Bitcoin Meltdown Caused by Massive Interest in the Digital Currency

“The Bitcoin correction we wrote aboutyesterday was not caused by a DDOS attack on one of the largest Bitcoin exchanges, Mt.Gox, but rather by a massive spike in interest in the crypto currency, according to Mt.Gox.

During trading yesterday the value of Bitcoin plummet by 60%, dropping from a high of $265 to around $150 (at the time of writing it has climbed back up slightly, to around $180). As the value of Bitcoin dropped, San Francisco-based exchange called TradeHill claimed the fall was a result of distributed denial of service attacks on Mt. Gox and Bitstamp.

But Mt.Gox has now posted a notice on its Facebook page explaining the dramatic dive as the result of too much interest in Bitcoin. As its infrastructure slowed down under the volume of new users crowding in, it said the resulting lag then caused traders to panic and sell off currency — triggering the drop.

Earlier this month the Tokyo-based exchange was hit by a DDOS attack — which it said had caused its “worst trading lag ever“. But this time the lag was caused by the Bitcoin goldrush, and existing investors’ fearing a Bitcoin bubble….”

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“In its market report for April, the International Energy Agency (IEA) has once again lowered its expectation for global oil demand this year. In theory, that should keep the price of gasoline down.

The International Energy Agency expects 2013 to be the third consecutive year of weak growth in demand, adding only 795 000 barrels per day (795 kb/d), according to the April Oil Market Report (OMR) published today.

Relatively strong demand growth among non-OECD countries of 1.28 million barrels a day (mb/d) will be tempered by a contraction of 480 kb/d in OECD consumption, particularly in Europe, where it will shrink by 340 kb/d. European demand has not been this weak since 1985.”

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“For the first time in many years, Microsoft has a vision.

In November 2012, CEO Steve Ballmer proclaimed that Microsoft (MSFT, Fortune 500)is no longer just a software company that licensed its operating system to PC makers to use as they pleased. Instead, Microsoft is now a devices and services company that develops its own end-to-end experience for consumers. Ballmer said Microsoft wants to maintain firm control over how its products are used.

Microsoft provided the first glimpse of how that plan might come together two weeks ago, when it unveiled its new strategy codenamed “Blue.” The company promises to roll out more frequent and more incremental updates of Windows, Windows Phone,Office and Xbox software. More than that, those updates will be coordinated across Microsoft’s multiple platforms, to get all customers’ “devices, apps and services working together.”

Instead of a mishmash of systems out there using outdated Microsoft software with glaring compatibility issues, “Blue” could ensure that Microsoft’s own products evolve at the same rate as the rest of the tech world.

If this is starting to sounds a lot like how Apple (AAPL, Fortune 500) and Google(GOOG, Fortune 500) do business, that’s intentional.

But Microsoft’s plan may be even better than anything Apple or Google currently have to offer. If — and it’s still a lofty if — there’s a shred of validity to rumors that Microsoft will merge the Windows and Windows Phone platforms, “Blue” could end up being a huge deal. Dissolving the barrier between mobile and desktop would be nothing short of impressive.

That would mean the main difference between Microsoft’s products would be the size of the hardware they run on. It’s the post-PC concept at its ideal peak….”

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“The number of Americans getting some type of disability check from the federal government is soaring.
Since 2003, there’s been a 29% jump in Americans with little or no work experience getting disability payments, according to the Social Security Administration. Over the same time, there’s been a 44% increase in disability claims by people formerly in the workplace.

Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.

All told, the federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Those numbers don’t even include people out on worker compensation claims — which are mostly paid for by private companies. Five states also offer short term disability, and there are nearly 1 million workers receiving private disability insurance.

But the Social Security-administered program that pays disability claims will likely run out of money by 2016, forcing politicians to either cut Social Security benefits, raise taxes or, most likely, dip into general Social Security funds for the money.

There are many reasons for the increase in disability claims, most notably the recession, an aging population, advances in medical technology and a decade of war.

