Bitcoin has advantages over gold, and actual currencies as a store of value. If you believe that society will spend a growing percentage of capital on "digital goods/assets" vs physical goods in the future, here is a rationale. When one considers that the cost of putting 1MB of information onto the Bitcoin blockchain is somewhere between $7,000 and $8,000 , it sounds like an expensive way to store information. It would be many orders of magnitude cheaper to store information in a database on a
By Chief Economist & Head of Credit Portfolio Management
The Relative Value Between Stocks and Bonds
Past week’s sell off in equity markets was one of the largest in recent years. When something like that happens, market analysts like to look at indicators such as the “Relative Strength Index.” This index is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The relative strength or weakness is known as “overbought” or “oversold” cond
By Jay Casey, President & Co-Founder
"IntelleCator" release - Intellectus Proprietary Economic Index
On: Macro, Quantitative Research, Algos, Intellectus Proprietary Indices
As many of you know, the team at Intellectus Partners has been working on and refining a number of Quantitative driven analytics. Today we release our proprietary economic algorithmic indicator, which we have coined the "IntelleCator". We take this opportunity to further expand upon our findings and methodology. The idea is that our economic indicator will enable the team to have a nearly real-time pulse on the health of the broader economy. This in turn, will provide us a clearer perspective
On: Stock Market Valuation, Macro, Intellectus Economic Intelligence
What is happening in the markets now. Change is sometimes uncomfortable. It’s been too long since we have had a correction, so one was due. We are off more than 5% from the recent high. A 5% correction is a must and needed event to take the speculators out. We typically get two corrections of this size per year. Interestingly, it has been over 400 days since we have had one. Good opportunities begin to present themselves upon these downlegs, but a 10% or more correction could clearly be in the
By Chief Economist & Head of Credit Portfolio Management
What Shutdowns and Debt Ceilings Say About Returns
For the all the tensions in Washington D.C. over who’s the blame for the shutdown of the government, investors are going to be quite happy. A shutdown of government sounds negative but is viewed by investors as a wrinkle rather than a big fork in the road. This is seen from bond and stock returns that have been uniformly positive during and after shut downs and debt ceilings negotiations end. U.S. political risk is seen an investment opportunity and there are several reasons why. According to a
Bitcoin futures were launched on the Chicago Mercantile Exchange in follow on to last week’s introduction on the Cboe. The result of these formal introductions is liquidity in the market for Bitcoin may pick up quickly. Naturally that would compress the price between futures and the underlying Bitcoin which is called the “the basis.” Currently the Bitcoin basis is around $450 to $800 which suggests there remains a significant liquidity difference between Bitcoin and futures markets. But now that
Financial markets once again embraced President Trump’s tax reform with euphoria. Although details lack and uncertainties remain, the impact of reform was priced in as a positive outlook for the U.S. economy. This was seen from a strong rally in small cap stocks and companies with a current high effective marginal corporate tax rate. The dollar received a boost and Treasury yields rose on the prospect of higher GDP in the coming quarters. Now the question rises whether tax reform is an “inflecti
Most clients have seen press reports about current tax proposals in Congress that promise significant changes to the taxation of individuals and businesses. H.R. 1, titled the “Tax Cuts and Jobs Act,” was introduced to Congress on November 2nd and is in the early stages of its legislative journey through the House of Representatives and the Senate. Prospects for the adoption of all, some or any of its current components is unclear at this point. One of the elements of H.R. 1 in its current form
In her sit down discussion in London, Federal Reserve Chair Yellen presented a milder version of what Alan Greenspan once dubbed 20-years earlier as “irrational exuberance” to describe the state of the stock market. Fed Chair Yellen said valuations appear to be “somewhat rich” when measured on traditional models. The model she referred to is the “Fed model” of stock valuations, introduced by Alan Greenspan at the Humprey Hawkins testimony in 1997. The model uses the 1-year forward earnings yield
The latest Consumer Price Index release was the third consecutive inflation report that came out on the soft side. The economy has been moderately growing at 2 percent average with wages around 2.5 percent and unemployment around 4.3 percent. An economist who advocates the “Phillips Curve” (the relationship between unemployment rate and inflation) would argue the U.S. economy is on the brink of a burst in inflation. And yet, the actual inflation is benign and even shows ingrained deflationary tr
On: Crypto, Blockchain, Bitcoin, ICO's
Crypto Currencies, Blockchain and the ICO Crypto currencies are a digital currency that uses encryption techniques to regulate the creation of currency and verify the transfer of funds, operating independently of any central bank. They are built on top of a Blockchain, which is a digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. While not exactly new, the Blockchain and Crypto currencies may be hitting critical mass and ar
Yields are falling despite the Fed, the Bank of Canada and the Bank of England, want to hike interest rates. The long end of the yield curve responds with natural defense because soft inflation and hikes means the Fed will not meet the inflation target. Indeed, the Treasury Inflation Protected Securities (TIPS) curve discounts a below target inflation for the next 30-years. This expectation has been in place since late 2014 since QE3 ended. Since that time, the 10-year has been in a downtrend wi
On: New Hire, Expansion, Asia, China
We are proud to announce another significant addition to the Intellectus Team. Alice Wu, the former President of Robertson Stephens, Head of Asia Region has joined Intellectus. Alice will be based in our San Francisco office and will frequently be spending time in Asia. Please welcome Alice to the team! Our press release is below: Silicon Valley-based Independent Wealth Management Firm, Intellectus Partners, Hires Alice Wu as Head of Asia Pacific Region, Wealth Creation & Preservation NEW
By Chief Economist & Head of Credit Portfolio Management
The Benefit of Post U.K. Election Uncertainty
Once again, British polls turned out to be unreliable, and the political fallout may linger for some time. While Brexit negotiations are about to get under way, the Conservatives position in the House of Commons has weakened on May’s mandate backed by a slim majority. This is the uncertainty the Pound Sterling reflected on Friday by falling 1.5 percent against major currencies. A currency that expresses political risk may serve as a reflation backdrop because it can loosen global financial cond
By Chief Economist & Head of Credit Portfolio Management
A Different Take on the Recent Payrolls Report
Last Friday's (May 5) payrolls report was a steady as you go report. The consistent strength in payroll growth suggests "slack" is gradually removed. If there was an acceleration in reduction of slack however, not only wages may rise faster, but productivity would go up too. This hasn't been the case so far with the recent productivity report showing a meager 0.6% annualized increase. The labor market is therefore currently tightening in a moderate fashion and this coincides with a slow deterio