“Only A Matter Of Time Before Developing-Market Stocks Unravel In An Unruly Manner“Tyler DurdenMon, 05/25/2020 — 08:57
Authored by Marcus Wong, EM market strategist who writes for Bloomberg
Emerging-market equities are looking more fragile as valuations appear out-of-sync with earnings, especially given the increasingly bleak narrative surrounding virus cases and U.S.-China trade tensions. Something akin to a Jenga game nearing its end, with players wondering which move will be the one to bring everything crashing down.
EM valuations appear close to a historical pivoting point, given the MSCI gauge is more than 13 times forward earnings on a 12– month blended basis. The index corrected on four occasions over the past five years when valuations approached or breached that level.
Lofty S&P 500 valuations offer little reassurance for EM stocks, meantime. The outperformance in U.S. equities has been supported by unprecedented intervention from the Federal Reserve, especially via corporate bond buying. With the exception of rich emerging-nations such as South Korea, most developing-nation central banks have been less ambitious with stimulus, perhaps constrained by concerns for their currencies and perceptions of debt-monetization.
Investors continue to pull out from EM ETFs for a record 13th consecutive week, and the bulk of the cumulative $21.9 billion in outflows hit equity funds.
While new virus cases in the developed world have mostly stabilized, key developing nations are catching up. Brazil overtook the U.K. on May 18 as the nation with the third-highest number of virus cases globally. Russia is second only to the U.S., which still has the most coronavirus cases.
Poorer developing economies are dealing with an impossible dilemma — the trade-off between causing starvation and deepening poverty via lockdowns, versus allowing a wider outbreak for the pandemic. With lockdown fatigue setting in, more nations are opting to save people’s livelihoods — risking a resurgence of infections.
Although emerging-market currency volatility has eased, it is still close to the highest in almost 20 months compared to developed-market counterparts.
There is also the risk of rising emerging-market inflation due to food price risk, as my colleague Simon Flint points out. Developing nations are particularly vulnerable to the impact of nationwide lockdowns and border shutdowns, given to weaker food supply chains and a relative scarcity of cold– storage facilities.
Most observers expect another emerging-market stock sell-off this year, probably by September, according to a Bloomberg survey of 61 investors, strategists and traders conducted in April. And those questions were posed and answered before President Donald Trump escalated his war of words with China.
The re-emergence of U.S.-China trade tensions could not have come at a worse time, underscoring concerns that political rhetoric will heat up ahead of November’s U.S. elections. In the near term, China’s announcement of its intention to impose a new security law in Hong Kong has already resulted in threats of sanctions from the U.S. America is due to release a report on Hong Kong Human Rights on May 25.
With the drumbeat of negatives getting louder by the day, it may only be a matter of time before developing-market equities unravel in an unruly manner.
S&P Futures Jump, Global Markets Rise In Holiday-Muted SessionTyler DurdenMon, 05/25/2020 — 08:16
US equity futures jumped in thin holiday volume, rising alongside European and Asian markets, and are now less than 20 points away from 3,000 having put the key resistance level of 2,950 in the rearview mirror, as investors cheered the reopening of more economies while ignoring the rapid deterioration in US-China relations which has put the fate of Hong Kong on the line. The dollar was flat despite the weakest yuan fixing in 12 years, while oil recovered modest overnight losses.
MSCI’s gauge of world stocks gained 0.32%. The pan-European STOXX600 index climbed 0.8%, with European markets green across the board, after a survey showed German business morale rebounded in May, boosting optimism around economic re-openings, although caution prompted the dollar to snap a rare losing streak.
With nervous investors wary of adding to their equity holdings over concerns on what a post-lockdown world would look like, Germany’s Ifo institute survey for May gave some relief. Its expectations index rebounded strongly to 80.1, from 69.4 last month, beating expectations of 75.0, while the business climate index rose to 79.5 from a downwardly revised 74.2 in April, also higher than forecast, and fueling optimism about the outlook of Europe’s biggest economy after a drop in the first quarter.
“Today’s Ifo index echoes more real-time signals that economic and social activity has started to pick up significantly since the first lifting of the lockdown measures in late April,” ING economists said in a note. “In short, the low point of the slump should now be behind us and there even is the chance for a short-lived strong rebound in the coming months.”
Construction and healthcare shares led a broad advance in the Euro Stoxx Index, with Bayer AG jumping almost 9% after Bloomberg reported it reached agreements to resolve some cancer lawsuits over its Roundup weedkiller.
