Unhackable computer network – Japan’s bullet trains scandal – AI and Finance

Posted on January 12, 2021 by Martin Dorman

China has unveiled the world’s first ‘unhackable computer network’

China has successfully tested the Jinan Project, and is set to begin using the system by the end of August. This marks a world milestone in the development of quantum technology, and identifies China as one of the world leaders in the field.

By the end of August, China plans to rollout the Jinan Project — the world’s first unhackable computer network, which is based on quantum principles. The project uses the city of Jinan as a quantum computer hub that boosts the Beijing-Shanghai quantum network due to its central geographical position between the two larger cities.

Specifically, the network alerts both users to any tampering with the system — as tampering alters the information being relayed. The disturbance is instantly recognizable and both parties can immediately identify when something is amiss.

Zhou Fei, Assistant Director of the Jinan Institute of Quantum Technology, sees the system having worldwide ramifications. He told the Financial Times that “We plan to use the network for national defense, finance and other fields, and hope to spread it out as a pilot that if successful, can be used across China and the whole world.”

By implementing the quantum computer network, China will become the first country to implement quantum technology for a real life, commercial end. It also marks China as a quantum leader worldwide — a status that is reinforced by their development of the Heifei machine, which could eclipse all current supercomputers, as well as their successful transportation of a photon from a satellite in space using quantum physics. Full Story

Technology is changing at such a fast pace, that what took 100 years to achieve a few years ago, could soon be achieved in under five years.

Substandard metal parts used in Japan’s bullet trains

Planes, trains and automobiles — Kobe Steel’s fake product data scandal has now touched every major form of transportation. Two big Japanese railway companies said Thursday that substandard parts from Kobe Steel (KBSTY) were used in the manufacturing of several bullet trains.

The scandal came to light Sunday, when Kobe Steel said employees had falsified data about the strength and durability of thousands of tons of aluminum and copper parts sold between September 2016 and August 2017. They did not meet specifications agreed with customers. Central Japan Railway (CJPRY), which operates high speed trains between Tokyo and Osaka, found aluminum parts used in the truck — the part that connects the wheels to train cars — failed to meet company standards, said spokesman Atsuo Utano. A total of 310 tested parts were found to be substandard. Full Story

The fallout from this will be big, and while most will not see the connection, this falls in line with the theme we laid out for 2017. That theme in case you have forgotten is “polarisation”. Japan just took a massive hit, and its reputation will be tarnished for a long time. China will use this to elbow its way in, and countries will start becoming nationalistic; you will start to hear variations of our product is better than theirs going forward.

On a separate note, this hiccup will put to rest any hopes Japan might have had of raising rates in the future. A plethora of nations is refusing to raise interest rates because there are more disruptive technologies about to come into play. We will expand on this in a future update, but the medical sector which has been immune to deflationary pressures is going to be ripped apart suddenly. As no one is expecting it, the fallout will be immensely painful (particularly for hospitals and many of their staff), and the higher education sector is just waiting to be taken apart. Deflationary forces are not going to go away anytime soon. The billion dollar question is whether inflationary forces can exert their effect in the face of so many deflationary factors.

BNP Paribas is unveiling a new trade matching tool that uses artificial intelligence

NP Paribas (BNPQY) is unveiling a new trade matching tool that uses artificial intelligence and says it will be ready for MiFID II, the European banking regulation that takes effect in early 2018. “We do a lot of trade matching for our clients – which is, matching the trade of our clients with the broker they have contracted with,” said Patrick Colle, CEO and General Manager of BNP Paribas Securities Services. “30% of trades do not match or need to be repaired – so here comes artificial intelligence.”

Colle said the algorithms comb through data and find reasons why a trade doesn’t match. The tool, called Smart Chaser, has a 98% accuracy rate. Full Story

Forget about complying with new EU banking regulations, the main focus is that AI is once again outperforming humans and this means that this bank is destined to fire at least 60,000 workers if not more in the not too distant future.

EU and Bank protection – Bank earnings and buybacks – Trump’s Fed chair nominee

Posted on January 11, 2021 by Martin Dorman

EU weakens plan on bank protection, risks ECB clash on bad loans

The European Commission proposed on Wednesday watered-down measures to help guard European Union banks against future crises, after two years of fruitless talks among the 28 EU states on more ambitious plans. The new proposals were designed to win over Germany, the EU’s largest economy and the staunchest opponent of sharing banking risks among EU states, but the German banking lobby quickly dismissed them.

The proposals could also slow the European Central Bank’s plans to reduce the exposure of banks to bad loans. Shares of Italian banks rose, since they would face big losses if the EU mandated they quickly unload bad debts [nL8N1MM4Q8].

