Bitcoin Crashes.....Again

Ok so we are not saying that Bitcoin is a total waste of money, we are just saying that with no backing but the ones and zeroes and a simple peer-to-peer wallet, anyone willing to dump their life savings into the currency is bound to get ripped off. 

Bitcoin coin plunged in price to $130 from a record high of $260 on Wednesday. Bitcoin is still up more than 800 percent year-to-date.

Mt. Gox issued a press release: "The rather astonishing amount of new accounts opened in the last few days added to the existing one plus the number of trade made a huge impact on the overall system that started to lag. As expected in such situation people started to panic, started to sell Bitcoin in mass (Panic Sale) resulting in an increase of trade that ultimately froze the trade engine!" 

Traders trying to log in to the Mt. Gox found a message: "Trading is halted until 2013-04-12 02:00am UTC (10 p.m. ET) to allow the market to cool down following the drop in price." 

Red our analysis about bitcoin here

-TheEconomicsMaster.com

 4/11/2013 @ 8:47pm

Bank of Japan Eases...North Korea Declares War? No Big Deal for the Markets

The Bank of Japan has decided it will buy government bonds, alot of government bonds in an attempt to help boost its economy. Japan has been suffering from deflation for the last two decades (read more about deflation here) and is looking to increase its bond holdings to increase the value of the Yen in the short run. The USD is up against the Yen on this news. Markets in Japan are up with the Nikkei rising over 2.2%. Once upon a time in the early and mid 90s, you could not go a day in the finance media without hearing about Japanese stocks, particularly the Nikkei. As an old school investor myself (remembering back in stocks traded in fractions!!) I am glad to see Japan back in the news, but unfortunately not for the right reasons.

North Korea has vowed "war" on America. I was on twitter last night and the jokes were hilarious. Obviously the market is feeling the same way because this news has no effect whatsoever on the markets. North Korea is like that kid that in elementary school that had a people to kill list, but never even got in a fist fight. Unless some actual bomb dropping or fighting breaks out, I wouldn't expect this news to impact the markets at all.

Watchlist

Alcatel-Lucent (NYSE: ALU) - Deutsche Bank just upgraded the old French Telecom company to a Buy from Neutral earlier today, the stock is trading over 12.5% in pre-market action.

Bank of America (NYSE: BAC) - Bank of America took a hit yesterday as profit takers decide to sell off. The stock was down more then $0.40 yesterday and is looking for a sharp rebound in today's trading.

Gold -  Gold has continually dropped as Europe and Japanese fears are easing. This may be the time to start playing on some gold contracts.

The DOW is up 52 points in pre-market action and gold down another 8.20 to settle at 1,545.30.


-TheEconomicsMaster
 4/42013 7:32 am

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Not So Quiet on the Western Front! - Markets Awaiting Central Bank Decisions

There are alot of people out there that are expecting the market to pullback. It is the second quarter after all, and the S&P 500 and Dow Jones have just went on historical runs in the first quarter. Investing seems like you are in a war zone sometimes; a battle of sorts, and you are always trying to sift through all the media BS and market hype and pick some winners. Losing money of course is equivalent to losing a battle and if you lose it all, you have lost the war. The battles are tough right now, and if you are short you are battling against a great power (The Fed). It is said that you cannot fight a land battle in Asia and this would be the equivalent of that.

US unemployment numbers are due out Friday. The U6 rate (total unemployed) is still hovering over 14%, so any sort of drop in this base number as economists see it, is a very good signal. Central Banks in Europe and Japan are expected to announce their decision on key interest rates this week. Investors are especially looking to Japan as currency speculators have been betting that the Yen will remain weak.

Watchlist

Bank of the Ozarks (Nasdaq: OZRK) - The Bank of the Ozarks has just raised its dividend by $0.17 from $0.15 with an ex-dividend date of April 12. At the same time Wunderlich Group has just downgraded to firm from a Buy to Hold.

Qualcomm Inc. (Nasdaq: QCOM) - Northland Capital has just initiated coverage on Qualcomm today with a rating of "outperform". I tend do agree with this one as Qualcomm has seen good growth in its cell business and should continue this model going forward.

Key Energy Services (NYSE: KEY) - FBR capital has just upgraded Key Energy to Outperform from Market Perform. Quarter 1 earnings expected to be released on April 22.


The DOW is up 13 points in pre-market trading oil down 0.64 to settle at 96.55. The USD is currently down 0.01% to the Yen, but should bounce back in today's trading, pending any economic news.

