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Citadel’s Ken Griffin Sees Ethereum Surpassing And Replacing Bitcoin

Citadel’s Ken Griffin Sees Ethereum Surpassing And Replacing Bitcoin

Back in May, when Goldman Sachs initiated coverage of crypto, it was…



This article was originally published by Zero Hedge

Citadel’s Ken Griffin Sees Ethereum Surpassing And Replacing Bitcoin

Back in May, when Goldman Sachs initiated coverage of crypto, it was mostly favorably inclined toward bitcoin which it nonetheless called a “one trick pony” and saw limited upside, but it was ethereum that stole Goldman’s heart. The reason: while Goldman said that bitcoin is mostly a store of value and nothing else, it said that over time, “the decentralized nature of the network will diminish concerns about storing personal data on the blockchain.” As a result, “a blockchain platform like Ethereum could potentially become a large market for vendors of trusted information, like Amazon is for consumer goods today.” And just to clarify what it means, the bank explained:

Ethereum can also be used to store almost any information securely and privately on a decentralized ledger. And this information can be tokenized and traded. This means that the Ethereum platform has the potential to become a large market for trusted information. We are seeing glimpses of that today with the sale of digital art and collectibles online through the use of NFTs. But this is a tiny peek at its actual practical uses. For example, individuals can store and sell their medical data through Ethereum to pharma research companies. A digital profile on Ethereum could contain personal data including asset ownership, medical history and even IP rights. Ethereum also has the benefit of running on a decentralized global server base rather than a centralized one like Amazon or Microsoft, possibly providing a solution to concerns about sharing personal data.

No surprise then that last weekend, the bank forecast that ether could hit $8,000 by year end, as a result of the token’s remarkable correlation with 2 year inflation swaps which, as everyone knows, are only going up and to the right.

It’s not just Goldman that has a preference for ethereum over bitcoin. Earlier today, comments from one of the most powerful people in all of finance, Citadel CEO Ken Griffin, about Ethereum’s dominance over Bitcoin are attracting even more attention to the second-largest cryptocurrency, which is outperforming many others this year by wide margins.

Griffin, who like Jamie Dimon was a noted crypto skeptic in the past, said Wednesday at a conference that the crypto space could be disrupted by Ethereum’s blockchain.

“We’re going to see Bitcoin be replaced conceptually by the Ethereum’s blockchain”, he said at the DealBook conference. “Replaced conceptually by the next generation of cryptocurrencies that will have the benefits of higher transaction speeds, lower cost per transaction. Perhaps people will start to think about how to deal with security and fraud prevention better.”

In the coming year, Ethereum is set for a historic transformation to Ehtereum 2.0, shifting from a Proof-of-work concept to a Proof-of-stake, whose energy consumption transaction speeds and costs will be a fraction of the current ones, while also getting the blessings of the ESG community in the process. Heading into the Ethereum 2.0 transition, pundits expect the price of the token to soar.

Griffin added he isn’t worried he missed out on crypto. “The train is, in some sense, still in the station,” he said.

A year-long rally in Ether, which sent the coin up more than 550% for 2021, trouncing Bitcoin’s performance by more than 400 percentage points, gathered momentum toward the end of the summer after a major protocol upgrade which reduced supply increases. 

“People are moving money into other cryptos now — not just Bitcoin,” said FTX US President Brett Harrison. “That is definitely following this trend of thinking about the future application development happening using crypto.”

Meanwhile, on Tuesday the largest U.S. cryptocurrency exchange, Coinbase, said that during the third quarter, Ether constituted 22% of transaction revenue, outstripping Bitcoin for the first time in trading volumes as well.

“We’re definitely seeing a lot of bullish Ethereum flows,” Juthica Chou, head of OTC options trading at Kraken, said on Bloomberg’s “QuickTake Stock” broadcast. “Ethereum captures the tailwinds of Bitcoin — on top of that, they had the protocol upgrade in August, which burns Ether.”

