Bitcoin cruised past $50,000 and is at a new 52-week high on Wednesday. It doesn’t make any sense.
The prevailing narrative sending prices higher is that there is a fixed supply of Bitcoin. As more people grow interested in buying the cryptocurrency, the higher demand goes and, in turn, the higher the price. While there is a fixed supply of Bitcoin, that may have little to do with its price over the long run.
Bitcoin aspires to be—essentially—money, like gold of long ago. But gold, which also has a fixed supply, didn’t go parabolic when the global economy expanded. Gold has gone from roughly $20 to $1,800 over the past 160 years. That’s less than 3% average annual gain.
There are other factors besides supply that determine the price of any money. Importantly, the price of everything else matters a lot. That’s how gold lost its status in the monetary world. Price deflation—a terrible thing for anyone with debt—was one of the reasons the world discarded the gold standard.
The biggest risk to Bitcoin isn’t regulatory action or competing cryptocurrencies. It’s a change in the narrative. The more Bitcoin becomes like currency—the more it circulates, is accepted at stores, and lent—the sooner the scarcity or supply narrative breaks down and the sooner the realities of being actual money set in.
—Al Root
*** The standard playbook for managing your personal finances went out the window in 2020. With the economy turned upside down and volatile markets, how do you plan for your financial future, and navigate short term and long term goals? Join MarketWatch and Barron’s editors today at 1 p.m. ET to learn how. Sign up here.
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Buffett’s Berkshire Hathaway Bought Verizon, Chevron Shares
Warren Buffett’s Berkshire Hathaway revealed its mystery investment. The firm bought millions of shares of Verizon Communications and Chevron during the fourth quarter.
- The firm ended this past year with 146.7 million shares of Verizon and 48.5 million shares of Chevron. Such stakes were worth $8.6 billion and $4.1 billion, respectively, at the end of 2020.
- Speculation swirled after Berkshire said at the time of its third-quarter filing that it received permission from the U.S. Securities and Exchange Commission to keep some investments unnamed. That can happen when a disclosure would make it more difficult for an institutional investor to complete its buying program in a stock.
- Verizon’s dividend yield is 4.6%, while Chevron’s is 5.6%. Both stocks rose in after-hours trading following the reveal.
What’s Next: Berkshire Hathaway was busy during the fourth quarter, adding to positions in Kroger, Merck, and AbbVie. The firm exited a position in Pfizer and pared back stakes in Wells Fargo, General Motors, and Apple.
—Connor Smith
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Major Winter Storm Slows U.S. Vaccination Effort
The deadly winter storm that has also left millions without power and heat has caused the U.S. Covid-19 vaccination effort, which has been accelerating, to slow dramatically. Foul weather delayed vaccine shipments and caused patient appointments to be canceled across Texas and other states.
- Approximately 820,000 vaccine doses were administered on Monday, far below the current average of 1.7 million doses a day and Sunday’s tally of 1.8 million doses given out, according to data compiled by Bloomberg.
- In Austin, Texas, appointments were canceled because “it’s just not safe for people to be out,” the city’s mayor said Tuesday. Some vaccination sites in Kentucky and Alabama were also closed, while vaccination efforts run by Missouri’s state government was put on hold, the governor said.
- The storm that has hit the Southeast with record-low temperatures and a historic amount of snowfall will move toward the Northeast later in the week, putting millions more at risk of losing power and potentially causing a significant slowdown to the vaccine rollout across the upper Eastern Seaboard of the U.S.
- The Biden administration told governors Tuesday that it will ship 23% more doses this week than last week and up the amount sent directly to pharmacies from 1 million a week to 2 million. “That’s a minimum,” Biden’s Covid-19 coordinator, Jeff Zients, said. “Supply will continue to ramp up.”
What’s Next: Just four days after saying that it would likely be “open season” on Covid-19 vaccine eligibility by April, Dr. Anthony Fauci said Tuesday that “that timeline will probably be prolonged, maybe into mid-to-late May and early June.” He blamed the change on the number of vaccine doses Johnson & Johnson estimates it will be able to deliver shortly after its likely FDA authorization.
—Ben Walsh
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Epic Takes Apple Battle to Brussels
Epic Games, the developer of popular game Fortnite and one of the world’s largest videogame companies, said Wednesday that it had filed an antitrust complaint against Apple with the European Commission.
- The complaint alleges that the Cupertino, Calif.-based iPhone maker “has not just harmed but completely eliminated competition” on the distribution and payments of apps on its popular App Store, with “a series of carefully-designed anti-competitive restrictions.”
- The two companies have been engaged in a legal fight since August last year, when Apple kicked Fortnite from the store and revoked Epic’s developer license after the game maker found a way to circumvent the 30% fee on App Store sellers.
- Apple says Epic acted “with the express intent of violating the guidelines that apply equally to every developer.” The two companies are headed to a U.S. trial due in May.
- Epic says that it is not seeking damages in its EU filing, but is asking the Commission to impose “timely and effective remedies.”
