Bitcoin Wobbly as Stocks Turn Red, China Locks, Parliament Rebells and Powell

Few can make much sense from these moves except that it’s probably a re-adjustment due to a changing macro environment that does not quite yet offer a very clear picture.

Dow futures for example are also all over the place, decently green first, a bit of red, now just a bit of green at 0.02% after dropping close to 1% on Monday.

FTSE is up however 0.36% due to a decent growth in jobs while Swan Lake plays in Parliament where the global debate is happening with South African scientists parading around in stating the new variant is mild and you have all gone hysteric, while Health Secretary Sajid Javid, to prove as much, says there are 200,000 cases with the new variant in UK.

Explaining that number, the BBC says he doubled and doubled the 10,000 estimate based on the 3,000 proven cases, and then doubled and doubled again, and got to 160,000. So then he went back and doubled+ a bit, to get us the nice nonsense figure that came out of you know what.

‘With’ or ‘from,’ is now the utterly sophisticated level of debate in UK where basic facts can so easily be established as more than a day later we know nothing of who was this first person that died “with” Omicron, how old was he, and did he die due to the new variant, or was it more the case he/she was pretty much gone already but happened to have it or maybe even caught it in hospital because two years on this thing is so serious that we still do not have isolated covid hospitals.

So we’re gone get a show later with the vote on nazi measures expected to start at 6PM UK time. Tune in as even the ‘unthinkable’ might happen. Boris Johnson might lose.

You’d expect him to withdraw the vax passport in the current circumstances, but he is relying on the wetwipe, Labour’s leader Keir Starmer who used the prime slot to tell the public it is his “patriotic duty” to support fascism.

It’s unclear how many in Labour will revolt, or abstain. Can always use ‘got runny nose symptoms and it’s from the cold but you know nowadays’ as an excuse. So Starmer might even act as opposition in the end. Maybe an Ed Miliband style backstabbing of David Cameron that threw to the wrench plans for quick stabilization of Syria back when the atrocious war could have been prevented, tying up the then Obama president as well and giving Putin Syria on a plate after telling Cameron he would vote for it.

All is fair in politics, so Johnson must be brave, or stupid, or who knows maybe even under Bill Gates orders, to still go ahead with it in the face of such opposition.

Lib Dems will vote against it. Sir Ed Davey, who might not quite look TV presentable but seems to have an intellect bigger than some planets, can potentially do some wonders for yellow as they go head to head against Johnson in a constituency vote that blue has held since its inception.

Yet again yellow is the official opposition and yet again the public does not give them the title of the official opposition and strip it away from Labour which has not been doing its job of holding the government to account.

And all this matters beyond these little isles because what happens here may determine what happens in Germany and then across all Europe and certainly in USA where up and up DeSantis might finally give us a young president.

Parliament will also vote on face mandates, which looks like it will pass, so scenes of elfs arresting Santa are coming to the land of Magna Carta.

Cloudy China

Our self inflicted wonds are little compared to the troubles of China where an apparently ‘angel’ property developer that seemingly had no liquidity problems tumbled 20% after Shimao’s services unit agreed to buy another unit of Shimao Group for 1.65 billion yuan ($259 million), suggesting there were some troubles.

The Hang Seng index lost another 1.33% today while China’s A50, their Dow Jones, lost 1% with boosted printing optimism giving way to worries about a collapse in the property market.

At the same time China has closed quite a bit of Zhejiang (pictured), a region next to Shanghai with a population similar to UK.

It’s China’s manufacturing powerhouse with 20 listed companies shutting down based on 217 cases.

Wenzhou, so far without cases, has been conducting outbreak prevention drills in recent weeks so that the government is ready to seal up affected areas, Reuters reports.

“After all, Wenzhou is not a big city and COVID-19 prevention work remains a top priority,” the official said on condition of anonymity.

At the same time, Japanese scientists have found that biology, rather than strict measures or QR code regimes, is behind the low cases in Japan, China and South Korea. Japan Times says:

“The reason that Japan has fared far better than the West when it comes to COVID-19 cases and deaths may come down to simple genetics, according to research by a leading Japanese institute.

