BTC hasn’t even hit the market yet. This is the first long-weekend that Americans will have to research BTC and to get the process started of buying it. The authentication process for websites like Coinbase take days if not a week or more to actually get signed up. Then an additional 2 to 4 days is required to move funds from a US bank account into a BTC wallet.
How High Bitcoin Go 2017 and Japan’s Yen-Bitcoin Carry Trade
BTC will keep going higher because the upward move is not being driven by speculators but instead by growing demand. Strong demand for BTC is coming from Japan and South Korea. Demand for BTC is soaring after Japan passed a law to accept BTC as a legal payment method which came in effect on April 1, 2017. Japan’s SoftBank is making big BTC investments with tens of millions of dollars in different BTC related companies. Japan is the first economy to adopt BTC at the large corporate level and that’s driving demand higher.
Think about what the people of Japan are doing. A major Japanese forex company is now letting people trade BTC and so there is a yen-bitcoin carry trade where you borrow yen at 0% interest rates and buy BTC. With the BOJ devaluing the yen, why would you want to hold yen when you could hold appreciating BTC?
How High Bitcoin Go 2017 and Beyond
Governments are increasingly looking at how to monitor BTC transactions. If governments are successful in their push for regulatory oversight of BTC transactions, we would see rapid mainstream adoption of BTC. Russia is adopting regulations on cryptocurrencies. The Deputy of the Russian Central Bank Olga Skorobogatova has called for virtual currencies to be treated as digital commodities. Russia is calling on its central bank to adopt regulations with a specific focus on tax, controls and accountability. What Russia wants to do is to make BTC transactions capable of being monitored by the government. If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations. If Russia is successful at bringing oversight to BTC, you could see Russia and many other countries adopt BTC. In fact, the reason the SEC did not approve a BTC ETF last month was due to lack of regulatory oversight.
Jeremy Liew, the first investor in Snap Inc., sets a price target on BTC of $500,000 by 2030. The mathematics behind Liew’s estimate are that currently there are 20 million BTC wallets provided by service providers like Coinbase and Blockchain. Liew expects the user base of BTC to grow 20 times in the next 13 years. If the user base grows to 400 million by 2030, that would put a price on BTC of about $500,000.
A trade war between the US and China is likely going to start next year with a key promise of Trump to declare China a “currency manipulator” on day one of his Presidency and to enact a 45% tariff on certain Chinese produced products sold in US markets.
China has threatened to retaliate by dumping Boeing and instead ordering from Airbus. China has said it will block sales of US automobiles and iPhones in China and that US soybeans and maize imports will be halted.
To better understand why I think 3D printing stocks are a good play on a trade war with China, we have to go back in history and use macroeconomic analysis to see how we got to where we are today.
China Joins the WTO
In 2001 China joined the World Trade Organization and began flooding America with illegally subsidized exports. Over the next ten years, the US would shut down over 60,000 factories, lose more than 5 million manufacturing jobs and see it’s historical annual rate of GDP growth cut by two-thirds.
Trade Deficits and Offshoring Subtract From GDP Growth
As a result of China joining the WTO, structural problems hit the US, Europe, and other major economies like Japan and South Korea.
If a country like the US runs a trade deficit, this directly subtract’s from its GDP growth. From that observation, you can see what the two most important structure drags on growth for many developed nations like the US have been.
The first has been the drag of the large trade deficits. The second has been the drag on lower domestic investment growth, as multinational corporations like Caterpillar, General Electric, and General Motors, have built more plants in other countries and fewer plants in the US.
Where have most of the offshoring of productions gone? The answer is China.
It’s no accident that the start of America’s era of slow growth in 2001 coincided with China joining the World Trade Organization or WTO, which gave China full access to American markets.
Contrary to the rules of the WTO, China began to flood the US with cheap, often illegally subsidized exports, and over the next decade and a half; the US would see the loss of over 60,000 factories and more than 5,000,000 manufacturing jobs.
The Emergence of Structural Trade Imbalances
During this time the economies of Europe, India, Brazil, among others, would likewise begin to have significant growth-sapping trade deficits with China and this would reduce global growth below what it would otherwise be.
The result would be the structural emergence of a growth-sapping global trade imbalance, as illustrated in the following set of figures.
Here, we see chronic annual trade deficits on the order of 200 to 400 billion dollars annually, with the heavily exported China.
By the year 2012, these deficits would help slow growth dramatically in both Europe and the US, and as a result, China’s two biggest customers would thereby be too weak to sustain China’s export-dependent growth.
In a ripple effect, slow growth in China, in turn, would lead to slower growth in so-called commodity countries like Australia, Brazil, and Canada, whose economies depend heavily on the sale of natural resources like coal, iron ore, and soybeans to China. More broadly, these structural trade relationships would lead to a new type of butterfly effect the world had not yet seen.
