Coppola Comment

Another day, another application for a spot Bitcoin exchange-traded fund (ETF) rejected. Yesterday, the SEC rejected an application from Fidelity's Wise Origin Bitcoin Trust, the fifth such rejection in three months. Back in November, the SEC rejected an  application from Van Eck Bitcoin Trust, and in December it rejected applications from Kryptoin Bitcoin ETF Trust and Valkyrie Bitcoin Fund.And on 20th January, it rejected First Trust Skybridge Bitcoin ETF Trust's application.   Valkyrie had already had an application for a Bitcoin futures ETF approved by default. So the rejection of its spot ETF came as something of a surprise. Indeed, some analysts seem to have expected the SEC's default approval of Bitcoin futures ETFs for Valkyrie and ProShares in October to open the floodgates for approval of spot Bitcoin ETFs.  But these are not the first spot Bitcoin ETFs the SEC has disapproved. The SEC has previously rejected applications from Winklevoss Bitcoin Trust, SolidX Bitc

"Britain nearly went bust in March, says Bank of England", reads a headline in the Guardian . In similar vein, the Telegraph's Business section reports "UK finances were close to collapse, says Governor": Eh, what? The Governor of the Bank of England says the UK nearly turned into Venezuela? Well, that's what the Telegraph seems to think:  The Bank of England was forced to save the Government from potential financial collapse as markets seized up at the height of the coronavirus crisis, Governor Andrew Bailey has said. In his most explicit comments yet on the country's precarious position in mid-March, Mr Bailey said 'serious disorder' broke out after panicking investors sold UK government bonds in a desperate hunt for cash. It left Britain at risk of failing to auction off the gilts needed to fund crucial spending - and Threadneedle Street had to pump £200bn into markets to restore a semblance of order. Reading this, you would think that the UK

The ever-optimistic OBR has some encouraging forecasts for interest rates and global government bond yields: Well, ok, they were rather more encouraging in November than they are now. The uplift was supposed to start ANY DAY NOW, but there has been an interruption to normal service. Leaves on the line, perhaps. Or the wrong sort of snow. The trouble is, the OBR has a long record of hockey-stick forecasting. Not that it is unique in having a noticeable bias to the upside: If ever there were evidence that economic forecasting owes more to magic than science, it is this pair of charts. Markets expected that interest rates would start rising in 2010, 2011, 2012, 2013, 2014......it is now 2016 and markets are beginning to wonder if they will ever rise. There is a feeble uplift pencilled in for 2018, and the ghost of a suggestion that there could even be a rate cut this year. The runes have failed, not once but repeatedly. Sack the shamans. Why the runes have failed is not at all

There is a widespread view that much bank lending is unproductive, i.e. does not raise GDP – or if it does, it does so in an unsustainable way by inflating asset prices or increasing inflation, rather than by increasing production.  Many proposals for bank reform therefore envisage restricting banks to “productive” lending, by which usually seems to be meant business finance and short-term consumer credit. Financial transactions on secondary markets, and the purchase of second-hand property, are regarded as unproductive. This appears attractive. Banks do indeed lend far more for property purchase than they do for business finance, and most of the properties purchased are second-hand. So, the thinking goes, if we could eliminate unproductive housing finance, banks would lend more to businesses, and that would mean higher GDP in the longer term. But I’m afraid there is a serious fallacy here. Lending for secondary market purchases does contribute to GDP, and not just in unhealthy

In my latest post at Pieria, I complain about trading strategists who don't do their homework: "There is considerable debate about whether markets are efficient, and whether investors are rational. To me it is self-evident that investors at times are anything but rational and markets at times are anything but efficient, but I will leave the economists to argue about that. If anyone really wants to know more about the limitations of the efficient markets hypothesis, read  this post  by Euronomist. And for more on whether or not human beings really are rational utility maximisers - as is implied by the rational expectations hypothesis - read  this post  by John Aziz. When it comes to monetary policy, though, all too often we are not dealing with inefficiency or irrationalilty, but simple ignorance....." The rest of the post can be found here .