Stock Losses Deepen in Asia With Oil Below $40; Won, Kiwi Weaken

Asia stocks extended their drop as oils selloff revived concerns over global growth and after Japans fiscal stimulus package fell short of what some investors had expected. High-yielding currencies retreated.

Japans Topix index slipped for a third day after the yen, which typically moves at odds with local shares, jumped 1.5 percent last session. Crude halted losses below $40 a barrel before an update on U.S. oil inventories, while gold was near its highest price since July 11. The Korean won weakened with the Malaysian ringgit as New Zealands currency also slipped.

A four-week advance in global equities has faltered as crude descended into a bear market. With investors looking to central banks and governments around the world to shore up growth, Japans announcement Tuesday that it would boost spending by 4.6 trillion yen ($45 billion) in the current fiscal year failed to ignite optimism that Prime Minister Shinzo Abe can revive the worlds third-biggest economy. The Bank of England is projected to cut rates Thursday.

After all the build-up, its a disappointment, Shane Oliver, a global investment strategist at AMP Capital Investors Ltd. in Sydney, which manages more than $110 billion, said by phone, referring to Japans fiscal stimulus announcement. This will be negative for Asian stocks Wednesday, reflecting the negative response weve already seen in the U.S. and Europe overnight, he said.

A slew of services purchasing managers indexes are due Wednesday, with figures from China showing a slower pace of expansion in July than in June. Thailand is projected to hold benchmark rates in a policy review.

Stocks

The MSCI Asia Pacific Index sank 1.2 percent as of 10:50 a.m. Tokyo time, set for its lowest close in almost a week, as all 10 industry groups declined.

Australias S&P/ASX 200 Index slipped 0.8 percent amid losses in banks. The Kospi index in Seoul slid 1 percent. Hong Kongs Hang Seng Index sank 1.6 percent as trading resumed after the market was shut on Tuesday because of a storm. The Topix lost 1.4 percent, and is down more than 3 percent this week.

A risk-off mood is coming to the forefront, said Chihiro Ohta, a senior strategist at SMBC Nikko Securities Inc. in Tokyo. In Japan, where many companies, especially in the auto sector, are easily affected by currency moves, the strength in the yen weighs on the overall profits for listed firms.

E-mini futures on the S&P 500 retreated 0.1 percent to 2,151.25 after the underlying index slipped 0.6 percent Tuesday, led lower by retailers and industrial stocks. The S&P 500 Index notched its first back-to-back declines since the aftermath of the U.K.s decision to quit the European Union.

Currencies

The yen weakened 0.3 percent to 101.24 per dollar, after touching 100.68 on Tuesday, its strongest level since July 11.

The governments plan incorporates 13.5 trillion yen of fiscal measures — including 7.5 trillion yen in new spending starting this year, and 6 trillion yen in low-cost loans.

For more on Japans fiscal stimulus boost, click here.

The Bloomberg Dollar Spot Index, a gauge of the U.S. currency against 10 major peers, added 0.1 percent, after sliding 0.6 percent in the previous session amid waning bets on the Federal Reserve raising interest rates in 2016.

The kiwi retreated 0.6 percent to 72 U.S. cents after jumping 1 percent last session, while the ringgit and the won were down at least 0.4 percent.

Bitcoin tumbled after one of the largest exchanges halted trading because hackers stole about $65 million of the digital currency. Bitcoin slumped 4.2 percent against the dollar, bringing its three-day drop to 18 percent.

Bonds

Australian notes due in a decade yielded 1.92 percent, up 10 basis points after they slid to an all-time low on Tuesday. The Reserve Bank of Australia delivered its second quarter-point cut for 2016 on Tuesday, taking the cash rate to a record-low 1.5 percent, as expected by a majority of economists and investors.

Yields on 10-year New Zealand debt added three basis points to 2.2 percent, while rates on similar maturity Treasuries held at 1.56 percent, following a two-day advance of about 10 basis points.

