Bitcoin

Following David Woo's initial $1300 fair-value price target for Bitcoin, the BofAML strategist has had to suffer through some significant changes; not the least of which is China's increasingly strict Bitcoin regulation. The shifts, he notes, raise key questions about the future of Bitcoin as he asks "is this the end of Bitcoin?"

From the first headline to the last, the following brief month-by-month summary of the year shows just how far markets and global happenings have come...

One of these is an "asset" that produces no profit based on an underlying architecture with low barriers to entry,  the other is a virtual currency... and remember: Bitcoin has no intrinsic value, doesn't trade at 1000x 2013 (or 340x 2014) EBITDA, and is nowehere near 40x it next year's revenues. It is, after all, simply a non-fiat currency. Which is why it is a bubble, and why, according to experts, Twitter is a screaming buy.

There are plenty of valid criticisms of Bitcoin, and a clear and thoughtful expression of those criticisms can only help the marketplace improve free-market crypto currencies in the future. Yet the irrational, ramblings of a statist who clearly hasn’t taken two minutes to objectively analyze Bitcoin is of no use to anyone and a disgrace to a supposedly highbrow newspaper like the New York Times.

Gross:Part 1of 2: We live not in a new gilded age but a bitcoin age where artificial money (from central banks) creates temporary prosperity

— PIMCO (@PIMCO) December 23, 2013

What would we do without Zero Hedge?  Does anyone else notice the rapid deterioration of financial news media, especially in the US?  OK, we are not naive, there are biases in the media, traders from big ibanks talking up their positions, and trading is all about information arbitrage.  But financial news used to be really serious.  Traders could turn on a TV to see what the markets were doing.

Investors from multi-billion dollar hedge funds to individuals buying as few as 10 properties have acquired more than 1 million homes across the U.S. in the past three years, transforming a mom-and-pop business into one of Wall Street's hottest investments. As we noted here, Blackstone Group LP alone has acquired more than 40,000 properties in 14 cities to become the largest single-family landlord in the country. As Bloomberg notes, the new landlords are transforming the way Americans live and accumulate wealth. But while Wall Street is becoming America's largest residential landlord, it appears China wants to get paid for commercial properties... and Detroit.

• Apple, China Mobile sign long-awaited deal to sell iPhones (Reuters)
• U.S. growth hopes help shares shrug off China money market jitters (Reuters)
• Rule Change on Health Insurance Rattles Industry (WSJ), Obamacare's signup deadline on Monday has its exceptions (Reuters)
• Tale of Two Polish Mines Shows Biggest EU Producer’s Woes (BBG)
• Probes See U.K. Market Manipulation Reports Rise 43% (BBG)
• Shoppers Grab Sweeter Deals in Last-Minute Holiday Dash (BBG)
• Banks Mostly Avoid Providing Bitcoin Services (WSJ)
• Secret Handshakes Greet Frat Brothers on Wall Street (BBG)

Over the past several months, Bitcoins have soared in popularity, acceptance and price. Naturally, it was only a matter of time before Bitcoin crime followed. As reported here previously, earlier this month, the largest heist in the history of Bitcoin was pulled off when the illegal drug bazaar Sheep Marketplace was plundered, either by hackers or insiders, and about $100 million worth of the currency was stolen from customers. That was only the most recent heist however: the reality is that Bitcoin theft has been around for years. In June of 2011, a user named Allinvain was the victim of what is arguably the first recorded major Bitcoin theft. Since then Bitcoin crime has soared - but like all things Bitcoin, it’s difficult to understand exactly how digital theft works. What are you stealing, exactly? And once you’ve got it, what do you do with it?

Overstock to Accept Bitcoin Starting In 2014

HSBC is back in the news. This time it relates to their transferring funds on the behalf of financiers for the militant group Hezbollah. If transactions such as these had even the slightest link to Bitcoin, there would be endless uproar, calls for countless Congressional hearings and demands to stop the currency at all costs. But when HSBC is caught doing it, what happens? A $32,400 settlement.

• China cash injection fails to calm lenders (AFP)
• European Union Stripped of AAA Credit Rating at S&P (BBG)
• Last-Minute Health-Site Enrollment Proves a Hard Sell (WSJ)
• Bernanke’s Recession-Fighting Weapon Developed by 1900s Banker (BBG)
• Asia Stocks Are Little Changed Amid China Funding Concern (BBG)
• Regulators' Guidance on Volcker Rule Gives Banks Little Relief on Debt Sales (WSJ)
• On one hand: Man Who Said No to Soros Builds BlueCrest Into Empire (BBG); on the other: Michael Platt's BlueCrest Capital Poised for Rough Close to 2013 (WSJ)
• BOJ Keeps Record Easing as Fed Taper Helps Weaken Yen (BBG)
• Bank of England becomes more cautious on economic predictions (FT)
• Gold Climbs From Lowest Close Since 2010 as Goldman Sees Losses (BBG)

Call it what you will. Arrogance is overbearing pride, the self-importance of being superior and a public display of haughtiness that knows no bounds.

• Traders Seek an Edge With High-Tech Snooping (WSJ)
• Gold Drops Below $1,200 an Ounce for First Time Since June (Bloomberg)
• SAC Manager Guilty as Insider Focus Turns to Martoma (Bloomberg)
• Why Ukraine spurned the EU and embraced Russia (Reuters)
• Target confirms major card data theft during Thanksgiving (Reuters)
• Zuckerberg is no suckerberg: Company to Sell 27 Million Class A Shares While CEO Will Offer 41.4 Million (WSJ)
• Facebook, Zuckerberg, banks must face IPO lawsuit (Reuters)
• Swiss Christmas Trees Feel Chill as Franc Helps Rivals (BBG)
• Iran, six powers to resume nuclear talks after snag (Reuters)
• Dolphins Suffering From Lung Disease Due to Gulf Oil Spill, Study Says (WSJ)

As the US equity market embraces the suck of taper, the Chinese interest rate market seems a little upset. 1-Year rate swap just spiked their most in 5 months (16bps) to an all-time high 5.065% (above the June Taper Tantrum levels). Following its enforcement actions on Bitcoin last night (and coincident DDoS attack on its website), the PBOC has decided not to inject liquidity into Chinese banks today

*PBOC WON'T LIKELY CONDUCT REPO OPERATIONS TODAY: TRADER

Add to that the fact that the Indonesia Rupiah just dropped to its lowest in 5 years and we suspect more than little turmoiling this evening as the rest of the world figures out why taper is risk-on.