The recession: The economic downturn in 2008 and early 2009 is thought to be the major reason for the jump in disability payments to people who were formerly working….”

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“The rebound in the housing market is “eerily familiar to the previous government policy-induced boom that went bust in 2006, and from which the country is still struggling to recover,” says Edward Pinto, who was the chief credit officer at Fannie Mae from 1987 to 1989.

In an opinion article in The Wall Street Journal, Pinto notes that the Federal Reserve’s aggressive policy of quantitative easing has lifted the stock market to record highs and supported strong bond prices. Moreover, he says, housing prices have jumped 8%, the biggest annual gain since 2006.

Pinto, now a resident fellow at the American Enterprise Institute, says that the market value of single-family homes has risen by more than $1 trillion. That “wealth effect” should empower homeowners to spend more, thus boosting the economy….”

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“The Standard & Poor’s 500 Index could drop 40 percent, according to contrarion investor Marc Faber.

“There are some people now calling for Dow Jones 18,000 or 20,000 by year end,” Faber told Newsmax TV in an exclusive interview. “The S&P could then easily drop by 40 percent.”

The editor and publisher of “The Gloom, Boom & Doom Report” said the market “needed the correction” starting in February or March….”

Watch our exclusive video. Article continues below….

“Instead of the endless procession of “different this time”, “buy-the-dip”, “money-on-the-sidelines” asset-gathering, Muppet-fleecers that CNBC so typically trots out, Sam Zell graced them with his presence and the truth was allowed a voice for a few minutes. Joined by David Rosenberg, who clarifies the insanity that engulfs US equities, explaining in wonderment that it is “not surprising the market rises even in the face of bad ISMs, worse jobs, and worst NFIB data, because Japan and the US are embarking on a gargantuan quantitative easing that is the lynchpin behind the stock market.” It is not about being bullish, or bearish, or agnostic, it is understanding the driver of this market – and that is not the economy, not earnings, “it is the mother of all liquidity-driven rallies.” Maria B, soundbite in hand, is slammed for her “glibness” at not fighting the Fed but it is Sam Zell’s brutal honesty that shocks even the money-honey. “This is a very treacherous market,” Zell explains – thanks to the giant tsunami of liquidity, “the problems of 2007 haven’t been dealt with,” and given the poor macro data and earnings, “we are suffering through another irrational exuberance,” leaving the entire CNBC audience speechless when he concludes, “the stock market feels like the housing market of 2006.”

Maria B:

“So don’t fight the Fed?“

Rosenberg:

“That’s a pretty glib comment for what is going on. You could have fought the Fed in 2000 and 2009 and done quite well… [thanks to the Fed] the market will tend to drift up – until something breaks.”

Zell:

“We’re debasing our currencies around the world.. which ultimately translates into a lot of inflation.”

 

“What we are seeing here is like a giant tsunami of liquidity.”

 

“People look at the market and think things are better. The level of uncertainty has reached a point where people are just throwing money [at risky assets] because they don’t know what else to do with it.”

 

“I would not be adding money to the stock market. This is a very treacherous market.”

 

“Yes, it’s gone up every day. Yes, you’re not supposed to fight the Fed, but sitting on the sidelines is preferable.”

 

“In our businesses, we are not seeing strong conditions.”

 

“The problems leading up to 2007 haven’t been dealt with.” …”

Full video interview & article

“(Reuters) – Feeling bolder after a 50 percent jump in Tokyo share prices inflated his stock portfolio in recent months, Akira Otomo surprised his wife with a new kimono and matching traditional obi belt costing more than $8,000.

After a decade and a half of self-imposed austerity, there are signs that wealthier Japanese shoppers are spending more. Confidence is rising, and with it sales of high-end goods and clothes, giving retailers a boost.