Bill Gross, the former chief investment officer of Pacific Investment Management Co., reiterated his warning on government debt Tuesday after yields touched all-time lows in the past month. The danger of the unprecedented rally, as Gross sees it, is that any reversal will be painful for investors.

Commodities

West Texas Intermediate crude added 0.8 percent to $39.81 a barrel, after falling 5 percent over the past two sessions.

The decline is not totally unexpected, but the speed and severity of the fall has been a surprise, said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. Disruptions tightened the market during the second quarter and the sustainability of those was always going to be relatively short lived. There are still relatively high inventories but the market is approaching a balance.

U.S. oil inventories dropped by 1.34 million barrels and gasoline stockpiles fell, the American Petroleum Institute was said to have reported. Government data out Wednesday is forecast to show crude and motor fuel supplies decreased.

Gold for immediate delivery was little changed at $1,364.78 an ounce.

Read more: www.bloomberg.com

How to Make Money Off Bitcoin Without Actually Owning It

It’s the equity investor’s conundrum: how to get access to the skyrocketing returns of bitcoin and blockchain without actually owning the tokens.

To Thomas Lee, a major bitcoin bull who heads research for Fundstrat Global Advisors, a dozen stocks should do the trick.

“We believe investors should have exposure to blockchain, particularly given bitcoin has essentially zero correlation to equities, bonds and commodities —- hence, as a portfolio strategy, bitcoin is a good diversification tool,” Lee wrote in a note to clients Friday. “But this is impractical for many equity managers, given the parameters of their mandate or because of practical issues (custody of tokens, etc.).”

Investors recently have sought ways to participate in the eye-popping bitcoin rally without having to purchase the cryptocurrency on the unregulated exchanges that have proven susceptible to hacks. Absent from Lee’s list are bitcoin futures, regulated derivative products that will debut on Cboe Global Markets Sunday and CME Group Dec. 18.

Lee has long been one of Wall Street’s biggest advocates of the cryptocurrency. Two weeks ago he doubled his price target on bitcoin to $11,500 by the middle of 2018. It went for $15,552 as of 10:31 a.m. in New York on Friday, according to Bloomberg composite pricing.

He suggests equity managers look to these ideas to leverage blockchain in their portfolios:

  • Bitcoin Investment Trust (GBTC)
  • MGT Capital Investments Inc. (MGTI)
  • HIVE Blockchain Technologies Ltd. (HIVE)
  • U.S. Global Investors Inc. (GROW)
  • DigitalX Ltd. (DCC)
  • NVIDIA Corp. (NVDA)
  • Advanced Micro Devices Inc. (AMD)
  • CME Group Inc. (CME)
  • Cboe Global Markets Inc. (CBOE)
  • Overstock.com Inc. (OSTK)
  • Goldman Sachs Group Inc. (GS)
  • Square Inc. (SQ)

The looming availability of futures weighed on these equity proxies this week, as speculators may be shifting away from stocks of companies that have benefited as bitcoin’s price rose more than 15-fold this year. Both HIVE Blockchain Technologies and U.S. Global Investors are down near 10 percent this week. Nvidia and Advanced Micro Devices have also suffered losses in the five days ending Dec. 8.

As for the totality of Lee’s picks, an equal weighted basket of these stocks is up 136 percent this year, according to the note. But as impressive as that may seem, he points out that it still lags bitcoin’s 1,685 rise in 2017.

    Read more: www.bloomberg.com

    Crypto-Linked Stocks Sink With Bitcoin on South Korean Warning

    The rout in bitcoin is also taking down stocks with ties to cryptocurrencies.

    Pareteum Corp. dropped 26 percent as of 1:13 p.m. in New York, while Digital Power Corp. and LongFin Corp. each slipped more than 6 percent after South Korea’s government said it wanted to clamp down on speculation, potentially by shutting down some exchanges. The warning sent bitcoin below $14,000, leaving it down 29 percent from last week’s record.