Here, we see that weak demand for Chinese exports from Europe and the US leads to weak import demand from China for commodities and other natural resources. In this way, chronic trade imbalances between China and other countries around the world would make it very difficult for a robust, global economic recovery.
Why Keynesian Stimulus Failed
From this butterfly effect, you can see why expansionary, Keynesian fiscal and monetary stimulus in the US and Europe, did not have the full effects anticipated. Indeed, this short-run Keynesian approach did nothing to address the underlying, chronic, long-term structural trade imbalances, acting as a drag on both the U.S. and European economies and by extension, much of the rest of the world.
3D Printing and China Manufacturing
China is rapidly losing ground to 3D printing technology. The business model of it being cheaper to manufacture goods in China could come to an end over the next ten years.
US companies will soon be able to make most things in small 3D printer factories right in your neighborhood or town. Factories, as we know them today, will get broken up and made smaller and local. Newsweek writes…
In the distributed manufacturing scenario, the carbon footprint, so to speak, of each shoe drops precipitously. Asian manufacturing is toast, probably upsetting the global balance of power. And factory jobs—well, they’re likely never coming “back.” 3-D printing automates a lot of what factory workers would’ve done. The hope is that distributed manufacturing creates a whole new set of opportunities for middle-class workers and keeps money local instead of funneling it overseas.
Coming Trade War With China
A Trump Administration will be placing tariffs on Chinese-produced goods effectively penalizing US corporations that manufacture products in China. China will retaliate by blocking the sale of US goods inside of China.
This trade war with China will only speed up the adoption of cheaper and faster 3D printing facilities inside the US IMO.
Many US businesses could increase their purchases of 3D printing machines as a result of the worsening trade relationship with China as well as the public outcry over the loss of millions of US jobs to China.
The earnings recession which began in Q1 2015 prevented businesses from buying 3D printers as consumer demand was uncertain. This last quarter we saw an end to the earnings recession, and if corporate earnings continue to rise, we could see more companies buying 3D printers.
Big Players and Big Money Flowing Into 3D Printing Technology
In May of 2016, the 2D printing giant HP revealed that it has been spending billions of dollars developing 3D printing technology and announced the release of its Jet Fusion 3D 3200 and 4200 printers. The more powerful 4200 was slated to begin shipping in the fall of 2016, while the 3200 will be available in 2017. HP claims these polymer 3D printers are up to 10 times as fast and twice as cost-efficient as current 3D printers powered by the leading technologies. HP sees the incredible future for 3D printing and aims to become the leading 3D printing company.
3D Printing Stock Chart
Chart Comments: Not a great looking chart. Twiggs Money Flow is rising but still below the 0% line. The 50-day moving average (blue line) at $15.21 is currently being tested, and a breakout above this level would be bullish.
Stratasys Stock Chart
Chart Comments: Stratasys’ chart looks even worse than DDD. The Twiggs Money Flow is rising nicely, but it is still below the 0% line.
HP Inc Stock Chart
Chart Comments: Twiggs Money Flow falls below 0% line after missing on revenue; however, overall, the strongest looking chart of the 3D printing stocks. Fantastic valuation at P/E 9.9 and forward P/E 9.2. Wait for candle over candle bounce before taking a long entry.
Disclosure: I do not hold any stocks mentioned in this article.
As wages rise, more and more business owners are turning to machines instead of human labor. President Obama and Democrats have spent the last 8 years replacing high-paying jobs in the manufacturing sector with low-paying jobs in the services and health care sectors. But in all fairness, both Republicans and Democrats are to blame for outsourcing, offshoring, and the elimination of good-paying manufacturing jobs. Both Democrats and Republicans have demonstrated how not to build up a middle class that will support the economy.
Technology is a rising threat to jobs as more robots are used in the workplace. Since wages began rising in 2015, there has been a significant increase in the implementation of robots, starting with the fast-food industry.
In my home state of California, Zume Pizza has replaced its human chefs with robots, cutting labor costs in half. TechCrunch visited Zume Pizza for a tour of their robotic pizza factory.
In response to recent minimum wage hikes, Wendy’s is now replacing fast food workers with robots. The fast food chain announced it would start automating all of its restaurants by installing self-serve kiosks in 6,000 locations by the end of the year. Although McDonalds has already been experimenting with kiosks, Wendy’s announcement is the largest roll-out to date and will likely spark a trend leading to fully robotic restaurants.
Uber is experimenting with using self-driving cars in parts of America, and there’s a push to start using self-driving trucks for long-distance deliveries.