The Commission proposal would reduce the sharing of banking risks and set strict conditions that states must meet before their banks gain access to safety nets funded at the EU level. Those changes were intended to placate Germany, whose departing finance minister, Wolfgang Schaeuble, repeatedly argued that sharing risks meant richer German banks would prop up weaker banks in other EU countries. His successor may be equally dubious. Full Story

Sounds familiar; it’s an early signal informing us that something similar is set to take place in the US but on a much larger scale. To get the masses to embrace this Bull Market, the era of easy money has to be brought back. So a variation of liar loans is set to debut in the future.

Bank earnings: ‘lower for longer’ means buybacks will continue

When big banks kick off the third-quarter earnings season next week, a familiar theme is likely to dominate: it’s hard to make money in a lower-for-longer world. Analysts expect banks to report tepid growth in nearly all their business lines, from mortgage originations to investment banking to lending, and most of the good news story is likely to come from a practice that’s often considered a sign that companies are out of ideas: issuing debt to buy back stock.

J.P. Morgan Chase & Co. JPM, -0.37% kicks off earnings season Thursday, followed that day by Citigroup Inc. C, -0.06% On Friday, Bank of America Corp. BAC, -0.37% reports, followed by Wells Fargo & Co. WFC, -0.27%

“Results are likely to be tepid due to very weak loan growth, modest increase in net interest margins, and weak capital markets related trends,” somewhat offset by lower expenses and better-performing loans, wrote J.P. Morgan analyst Vivek Juneja in a note Friday. “On average, most of the (quarter-over-quarter) EPS growth in 3Q is likely to be led by share buybacks at our banks,” Juneja added. Full Story

Very few will spot the main point in this story; banks are admitting that this recovery is bogus and that the only way to maintain the illusion of all is well is to take on more debt to buy their shares and in doing magically boost EPS. Share buybacks are set to soar again, and we suspect that before this bull keels over, that the total amount of funds put aside for Dividends and share buybacks will soar to $2 trillion over a 12 month period.

Trump Pick for Fed’s Bank Regulation Chief Wins Senate Confirmation

Randy Quarles, a Bush-era regulator whom Democrats criticized for not doing enough to prevent the 2008 financial crisis, has been confirmed by the U.S. Senate to lead the Federal Reserve’s oversight of Wall Street.

The 60-year-old won approval to join the central bank’s board of governors in a 65-32 vote on Thursday, Oct. 5, as well as approval to serve as vice chairman of banking supervision. The decisions followed a split recommendation from the chamber’s banking committee in early September and came just in time to prevent the panel from shrinking to less than half its full complement of seven members when Vice Chairman Stanley Fischer leaves mid-month.

All of the governors are members of the bank’s 12-person Federal Open Market Committee that sets monetary policy, so the excess vacancies would have shifted the balance of power even further toward the five regional Fed presidents who serve on the panel, as well as heightened uncertainty about the pace of interest-rate adjustments.

Even so, Quarles’ portfolio as head of the Fed’s regulatory programs, handled on a de facto basis by Governor Daniel Tarullo before his departure earlier this year, is vastly different from that of the 73-year-old Fischer, a monetary policy expert. Among his responsibilities will be overseeing annual stress tests designed to ensure that the largest U.S. banks have sufficient capital to withstand an economic crisis. Full Story

The dominoes are all falling place; the argument we put forward almost one year ago that Dodd-Frank would either be gutted out or eliminated is gaining traction. If Trump replaces Yellen with a dovish leaning person, then its game over for Dodd-Frank and the market will have the fuel necessary to soar to stupendous levels.

Cryptocurrency Kodak and Bitcoin surges – Quantum Computing vs Blockchain

Posted on January 10, 2021 by Martin Dorman

Kodak surges at it becomes latest ‘cryptocurrency’ convert

NEW YORK (AP) — Kodak, which traces its roots to the early days of film-based photography, is getting into the digital licensing and cryptocurrency market as part of a partnership with WENN Digital. The companies are launching blockchain technology with KodakOne and KodakCoin. Blockchain is a ledger where transactions of digital currencies, like bitcoin, are recorded.

Rochester, New York-based Kodak, founded in 1880, is the latest company to enter the cryptocurrency market as Bitcoin makes gains. Bitcoin has surged from less than $1,000 a year ago to more than $14,000.

Recently, Long Island Iced Tea Corp. said it plans to change its name to Long Blockchain Corp., as it wants to focus more on blockchain technology while continuing to make beverages.

The Kodak systems will allow photographers to register work that they can license and then receive payment. The initial coin offering will open Jan. 31. Full Story

A clear indication that Bitcoin will probably trade below 10K and possibly as low as 5K before rallying to new highs; more and more companies will follow this path. Eventually, a garbage collection company might decide to join the pack.