In Asia, the MSCI’s index of Asia-Pacific shares outside Japan was 0.3% higher on thin volume, as stocks gained led by industrials and health care, after falling in the last session. Hong Kong shares inched higher after Friday’s slump, following police clashes at the weekend with protesters marching against China’s move to crack down on dissent. All markets in the region were up, with Australia’s S&P/ASX200 gaining 2.2% and Japan’s Topix Index rising 1.7%. The Topix gained 1.7%, with W-Scope and Showcase Inc/Japan rising the most. The Shanghai Composite Index rose 0.1%, with Danhua Chemical Technology and Beijing Sanyuan Foods posting the biggest advances
Contracts on all three major US indexes also rose, but with markets in Singapore, Britain and the United States closed for public holidays on Monday, market moves were relatively small and held within well-worn ranges. Emini futures gained 1%.
Volumes may be light with holidays in the U.S., U.K. and Singapore. Treasuries weren’t trading, and futures on the 10-year note were little changed. Elsewhere, bond markets were stable with Italy’s 10-year yield at 1.60%, just off six-week lows hit on Friday, and safe-haven German 10-year yields down 1 basis point at –0.50%.
In FX, China set its daily yuan reference rate at the weakest level since 2008 after the increasing acrimony drove the currency to a seven-month low on Friday. A benchmark of emerging-market stocks headed for its first rise in three sessions.
The bullishness in the stock markets contrasted with caution in currency markets, where the dollar ended a rare weekly loss to rise to a one-week high against its rivals in early trading, but has since given up much of the gains. The dollar gained after China’s move to impose a new security law on Hong Kong heightened concerns about the stability of the city and global trade prospects.
Traders were rattled on Friday when Beijing announced details of the security legislation, which critics see as a turning point for the territory. Sino-U.S. ties have worsened since the coronavirus outbreak, with the administrations of President Donald Trump and President Xi Jinping trading barbs over the pandemic, including accusations of cover-ups and lack of transparency.
“One big threat to the recovery in markets is the escalating war of words between the U.S. and China,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. Separately, “the main focus will likely remain on continuing evidence that the number of new Covid-19 cases is slowing in developed countries, progress towards medical solutions, the reopening of economies and signs that economic activity is picking up.”
“Rising tensions between the U.S. and China around Hong Kong, trade policy and who is responsible for the 2020 economic dislocation are threatening to end the post March-trough rally,” said Perpetual analyst Matthew Sherwood.
While fresh turmoil in Hong Kong is threatening to damage an already souring Sino-U.S. relationship, investors are looking to the reopening of economies from Japan to Australia and the U.S. to provide impetus to global stock markets, which have already priced in a successful reopening and then some.
In commodities, WTI rose 32 cents, or 1%, to $33.57 a barrel. Brent crude was up 9 cents, or 0.20% higher, at 35.14.
Top Overnight News
China’s Foreign Minister warned the US not to try and change China and said some Americans were risking a “new cold war”
Hong Kong protesters held their biggest rally in months following China’s dramatic move to crack down on dissent in the city as lawmakers are set to consider legislation that would punish anyone who disrespects China’s national anthem
China Investment Corp. is looking for more resilient assets as the nation’s $941 billion sovereign wealth fund seeks to boost long-term returns
Germany’s 9 billion-euro ($9.8 billion) bailout of Deutsche Lufthansa AG is being slowed by discussions meant to ensure the rescue plan receives swift European Union approval once it’s finalized, people familiar with the matter said. Bild am Sonntag reported earlier that Lufthansa would face a three– year deadline for repayment of the aid package to save the ailing airline
U.K. Prime Minister Boris Johnson put his own authority on the line as he fought to save his most senior aide Dominic Cummings in the face of growing demands to fire the adviser for allegedly breaking lockdown rules
The Japanese government was set to end its nationwide state of emergency by lifting the order for Tokyo, its surrounding areas and Hokkaido on Monday, allowing more parts of the economy to re-open as new coronavirus cases tail off
Asian equity markets began the week mostly higher following last Friday’s recovery on Wall St. where the US major indices gradually clawed back opening losses after encouraging comments from NIH’s Fauci and US plans for large Phase 2 trials, spurred vaccine-related optimism. ASX200 (+1.5%) and Nikkei 225 (+1.5%) traded positive with tech and energy front running the broad gains seen across Australia’s sectors, while sentiment in Tokyo was underpinned by expectations the state of emergency will be lifted today in all remaining areas including the capital and with the government reportedly considering compiling a new package mostly consisting of financial support to companies which would be funded by a second supplementary budget valued more than JPY100tln. Hang Seng (-1.0%) and Shanghai Comp. (Unch.) lagged their regional peers with the mainland bourse choppy amid ongoing US-China tensions and with the Hong Kong benchmark extending on last Friday’s near-6% slump after thousands of protester rallied on Sunday against China’s national security law, while the protests were met heavy handed by the police which used pepper spray and a water cannon to disperse the crowd. Finally, 10yr JGBs were marginally lower amid gains in Japanese stocks but with downside stemmed by the BoJ ‘s presence in the market for nearly JPY1.1tln of JGBs mostly concentrated in 1yr-10yr maturities.
