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| Market sell off deepens as bitcoin's slide continues - business live | Market sell off deepens as bitcoin's slide continues - business live |
| (35 minutes later) | |
| Bitcoin is being hit by two different issues (as explained earlier). | |
| Firstly, you have the growing threat of regulation, with India’s finance minister pledging yesterday to ‘eliminate’ the use of digital currencies by criminals. That follows similar similar warnings from politicians in the UK, US and South Korea. | |
| Secondly, you have the investigation into Bitfinex (a leading digital currency exchange), and crypto firm tether. Regulators are questioning whether tether, whose coins are used to trade digital currency, are actually fully backed by US dollars as it claims. | |
| As Bloomberg explains: | |
| Tether’s coins have become a popular substitute for dollars on cryptocurrency exchanges worldwide, with about $2.3 billion of the tokens outstanding as of Tuesday. While Tether has said all of its coins are backed by U.S. dollars held in reserve, the company has yet to provide conclusive evidence of its holdings to the public or have its accounts audited. | |
| Skeptics have questioned whether the money is really there. | |
| This double-dose of bad news is sparking a rout across the sector, sending bitcoin sliding through $8,000 (it’s $7,888 right now). | |
| Neil Wilson of ETX Capital reckons that “the wheels are coming off the bitcoin bandwagon”. | |
| The regulatory crunch appears closer than ever and sooner or later this market could be headed back down to earth. Selling pressure at the moment is intense as there has been nothing but bad news for bitcoin bulls of late. | |
| The key concern facing the bulls is the CFTC investigation into Tether and the Bitfinex exchange. Claims of full dollar convertibility are under scrutiny. Given there are about 2bn tether coins in existence, there should be a $2bn account somewhere but Tether has yet to prove it or have accounts audited. | |
| The idea that Tether is creating coins to buy bitcoin is straight out of satire. If bitcoin is a Ponzi scheme, then this is Ponzi squared; printing fake money to buy a different type of fake money in order to ramp up the price of the latter. If it weren’t likely to cause real world losses for many investors it would be hilarious. | |
| Meanwhile, we see the jaws of the regulatory crunch closing on other fronts with moves to ban or greatly restrict trading on bitcoin gaining traction worldwide. Ultimately if the CFTC decides bitcoin prices have been manipulated it casts a huge shadow of bitcoin and entire crypto market. | |
| At Davos last week, a series of experts cast doubt over bitcoin -- those predictions seem to be being born out today.... | |
| Ouch! Bitcoin has just tumbled through the $8,000 mark. | |
| It’s now trading at $7985 on the Bitstamp exchange, down over 11% this morning as volatile trading continues to rock the digital currency sector. | |
| This inflicts further losses on those who bought into bitcoin late last year. | |
| Bitcoin has now lost around 40% of its value this year (bitcoin started the New Year at $13,880), and 60% since its all-time peak in December. | |
| Bitcoin falls below $8,000. Down 11% today, after the huge fall in value over the past month. | |
| The US stock market is heading for another bath. | The US stock market is heading for another bath. |
| The Dow Jones is being called down around 220 points, or 0.8%, amid nervousness ahead of today’s non-farm payroll jobs report. | The Dow Jones is being called down around 220 points, or 0.8%, amid nervousness ahead of today’s non-farm payroll jobs report. |
| In Europe, the Stoxx 600 index is now down 1.1% - and facing its biggest weekly loss since the US presidential election in November 2016. | In Europe, the Stoxx 600 index is now down 1.1% - and facing its biggest weekly loss since the US presidential election in November 2016. |
| In London, the FTSE 100 is extending its recent losses. It’s down another 28 points, or 0.3%, at 7461, its lowest level since 15 December. | In London, the FTSE 100 is extending its recent losses. It’s down another 28 points, or 0.3%, at 7461, its lowest level since 15 December. |
| Investors are ignoring last night’s strong results from Amazon, in favour of fretting about the bond market again. | Investors are ignoring last night’s strong results from Amazon, in favour of fretting about the bond market again. |
| Bond yields (which rise when prices fall) are climbing, on the back of concerns that Donald Trump’s tax cuts will drive up US borrowing. | Bond yields (which rise when prices fall) are climbing, on the back of concerns that Donald Trump’s tax cuts will drive up US borrowing. |
