Sizzle/Fizzle

Machine Learning Sizzles, Bitcoin Fizzles And Schrödinger’s Physical Retail Does Both

Sizzle

Bricks and Mortar, Alive? What if we were to tell you that retail shopping isn’t dead? That there may be a spark of life in the bricks and mortar model? The caveat may have to be that we’d be talking about Amazon, with a new bookstore on the way in its storied (pun intended) march to its own physical, branded store footprint. The Amazonian overture is one that might point toward a trend, as Amazon is marrying the digital and the tangible in an effort to promote Kindle and Echo alongside Kundera and Brontë.

Generation Z as Retailing Salve: Gen Z is a demographic sizzle that may step in to embrace that Amazon bookstore model, as just mentioned, with Euclid research finding that as many as 66 percent of post-millennial shoppers want to be in-store, touching the merchandise, riffling pages and even listening to the latest Taylor Swift earworm as they browse the aisles.

Machine Learning Gets a Thumbs Up: Who likes machine learning? Google likes machine learning, having made the leap to buy Kaggle, which helps to create and promote contests focused on data and data science. The contest model, which is expected to remain in place, is an interesting one, as it seems to place confidence in competition (and rewards) as a way to bring the best new products to the market.

Fizzle
Bricks and Mortar Financing, Dead? We made a qualified statement on bricks and mortar, the Amazon way, in the Sizzles section. One fizzle comes in the form of financing, where shopping malls are shuttering faster than your old Nikon. That’s bad news for commercial mortgage-backed securities tied to real estate, where loan viability and payments visibility remains in doubt if rent is not there to cover interest payments or if no tenants are left to pay said rent.

Snap Rally Snipped: Beware the tech IP promising riches. As the world knows, Snap shares were snapped up out of the IPO gate last week, with a 44 percent gain the first day of trading, and touched as high as $29 a piece intraday. Yet those same shares now trade hands for a bit less than $24 as of this writing. The yo-yo effect may portend some caution for tech IPOs going forward, at least where valuation is concerned.

IT Shortages: How can you fight the bad guys if you can’t hire the good guys? CyberEdge Group has said that ransomware incidents are hitting new highs in terms of, well, incidents, and that is in and of itself a troubling trend. But 9 out of 10 1,100 IT decision-makers surveyed also say that there are not enough skilled IT workers to help hold down and secure the corporate forts. Too much data and not enough eyeballs equals a tough fight.

Fizzle of the Week: Bitcoin

We’d say it was a volatile week for bitcoin — but if we are being honest, every week is pretty much a volatile week for bitcoin. Between the price fluctuations, the speculators, the investors, the periodic hacking of the exchanges — whether you love bitcoin and think it is payments’ greatest hope,  or hate bitcoin and think it’s payments’ greatest hype — no one has ever once complained that the digital currency beat is boring.

And this week bitcoin has once again failed to disappoint. The Fed has spoken — and the price of bitcoin crashed. These events are not formally tied to each other. In fact, no one is actually sure what caused the price of bitcoin to suddenly stop rising on March 9 and suddenly drop to its lowest level in 30 days.

But we can’t imagine it helped when a governor of the U.S. Federal Reserve Jerome H. Powell told a conference held at Yale Law School that central banks issuing digital currency would become global targets for cyberattacks, cybercounterfeiting and cybertheft. In fact, we imagine that since digital currency-watchers are eagerly awaiting a ruling from a different federal regulator (the SEC) on the fate of a bitcoin-based exchange-traded fund, it was a particularly tough time to hear any negative feedback from a federal official.

Then again, bitcoin is historically pretty volatile — which means it is just as likely an explanation that a mass spooking ran through the ecosystem for no reason in particular.

You can be the judge.

What the Fed(eral Official) Said

Jerome H. Powell wasn’t totally negative in his remarks on bitcoin at Yale earlier this week — he did say that people ought to be open to new ideas and innovations that “drive economic growth and improvements in our financial system” and did allow for bitcoin having some connection to those things.

But at the end of the day, the most important responsibility regulators and financial authorities have to the public — their first, last and main job — is to keep the public’s money safe, secure and well-accounted for.
Unfortunately, Powell noted, bitcoin does not always play so well in those areas.

“Central banks could face difficult trade-offs between strengthening security and enabling illegal activity,” Powell said. “Advanced cryptography could reduce vulnerability to cyberattacks but make it easier to hide illegal activity. To the extent we relax strong cryptography to make it easier for authorities to monitor illegal activity, we could simultaneously weaken security.”

Digital currency doesn’t need to go, according to Powell, but it does need to be watched closely and regulated carefully, because the Fed has to stay ahead of the significant security and privacy issues that still exist inherently with it.

“We live in a time of extraordinary technological change,” Powell said. “We should be open to the new ideas and innovations that will drive economic growth and improvements in our financial system. At the same time, the public rightfully expects that authorities will do whatever it takes to keep their money safe.”

As Powell was uttering those words on March 3, with the price of bitcoin up around an all time high, the value broke $1300 a coin, making it more valuable than gold by the ounce.

But, as they say, what goes up must come down.

And as of Tuesday (March 7) the record price of bitcoin seemed to have set off a case of the sell-off heebie jeebies.

The Unexplained Drop

As suddenly as bitcoin starting going up, on Tuesday it started going down. The price of bitcoin dropped by some $70 on March 7 for no readily apparent reason. It then started to recover Tuesday afternoon — only to drop again on Wednesday, recover again and then drop again on Thursday. By midday on March 9, the price of bitcoin had lost about $120 — though once again the price did start to recover.

It is anyone’s guess as to what will happen tomorrow.

Bitcoin had spent the past week climbing toward new record highs on optimism that the SEC could soon approve a bitcoin-based exchange-traded fund. The yo-yoing in the price of bitcoin led some to speculate that early word had gotten out — and that the SEC is planning to deny approval for the bitcoin ETF.

However, the consensus view at this point is that the sudden drop, recovery, drop, recovery is just a symptom of bitcoin’s main problem — it’s incredible volatility.

Which is exactly the opposite of what currencies need and want to be.

Which leads us to the SEC decision, which is all about bitcoin like that other c-word: commodity. Like pork bellies, bitcoin is being treated by most as a commodity, and the SEC decision deadline on that score is fast approaching, which means among some investors (and enthusiasts) every fluctuation in bitcoin’s value is a tea leaf waiting to be read.

The SEC has until March 11.

What to do until then?

We suggest watching the price of bitcoin — and enjoy playing follow the bouncing ball. This week, with its price slipping down almost as fast as it climbed up, it is the fizzle.

Next week though — who knows? That’s part of the wonder of bitcoin.

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