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Home » Daily Briefing » Daily briefing - 23 November 2016

Daily briefing - 23 November 2016

In blockchain news this week, Santander and Goldman Sachs both withdrew from continued participation in the R3 consortium, though both banks appear set to continue working with rival consortium Digital Asset Holdings. According to Fortune magazine, Goldman became concerned about an unworkable number of players in the R3 consortium. Blockchain has come a long way in the last year, now taken seriously by major banks, central banks and regulators — though there's been no common project to excite all comers, apart perhaps from the fascinating Hyperledger project.

Meanwhile, in other blockchain news, the original bitcoin itself has been plodding along unloved and unnoticed, but has been hovering around its all-time high of $750, initially reached back in mid-2013, for several weeks now. Yesterday, bitcoin hit another significant landmark when the 16 millionth bitcoin was mined. That means the first 16 million of 21 million bitcoin has been mined in the first seven years of the cryptocurrency's existence, with four million more due to be mined in the next four years. Bitcoin adepts say that it will take a century to mine the final million. Have a look at this chart on bitcoin.de to see how the cryptocurrency has fluctuated and stabilised in recent years.

Banks are watching intently to see who will take the new job of Federal Reserve vice chairman to oversee Wall Street. President Obama has not named anyone to the position, which was created by the Dodd Frank Act, because of the difficulty his nominee would face getting past the Republican-controlled Senate. To date, the job has been unofficially handled by Fed Governer Daniel Tarullo, who is little loved by banks. "Tarullo's tenure has been defined by the goal of making Wall Street safer, an approach that the industry argues has gone too far in curtailing risk-taking that's needed to drive the economy," writes Bloomberg's Jesse Hamilton. "The Fed is also close to finishing a major rule that requires banks to hold a lot of debt that could fund the resurrection of a lender after it fails, and the agency is among those getting ready to sign off on broad new limits on Wall Street bonus pay." It remains to be seen which way Trump will move on banking and regulations.

In fact, despite no one knowing what the Trump administration actually plans to do, the market appears to be displaying what Alan Greenspan termed "irrational exuberance", with the financial sector reversing out of the pre-election slump that seemed to be characterised by the Wells Fargo scandal. Yesterday the Dow Jones index broke through 19,000 for the first time ever. According to Reuters, big gains that started in financials and industrials just after the election are spreading to other sectors."You're seeing some strength across the board. That's a healthy sign and indicates to me that we're in a bull market," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York. "The market started to give up some gains last week, but that didn't increase selling pressure. It actually drew people back in."

The vast sales achieved last year by Alibaba on Singles Day has attracted the suspicions of the Securities and Exchange Commission in the US, which questioned if all of those sales were real. This year, Alibaba's numbers have gone up again — by 32 percent. It appears that what the Financial Times calls the "time honoured practice of placing fake orders" has arrived in the digital age. Dubbed 'brushing', the basic idea is that hackers place fake orders on websites in order to make an online shop look busier than it really is. Some hackers use bots, while others hack websites of ordinary customers to place fake orders, leaving puzzled users to wake up and find that someone has been using their account but not actually buying anything. The apparent spike in sales can drive online rankings, pushing websites up the ladder on rankings sites — think of the work most businesses do to get their names rated highly on Google, for instance. Suspicions linger that the incredible total 2016 Singles Day of sales of $17.8 billion was in part driven by these brushing armies. Alibaba said that the $17.8 billion figure referred only to settled sales, rather than GMV (Gross Merchandise Value) ordered.

In other news, today we're been following this Twitter debate between Andreessen Horowitz partner Benedict Evans and Financial Times star Izabella Kaminska about fake news, Facebook and Google. Do remember, if you're not paying for it, you're the product.

Clydesdale Bank posts first profit in five years
Chase Pay app makes its debut
Venezuela's Maduro threatens legal action against JPMorgan
MFS Africa connects 120m mobile wallets in sub-Saharan Africa

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