Baidu

• MOAR: BOJ Said to See Significant Room for More Bond Purchases (BBG)
• Meltdown Averted, Bernanke Struggled to Stoke Growth (Hilsenrath)
• New Mortgages to Get Pricier Next Year (WSJ)
• Republicans to Seek Concessions From Obama on Debt Limit (BBG)
• Hunting for U.S. arms technology, China enlists a legion of amateurs (Reuters)
• Jury Begins Deliberating in Case of SAC Portfolio Manager (WSJ)
• BP to Write Off $1 Billion on Failed Well (WSJ)
• Rajan Unexpectedly Keeps India Rates Unchanged to Support Growth (BBG)
• Thai protesters say they will rally to hound PM from office (Reuters)
• SEC Brings Fewer Enforcement Actions, Slows Early-Stage Probes (WSJ)

• Tough Question for Fed: Time to Act? (Hilsenrath )
• Merkel Begins Third Term Strengthened by SPD Partner Backing (BBG)
• Wary of Roma, Europe cold-shoulders its new eastern workmates (Reuters)
• New Medicines Emerge, but Few Blockbusters (WSJ)
• SIP in the crosshairs: U.S. Exchanges Near Deal for Infrastructure Upgrade (WSJ)
• Secret Inside BofA Office of CEO Stymied Needy Homeowners (BBG)
• AIG Said to Near Sale of Plane Unit to AerCap (BBG)
• Inside the Saudi 9/11 coverup (NYPost)
• Russian Bank Chief Weighs Firings as Costs Absorb Revenue (BBG)
• Video Boom Forces Verizon to Upgrade Network (WSJ)
• Chinese Manufacturing Slows (AP)

We've all read countless explanations of investor psychology in a general sense, but rarely does anyone put their name to a calamity, or at least their nom de plume. We recognise it when exuberance makes charts go vertically up or when stone cold fear pushes them ruthlessly down, but our ego inevitably makes us shy away admitting that we take part in any function of it - "that's those other sheep". We're merely unemotional observers, until we aren't. Is anyone going to admit they were buying in the final moments before the last bitcoin crash? Unfortunately, our brains are hard-wired to get us into investing trouble.

It was inevitable that a few short days after Wall Street lovingly embraced Bitcoin as their own, with analysts from Bank of America, Citigroup and others, not to mention the peanut gallery vocally flipflopping on the currency after hating it at $200 only to love it at $1200 that Bitcoin... would promptly crash. And crash it did: overnight, following previously reported news that China's Baidu woild follow the PBOC in halting acceptance of Bitcoin payment, Bitcoin tumbled from a recent high of $1155 to an almost electronically destined "half-off" touching $576 hours ago, exactly 50% lower, on very heave volume, before a dead cat bounce levitated the currency back to the $800 range, where it may or may not stay much longer, especially if all those who jumped on the bandwagon at over $1000 on "get rich quick" hopes and dreams, only to see massive losses in their P&Ls. Which incidentally, like gold, is to be expected when one treats what is explicitly a currency, instead as an asset, with delusions of grandure that some greater fool will pay more for it tomorrow than it is worth today.

Bitcoin is being sold aggressively on heavy volume as this headline hits:

*BAIDU SUSPENDS BITCOIN PAYMENT ACCEPTANCE ON VALUE FLUCTUATION

This is one of the reasons Citi and BofAML noted as 'disadvantages' and it seems Baidu agrees (for now). Remember when Baidu "accepted" Bitcoin in Oct it was trading at USD150 - it has rallied 8x since then...

As we said back in March, when Bitcoin's parabolic rise first started, it was only a matter of time before first one, then all central banks take on Bitcoin for the simple fact that it present too great a threat to the fiat system. Sure enough, on the chart below of BTC China it is quite clear just at what point overnight the People's Bank of China announced that Bitcoin is simply a virtual commodity and "isn't a currency with any real meaning" (paraphrasing Alan Greenspan), and that it officially bans financial companies from Bitcoin transactions.

A dispassionate analysis of Bitcoins, their function and implications.