| It's jobs day and Dow futures are down 200 points as investors fret over climbing global bond yields, ignore Amazon, Apple premarket cheer. It's Groundhog Day too. https://t.co/LH1GiIkdvr pic.twitter.com/MlAyyxRgT1 | It's jobs day and Dow futures are down 200 points as investors fret over climbing global bond yields, ignore Amazon, Apple premarket cheer. It's Groundhog Day too. https://t.co/LH1GiIkdvr pic.twitter.com/MlAyyxRgT1 |
| Craig Erlam of City firm OANDA says trading is “rocky” in Europe today. He points to the volatility in the bond market, where UK and German government debt has weakened: | Craig Erlam of City firm OANDA says trading is “rocky” in Europe today. He points to the volatility in the bond market, where UK and German government debt has weakened: |
| Gilt yields are at their highest since May 2015 and Bunds at their highest since September 2015. This may well be contributing to the declines we’ve seen recently across Europe – along with the corresponding appreciation of the euro and pound – and could now be taking its toll on US stocks. | Gilt yields are at their highest since May 2015 and Bunds at their highest since September 2015. This may well be contributing to the declines we’ve seen recently across Europe – along with the corresponding appreciation of the euro and pound – and could now be taking its toll on US stocks. |
| That doesn’t necessarily mean we’ve entered a risk-off period or that stocks are headed for a correction but a sharp rise in yields, as we’ve seen, can also weigh on equity markets. | That doesn’t necessarily mean we’ve entered a risk-off period or that stocks are headed for a correction but a sharp rise in yields, as we’ve seen, can also weigh on equity markets. |
| The FT has a good take on the anxiety in the bond markets: | The FT has a good take on the anxiety in the bond markets: |
| The US is heading into some of its biggest budget deficits outside of wars and recessions as Congress debates increasing ceilings on federal spending on top of December’s trillion-dollar tax cuts. | The US is heading into some of its biggest budget deficits outside of wars and recessions as Congress debates increasing ceilings on federal spending on top of December’s trillion-dollar tax cuts. |
| Lawmakers are contemplating lifting caps on defence and non-defence spending as they seek a funding deal in coming weeks. The Bipartisan Policy Center, a non-partisan think-tank, predicts that Congress will settle on plans that drive the deficit to 5.7 per cent of US gross domestic product in 2019 as annual borrowing exceeds $1.1tn. | Lawmakers are contemplating lifting caps on defence and non-defence spending as they seek a funding deal in coming weeks. The Bipartisan Policy Center, a non-partisan think-tank, predicts that Congress will settle on plans that drive the deficit to 5.7 per cent of US gross domestic product in 2019 as annual borrowing exceeds $1.1tn. |
| That would be well short of deficits as a share of GDP reached after the Great Recession or the second world war. But it would be comparable to the shortfall after the recession of the early 1980s under Ronald Reagan, even though the US is now at or beyond full employment and the global economy is in its strongest upswing in a decade. | That would be well short of deficits as a share of GDP reached after the Great Recession or the second world war. But it would be comparable to the shortfall after the recession of the early 1980s under Ronald Reagan, even though the US is now at or beyond full employment and the global economy is in its strongest upswing in a decade. |
| More here: Economists warn of Trump deficit’s ‘dark trajectory’ | More here: Economists warn of Trump deficit’s ‘dark trajectory’ |
| Germany’s Dax index has now shed all 2018’s gains, dragged down partly by Deutsche Bank after its disappointing results. | Germany’s Dax index has now shed all 2018’s gains, dragged down partly by Deutsche Bank after its disappointing results. |
| Oops! #Germany's Dax looks quite ugly. After one of the best Jan on record, Dax now down on the year, having suffered one of the largest selloffs since 2016. pic.twitter.com/XapcDZcCH4 | Oops! #Germany's Dax looks quite ugly. After one of the best Jan on record, Dax now down on the year, having suffered one of the largest selloffs since 2016. pic.twitter.com/XapcDZcCH4 |
| Economics professor Nouriel Roubini has just been on Bloomberg TV, blasting bitcoin as the “biggest Ponzi scheme in human history”. | Economics professor Nouriel Roubini has just been on Bloomberg TV, blasting bitcoin as the “biggest Ponzi scheme in human history”. |
| Roubini claims that “charlatans and swindlers” drove digital currencies to record levels last year, before cashing their profits. | Roubini claims that “charlatans and swindlers” drove digital currencies to record levels last year, before cashing their profits. |
| Ordinary punters, who bought bitcoin when it was trading around $20,000, have lost 60% of their shirts since, says Roubini. | Ordinary punters, who bought bitcoin when it was trading around $20,000, have lost 60% of their shirts since, says Roubini. |