At the conference, Griffin commented further on cryptocurrencies, saying his firm doesn’t trade crypto because of regulatory uncertainties.
“I wish all this passion and energy that went to crypto was directed towards making the United States stronger,” said Griffin. “Let’s face it — it’s a Jihadist call that we don’t believe in the dollar. I mean, what a crazy concept that is,” he said, reiterating similar comments he had made about crypto just a few weeks back.

“When you have to value cryptocurrencies, what is the basis that you use for valuation?” Griffin asked. “It really comes down to: Will someone pay me more for it tomorrow?”

Actually that’s not only simplistic, it’s wrong: what it really comes down to is will central banks print more fiat tomorrow than today. The answer is clearly yes, and until that changes – and it won’t – someone will always pay more for cryptos tomorrow than they are worth today.

Some other things Griffin discussed:

  • Griffin said inflation and rising prices were no longer something that could be ignored. “The theory that this is transitory is starting to get long in the tooth,” he said. That is also affecting the stock markets, which by Mr. Griffin’s reckoning have become “frothy,” primed to overreact, particularly in stocks like Tesla that have experienced high volatility.
  • The financier defended payment for order flow, in which market makers — such as Citadel Securities — pay online brokerages like Robinhood for the right to process their customers’ trades. While the practice has been criticized for potentially leading to conflicts of interest, Griffin said that it had helped lead to lower trading costs for individual traders and that he opposed potential new regulations. “Are we going to go back to re-regulated markets and taking back the competition that has allowed Americans to save so much money when trading?” Doing so, he argued, would be “a tragedy.”
  • Griffin, a billionaire, opposed raising taxes, saying it would discourage innovation in America, citing Tesla’s Elon Musk as an example. “We don’t want tax policy to drive great entrepreneurs like Elon out of their seats,” he said.

The hedge fund manager said his remarks likely would lead to hate mail in his inbox and on Twitter.

Tyler Durden
Wed, 11/10/2021 – 19:22

Author: Tyler Durden


Are These The Charts That Spooked Jerome Powell?

#CKStrong Fed Chair, Jerome Powell finally admitted today there is too much stimulus demand (in the macro context) in the global economy and the Fed will…


Fed Chair, Jerome Powell finally admitted today there is too much stimulus demand (in the macro context) in the global economy and the Fed will have to accelerate its tapering.

The following charts clearly illustrate the U.S. economy is overheating and a major contributing factor to inflation. Nominal retail sales and core capital good shipments remain 15 percent above and years ahead of their pre-COVID trend. Think of the trend line as the supply curve.

In hindsight, it is easy to say the global policymakers overshot with their stimulus, but it is certainly better than the alternative and a deep recession/depression.  Just as you and I, policymakers make decisions with imperfect information.  Counterfactuals don’t go a long way in the political arena.

We think it is about time the FOMC finally starts to focus on the problems caused by the “monetary supply chain,” rather than blaming the economic imbalances on “supply chain issues,” and it appears they have. If demand were not so strong, the supply chain issues would have worked themselves long ago, and the Port of Los Angeles and Long Beach wouldn’t look the 405 freeway during rush hour.   

As reflected in the charts below, the supply chain broke early during the pandemic as upstream suppliers were “bullwhipped” by the massive volatility in point-of-sale or end demand.

We believe the next inflection point, where the Fed keeps tapering and then tightening until something breaks, which leads to reversal and a new monetary regimes, is a long way off.

Stay tuned.

Author: macromon

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Financial Markets and Omicron and Powell

Five year inflation breakeven (unadjusted) down, 10yr-3mo term spread down, VIX and EPU up, and S&P 500 down. Figure 1: Five year inflation breakeven…

Five year inflation breakeven (unadjusted) down, 10yr-3mo term spread down, VIX and EPU up, and S&P 500 down.