European bourses have kicked the week off on the front-foot after taking a positive lead from Asia.In the absence of UK and US participants, European indices initially eked out mild gains but sentiment picked up in recent trade (Eurostoxx 50 +1.1%) in spite of lingering tensions between US and China and ongoing concerns about an impending clash regarding the EU recovery fund with sentiment instead potentially lifted by a pick-up in reopening efforts across the continent. Sectors are higher across the board with outperformance seen in IT and industrial names, with performance for the latter bolstered by German heavyweight Bayer (+6.9%) after the Co. reportedly reached a verbal agreement regarding 50-85k of the 125k US Roundup lawsuits. Elsewhere, individual movers include Lagardere (+11.8%) with Co. shares boosted after French billionaire Arnault agreed to buy a stake in the Co., whilst Deutsche Lufthansa (+2.0%) shares have been supported amid ongoing hopes that the Co. can strike a deal with the German government and reports that the airline will resume more flights as of mid-June; something which has also provided a tailwind in the travel-space for Tui (+11.3%). Elsewhere, gains of over 2% for Renault were faded early doors (currently +1.1%) with the Co. and Nissan set to announce billions of USD in cost cutting measures this week, according to sources. Note, competitor Peugeot (+2.8%) has managed to maintain strength in early European trade as markets await details of support measures for the French auto sector that are due to be announced tomorrow.
In FX,the G10 underperformers thus far in holiday-thinned volumes as the Single Currency eyes a roadblock regarding the EU Recovery Fund – with the “frugal four” (Austria, Denmark, Netherlands, and Sweden) countering the Franco-German proposal of grant distributions. The perceived hawks call for loan allocations – a drawback for peripheries Italy, Spain, and Greece (among others) – with the former also facing a potential rise in domestic anti-Euro sentiment. EUR/USD breached Friday’s 1.0885 low which coincide with the 10DMA to a current low of 1.0871, having briefly dipped below its 21DMA at 1.0873. Further levels to the downside include a Fib at 1.0864 (61.8% of the 1.0775−1.1008 move) ahead of the psychological 1.0850. Unrevised German GDP finals and an overall mixed Ifo survey did little to shift the narrative. Option expiries see EUR550mln at 1.0875−85, 800mln at 1.0895−1.0900, and EUR1bln rolling off between 1.0910−20. The Franc meanwhile sees safe-haven outflows, albeit to a greater extent vs. its Japanese counterpart as EUR/CHF revisits support around the 1.0575 area.
DXY, CNY, HKD — The broader Dollar and Index initially extends on overnight gains before pulling back, with support also derived from the heavy EUR basket contribution. DXY inched higher towards 100.000 (vs. low 99.716) to the upside with its 50DMA residing nearby at 100.02. Elsewhere, the Yuan remains on the backfoot amid heightened US-Sino tensions, coupled with international backlash for Mainland’s crackdown on anti-govt Hong Kong behaviour. Further, the PBOC set the weakest CNY fixing since 2008 (7.1209 vs. Prev. 7.0939) following Friday’s losses. HKD meanwhile unsurprisingly experienced weakness but USD/HKD sees itself just above the bottom end of the 7.75−7.85 peg.