| .@flacqua asks @Nouriel Roubini if regulating #cryptocurrency will legitimize it. Roubini answers, "I don't think so." @tomkeene @BloombergTV https://t.co/Ng2PG7JNIF pic.twitter.com/1BeAOgr6V7 | .@flacqua asks @Nouriel Roubini if regulating #cryptocurrency will legitimize it. Roubini answers, "I don't think so." @tomkeene @BloombergTV https://t.co/Ng2PG7JNIF pic.twitter.com/1BeAOgr6V7 |
| Here’s Rob Davies on the job losses at Carillion: | Here’s Rob Davies on the job losses at Carillion: |
| There’s a good piece in the New Statesman today about the problems in Britain’s outsourcing sector, and the lessons to be learned. | There’s a good piece in the New Statesman today about the problems in Britain’s outsourcing sector, and the lessons to be learned. |
| In it, Grace Blakeley argues that the demise of Carillion, and Capita’s financial problems, show that the outsourcing market is failing, and must change. | In it, Grace Blakeley argues that the demise of Carillion, and Capita’s financial problems, show that the outsourcing market is failing, and must change. |
| Blakeley says: | Blakeley says: |
| Firstly, rather than granting contracts to a small number of huge multinationals which then commission other, smaller specialist firms to do the work, the government should get rid of the middle man and deal with suppliers directly. This would boost small businesses, and tackle the uncompetitive nature of the current outsourcing market. It would also protect the government from another Carillion crisis. | Firstly, rather than granting contracts to a small number of huge multinationals which then commission other, smaller specialist firms to do the work, the government should get rid of the middle man and deal with suppliers directly. This would boost small businesses, and tackle the uncompetitive nature of the current outsourcing market. It would also protect the government from another Carillion crisis. |
| Secondly, public contracts should not be awarded solely on the basis of “value for money”. Government contracts should be seen as an opportunity to create public value – where value is understood in holistic rather than narrow economistic terms. The government should account for the wider economic and social impact of its suppliers when determining which supplier should be awarded a particular contract. The Labour party’s proposals to account for the quantity and quality of employment created by a supplier, the nature of its corporate governance, its environmental impact and its attitude towards tax suggests how this could be done. | Secondly, public contracts should not be awarded solely on the basis of “value for money”. Government contracts should be seen as an opportunity to create public value – where value is understood in holistic rather than narrow economistic terms. The government should account for the wider economic and social impact of its suppliers when determining which supplier should be awarded a particular contract. The Labour party’s proposals to account for the quantity and quality of employment created by a supplier, the nature of its corporate governance, its environmental impact and its attitude towards tax suggests how this could be done. |
| Thirdly, we need to call time on private financing. If the government wants to build a major infrastructure project it should do so through historically cheap public borrowing, on the public balance sheet, justifying the investment based on the economic, social, or environmental impact. Good public investment done well more than pays for itself in the long run. It should also expand its definition of investment to include investment in human as well as physical capital – spending on healthcare and education is just as much of an investment in the long-run economic capacity of this country as investments in roads and bridges. | Thirdly, we need to call time on private financing. If the government wants to build a major infrastructure project it should do so through historically cheap public borrowing, on the public balance sheet, justifying the investment based on the economic, social, or environmental impact. Good public investment done well more than pays for itself in the long run. It should also expand its definition of investment to include investment in human as well as physical capital – spending on healthcare and education is just as much of an investment in the long-run economic capacity of this country as investments in roads and bridges. |
| More here: The problem with outsourcing is not Carillion but the market itself | More here: The problem with outsourcing is not Carillion but the market itself |
| NEWSFLASH: Nearly 400 Carillion staff have just been made redundant, following its fall into liquidation last month. | NEWSFLASH: Nearly 400 Carillion staff have just been made redundant, following its fall into liquidation last month. |