What’s Next: In June 2020, Brussels launched a formal investigation into the App Store, notably its purchase system. The Commission said it wanted “to ensure that Apple’s rules do not distort competition in markets where Apple is competing with other app developers.”
—Pierre Briançon
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Chinese Box-Office Numbers Send IMAX and Movie Theater Shares Higher
With the Covid-19 pandemic largely under control across China, movie goers turned out in droves during the first long weekend of the Lunar New Year holiday week, setting a record for box office receipts in the country that sent U.S. theater stocks higher.
- Movie theaters are limited to between 50% and 75% capacity in China, but pent up demand from consumers led to $775 million in box office revenue being brought in over the first weekend of the Lunar New Year holiday week, traditionally a big moviegoing period.
- The top-grossing picture was Detective Chinatown 3, which notched $424 million in ticket sales over the weekend and was made entirely using IMAX cameras. News that the company took in $23.5 million from the comedy’s first weekend alone sent IMAX shares up 6.8% in Tuesday trading.
- U.S. and European movie theater companies also rallied. AMC opened 8% higher before fading to end the day up 1%, Cinemark rose roughly 3.4%, and London-listed shares of Cineworld gained 3.3%.
- “There are two broad takeaways from the weekend in our view,” J.P. Morgan analyst Alexia Quadrani wrote in a note to clients Tuesday. “1) there will be strong demand for out-of-home experiences when the pandemic ends... 2) the best way to play this trend in the exhibition space is through IMAX.”
What’s Next: China’s blowout weekend is making analysts and investors more optimistic about the fate of moviegoing after the pandemic eases in the U.S. and Europe, where reopening is several steps behind China.
—Ben Walsh
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Biden Extends Mortgage Relief for Homeowners Through June 30
The Biden administration expanded its Covid-19 relief for homeowners, extending a moratorium on foreclosures through June 30 for government-backed home loans, and giving cash-strapped homeowners more time to pause mortgage payments.
- Tuesday’s announcement, which applies to Federal Housing Administration-, Veterans Affairs-, and U.S. Department of Agriculture-backed loans, extends the March 31 expiration that was put in place earlier this year. The Federal Housing Finance Agency, which operates Fannie Mae and Freddie Mac, said last week it would allow up to 15 months of mortgage forbearance for its borrowers.
- The extensions could help the roughly 2.7 million homeowners in active mortgage forbearance plans—more than half of which were scheduled to end by June, according to the mortgage-analytics company Black Knight. Biden’s administration said people of color are more likely to have deferred or missed mortgage payments.
- Many homeowners who have postponed payments borrowed from the Federal Housing Administration, which often loans to individuals with lower incomes and smaller down payments than those with other government-backed loans, according to The Wall Street Journal.
- The Biden administration is trying to prevent those homeowners from having to start repaying their FHA mortgages before the economy has a chance to recover, Jim Parrott, a former Obama administration housing adviser who now advises the housing industry, told the Journal. “It needs to be synced up.”
What’s Next: Forbearance plans helped prevent 500,000 foreclosure initiations in the fourth quarter of 2020, but “forbearance cannot continue indefinitely,” William R. Emmons, an economist and assistant vice president at the Federal Reserve of St. Louis, previously told Barron’s. The plans are expensive for mortgage servicers, investors, and lenders.
—Janet H. Cho and Shaina Mishkin
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Dear Moneyist,
I am a 49-year-old woman with four adult children aged 19 to 29. I bought my home in 1998 as a single mother and my children grew up here. I now have a live-in boyfriend who has done extensive repairs and upgrades to the home over the last 3 years—he performed all the labor himself while I purchased all materials.
When he was working, he contributed his fair share to our expenses. However, he works in the oil-and-gas industry, and was laid off about a year ago and has not worked since then. His employment outlook is uncertain as oil and gas is not rebounding, and he may need to get additional training to change careers.
Although we are in a committed relationship and intend to remain together as life partners until one of us dies, we are unlikely to ever formally marry as we both had very bad experiences.
He is 9 years younger than I am, and has three children from his previous marriage who are considerably younger than my children (7 to 12). They will likely spend a good portion of their childhood in this home over the coming years.
Other than my home, I have little in the way of assets—a car and some insurance policies—but very little in liquid cash. I am at an absolute loss as to the fair way to address the home in my will. Three of my children want the house to go to them, if I should die. The other said I should leave it to my oldest daughter.
My boyfriend does not want to leave this home should I pass away, but he also says the house should go to my kids since it is their family home. Of course, I hope to live long enough that all the kids are grown and settled, in which case I can make a new will.
In the meantime, I need to have a will that makes sense should I expire early.
I am very concerned with treating everyone fairly. The last thing I want when I die is for one of my kids (or my boyfriend) to feel as if I didn’t love them because of how I divide things. Please help!
—Girlfriend, Mother & Homeowner
Read The Moneyist’s response here.
—Quentin Fottrell
***
—Newsletter edited by Matt Bemer, Anita Hamilton, Stacy Ozol, Mary Romano
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