Cryptocurrency Reaching New Heights via JP Morgan and Facebook

by Michael Keane

In 2019, cryptocurrency, and more importantly the blockchain technology behind it, has taken large steps towards societal adoption. Notably, both JP Morgan and Facebook have fully jumped in with announcements of competing currencies. We are also finding politicians becoming more and more active on the regulation side.This has a feel to it similar to the early stages of the internet.

With JP Morgan and Facebook now heavily involved, cryptocurrency is likely here to stay. Two years ago, Jaime Dimon, JP Morgan's CEO, readily came out and called cryptocurrency a fraud (CNBC story here). Not 18 months later, in a company document, he releases the JP coin (CNBC story here). As you can see, the only fraud was believing what Jamie Dimon said before. Good strategy that carries credibility issues. But here is the take away. Banks are there to manage value. They would be silly not to invest in the ability to manage cryptocurrencies in the best way they know how. To date, it is to create their own.

Facebook's situation is even more juicy. As has been documented in the past (even with a feature film The Social Network), Mark Zuckerberg has been accused of stealing Facebook from Tyler and Cameron Winklevoss. The case was settled and the brothers walked away with a settlement in the hundreds of millions of dollars. What did they do with the money? Cryptocurrency (CNBC story here). They invested heavily in infrastructure, regulation, and the currencies themselves. Now that Facebook  has entered the cryptocurrency in a big way with Libra, both the Winklevoss twins and cryptocurrency as an industry have both received a big viability confirmation (CNBC story here).  It also turns out that business trumps likeability as the twins and Facebook have started to mend fences.

Politicians on the other hand are nearly standing on their head trying to catch up. They have not prepared themselves for the arrival and legitimacy of cryptocurrency. They actually were just ignorant enough to listen to Dimon's comments about it being a fraud. Ooops. You better believe work is being done now though. Hearings are ramped up (CNBC story here). This side of things could get ugly as the theory behind cryptocurrency butts up against the theory of needing a government to regulate it.

The time for understanding cryptocurrency is here and will likely need to some time and practice. Don't be the ostrich.

** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

What Corporations Did With Their Tax Cuts

There were a few major topics identified when we first set out to analyze the effects of the 2018 tax bill. The link to the original post can be found (here).

One major topic was how corporations would handle the extra cash coming their way. One year out, we have some evidence as to know their behavior. A recent Bloomberg story identified analysis by Citigroup that showed corporations have spent more on stock buybacks than on capital expenditures (story here). This is the first year since 2007 that this has happened. 

We mentioned in our original post how wages, stock buybacks, dividends, and capital expenditures would show the intentions of the executives of US corporations. Here is some data

- Wages grew 3.2% in 2018. That is the highest annual gain in a decade. CNBC story here.


- Stock buybacks increased to over $800 billion. That is an increase of 60% over the 2017 total of $500 billion. This happened with a stock market that ended the year 5% to the downside. (Bloomberg)

- Capital Expenditures increased $100 billion from $600 billion to $700 billion.  (Bloomberg)

- Dividends increased 10% to $450 billion from $400 billion in 2017 (Bloomberg)

These numbers tell a strong story about how corporations used the extra revenue from the tax cut. It is not a healthy story. A higher than normal percentage was dedicated to buybacks. On the one hand, having that as the reason for rising earnings and stock prices is not a long term recipe for success for investors. Corporate America used the tax cut to buyback stock to boost earnings per share that inflated bonuses while wage growth was a paltry 3%. On the other hand, it is positive news for all those execs whose bonuses are tied to earnings. It also stemmed the slide in the stock market.

Corporate America needs to take the infrastructure opportunity coming and invest those tax dollars in its employees and products.  


** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

Blockchain Gets Major Endorsement

by Michael Keane

Last week, JP Morgan announced that it has created its own cryptocoin, the JPM Coin. Given what has been said before by the company, this was a major shift and endorsement not only for cryptocurrencies, but also a big endorsement of the blockchain technology behind it.

While Blockchain technology is absolutely still in its infancy, the announcement can be looked on as a game changer when it comes what the true perception of the technology by the big players. It harkens back to the infancy of the housing crisis, when at first the banks laughed at people like Dr. Michael Burry and Mark Baum, but then joined them in a big way while using deception announcements to keep the public at bay. Last week's announcement by JP Morgan would not have come without some testing of the technology's utility to the bank's mission and profit model. Jamie Dimon calling cryptocurrencies a "fraud" 18 months ago now looks like a delay tactic.

This announcement is also a very good indicator that average consumer uses are now ready to had in the marketplace. 

The following outlets have caught the sea change in JP Morgan. Enjoy!

Cnbc article-Hugh Son

CNN Article- Matt Egen

Forbes Article - Michael del Castillo 


  ** This blog is used for opinions and ideas and should not be used as a direction to act without doing your due diligence.**

CNBC Interview Supporting Oil War Thesis

The following CNBC Closing Bell interview between John Kilduff of Again Capital and Kelly Evans shows that the thesis on tensions being the only major catalyst for a rise in oil prices is growing in popularity.

The link to our story is here.

The link to the CNBC interview is here.

** Please due your due diligence. These are opinions and should not be acted on without your own research.**

Culture Difference Chipotle vs. McDonalds

A very interesting thing happened today. KeaneVCC follows both CNBC and The Wall Street Journal on Twitter. The differences in cultures of Chipotle and McDonalds were put on full display with separate press releases thrown up on Twitter within an hour of eachother. 

Chipotle has announced (CNBC link here) that in order to continue to get the best employees, they are raising benefits to include tuition reimbursement, paid vacation, and paid leave.

McDonalds also had a major announcement today. They hired Robert Gibbs their new Chief Communications Officer (Wall Street Journal link here).

It is interesting to think that up to a certain point, both companies are committing millions of dollars on their corporate message in very different ways in order to achieve the same goal. Lately there is more and more evidence of this cultural divide between companies run by Boomers and Gen Xer's and newer companies run by Gen Xer's and Millenials. Newer companies seem to be going back to the WWII generation model when it comes to compensation and employee value.