GBP, CAD — The marginally better performers ex-USD, but action remains minimal in thin conditions. Cable overnight remained restricted under 1.2200 as PM Johnson was said to face Cabinet revolt after supporting senior adviser Cummings who faced calls to resign after breaching the lockdown – potentially leading to Cabinet dissent and citizens disobeying lockdown rules. Brexit developments have also remained in focus amid the diminishing timeframe to hammer out an FTA by year-end. Weekend developments noted that the UK is in a fresh stand-off with the EU regarding delays in granting diplomatic status to the EU’s representation in London. Furthermore, relations with China should be watched over the Hong Kong developments – with PM Johnson reportedly looking to reduce Huawei’s involvement in UK5G network within the next three years. Cable resides towards the bottom of the current 1.2162−91 intraday band, ahead of a 61.8% Fib of last week’s bounce coinciding with Friday’s low ~1.2160. The Loonie meanwhile tracks price action in the US energy benchmarks. USD/CAD resides just south of 1.4000, having earlier tested resistance at its 21DMA at 1.4007 (intraday high).
AUD, NZD — Antipodeans tracked the weakness in the Yuan as tensions with China remain elevated and with the US-Sino spat also providing less basis to join in on global lockdown easing optimism/vaccine hopes. AUD/USD drifted off session lows ~0.6520 (vs. high 0.6550) amid a pullback in the DXY, with the 100 and 21DMAs both residing at 0.6490. The Kiwi meanwhile fares modestly worse as the AUD/NZD cross found a current base at 1.0700. NZD/USD meanwhile sees itself just under 0.6100 (vs. high 0.6108) but threatening Friday’s low at 0.6079.
JPY — Modest losses for the Japanese currency, albeit more-so a function of the firmer Buck. Reports noted that Japan is to lift the state of emergency declaration in Tokyo, Kanagawa, Saitama, and Hokkaido today. USD/JPY sees itself hovering on either side of its 55DMA (107.71) vs. its overnight low at 107.54 and ahead of its 50DMA at 107.91..
In commodities,WTI and Brent front month futures see mild gains in early trade with traded volumes on the lighter side amid absences from UK and US markets/participants; while fresh fundamental news flow remains light. Eyes remain on the wider implications on global trade and sentiment from the fallout of the US-Sino trade spat threatening a cold war, whilst investors must not be distraction from the prospects of reinstated lockdowns should COVID-19 cases rise again. On Friday, the Baker Hughes rig count printed another decline in active rigs, whilst OPEC Secretary General Barkindo posited tentative signs of recovery and we believe the worst is behind us. WTI July meanders around USD33.50/bbl (USD32.50 – 33.75/bbl range), whilst Brent July sees itself oscillating between gains and losses, now residing north of USD35/bbl (34.50−35.40 range). Spot gold moves in tandem to the Buck as sees itself with mild intraday losses around USD1730/oz (USD1724 – 35 band) whilst copper mimics price action in stocks to reclaim USD2.40/lb to the upside.
They may have been burned on USOand Hertz, but for retail investors across the US, the joys of trading stocks are just too great to offset these two “BTFD-gone-wrong“blemishes. In fact, bored and flooding into zero-cost online trading platforms like Robinhood, Etrade and Schwab…
… retail investors’ recent pursuit of some of the hottest momentum stocks has created a self-fulfilling prophecy whereby the biggest momentum stocks keep rising, drawing in even more retail investors who — in the spirit of Mrs Watanabe — chase not only what goes up resulting in even higher prices for the most visible momentum names and megacap growth stocks such as the FAAMGs…
… but also happily buy any dipthey see, such as the one in SBUX.
To be sure, there was some initial confusion where retail investors found all this capital they are now allocating to risk assets, but that was laid to rest last week when we reported “How Retail Investors Took Over The Stock Market”, in which we showed that according to credit card data analytics company Yodlee, after putting some money into savings and withdrawing cash, the third most popular activity for most income segments was “securities trades” — i.e., buying stocks — especially among the pure middle class, those making between $35K and $75K.
But what is even more remarkable is that as retail investors chase many of the same names that make up the Hedge Fund VIP list (profiled here), however without a downside hedging pair-tradewhich has hurt so many hedge funds which, as the name implies, must hedgeand can’t be all in a handful of long positions which has detracted substantially from broad L/S equity hedge fund gains this year…
… which are down 9% YTD and performing far worse on a risk-adjusted basis…
… retail investors have successfully outperformed the so-called smart money once again.
As Goldman confirms in its latest hedge fund performance tracker, the continued surge in retail investor trading activity has helped boost the growth stocks most popular with hedge funds, adding that “data collected by our equity analysts from brokers show daily average trades more than doubling in early 2020 relative to the typical pace in recent years.”
