Bitcoin is breaking records

• Oscar Williams-Grut
 

• Aug. 7, 2017, 5:28 AM
• 13,748

The price of Bitcoin is hovering at a record high on Monday, following a surge over the weekend.

Bitcoin is up 0.96% against the dollar to $3,260.80 at 10.07 a.m. BST (5.07 a.m. ET). It follows a rally for the cryptocurrency on Saturday that saw it break through $3,200 per coin for the first time ever. It reached an all-time high of $3,344 per coin over the weekend.Markets Insider

Meanwhile, the price of Bitcoin Cash, the rival cryptocurrency that was split-off from Bitcoin at the start of the month, has been diving. The price is recovering on Monday, up 28% to $271.71, according to CoinMarketCap.com.

Mati Greenspan, an analyst at trading platform eToro, says Bitcoin Cash's dip and Bitcoin's rally are likely related.

Greenspan writes in an email on Monday morning: "All that money that seemingly came out of thin air to pump up the value of Bitcash is now being fed right into Bitcoin. Bitcash has fallen from its peak of $12 Billion all the way down below $4 Billion this morning.

"Bitcash sought to replace the original form of digital money but the miners never embraced it. As it was seen by many as something for nothing, many users are now dumping." (You can read more about why Bitcoin Cash was split out of Bitcoin here.)

Here's how Bitcoin has performed over the last year, showing we're firmly in record territory:Markets Insider

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ALBERT EDWARDS: The same problems that caused the financial crisis are back

• Akin Oyedele
 

• 13h
• 6,258

Albert Edwards Real Vision Television

The savings rates in the US and the UK are dropping, and economists are trying to figure out what that means. 

When the US government released its annual revisions to economic growth last week, it made sharp downward revisions to the personal saving rate. Savings as a share of disposable income was 4.9% last year, not 5.7% as earlier calculated, the Bureau of Economic Analysis said.

The update showed that incomes were less than previously reported, while consumption was higher.

Albert Edwards, a Societe Generale strategist and permabear, published the doomsday interpretation of this data in a note on Thursday. For Edwards, it's the eve of the financial crisis all over again.

"Every day more evidence mounts that almost exactly the same debt excesses that caused The Global Financial Crisis (GFC) in 2008, are present today," he said.

Slumping savings rates in the US and the UK were last seen in 2007, "just before the bursting debt bubble blew the global economy and financial system to smithereens."

Edwards assigned the blame to the Federal Reserve. Quantitative easing, which stoked demand for bonds and other debt assets, "has not only inflated corporate debt to grotesque levels, but finally the US savings rate has responded to the surge in household paper wealth that QE has produced," Edwards said. 

He continued: "Typically the SR always declines (shown as a rise in the chart below) with rising wealth. Why do you need to bother saving if interest rates are close to zero and house and stock prices are rising?"

Societe Generale

The risks from a low saving rate are two sided, said Mickey Levy, the chief economist for Americas and Asia at Berenberg Capital Markets. "It suggests that consumers are confident enough to increase their spending relative to income growth but it also means that consumers have less of a buffer in the case of any adverse shock."

However, Neil Dutta, the head of US economics at Renaissance Macro Research, said the savings rate is "basically where it should be when taking household wealth relative to income into account."

And so, even if the lower savings rate reflects another credit binge, as Edwards argues, more consumer spending is keeping the US economy afloat for now. 

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Stock pickers are having a record-breaking year

• Joe Ciolli
 

• 5h
• 1,191
 

The way stock traders surely feel amid the record streak of outperformance for active managers. Reuters / Paulo Whitaker

Reports of the demise of the active stock picker have been greatly exaggerated.

About 58% of large-cap fund managers beat their benchmark in July, marking the fifth straight month in which a majority of them outperformed. That's the longest such streak on record, according to Bank of America Merrill Lynch data going back to 2009.

It wasn't supposed to be like this. To hear doomsayers tell it over the past several years, the rise of the machines was supposed to hurt people who make their living analyzing and buying stocks based on fundamentals. Exchange-traded funds were supposed to homogenize the market, causing stocks to trade increasingly in lockstep.

In reality, the opposite has happened.

The average pair-wise correlation of stocks in the S&P 500 — which measures the degree to which they trade in tandem — sits at its lowest in 17 years. And the more stocks operate with a mind of their own, the more opportunity exists for investors to pick ones that provide market-beating returns.

Stock-picking conditions are more ripe right now than they've been since the tech bubble. Bank of America Merrill Lynch

But at the end of the day, active managers are only as good as their stock picks. Luckily for them, those have been on point.

BAML attributes active managers' success in July to a record overweight position in tech stocks. The Nasdaq 100 climbed 4.1% during the month, more than double the return for the S&P 500. The firm also notes a "consistent bias" toward low-quality stocks, which also beat the benchmark last month.

It remains to be seen how well active fund managers will fare once intra-stock correlations rebound from current lows. But until then, stock pickers are making the most of their opportunity to show they still matter.

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