Research firm Forrester reports that robots could eliminate many positions in customer service, trucking and taxi service which amounts to about 6% of the U.S. job market.
Robots are slowly making their way into every industry. ICICI Bank Smart Vault now offers customers the ability to access their valuables 24 hours a day while reducing their labor costs to provide such a service.
Royal Bank of Scotland recently announced that it would soon unveil Luvo — a “human” AI that can answer questions online and mimic human empathy. This robot will be able to serve customers 24 hours a day, reduce the workforce and cuts costs.
A Swedish bank plans to use the robot Amelia for customer services. And companies in China, Japan, and Taiwan have already implemented Softbank’s Pepper robot.
Previous technological revolutions over the centuries have mainly focused on enhancing human productivity. My concern with the robotic revolution is that its goal is increasingly that of replacing human productivity.
Alex Tabarrok and Tyler Cowen of George Mason University, who had a significant impact on my life through their International Trade course, debate the issue of whether machines will take our jobs. Tyler Cowen agrees with me that the robotics revolution is one of the leading causes of concern for the future of the US economy. Alex Tabarrok’s “don’t worry, be happy” argument is the same one we heard regarding international trade in the 90s and about how it was going to create so many jobs in the US. After 20 years of economic data, we can now say that international trade was not so good for the US economy. Economists underestimated Game Theory and the “cheat” motivator regarding currency devaluation and government intervention in the free market.
Here is the debate between Tyler Cowen and Alex Tabarrok in its entirety and you can decide who you agree with more.
The main rug on which perma-bulls stand is the falling unemployment rate in the U.S. A falling unemployment rate seems like a good thing for markets but is it?
Japan Unemployment Rate
We all know that Japan’s economy has been in trouble for decades as its central bank scrambles to prop up the economy. The Bank of Japan is buying massive amounts of index ETFs, rapidly increasing its holdings as a proportion of the market cap.
What you may not know is that Japan’s unemployment rate has hit the lowest level in decades.
The reason Japan’s economy is not improving in lockstep with the falling unemployment rate is that good paying manufacturing jobs are on the decline, while lower paying medical and service sector jobs are on the rise.
Does a declining manufacturing sector sound familiar? It should. The loss of good paying manufacturing jobs is what’s happening in the U.S.
All jobs are not equal as the unemployment rate suggests. Japan and the U.S. are replacing higher paying manufacturing jobs with lower paying service sector jobs.
If a falling unemployment rate is not good for Japan’s economy, why would everyone believe that it was so great for the U.S. economy? As traders, we have to be careful not to be fooled by a low unemployment rate.
In 2016, foreign countries have dumped a shocking $192 billion worth of U.S. Treasury bonds. This dumping of bonds is the biggest selloff of U.S. debt since 1978.
China, Japan, France, Brazil and Colombia are the leading countries that are dumping U.S. debt.
U.S. Treasury bonds are the safest investments in the world. Countries often hold large portions of their cash reserves in U.S. Treasury bonds. Countries are dumping U.S. debt because they need the money.
Most countries are selling everything including the kitchen sink to come with the money required to pay the bills and to try and stimulate their economies.
Foreign sales of U.S. debt appear to be primarily driven by economic necessity.
Debt Sales Also Driven By Record National Debt
The U.S. debt held by China is $1.243 trillion, as of April 2016. That’s 30% of the $4.046 trillion in Treasury bills, notes, and bonds held by foreign countries. The rest of the $19 trillion debt is owned by either the American people or by the U.S. government itself.
Between 1789 and 1992, the entire national debt was about $4 trillion. Today, $4 trillion is just what we owe other countries. The total $19.3 trillion national debt could be spooking U.S. debt buyers. At what point do debt buyers begin to question the ability of the U.S. government to service the $19.3 trillion national debt? The U.S. government can’t even hike rates more than a quarter-point some seven years after the last recession because the economy is so weak. If the U.S. economy goes into another downturn, that will mean more stimulus and spending that will drive the national debt beyond $23 trillion in the blink of an eye.
U.S. government debt as a percent of GDP has recently broken above 100%.
[graphiq id=”4iWDyD7B3YF” title=”Gross Government Debt of United States in Percent of GDP” width=”440″ height=”582″ url=”https://w.graphiq.com/w/4iWDyD7B3YF” link=”http://country-facts.findthedata.com/l/1/United-States” link_text=”Gross Government Debt of United States in Percent of GDP | FindTheData” ]
With the U.S. consumer’s buying power destroyed by years of offshoring at the hands of corrupt political parties taking money from foreigners, what value does the U.S. have beyond its natural resources? At some point holding U.S. debt becomes too risky and not worth the low yields paid as shown in the chart below.