Bitcoin headed to $100,000 in 2018, says analyst who predicted last year’s price rise

Bitcoin (Exchange: BTC=) could hit $100,000 in 2018, an analyst who correctly predicted the cryptocurrency’s rally at the start of last year told CNBC on Tuesday. Kay Van-Petersen, an analyst at Saxo Bank, added that other rival digital coins could also outperform. Van-Petersen forecast in December 2016 that bitcoin would reach $2,000 in 2017 . At the time, bitcoin was trading below $900, according to CoinDesk, a website that tracks the price of digital currencies on a number of different exchanges. Bitcoin blew past the $2,000 figure in May. Van-Petersen said Tuesday that bitcoin could hit between $50,000 and $100,000 in 2018. “First off, you could argue we have had a proper correction in bitcoin, it has had a 50 percent pull back at one point, which is healthy. But we have still not seen the full effect of the futures contracts,” Van-Petersen said. The CME and Cboe both launched bitcoin futures trading contracts last year. Full Story

This eerily similar to some of the articles the Gold camp was pumping out in 2011 and early 2012 after Gold topped out. Their take at the time was that Gold was just building momentum and getting ready to soar to the next galaxy. Instead, the spacecraft blew up before it even achieved escape velocity. Individuals that pen such articles are nothing but shills looking for a way to push the markets up so they can bail and leave the masses holding a rusty can.

Bitcoin cryptocurrency is part of blockchain technology, and while the outlook generally appears good for blockchain, some technology experts are already warning that quantum computers could blow a hole through blockchain. We feel that several significant discoveries will be suddenly announced in the field of quantum computing.

Bitcoin could still trend higher, but when people keep pushing ridiculous targets, it indicates that the market in question is more likely to pullback then rally to new highs. At this point, the odds are far better for bitcoin to trade to 5K then 100K. Bitcoin is not something we would invest for the very long term, it is going to go through a brutal correction at some point, but this market is still indicating the superbubble pattern we spoke of last year is still intact. For this to play out, the market would need to experience a very strong correction and shed at least 60% of its value, but we would prefer a pullback of 70%.

The story below discusses the quantum computer threat

Could Quantum Computing Kill Blockchain and destabilize cryptocurrency?

Quantum computing gives us extraordinary computational power, making mince meat out of problems classical computers struggle to solve. The world’s most pressing issues, like that of climate change, can only be overcome with machines like quantum computers. Yet, as with all new technologies, it has the power to render features of other technologies obsolete. These technologies must mutate to survive and thrive, or else be left in the junkyard of one-hit wonder technologies.

With blockchain, that predator is quantum computing. Blockchain’s security comes from its enhanced encryption standards, but the power of quantum computing leaves experts worried that the encryption employed by blockchain will be overcome too easily by quantum computing.

Recently, researchers from the University of South Wales constructed a new architecture, similar to the ones used in today’s processors, to perform quantum calculations. This has significant implications for the average person. It means that the same technology used to run the devices you use today could be used to run quantum computing calculations.

Quantum computing, even pocket quantum computing, is inevitable. However, it has always been seen as a distant dream – 10 to 15 years in the future has been the industry opinion on the arrival of commercial quantum computing. This discovery by UNSW researchers discredits that prediction. It could now arrive much faster and that may not bode well for cryptography and blockchain as a whole.

It is technically possible for a classical computer to break through the asymmetric encryption that coins like Bitcoin use, using sheer brute force (running through all possible solutions); it would just take a very long time. Quantum computers operate at a magnitude many times quicker than classical computers though, and it is easier for it to defeat asymmetric encryption.

That puts cryptocurrency and blockchain in a tight spot. Cryptocurrency and blockchain could be forced to evolve, to mutate so as to possess new characteristics, or else the much-loved security and privacy that enthusiasts sing praises about might be a thing of the past.

If quantum computing research continues at its current pace, then it will have no problem breaking the encryption used by blockchain. The economic system of cryptocurrencies would become all but useless since it would be possible for hackers to steal your coins, commit fraud and control the blockchain. If someone could easily steal your bitcoins, it wouldn’t be good for Bitcoin’s reputation.

You may have heard of the term “51% attack”. This is when miners control over 50% of the network, allowing them to double spend. In layman’s terms, this means they can spend money twice by deleting transactions from the blockchain.

Quantum computers could give malicious miners the power they need to break this 50% threshold. This particular security worry is not an immediate concern. The projection is that it will be at least 10 years before quantum computers are capable of doing this. However, with the recently revealed engineering architecture for quantum computers, that timeline may be shortened.

There is a far bigger concern which, as we mentioned, is the ease with which quantum computing can break public key encryption. Quantum computing is expected to reach this level of power by 2027. In other words, if today’s encryption standards and by extension, blockchain security, doesn’t evolve new security techniques or encryption standards, it will be practically useless.