Most Japanese have an inherited component of the immune system that can more effectively kill various coronaviruses, including the one that causes COVID-19, scientists with Riken research institute have said, adding that this could be one of the factors behind the low number of cases and deaths in Japan during the pandemic compared with the U.S. and Europe.”

That’s what plenty suspected already which makes China’s lockdowns a bit of a show and potentially a trap of sorts.

The Powell Trap

Jerome Powell will do his best tomorrow to pretend he knows much in the face of uncertainty with reports suggesting he might say that the asset purchasing – money printing – will end in March.

That’s to tackle inflation, but with China closing some of its manufacturing again, it isn’t very clear whether we are seeing actual monetary inflation, or a reduction in goods supply.

Prices for second hand cars for example have increased quite a bit. That’s inflation in raw data, but it’s not monetary inflation, it’s shortages in new cars.

There’s nothing Powell can do about the latter, except be fooled into thinking it is because of printing and so be made to fall into a trap.

The supply chain issues caused by China, which is now continuing to make it worse, are a political issue rather than Powell’s business.

Acting on such distortion through blunt tools risks causing bigger problems, especially when we don’t quite know yet whether politicians will keep being fooled by China’s trap and so they too do pointless drills in clean cities for the theatre of looking disciplined.

That’s because if Powell goes too fast, then the risk is deflation again, and so his plan to let inflation run above 2% so as to kick the economy onto a course of general ordinary inflation, might be thrown off-course.

He needs to hold his nerves, but arguably so do investors because nothing Powell says is written in stone. They can change plans again as March does sound a bit too fast even if there wasn’t new hysteria. With the hysteria, you’d probably need to take into account new distortions.

Regardless, for a healthy banking system you do need interest rates to move to 2% as banks need an incentive to lend. So it’s more about how fast you go and we’d go slower. Maybe down to $50 billion until March, $25 billion until June, zero by Autumn, then a small rate increase in a year.

By then we’d have a far clearer view and so would be better positioned to manage the balance between letting the boom flow while keeping inflation to acceptable levels.

Bitcoin Direction

With all of the above, it’s no wonder bitcoin doesn’t quite know what it’s doing. It should expect China printing, but maybe less in US, but the China printing should be a lot bigger than less US printing.

Housing in China now as a bad investment could mean more go to bitcoin as an investment. PBOC there is trying to make that as difficult as possible, but even their state media keeps talking about bitcoin price movements so there’s still a China bitcoin market.

In Europe, the restrictions are probably distracting attention but it does look like full on lockdowns are a thing of the past.

What we’re getting now is not too clear with it still in development, but the worst seems to be these QR code checkpointing everywhere while everyone looks like they’re in hospital in a boring zombie movie of sorts with their dirty facemasks that they mostly wear on the chin and probably never wash or worse, keep mixing each other’s masks in a disgusting because you can’t easily differentiate them and they’re so disgusting that the whole family probably leaves them in one spot by the door as soon as they enter to get rid of the dirty zombie look. Tell which mask is whose in that collection.

Which may well mean that practically masks increase transmission, but who can argue with wood donkeys who’ll say you’re meant to only use it once, yadayda, like they dealing with robots, not people, some of them poor, and plenty of them preferring to save money by doing the bare minimum for the zombie show.

In UK, it probably won’t go any further and hopefully there won’t even be QR nazing. If there’s something really serious, then there are the systems in place which can be rebooted very quickly and potential fools would be fooled, but the test is generally over.

So this thing is moving away from being something potentially economic to just pure politics where it will have a far harder time in keeping anyone’s attention, presuming this QR coding can be defeated as that would have an economic impact in some industries which might then spread to the whole economy.

Meaning there’s potentially some room for optimism again with the biggest question being just which direction will bitcoin follow after these temporary re-adjustment pieces fall into place.

Something that very much remains to be seen, with the crypto giving no blow off top yet. So we’re in uncharted territory where both moon or doom are very much on the cards.