This echoes the data from Robinhood, which showed nearly a tripling in user activity this year, with the number of distinct user-positions in S&P 500 stocks rising from 4 million at the start of 2020 to 5 million at the market peak in February, 7 million at the S&P 500 trough in March, and 12 million today. This sharp increase in retail trading has helped a basket of popular retail stocks (which for those who have access can track it using Goldman’s Marquee platform under the GSXURFAV ticker) outperform the S&P 500 by 13 percentage points YTD.
And, as Goldman notes, “because so many retail favorite stocks are also popular with hedge funds, the retail trading surge has also benefited the performance of hedge fund portfolios. Eleven of the 50 stocks in our Hedge Fund VIP basket also rank among the 50 most popular retail trading stocks, including the top three stocks in the VIP list (AMZN, MSFT, and FB).” The full list of the 50 most popular retail stocks is below (while the matching hedge fund VIPlist can be seen here).
This means that as a result of this cross-investor “symbiosis”, one where the Fed’s intervention means that there are just a handful of stocks that everyone must buy in hopes of outperforming the broader market, the 11 stocks in common have returned a median 18% YTD compared to a median.
But the punchline is that as a result of the massive concentration in non-FAAMG stocks across hedge funds which as we explained earlierhave punished the smart money, retail investors are once again outperforming hedge funds!
Needless to say, this is a bizarre outcome: after all, what is the point of all the in-depth analysis conducted by hedge funds if 20-year-old retail investors armed with just an online trading platform and listening to CNBC can outperform them?
And as hedge funds struggle with this existential dilemma — which will last as long as central banks step in every single time to prop up the market now that moral hazard has officially been banished — we remind readers that this is not the first time retail managed to outperform hedge funds in recent months. In fact, in late February — just two days after the S&P hit an all time high — the we posted the exact same observation,and concluded by saying that “while it is certainly a novelty to see retail investors outperform hedge funds, we doubt this divergence will last long.”
It did not, and the market crashed just days later.
So fast forward three months to today when the same bizarro divergence is back, prompting many to ask if the same selloff we observed in early March is about to strike again? With the Fed going all in to make sure it does not, this time it may — in fact– be different, but according to Wall Street pros (who, let’s face it, now have less clout than daytrading Joe Sixpack if based on performance) this latest torrid scramble by retail investors will again “end badly”:
“Obviously you’re exposing yourself, depending on how you’re doing it, to catastrophic losses,” said Brian Nick, chief investment strategist at Nuveen. “If you get a lot of investors in either individual securities, companies or investment strategies that they may not have experience with, it could lead to unhappy investors down the road.”
“There is a long, documented history of retail investors chasing a handful of story stocks and then getting burned,”said James Pillow, managing director at Moors & Cabot Inc. “We humans love a good narrative. I cannot imagine this time around ending any different.”
Perhaps. But for now it is the hedge funds that are again chasing retail investors, because as Deutsche Bank’s Parag Thatte writes in his latest Investor Positioning and Flows report, “long/short hedge funds, measured beta to the mega cap growth as a whole is below historical average but has been rising over the last three months.”
At the end of the day, however, what happens next depends entirely on the Fed. After all, as one after another strategist now admit — most recently Bank of America — this is a “Fake market” where “government and corporate bond prices have been fixed by central banks.” One may, in fact, call it legalized gambling and that’s precisely what one of the retail gamblers “investors” admitted when interviewed by Bloomberg:
[Meet] Ameer Umarov, a cab driver in Arizona with an interest in math and a passion for video games. Months ago, when he realized the coronavirus was growing into a global health crisis, he reactivated his Amazon.com account to make some purchases. Not for masks or hand sanitizer — for books on stock trading. Two a week, at one point.
When equities started surging in late March, Umarov stayed away, scared by the volatility. He was ready to act by the first week of April. He bought shares of Boeing Co., a bad decision that set him back more than $4,000. But a stake in Halliburton Co. brought him $9,800, after he sold shares on the day of a 16% rally late last month. A few other purchases — Goldman Sachs and Micron Technology Inc., among them — yielded mixed results. All told, Umarov is down some $400 since he began.
“It’s a gamble, but a highly intellectual gamble,” he said by phone. “It’s about knowledge and risk, but especially for guys like me, it’s all about sheer luck.”