The good news is that long-term thinking developers of cryptocurrencies are in fact preparing for this eventuality and they’ve got a few tricks up their sleeve. https://goo.gl/df4ykZ

China has opened the world’s largest Quantum Computer research centre at the cost of $10 billion. Russia with the world’s best hackers has several covert programs dedicated to quantum computing. It is just a matter of time before they figure out a way to use quantum computers to not only hack the bitcoin market (very easily) but to hack many other encrypted systems. We have already witnessed the many heists hackers have performed on the bitcoin market using non-quantum computers.

The underground world is usually always two steps ahead of the corporate world, and that’s generally because the corporate world does not want to spend large amounts of money to update their systems to new threats. They rely on an uninformed consumer believing their pathetic excuses that something unprecedented happened that was beyond their control and now that it has happened they are implementing top-notch technology to protect their systems. When hacked again, they will mouth the same excuse, which is what they have been doing for the past 30 years. Full Story

Is the Bitcoin Bull Stock Market Dead? Or just taking a breather?

Posted on January 7, 2021 by Martin Dorman

Is the Bitcoin Bull Market dead?

Despite the heavy beating Bitcoin has taken, the sentiment has not turned bearish, and there are still have too many articles being published on a weekly basis claiming that Bitcoin is going to surge to 100K and beyond.Do these experts ever bother to look at the charts before issuing such targets or do they do so after ingesting some toxic substance? We will never know the answer to that question, but what we do know is that in most cases they have no idea of how high or low the market is going to go.

They issue lofty targets that have a very low probability of being hit because if the market trades to these levels, they become instant heroes if they miss they can push some convoluted theory, for example, market manipulation to justify the bad call. The fact that Bitcoin is trading over 50% below its highs does not seem to faze these experts; they are quite resilient and continue to push for targets that border on the fantastic.

We warned our readers that the bitcoin Bull was going to run into trouble

We published two articles on bitcoin since Dec of 2017, one on the 4^th of December, and in that article, we made the following claim

Bitcoin, on the other hand, is now in the feeding frenzy stage, so this market is ripe for a correction

The second article on the 24^th of January, and in that article, we issued price targets

The bloodletting will continue until the trend of lower highs that started after Dec 14, 2017, comes to an end. On the conservative side, we think Bitcoin could drop down to the 8,800-9,200 ranges, but this market is far from your typical market, and there is a good chance that Bitcoin could drop down to the $5000-$5600 ranges before the dust settles.

On the 4^th of February, Bitcoin prices dropped down to $6, 627, that’s within striking distance of the low-end targets ($5000-$5600) we issued. So is the correction over and is this market ready to trend higher.

Bitcoin has violated the Main Trend Line

The first thing that stands out is that Bitcoin is trading below the main uptrend line and until that obstacle is cleared the path of least resistance is down. Based on this one observation we can state that the probability of it testing the $5000 ranges is significantly higher than of it surging to new highs. It could trade lower, but that will depend on how it behaves when it tests that level, so there is no point in discussing targets below that mark. Experts expecting Bitcoin to surge to new highs could be in for a shock this year.

There are still too many bullish articles on bitcoin

Here is a small sampling of the articles published over the past four weeks

Bitcoin price: Cryptocurrency to soar above $30,000 in 2018
Bitcoin price to ‘double’ in 2018 cryptocurrency boom
Struggling bitcoin will double by mid-year, Wall Street’s Tom Lee says
Bitcoin Bull Tom Lee Goes Hyperbolic on Latest Price Forecast
Cryptocurrencies Forecast to Resume Surge According to Expert
Bitcoin Price Will Double by End of 2018
Bitcoin Will Stabilize, Hit $50K by 2019: Neu-Ner
Bitcoin price ‘to double’ in 2018 – so what about Ethereum and Ripple

Lower Highs Trend is a negative factor

The trend of lower highs shows no sign of abating. A series of lower highs is usually a bearish signal and signifies lower prices. The first positive sign would be for Bitcoin prices to surge above its downtrend line.

Lastly, if you look at the above image, you can see that the Bitcoin camp is still not in disarray. One of the things we pay very close to attention is investor sentiment, and until the Bitcoin camp is in disarray, we feel that it’s unlikely to surge to new highs until this gauge is in the hysteria zone.

Conclusion

Bitcoin had a fantastic run; in fact, the run-up was so spectacular that it makes dot.com mania of the 90’s seem sane in comparison. Any market that has experienced such a spectacular run must also experience a back-breaking correction. While it appears that the drop from $20K to $6600 ranges might qualify as backbreaking, one has to remember that Bitcoin surged over 11,000%, so the current pullback is only backbreaking for the latecomers. Usually, when a market experiences such a strong move, the 1^st few breakout attempts tend to fail.

The prudent course of action would be to wait until there is a surge in the number of articles calling for the demise of bitcoin and investor sentiment sours, before committing new capital.

Hidden Pulse