| The Official Receiver says it has managed to save more than 900 jobs, but 377 more have lost their jobs. They’re now being told to contact the JobCentre. | The Official Receiver says it has managed to save more than 900 jobs, but 377 more have lost their jobs. They’re now being told to contact the JobCentre. |
| The employees whose jobs have been saved work on “infrastructure, central and local government, and construction contracts”. They are now being transferred to new employees who have taken on these contracts. | The employees whose jobs have been saved work on “infrastructure, central and local government, and construction contracts”. They are now being transferred to new employees who have taken on these contracts. |
| Carillion employed almost 20,000 staff in the UK, so thousands more Carillion workers still face an uncertain future. | Carillion employed almost 20,000 staff in the UK, so thousands more Carillion workers still face an uncertain future. |
| A spokesperson for the Official Receiver says: | A spokesperson for the Official Receiver says: |
| “As part of the ongoing liquidation of the Carillion group I am pleased we have been able to safeguard the jobs of 919 employees today. Most staff are transferring on existing or similar terms and I will continue to facilitate this wherever possible as we work to find new providers for Carillion’s other contracts. | “As part of the ongoing liquidation of the Carillion group I am pleased we have been able to safeguard the jobs of 919 employees today. Most staff are transferring on existing or similar terms and I will continue to facilitate this wherever possible as we work to find new providers for Carillion’s other contracts. |
| “Despite best efforts it has not been possible to secure the jobs of 377 staff, who will be made redundant. Those affected will be entitled to make a claim for statutory redundancy payments. The Jobcentre Plus’ Rapid Response Service stands ready to support any of these employees by providing advice and information so people can move into a new job as quickly as possible. | “Despite best efforts it has not been possible to secure the jobs of 377 staff, who will be made redundant. Those affected will be entitled to make a claim for statutory redundancy payments. The Jobcentre Plus’ Rapid Response Service stands ready to support any of these employees by providing advice and information so people can move into a new job as quickly as possible. |
| “I recognise that this will be a worrying time for all those affected, their families and local communities. I would like to thank all staff for their professionalism throughout the liquidation. | “I recognise that this will be a worrying time for all those affected, their families and local communities. I would like to thank all staff for their professionalism throughout the liquidation. |
| “I am expecting many employees working on other Carillion contracts to transfer in the coming weeks and we are continuing to keep the workforce updated as these are arrangements are finalised.” | “I am expecting many employees working on other Carillion contracts to transfer in the coming weeks and we are continuing to keep the workforce updated as these are arrangements are finalised.” |
| #OfficialReceiver update on employment in the #Carillion group - 919 jobs secured today; despite best efforts 377 employees to be made redundant:https://t.co/DS7f3cAt77 pic.twitter.com/eFtBeA7utx | #OfficialReceiver update on employment in the #Carillion group - 919 jobs secured today; despite best efforts 377 employees to be made redundant:https://t.co/DS7f3cAt77 pic.twitter.com/eFtBeA7utx |
| Noble Francis, economics director at the Construction Products Association, fears that we haven’t seen the full impact of Carillion’s collapse yet. | Noble Francis, economics director at the Construction Products Association, fears that we haven’t seen the full impact of Carillion’s collapse yet. |
| Markit/CIPS UK construction activity in January effectively flat in January. House building fell whilst there were marginal rises in commercial & infrastructure after falls in the 2nd half of last year. #ukconstruction #construction https://t.co/GzFiAsgeuc pic.twitter.com/Pj5Xk2jjaV | Markit/CIPS UK construction activity in January effectively flat in January. House building fell whilst there were marginal rises in commercial & infrastructure after falls in the 2nd half of last year. #ukconstruction #construction https://t.co/GzFiAsgeuc pic.twitter.com/Pj5Xk2jjaV |
| What we don't know is the impact of the liquidation of Carillion on construction activity. The surveying is likely to have occurred prior to the main effects of work stopping on site in the 2nd half of the month & will mainly have effected the infrastructure & commercial... | What we don't know is the impact of the liquidation of Carillion on construction activity. The surveying is likely to have occurred prior to the main effects of work stopping on site in the 2nd half of the month & will mainly have effected the infrastructure & commercial... |