“I’d given up on my stock portfolio, but I’m happy prices are finally getting back to where they were before the Lehman crisis,” said Otomo, 56, who runs a human resources training company. “I’m looking to sell, and I’m sure I’ll spend some of the profits,” he added as he left an apparel shop in Tokyo’s upscale Omotesando district.

The trigger has been Japan’s radical gamble to end deflation under Prime Minister Shinzo Abe – a combination of aggressive monetary easing, currency devaluation and promises of reform dubbed “Abenomics.”

Many retailers forecast higher profits for this year on improved sales of luxury goods and clothing. But some retailers and shoppers are unsure if spending will continue once the feel-good factor of higher stock prices fades. For many Japanese, wages remain depressed and employment prospects uncertain.

“The rich have money, but I don’t feel the economy’s getting better,” said Eri Mori, a 42-year-old Osaka housewife. “I don’t see salaries rising.”

PORTFOLIO EFFECT

The stock market rally .T that has given Otomo the confidence to splurge was sparked by Abe’s pledge to overhaul the Bank of Japan so it would ease monetary policy more aggressively. The BOJ delivered last week, agreeing to double the amount of government debt it holds over the next two years.

Abe is counting on the wealth effect from further gains in stock prices, encouraging investors to cash in and spend more.

“The sudden improvement in the stock market has led to a big rise in sales at our department stores for luxury brands and high-end goods like jewelry, precious metals and watches,” said Ryoichi Yamamoto, president of J.Front Retailing Co (3086.T), which operates store chains like Daimaru and Matsuzakaya that do more business in Osaka and Nagoya.

The company sees that higher demand acting as a “tailwind” to drive up operating profit by close to a third to a record 40 billion yen ($404 million) in the year to next February….”

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In Play ,

On the Wires 

Import prices down 0.5%…yoy – 2.7%

It looked like a Garvestone Doji was forming on Tuesday, but we had a parabolic spike yesterday to $260 with a reversal down to the low $100s closing at $180.

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“Fund manager John Hussman of the Hussman Funds has been hammering on what is probably the biggest risk to future stock performance:

The risk that today’s record-high profit margins will fall, taking corporate earnings down with them.

Those who want stocks to keep charging higher have come up with a list of many reasons why it’s “different this time” and today’s profit margins will keep on increasing. These include:

• Almost half of big corporate profits now come from international operations, so profit-to-US GDP measures aren’t meaningful
• The source of the high profit margins is efficiency and low labor costs, and those gains will continue (labor glut, high unemployment, etc.)
• There is no law that says profit margins HAVE TO drop…

Those points have some merit.

But the idea that it really is “different this time” and that corporate profit margins will now remain at record levels forever seems, at best, dreamy.

After all, this is what profit margins (blue) have done in the past….”

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“LOS ANGELES (AP) — The number of U.S. homes repossessed by lenders last month fell to the lowest level in more than five years, the latest evidence that the nation’s foreclosure crisis is abating amid an improving housing market.

While some states still saw increases in homes taken back by banks, nationally home repossessions fell 3 percent in March from the previous month and were down 21 percent from a year earlier,foreclosure listing firm RealtyTrac Inc. said Thursday.

Thirty-four states posted annual declines in completed foreclosures. Among those bucking that trend: Arkansas, Maryland, Washington and Pennsylvania.

All told, lenders repossessed 43,597 homes last month, the lowest level since September 2007.

At the current monthly pace, completed foreclosures will total roughly 550,000 this year, down from 671,000 last year, RealtyTrac said.

An uptick in homes that entered the foreclosure process last month, however, may end up pushing that total to 600,000, said Daren Blomquist, a vice president at RealtyTrac.

Several factors are contributing to the decline in completed foreclosures: Steady job growth and ultra-low mortgage rates are helping the once-battered housing market recover, driving demand for homes and prices upward.

Higher home values help restore equity to homeowners, which can help those at risk of foreclosureby improving their chances of refinancing their mortgage to a lower payment or place them in a better position to sell their home.