    Overstock.com Inc., On Track Innovations Ltd., and Riot Blockchain Inc. also traded lower Thursday, in relatively light volume during a holiday-shortened week.

    The crypto space has been on a wild ride this month, with the digital token bitcoin soaring to record highs before a dramatic selloff last week. The assets rebounded earlier this week, before resuming their slide lower in a test for investor enthusiasm in the asset class.

    Such volatility isn’t new for bitcoin or its proxies. The digital coin has seen many peaks and valleys over the course of its history. This year, it’s climbed 1,300 percent and once reached more than $19,500. Related assets have largely moved in tandem with the cryptocurrency. Shares of Riot Blockchain and Digital Power, while taking a hit today, are still up 611 percent and 475 percent this year, respectively.

    For related news and information:
    XBT Curncy GP for bitcoin
    VCCY for a cryptocurrency monitor

    For more on cryptocurrencies, check out the podcast:

      Read more: www.bloomberg.com

      Asia Stocks Mixed in Subdued Trading; Yen Declines: Markets Wrap

      Stocks in Asia were mixed in subdued trading as investors deferred placing bets following the recent run-up to record highs and ahead of a Federal Reserve meeting this week. The yen fell to its lowest in a month.

      Equity benchmarks fluctuated in Tokyo and were little changed in Sydney and Hong Kong. Volumes were at least 20 percent below their 30-day average on the Nikkei 225 Stock Average and the Kospi index. Data showed hiring increased by more than forecast in November and the unemployment rate held at a 17-year low, paving the way for another U.S. interest-rate increase this week. The S&P 500 Index and Dow Jones Industrial Average closed at all-time highs on Friday in light volume.

      The dollar held on to last week’s gains as President Donald Trump prepares to give a closing argument for the proposed tax reform on Wednesday. Bitcoin futures began trading in Chicago, while the spot price gyrated.

      Investor optimism was already bouncing back after the U.S. government averted a shutdown and tax reform negotiations made progress. With global equities trading near record highs, many money managers earlier this month were booking profits prior to the end of the year amid an equity rotation and waning risk sentiment. While traders see an interest-rate increase by the Federal Reserve as pretty much a done deal this week, there remains a furious debate about the pace of hikes next year.

      China’s inflation pressures moderated slightly in November, giving policy makers another reason to stick to tougher financial regulations to tackle debt and less cause to boost borrowing costs. A rise in producer prices matched estimates, but slowed from October, while consumer-price gains eased as food costs dropped. Money supply and new-loan data are due this week.

      Trading in bitcoin futures started on the Cboe Global Markets, the first major U.S. exchange to offer a product pegged to the cryptocurrency. Bitcoin surged more than 1,500 percent this year. As of 7:36 p.m. New York time, contracts expiring in January were priced at $15,800, or about 3 percent higher than bitcoin itself, according to data compiled by Bloomberg

      Terminal customers can read more in our Markets Live blog.

      Here are some of the key events scheduled for this week:

      • Fed policy makers are projected to raise the target range for their benchmark interest rate against a backdrop of continuing robust U.S. economic conditions, a vibrant labor market and forecasts for inflation to pick up.
      • The European Central Bank, the Bank of England and the Swiss National Bank also set monetary policy.
      • Among top U.S. economic reports next week are consumer inflation and retail sales for December.
      • European lawmakers continue to debate Brexit and weigh moves on the next step, while North America Free Trade Agreement (NAFTA) negotiators meet again.

      And these are the main moves in markets:

      Stocks

      • The Topix index and the Nikkei 225 Stock Average were little changed as of 10:32 a.m. in Tokyo.
      • Australia’s S&P/ASX 200 Index fluctuated as did South Korea’s Kospi index.
      • Hong Kong’s Hang Seng Index rose 0.3 percent and the Shanghai Composite Index was little changed.
      • Futures on the S&P 500 were flat. The underlying gauge gained 0.6 percent on Friday.
      • The MSCI Asia Pacific Index added less than 0.1 percent.