Umarov is right: the Fed’s endless interventions have made a mockery the “market”, obviating any fundamental analysis or in-depth research, and ushered in the biggest casino known to man. Which is why in a time when a trade’s success depends only on whether one picked the right side of the coin toss, it is no surprise that a millennial investor armed with nothing more than a trading platform can outperform the “smartest men in the room.”
I been reading posts on Bit coin to get an idea about its use as money. There are many ideas on that subject pro and con that are insightful. One, in particular, is of the sentiment that “We appreciate the effort of the private citizens who gave us this option”. That is an excellent way of putting it “We appreciate the effort” if in fact the effort is being done by the private citizens.
But it should be kept in mind that the powers that be work with and on problem-action-solution! So could the problem be, or maybe I should say, (the action that starts the problem) be the closing of the gold window by Nixon, (knowing what would be possible with computers in the near future), Have the problem be the world awash in fiat currency. Then knowing that they (the causers of the problem would never be trusted to come up with a solution) let the (or have a) crypt-private citizen (s) come up with the solutions. Which would be what they wanted all along, crypto-currencies?
Remember what Arron Russo Told Us!
Everything On That Chip! “That sounds like a Bit Coin Block Chain to me!”
And being that they are holding almost all the known connection points they (the currencies) would be under their control in a short time. This would also explain why the fed thinks its a good idea, and the governments are not after the makers. What really worries me is that after seeing that maybe it’s not so cryptic (Silk Road) and that it has other problems that have come up. Like people having their bit coin vanish, or server errors.
This statement was just made by insiders of the Bit coin Foundation General Counsel “Using bit coin for illicit transactions is really, really dumb,” said Patrick Murck, the Bit coin Foundation’s general counsel. “Bit coins are so easy to track.” So they can track illicit transaction, but everything else is not tracked, Is that what I’m hearing?
512 Qubit (Q‘Bit) Quantum Computer, NSA Surveillance To Be Turned Over To AI Machines
So no more talk about encryption OK!
My view on the subject of Bit-coin is that it may not be fiat money but it’s just as bad morally! Because it allows money (if that is how it is viewed) to be created without end, and here is the problem with that. You take power from those who make money ie. from the old Alchemy and give it to the new). Sound good huh?
“The ancient alchemists sought (it is believed) in vain to convert lead into gold. Modern alchemists have succeeded in that quest. The lead bullets of war have yielded an endless source of gold for those magicians who control the Mandrake Mechanism. The startling fact emerges that, without the ability to create fiat money, most modern wars simply would not have occurred. As long as the Mechanism (easy money creation) is allowed to function, future wars are inevitable.”
G.Edward Griffin The Creature from Jekyll Island
Abridged text in bracket
In a somewhat related story… Did Max Make a fraudulent slip? Did he say bit coin is all in his head?
Good concept but a few flaws. The banksters own all the gold so trading in precious metals etc wont work. And lets not forget who owns the mines who can dig up ‘currency’. As you mentioned, fiat paper money does not work. Bartering solid goods like days of old worked then, but how do you barter a Boeing 747 ? Some items require the contribution of thousands of people, so how do you barter something thousands own ( and get the owners to agree on the trade )? I understand Hitlers Germany used ‘work certificates’. If you dug a road or plowed a field then a certificate would be issued. That certificate could be used to buy items. Unlike worthless printable money, work has to be done to earn a certificate. So banksters who sit around tables laundering money and exploiting usury, do not do any work and contribute nothing, therefore can not get work certificates
What is one personal responsibility? You know about gold, and silver Yes, the population has allowed a few to get far more than they should have. But, at least for the foreseeable future nothing else will hold wealth. Bit-coin can only logically be used to transfer currency used in transactions. It has no human work to back it up. People use the term intrinsic value but don’t realize that the work that is needed to get (in the case of gold) or make in the case of a 747 is that intrinsic value! Because in the end money is a compression of ones time. What you are saying is true, but is limited. As far as 747’s are concerned one would have to think in terms of collective ownership ie Co-Op’s. the same way of doing business could continue with the only change is more equality in earnings.
Disclaimer: There is very little chance that bitcoin, lite coin, and the other crypto-currencies WILLNOTGOUP in value. Even more so if it’s really invented by a private citizen. Keep in mind that this is a Silver Bug’s Conspiratorial View!