Meanwhile, states like California, Nevada and others have passed laws to increase homeowners’ protections from foreclosure. Those laws have effectively delayed the pace of homes entering the foreclosure process, which has helped to thin the pipeline of completed foreclosures in those states.

Even so, the number of foreclosure starts, or homes that entered the foreclosure process, edged higher for the second month in a row in March….”

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“(Reuters) – Protective Life Corp agreed to buy a portfolio of old policies from French insurer AXA SA’s U.S. business for $1.1 billion, with the aim of squeezing more value out of them.

Birmingham, Alabama-based Protective Life said the deal with Axa’s Mony Life Insurance Companyshould produce a steady income stream and increase earnings per share. Most of the policies are life insurance written before 2004.

AXA, which bought Mony in 2004 for $1.5 billion, will take a capital loss of below 100 million euros ($131 million), in part attributable to the difference between what it paid for the business initially and what it is being sold for now.

Last month, people familiar with the situation said Protective Life was the leading candidate to buy U.S. life insurance assets from Axa, which has been expanding into emerging markets while scaling back its presence in North America after years of underperformance in that region.

AXA said on Thursday it would continue to use Mony Life to write new business in the United States.

“This transaction allows us to further grow our US business where we have been achieving good momentum while freeing up capital invested in closed portfolios to improve our financial flexibility and enable additional investment in high-growth markets and businesses,” AXA Chief Executive Henri de Castries said in a statement.

AXA shares were up 1.2 percent at 3.38 a.m ET, outperforming the European insurance sector <.sxip>, which was up 0.4 percent.

The transaction values the portfolio at 0.7 times its book value, a premium to AXA’s own book value, a Paris-based analyst said. AXA trades at 0.6 times book, according to Thomson Reuters data….”

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“Two days after J.C. Penney’s board of directors ousted Ron Johnson from the chief executive role, hedge fund manager and board member Bill Ackman has broken his silence to say he’s sticking by the beleaguered department store retailer, according to a report.

“We’re not going anywhere,” Ackman told “Women’s Wear Daily” in his first public comments about the retailer since Johnson was fired. “In fact, we’re going the other direction. We’re digging in.”

On Monday, the company announced that former CEO Mike Ullman, who held the position from 2005 to 2011, would take over again in the middle of a planned multi-year turnaround that hasn’t gone well so far.

Last year, comparable same-store sales dropped 25 percent as J.C. Penney customers turned away from its new everyday low price strategy, which replaced heavy discounting and couponing.

As sales have slid, so has the value of both the company’s stock price and Ackman’s Pershing Square Capital Management fund’s stake in the company. The fund currently holds 17.8 percent of the retailer’s outstanding shares.

The fund manager helped recruit Johnson last year, and had previously defended him throughout the company’s struggles but turned more critical of Johnson on Friday, shortly before he was fired….”

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“Chevron, the second-largest U.S. oil company, said on Wednesday its production of oil and gas has declined from a relatively strong fourth quarter while work on two of its three biggest U.S. refineries cut into downstream performance.

Output from oil and gas wells – accounting for about nine tenths of the company’s business – declined in the first two months of the first quarter from the previous quarter, due to maintenance in the Gulf of Mexico and weather-related downtime elsewhere.

Maintenance at Chevron’s largest refinery in Pascagoula, Mississippi, the ninth-largest refinery in the country, led to a decline of 145,000 barrels per day in U.S. refining input from the previous quarter to 557,000 bpd.

Its domestic refining operations have already been hit hard by the shutdown of a key unit at its plant in Richmond, California, after a fire last August. That unit is due to start up at some point this quarter.

In the second quarter of 2012 – the last period of full U.S. refining production before the fire – input was 928,000 bpd.

Unlike past quarters, the San Ramon, California-based company did not indicate where its first-quarter earnings were headed in its quarterly interim update on Wednesday….”

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Bird flu should make for tasty Chinese burritos…..no?

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