Friday Charts: R.I.P Bitcoin, Shrinkage and the Best Case of Déjà Vu Ever
Words mean little on Fridays in the Wall Street Daily Nation.
Instead, we try to let pictures do the talking for us.
Each week, I select a handful of graphics to put important economic and investing news into perspective for you.
I’ll (mostly) shut up now. Enjoy!
Bitcoin Scam Update
Earlier this year, you would have thought that a Bitcoin could cure cancer. End heart disease. Even reverse aging.
The hype was that intense.
You’ll recall that, back in May, I told Bitcoin investors to channel their inner Ice Cube and “check yo’ self before you wreck yo’ self.” I hope you listened.
Yesterday, the overhyped digital currency plummeted 33% on news that the FBI seized and shut down Bitcoin-based online marketplace, Silk Road.
Perhaps most damning, the criminal complaint against Silk Road reveals that someone was able to get a list of Bitcoin users. So much for the digital currency offering anonymity – which, incidentally, was heralded as its main benefit.
As Bloomberg’s Mark Gimein says, “The only point left in its [Bitcoin’s] defense might be that you don’t like central banks or national currency. If so, for those left holding a bunch of Bitcoins, this can turn out to be a very expensive protest.”
Agreed! Consider this your final warning. Cash in your Bitcoins while you still can.
Talk About Being a Drag
The government shutdown continues. Dun-dun-duuuuun!
While I’d like to ignore it, I can’t.
As Goldman Sachs’ (GS) Alec Phillips points out, “For every day of shutdown, federal compensation in Q4 is reduced by $400 million.” Less income for government employees equals less spending. So at some point, the shutdown is going to start weighing (heavily) on the economy.
But where is that point?
I’d say it’s around 21 business days. At that point, the shutdown would slash GDP growth for the fourth quarter by about 40%. Yikes!
Enough with the grandstanding, fellas. Get back to work!
Déjà Vu Anyone?
Let’s play a little game of “Name That Year” in U.S. history…
- Republicans voted down a debt-ceiling increase
- Syria found itself engaged in a war
- 10-year Treasury yields rose one percentage point in a matter of about four months
- GDP growth averaged a sluggish 2% in the first half of the year
- Profit growth for S&P companies virtually flatlined on year-over-year basis
- And, finally, the United States won the America’s Cup
I’m definitely talking about 2013, right? Wrong! Try 1967.
Hat tip to LPL Financial’s Chief Market Strategist, Jeff Kleintop, for noticing the eerie similarities. Here’s one more for you, though.
As you can see, it’s as if the S&P 500 Index is mirroring its performance from 1967.
“If the pattern continues to hold,” says Kleintop, “Lawmakers will eventually ‘kick the can’ on the fiscal issues, and the concerns leading to the current pullback may give way to a resolution that powers a comeback for U.S. stocks later this year, as we saw in 1967.”
That would be the best case of déjà vu ever, wouldn’t it?
That’s it for this week. Before you go, though, let us know what you think about Bitcoins, political stalemates and history repeating itself by going here.
Ahead of the tape,