Figure 1: Five year inflation breakeven (blue), ten year – three month Treasury spread (red), both %. Source: Treasury via FRED, and author’s calculations.

Ignoring adjustments for inflation risk term and liquidity premia, implied expected 5 year inflation is down to 2.8%, while growth prospects also revert back to September levels.

Figure 2: VIX (blue, left scale), and Economic Policy Uncertainty index (red, right scale).  Source: CBOE via FRED,

Risk and policy uncertainty are also at recent highs, but still are dwarfed by Trump era highs (83 for VIX at 27.2; 862 for EPU at 180 on 11/29).

Figure 3: S&P 500 index (blue, log scale). Source: S&P via FRED. 

Given this backdrop (lower expectations for growth and presumably profits, due to Omicron, and higher interest rates from Powell’s statement re: inflation persistence), it’s not surprising to see a drop in stock indices.

Author: Menzie Chinn

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Retailers Open Pop-Up Container Yards To Bypass Savannah Port Jams

Retailers Open Pop-Up Container Yards To Bypass Savannah Port Jams

By Eric Kulisch of American Shipper,

Overflow lots set up by large retailers…

Retailers Open Pop-Up Container Yards To Bypass Savannah Port Jams

By Eric Kulisch of American Shipper,

Overflow lots set up by large retailers this month as temporary staging areas for imported containers have helped bring down congestion levels at the Port of Savannah, and Georgia officials expect further efficiency gains with this week’s opening of two more port-sponsored pop-up sites.

The Georgia Ports Authority, in partnership with the Norfolk Southern, will start accepting loaded containers on Monday at the freight railroad’s nearby Dillon Yard and later this week will begin routing shipping units to a general aviation airport in Statesboro, located about 60 miles west of Savannah, Chief Operating Officer Ed McCarthy told FreightWaves.

Moving containers to off-port properties is part of the recently announced South Atlantic Supply Chain Relief Program designed to reclaim space at the Garden City Terminal, where container crowding is making it difficult for vessels to unload and for stacking equipment and trucks to maneuver. In October, Savannah handled an all-time record of 504,350 twenty-foot equivalent units for a single month, an increase of 8.7% over October 2020. The volume surpassed the GPA’s previous record of 498,000 TEUs set in March.

Port officials began testing the Dillon Yard and Statesboro locations last week after renting top loaders for stacking and truck transfers, installing computer lines in order to track containers entering the gate with radio frequency identification, and laying extra pavement at the rail facility, McCarthy said. 

Four or five more pop-up container facilities are scheduled to open around Georgia by mid-December and the port authority is talking with freight railroad CSX about an auxiliary storage site in Rocky Mount, North Carolina, the COO said in an interview. 

The sites are mini-versions of inland ports where containers are brought to strategically located sites by intermodal rail, shortening the distance trucks have to travel to collect imports or drop off exports and reducing traffic in and around busy seaports. The concept essentially brings the seaport closer to manufacturing, agriculture and population centers. 

The GPA currently operates a large inland intermodal rail terminal in Murray County, Georgia, as well as an inland dry bulk facility. Construction on a second inland rail link for containerized cargo in northeast Georgia is scheduled to begin in April and be completed by mid- to late 2024, spokesman Robert Morris said. South Carolina also operates two inland ports, Virginia has one in the northwestern part of the state and the Port of Long Beach in California recently launched an effort to quickly flow cargo to Utah for distribution by converting truck traffic to rail.

Several users of the Port of Savannah this month have opened pop-up yards of their own where they can directly flow import containers to avoid waiting for longshoremen to sort through shipping units for their cargo and then retrieve them when space opens at one of their distribution centers. Each of the private spillover yards can accommodate 2,000 to 3,000 containers. 

“We’re starting to see some of our customer base do their own pop-ups. They’re contracting with some folks who have capabilities in the Savannah region and … taking their long-term destiny in their own hands,” McCarthy said in an interview.