| ...60% of Carillion 72 key projects were in infrastructure & the effect of the liquidation of Carillion on the estimated 25,000-30,000 sub-contractors will only become apparent over the next few months. | ...60% of Carillion 72 key projects were in infrastructure & the effect of the liquidation of Carillion on the estimated 25,000-30,000 sub-contractors will only become apparent over the next few months. |
| Duncan Brock of the Chartered Institute of Procurement & Supply says political and economic uncertainty is hitting the UK construction sector, pushing it towards stagnation. | Duncan Brock of the Chartered Institute of Procurement & Supply says political and economic uncertainty is hitting the UK construction sector, pushing it towards stagnation. |
| “The blocks to progress included a sharp rise in costs and a shortage of key materials, which contributed to longer lead times as supplier capabilities were stretched to their limits. | “The blocks to progress included a sharp rise in costs and a shortage of key materials, which contributed to longer lead times as supplier capabilities were stretched to their limits. |
| “Against this challenging backdrop, though larger orders from cautious clients also failed to materialise, firms retained a sunny disposition with optimism at a seven-month high and a slight rise in employment continued. | “Against this challenging backdrop, though larger orders from cautious clients also failed to materialise, firms retained a sunny disposition with optimism at a seven-month high and a slight rise in employment continued. |
| “With construction teetering on the edge of contraction, this surprise outcome will serve as a jolt to policymakers, that the impact of political and economic uncertainty remains large at the beginning of 2018.” | “With construction teetering on the edge of contraction, this surprise outcome will serve as a jolt to policymakers, that the impact of political and economic uncertainty remains large at the beginning of 2018.” |
| Sam Teague, Economist at IHS Markit, says there wasn’t much New Year cheer in the building sector: | Sam Teague, Economist at IHS Markit, says there wasn’t much New Year cheer in the building sector: |
| “January’s PMI data indicated a difficult start to 2018 for the UK’s construction sector, underlined by business activity growth slumping to a four-month low and new orders sliding back into decline. | “January’s PMI data indicated a difficult start to 2018 for the UK’s construction sector, underlined by business activity growth slumping to a four-month low and new orders sliding back into decline. |
| “A contraction in house building added to lacklustre commercial building and civil engineering markets, and reduced inflows of new work suggest overall activity could slip into decline in February. Furthermore, cost pressures remained intense, fuelled by shortages of input materials and high costs for imported products. | “A contraction in house building added to lacklustre commercial building and civil engineering markets, and reduced inflows of new work suggest overall activity could slip into decline in February. Furthermore, cost pressures remained intense, fuelled by shortages of input materials and high costs for imported products. |
| Max Jones, global corporates relationship director for construction at Lloyds Bank Commercial Banking, says the collapse of Carillion has hit the construction sector. | Max Jones, global corporates relationship director for construction at Lloyds Bank Commercial Banking, says the collapse of Carillion has hit the construction sector. |
| Jones explains: | Jones explains: |
| “It has clearly been a month like no other for the sector, so this drop in the PMI reading comes as no major surprise. | “It has clearly been a month like no other for the sector, so this drop in the PMI reading comes as no major surprise. |
| “The impact of Carillion’s liquidation has rippled down the supply chain and shaken confidence across the industry. There have inevitably been fears for the sub-contractors with exposure to the collapse, though some have drawn down on emergency support from banks, including the £50m Lloyds fund. | “The impact of Carillion’s liquidation has rippled down the supply chain and shaken confidence across the industry. There have inevitably been fears for the sub-contractors with exposure to the collapse, though some have drawn down on emergency support from banks, including the £50m Lloyds fund. |
| Tens of thousands of small construction companies, and other suppliers, across the UK were hit by Carillion’s shock liquidation in early January. Work was halted at two major hospitals, while other firms were forced to lay off staff as they’re unlikely to be paid for work carried out for Carillion. | Tens of thousands of small construction companies, and other suppliers, across the UK were hit by Carillion’s shock liquidation in early January. Work was halted at two major hospitals, while other firms were forced to lay off staff as they’re unlikely to be paid for work carried out for Carillion. |