      Currencies

      • The Bloomberg Dollar Spot Index was steady. It ended last week up 1.1 percent.
      • The yen was down 0.2 percent to 113.64 per dollar.
      • The euro traded at $1.1775.
      • The pound was flat at $1.3396.

      Bonds

      • The yield on 10-year Treasuries was steady at 2.38 percent.
      • Australia’s 10-year yield rose almost three basis points to 2.56 percent.

      Commodities

      • West Texas Intermediate crude fell 0.3 percent to $57.19 a barrel.
      • Gold lost 0.1 percent to $1,247.67 an ounce.

        Read more: www.bloomberg.com

        Bitcoin Mania Interrupted, for Now, After Outage Triggers Selloff

        It takes a lot to startle fans of bitcoin, the digital gold of the moment. But Wednesday was, well, a lot — a wild run of exuberant peaks and white-knuckled declines that left even diehards breathless.

        The dizzying rally in bitcoin, a bull market with few precedents in investing history, was abruptly interrupted by a market outage in the U.S. that seemed to captivate Wall Street even more than the day’s selloff in high-flying technology stocks.

        Only hours after soaring past $11,000 — a price that represents a gain of more than two-fold since September — bitcoin plunged nearly 20 percent in less than 90 minutes.

        Whether the swoon represented a brief setback or the start of something worse, the wild ride underscored just how volatile the cryptocurrency has become in what some warn could be one of the biggest bubbles of all time.

        “Bitcoin trading isn’t for the novice investor,” said John Spallanzani, chief macro strategist at GFI Securities LLC in New York, who does technical analysis on the cryptocurrency. “Corrections are fast and furious and you can get run over just like in the movie.”

        The day started with a touch of frenzy in the air, as the digital currency took its first trip past $10,000 and yet another celebrity — this time, pop icon Katy Perry — tweeted about her fascination with the rally. But things suddenly seized up during U.S. hours when traffic swelled on on-line exchanges.

        Confusion reined in the market for hours. Investors fearful of missing out on the frenzy were greeted instead with service outages and delays. Coinbase tweeted that traffic on its platform hit an all-time high at eight times the peak demand experienced in June. Access remained unavailable to some users.

        The selling reached furious levels shortly after 1 p.m. in New York, when bitcoin fell back below $11,000 and didn’t stop until $9,009. It hovered just below $10,000 as of 4:30 pm.

        “Issues in the exchanges add to it without a doubt,” said David Mondrus, chief executive of Trive, a blockchain-based research platform. “When you have a lack of ability to exit, then people dump in order to exit faster.”

        For many, the retreat was overdue after bitcoin had rallied 20 percent in just four days in a run-up that drew increased warnings it was headed for a sharp retreat. The cryptocurrency ended September at $4,171.25.

        “It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Nobel Prize-winning economist Joseph Stiglitz said in a Bloomberg Television interview Wednesday. “Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed.”

        He joins a host of economists and financiers who’ve denounced the crypto rally as a craze, including most recently Vanguard Group Inc. founder Jack Bogle, who advised investors to “avoid bitcoin like the plague.”

        Proponents have heard those warnings for years, and watched bitcoin’s price rise 935 percent this year alone. Those kind of gains have grabbed Wall Street’s attention, evident Tuesday as buttoned-up financiers and analysts piled into CoinDesk’s cryptocurrencies conference in Manhattan, turning the event into a standing-room-only affair.

        Still, Wednesday’s jarring reversal had Spallanzani reminding investors that the ride down might not be over, at least for now.

        “If bitcoin can’t hold above $10,000, a technical correction could be underway, with a drop to as low as $8,400,” he said. “Asian trading tonight should be an interesting session.”

          Read more: www.bloomberg.com