The Rocky Mount intermodal facility being discussed with CSX will probably be used as an alternative storage location for empty containers. It could be running by early December, the COO said. Whether containers are diverted from other locations or whether empties are loaded up in Savannah and sent there remains to be determined. 

The Biden administration, which is focused on alleviating a nationwide supply chain crisis that is creating product shortages and contributing to inflation, helped fund the GPA’s emergency storage yards by reallocating $8 million in federal funds. Additional flexibility recently granted by the Department of Transportation allows port authorities to redirect cost savings from previous projects funded by port infrastructure grants toward mitigating truck, rail and terminal delays that are preventing the swift evacuation of containers from ports.

White House port envoy John Porcari, the liaison between industry and the White House Supply Chain Disruptions Task Force, said the government is looking to create more inland ports. 

“We’re encouraging other ports to do the same [thing as Savannah.] I think you’ll see a generation of projects in the short term around the country that will help maximize the existing on-dock capacity through interior pop-up sites,” Porcari said on Bloomberg’s “Odd Lots” podcast last week. 

“The fundamental issue is that the docks themselves are such valuable pieces of real estate that you don’t want the containers dwelling there a second longer than you have to. You want to get them to the interior or back on ships to their target markets overseas,” he said.

Better Fluidity

Improvements in rail handling, a dip in import volumes in line with seasonal patterns and the customer pop-up yards have combined to improve cargo flow and reduce the number of ships waiting for a berth at the Port of Savannah, McCarthy said. 

The port authority released an operations update last week showing the average dwell time for a container moving by rail after vessel unloading is two days, and that the average resting time within the terminal for import and export containers is about eight days, down from 11 and 10 days, respectively. The backlog of empty containers remains a problem, with boxes lingering an average of 17.8 days.

The improved performance is helping personnel work vessels faster and reduce Savannah’s cargo backlog. The number of ships at anchor in the Atlantic Ocean declined to 15 as of Monday morning from 22 two weeks ago, Morris said. There were 24 container vessels at anchor in mid-October. Total containers on the terminal also declined 13% and are down 16% from the peak of 85,000, according to the update.

McCarthy said there are about 225,000 TEUs currently on the water, a 10% to 12% reduction from early November that indicates “we are over the hump of the peak season.”

Last week, ocean carrier CMA CGM said its Liberty Bridge service from northern Europe to the U.S. East Coast would temporarily skip Savannah due to the congestion. According to the revised schedule, seven stops between late December and early February will be omitted. Shippers can send Savannah cargo to the Port of Charleston, South Carolina, until then, it said.

The GPA also noted that providers have increased the supply of chassis, the wheeled frames on which containers rest when pulled by truck, and are increasingly able to repair more chassis to help meet demand for cargo deliveries.

Mason Rail Terminal expansion. (Source: Georgia Ports Authority)

The Port of Savannah increased its near-dock rail capacity by 30% with the commissioning two weeks ago of a second set of nine tracks at the Mason Mega Rail Terminal. The port moved 550,000 containers by rail last year and now has more than 2 million TEUs of capacity with an eye toward future growth. The ability to discharge cargo from a vessel and ship it out by train in less than two days is best in class for the U.S., McCarthy noted.

A huge new container yard will come online in phases starting in December and culminate with about 820,000 TEUs of additional capacity by March. The project includes rubber-tired gantry cranes for sorting, stacking and transferring containers.

Construction of another berth is underway and scheduled to be complete in 2023.

Meanwhile, the federal dredging project to deepen the Savannah River to 47 feet (54 feet at high tide) is expected to be completed in the first quarter of 2022. It has already allowed vessels with deeper drafts to enter the port, McCarthy said. The deepening translates to about 200 extra loaded containers per foot and a total of 1,000 per vessel when the project is finished.

Tyler Durden
Tue, 11/30/2021 – 19:45

Author: Tyler Durden

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