• Morning Humor from Hilsenrath - Fed Balance Sheet Not Seen Returning to Normal Until at Least 2019 (WSJ)
• Health Policies Canceled in Latest Hurdle for Obamacare (BBG)
• Was there anything RBS was not manipulating? RBS Said to Review Currency-Trading Practices Amid Probe (BBG)
• Sebelius to Testify Before House Panel (WSJ)
• And more humor: Spain's Statistics Institute Confirms End of Recession (WSJ) ... and now we await the triple dip
• Finally some credible reporting on Yellen's "foresight" - Yellen feared housing bust but did not raise public alarm (Reuters)
• Japan government moves closer to Fukushima takeover (FT)
• China to step up own security after new NSA allegations (Reuters)
• Blackstone Vies With Goldman in Spain Rental Housing Bet (BBG)
• In new U.S. budget talks, Republican proposal has flipped the script (Reuters)

• U.S. spy chiefs face Congress amid spying rift with Europe (Reuters)
• Deutsche Bank income hit by €1.2bn of legal provisions (FT)
• China's second tapering attempt fails: China central bank seeks to reassure money markets after rate spike (Reuters)
• UBS Takes Action Against Staff in Foreign-Exchange Probe (WSJ)
• Saudi Arabia frees man jailed for Mohammad tweets (Reuters)
• Tax Revolts Hit Hollande as Farmers, Soccer Clubs Protest (BBG)
• German parliament to meet over U.S. spying scandal (Reuters)
• Google Nears Smartwatch Launch (WSJ)
• How to end gridlock in DC? Pork projects (Reuters)
• UBS ordered to increase capital reserves (FT)

Supermarkets, healthcare and education are next in line for technological upheaval. We look at the best ways to profit from upcoming changes.

• Despite budget win, Obama has weak hand with Congress (Reuters)
• Carney Brings In McKinsey for Bank of England Strategy Rethink (BBG)
• Bill Gates Buys Stake in Spanish Construction Company FCC (WSJ)
• Jerusalem Mayor Barkat Seeks New Term in Race Arabs Sitting Out (BBG)
• J.P. Morgan Aimed to Limit Damage (WSJ)
• EU Lawmakers Reject Draghi Call for Bank Bondholder Clemency (BBG)
• Wall Street Profits May Halve in Second Half (WSJ)
• Petrobras-led group wins Brazil oil auction with minimum bid (Reuters)
• Apple to Refresh IPads Amid Challenges for Tablet Share (BBG)
• Italy plans to offer guarantees on govt bond derivatives (Reuters)
• Berkshire Beats Apple as Favorite Stock of Tiger 21 Group (BBG)

The last week has seen dramatic upwards price action in the bitcoin markets, driven by a series of macro and micro events across the globe. The fallout from Silk Road’s closure turned out to be but a blip in bitcoin’s price history, with significant gains since then. Turmoil in global financial markets and recent news of leading global websites accepting bitcoin may have bolstered enthusiasm for digital currency, but most interesting may be CNY’s definitive recent price leadership.

While it is not surprising to see the apparent supreme dominance of Google and Facebook on the Web, the more important question is global data privacy and the related measures.

• U.S. Government Shut Down With No Quick Resolution Seen (BBG)
• 12 House Republicans now say they’d back a ‘clean’ CR (WaPo)
• Republicans’ 2014 Senate Edge Muddied by Shutdown Message (BBG)
• Obama Shortens Asia Trip Due to Government Shutdown (WSJ)
• Fed Said to Review Commodities at Goldman, Morgan Stanley (BBG)
• Foreign Firms Tap U.S. Gas Bonanza (WSJ)
• Behind Standoff, a Broken Process in Need of a Broker (WSJ)
• Japan Awaits Abe’s Third Arrow as Companies Urged to Invest (BBG)
• Microsoft investors push for chairman Gates to step down (Reuters)

• The new normal name of a broken market: glitches - NYSE, Nasdaq Consider Cooperating to Address Glitches (WSJ)
• Early Thursday Humor: Abe Tells Wall Street Japan’s Economy Is Exceptionally Good (BBG)
• Rising Rates Seen Squeezing Swaps Income at Biggest Banks (BBG)
• JPMorgan Mortgage Talks Said to Discuss $11 Billion Deal (BBG)
• Can't make this up: HFT firm "finds" Fed did not leak data early to benefit HFT firms (FT)
• Hertz Cuts Full-Year Forecast on Weak U.S. Airport Rentals (BBG)
• Greece does not need third bailout, seeks debt 'reprofiling' - deputy PM (Reuters) - right, it needs a fourth and fifth
• Hezbollah gambles all in Syria (Reuters)
• Twitter Adds J.P. Morgan and Morgan Stanley as Bankers on IPO (WSJ)
• Messi in Court Shows Tax Collectors Set to Pursue Star Athletes (BBG)