Market Morning: Bitcoin Untethered, Fed Talks Marijuana, Whole Amazon Foods Clash

Bitcoin Untethered, Literally

Speculation is mounting that the price of bitcoin (BTC-USD) and other altcoins like ethereum (ETH-USD) and bitcoin cash (BCH-USD) has been manipulated using a scheme pretty much identical to what the Federal Reserve uses to inflate the price of US treasuries. Tether (USDT-USD), a crytpocurrency token supposedly backed by, or “tethered” to US dollars on a 100% reserve basis, is suspected to have been acting like a fractional reserve bank, creating unbacked tether in order to buy bitcoin and other altcoins during selling panics, and then retiring the unbacked tether once a rally has been sustained. No word on whether this is true or not, but if it is, the tether guys are in some trouble. Only banks are allowed to use fractional reserve. So there.

SEE: Mastercard Seeking Patent For Blockchain-Based Payment Card Verification

What to do: If true, bitcoin could take a beating. Discuss amongst yourselves.

Whole Foods From the Amazon, a Culture Clash

When we think of Whole Foods Market, we think of laid back health food enthusiasts calmly discussing the latest research into exactly how many grains of sorghum is ideal for optimal spleen functionality. When we think of Amazon (NASDAQ:AMZN), we think of cutthroat lowest-price-possible kill-the-competition. No wonder the two companies’ executives are butting heads about how to do business.

“I have done this for 40 years, I am financially secure, I love Whole Foods,” said Whole Foods CEO John Mackey in a leaked recording published by Business Insider. “I ultimately am not afraid to get fired so — not that I think they [Amazon]are going to fire me — but I’m not afraid of it, so that gives me a position of strength to speak truth to power when it’s necessary to do so, and I’ve done it many, many times.”

What to do: Consult your local Whole Foods grocer concerning the latest spleen health advice. There may be some bumps, but ultimately it looks like the two companies will figure out how to work together, combining their strengths. Whole Foods prices should continue to fall for the benefit of Amazon Prime members and their various organs everywhere.

Comcast Outfoxes Disney

Following yesterday’s decision by a federal judge to OK the AT&T Time Warner merger, Comcast (NASDAQ:CMCSA)  is on the move and has outbid Disney (NYSE:DIS) by 19% to take control of Fox (NYSE:FOX). Comcast has offered $65 billion in cash for the empire, a deal that was unanimously approved by the board of directors and will therefore not require shareholder approval.

“We are highly confident in our ability to finance the transaction, and our offer includes no financing-related conditions,” said Comcast CEO Brian Roberts as reported by Foxbusiness, soon to be owned by Comcast, unless Disney ups its offer. “We are also highly confident that our proposed transaction will obtain all necessary regulatory approvals in a timely manner and that our transaction is as or more likely to receive regulatory approval than the Disney transaction.”

What to do: Media mergers are likely to start cascading here. On strategy is to look for media companies that could be acquired and take a position in anticipation of an offer.

Fed Chair Powell Reaches Out Awkwardly to Marijuana Users

One of the more interesting policy questions that was asked at Fed Chair Jay Powell’s presser yesterday had to do with monetary policy…surrounding cannabis. Careful not to state any sort of Federal Reserve official position on the matter of federal cannabis laws, Powell did say that it would be great of the federal government could resolve the dialectic between federal law prohibiting marijuana, and various state laws permitting it. It puts federally chartered banks in a very difficult position, he believes. This is why so many cannabusinesses are forced to use all cash for everything.

What to do: Read between the lines, and he seems to be subtly asking Congress to legalize marijuana on a federal level. There isn’t much the feds can do to prevent states from allowing it in their territory, which would be wildly unpopular, spurring a potentially violent and dangerous crackdown. Related tickers: (NYSE:CGC) (OTCMKTS:EMHTF) (NASDAQ:GWPH)

Apple Hermetically Seals Government Access to iPhones

Apple (NASDAQ:AAPL) is planning to unveil a new feature that will lock access to iPhone data through the lightning port 1 hour after the phone was last locked. Apple didn’t specifically say it was doing this to stop the government from snooping on people’s iPhones, but that’s what the media is picking up on, mainly. Nothing to see here, says Apple. We’re just increasing security against potential hackers.

“We’re constantly strengthening the security protections in every Apple product to help customers defend against hackers, identity thieves and intrusions into their personal data,” Apple said in a statement Wednesday. “We have the greatest respect for law enforcement, and we don’t design our security improvements to frustrate their efforts to do their jobs.”

 

 

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