| NEWSFLASH: Britain’s construction industry has slowed to near stagnation, and housebuilding is in decline. | NEWSFLASH: Britain’s construction industry has slowed to near stagnation, and housebuilding is in decline. |
| Data firm Markit reports that UK building companies experienced a “subdued start to 2018”, with total industry activity barely rising. | Data firm Markit reports that UK building companies experienced a “subdued start to 2018”, with total industry activity barely rising. |
| Its monthly construction PMI, which measures activity, dropped to just 50.2 for January from 52.2 in December. That’s worryingly closed to the 50-point mark that separates expansion from contraction. | Its monthly construction PMI, which measures activity, dropped to just 50.2 for January from 52.2 in December. That’s worryingly closed to the 50-point mark that separates expansion from contraction. |
| In another blow, housebuilding activity shrank - while civil engineering work picked up. | In another blow, housebuilding activity shrank - while civil engineering work picked up. |
| Job creation across the construction industry also slowed, to an 18-month low. That’s a fresh hit to apprentices already reeling from the collapse of Carillion last month. | Job creation across the construction industry also slowed, to an 18-month low. That’s a fresh hit to apprentices already reeling from the collapse of Carillion last month. |
| Markit says: | Markit says: |
| A return to contraction in residential building activity was accompanied by near-stagnant commercial and civil engineering activity. New orders declined, linked by many companies to market uncertainty. | A return to contraction in residential building activity was accompanied by near-stagnant commercial and civil engineering activity. New orders declined, linked by many companies to market uncertainty. |
| On a more positive note, confidence towards future growth prospects improved, with many firms anticipating an increase in new project wins later in the year. | On a more positive note, confidence towards future growth prospects improved, with many firms anticipating an increase in new project wins later in the year. |
| More to follow... | More to follow... |
| This is turning into bitcoin’s worst week since 2013.... | This is turning into bitcoin’s worst week since 2013.... |
| Bitcoin falls 9% to below $8,200. It's now -30% on the week, its biggest weekly fall in nearly 5 years. | Bitcoin falls 9% to below $8,200. It's now -30% on the week, its biggest weekly fall in nearly 5 years. |
| Of course, bitcoin has always bounced back from its previous slumps (five years ago it was worth just $20). But is this time different?.... | Of course, bitcoin has always bounced back from its previous slumps (five years ago it was worth just $20). But is this time different?.... |
| Telecoms group BT is also having a bad morning. | Telecoms group BT is also having a bad morning. |
| Shares have fallen over 5% to 241.3p, a five-year low, after some underwhelming results this morning. | Shares have fallen over 5% to 241.3p, a five-year low, after some underwhelming results this morning. |
| Profits over the last nine months are down 9%, and the company has also reported a fall in TV customers - despite splashing out on live Ashes coverage (given England’s performance, perhaps they should have spared us....) | Profits over the last nine months are down 9%, and the company has also reported a fall in TV customers - despite splashing out on live Ashes coverage (given England’s performance, perhaps they should have spared us....) |
| My colleague Mark Sweney points out that BT’s consumer division seems to be slowing, while its IT services division continues to struggle.... | My colleague Mark Sweney points out that BT’s consumer division seems to be slowing, while its IT services division continues to struggle.... |
| BT’s TV service lost 5,000 customers in final q 2017. But says was “Best quarter ever” as viewin up 23% y-on-y due to Ashes/Champs League. Deal for Sky channels from 2019 cost £50m in “upfront costs”. | BT’s TV service lost 5,000 customers in final q 2017. But says was “Best quarter ever” as viewin up 23% y-on-y due to Ashes/Champs League. Deal for Sky channels from 2019 cost £50m in “upfront costs”. |
| BT’s share price has fallen 4% as growth stalled at its consumer division - where broadband customer additions have slowed and BT TV lost customers despite Champions League and Ashes coverage - in the last quarter of 2017. And the global IT services division continues to tank. | BT’s share price has fallen 4% as growth stalled at its consumer division - where broadband customer additions have slowed and BT TV lost customers despite Champions League and Ashes coverage - in the last quarter of 2017. And the global IT services division continues to tank. |