-TheEconomicsMaster.com
  4/3/13 - 8:21 am

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Is Cash A Safe Haven?

Stocks have been batshit crazy as of late, so who can blame the common investor for wanting to take profits? I know I have. Once you cash out, what is the next safe haven for your money? As we know, the Federal Reserve has been printing money to the tune of approximately $85 billion per month, and this has been good for banks and the markets. Eventually, the spigot will have to turn off and the market will punch back, but what if you are 100% in cash, is this wise? What can you do to protect your profits?

Inflation
Enemy number one to your cash is inflation. It is hard to take profits and sit in cash for 6, 12, 18 months and expect that dollar to go further for you as a consumer and investor. Even if the Fed does stop printing money and the market tanks, you can still potential lose 2-3% a year due to inflation in a good economy. So what are the options?

Certificate of Deposit
Certificate of Deposits (CDs) are offering yields in the 1-2% range due to the Fed keeping interest rates at historic lows for years. Despite this fact, some banks are offering premium rates and and can offer up to 2.5% on CD yields with bigger deposits and relationship rates. Shop around, if you are worried about being in the markets and have cashed out with a considerable profit, you may be able to get decent returns on your money, at least to combat inflation. Unfortunately, most savings, checking and money market accounts are still only offering 0.01% yields.

Treasury Inflation-protected Securities (TIPS)
One of my personal favorite is TIPS. I have a good portion of my 401(k) in TIPS after taking profit on my company stock. They work like this: The principal value of TIPS rises with inflation or falls with deflation. The interest payment on a TIPS is based on the bond's principal value. So if your $1,000 TIPS rises to $1,020, the interest payment is based on $1,020, rather than $1,000. 

Short (Inverse) ETFs
Short ETFs are risky, but you could see considerable gains if the markets goes in the opposite direction. I would say if you were to go short via an ETF, put no more than 2-3% of your entire portfolio in the positions. The best part of short ETFs, is that they can be bought and sold like normal stock and are not required to trade on margin like a traditional short positions. The bad is that they erode in value unless the market moves down sharply and quickly. Holding on to a short ETF for 2 years while a market remains stagnant will only leave you with a reduction in your premium. Even with the risks, if you can predict the market turn correctly or catch it on the way down, short or inverse ETFs can be a good hedge against a down market and help protect some of your gains and combat inflation.

Conclusion
My conclusions are simple, as of witting this I would say cash is a safe haven only if you are going to spend that money on stuff. As a consumer you can't go wrong with cash and we all know the old adage, cash is king. On the other hand, as an investor or long term saver, cash will only erode in value via inflation unless you protect yourself. The instruments mentioned above are only a small fraction of investment available to protect yourself from inflation. There are more alternative such as company bonds, preferred stock, real estate, precious metals, etc. Do some research and find out which is bet for you and your investment strategies.

TheEconomicsMaster.com
4/2/2013 10:05 pm

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A New Quarter Has Arrived - Market News for April 1, 2013

Its April Fool's Day, and what better way to celebrate than proposing yet another tax on the wealthiest Americans? That is what Ben Stein has proposed, and while I respect the man as an economist, some of his opinions are just downright wrong. What is the point of capitalism when we punish those that succeed and reward those that do not? Not good economic policy if you ask me.

The European crisis in Cyprus has calmed down and it will be interesting to see
how the market fares in what the last 2 years has been a bit of a sell off type quarter for stocks. Will Bernanke ever stop printing money, and what about the bond market? Forget buying bonds for right now as indefinite money printing has dampened any hope for an increase in bond yields.

Stocks to Watch Today:

Clean Harbors, INC (NYSE: CLH): Clean Harbors, Inc was upgraded from Perform to Outperform by Oppenhiemer today, expect good things to come from this stock.

Research in Motion (Nasdaq: BBRY): The Blackberry maker just wont go away and is trying to make a comeback. The stock price has been bouncing around the %15 range since the release of its latest phone, there are buyout rumours floating around so this may be a decent short term play.

Lionsgate Entertainment (NYSE: LGF) Lionsgate has seen a nearly 65% increase in 2013 and with CBS looking to buy the TV Guide Network, the stock may still have room to roar (bad pun, lol)

The S&P has closed at an all time high last Thursday and in a traditionally weak quarter for stocks, I am taking my profits.
In pre-market trading, the DOW is up 4 points while gold is up 4 points. Oil is down 0.62 and currently trading at $97.02

-TheEconomicsMaster.com

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