A Lambo For Under 10 Bitcoin: You Can Now Buy Supercars For Cryptos

Listening to the CNBC today one would be left with the impression that once having purchased bitcoin, there is nothing one can do with it (except check its price 30 times per minute of course). Which, of course, is dead wrong: one can buy pretty much anything that Overstock (among increasingly more online retailers) has to offer, one can purchase a home not only in the US but also the UK, and as of a week ago, one could pay an Albany car dealer the digital currency and drive off with any vehicle off the lot.

And now, rushing to capitalize on the countless brand new crypto millionaires minted in the past year, is Moonlambos, an online dealership for supercars with offices in Santa Monica and London which dubs itself "the premier destination for exotic supercars that deals exclusively in cryptocurrency."

The innovative dealership catering exclusively to bitcoin buyers, sells Aston Martins, Ferraris, Lamborghinis, Mclarens, Porsches and other coupes and convertibles, with a price rangins from 5 bitcoins for a Mercedes 230 SL Pagoda, to a 9 bitcoin Lamborghini Gallardo. to 20 bitcoin for a Ferrari 488, all the way to a 44 bitcoin Lamborghini Aventador LP 750-4 Superveloce.

What some may find most fascinating, however, is the constantly changing price in bitcoin for any one car - a result of the most volatile underlying asset currently in circulation (with the possible exception of electricity).

However, the real news here is not that there is now an exclusive online outlet aimed at bitcoin millionaires: it is that - as we have mused previously - there are so few of them when one considers that the population of crypto nouveau (ultra) riche has exploded in recent months, and is so very eager to spend its newfound wealth. It is almost as if, due to ideological barriers or other irrational considerations, retailers - who are all hurting in Amazon"s shadow - think they are too good to accept a new currency which millions would be delighted to spend, and would rather file for bankruptcy than accept the likes of bitcoin, ether and ripple.

Oh, and for those who say that cryptos are too volatile for any merchant to accept, here is a word you can ask Alexa to look up: "hedging."

American Purchases Of "Stuff They Don"t Need" Hits 17 Year High

Anyone who has been paying attention to the New York Fed’s Quarterly Report on Household Debt and Credit is probably aware that Americans are drowning in debt...

...Aggregate household debt climbed $116 billion during the third quarter to $12.96 trillion, edging past its previous peak from Q3 2008. But even as millennials struggle to pay down an insurmountable pile of student debt...

...CNBC is reporting that holiday spending this season is on track to hit a 12-year high, according to an annual survey of consumer spending habits. Keep in mind, that survey was taken before Comcast, Boeing, Fifth-Third Bank and AT&T announced they would be handing out last-minute holiday bonuses to rank-and-file employees...

But as both debt and holiday-related spending rise in tandem (suggesting that the former is being utilized to finance the latter), one Bloomberg columnist has estimated that, instead of paying down debt, one-fifth of consumer spending in Q3 went to items that people don’t really need...

Back in the 1950s, the economist John Kenneth Galbraith made a bleak argument about modern capitalism: Advertising can create artificial wants -- say, for the latest gadget or skin cream -- that spur ever-greater consumption without actually making people better off. As a result, economies can grow without improving the lot of humanity.

 

Whether or not he’s right -- it remains a matter of debate -- the idea raises an interesting empirical question: How much of what we consume is related to wants rather than needs?

 

This isn’t easy to answer using even the most detailed data on consumer spending, because many categories could go either way. A car, for example, could be pure transportation or a Ferrari. That said, a number of categories -- such as gambling, hairdressers and recreational vehicles -- are pretty clearly nonessential. Following them consistently over time can give at least a sense of trend.

 

So how are we doing? In the third quarter of this year, nonessential items (of my own subjective selection 1) accounted for almost 18.5 percent of total U.S. consumer spending. That’s the highest share since June 2000.

According to the column’s author, Mark Whitehouse, this nonessential spending has reached its highest level in 17 years...

Whitehouse does list one interesting caveat: Because he calculates the value of nonessential goods in nominal dollars, the overall spending on nonessential items may have been constant in real terms...

...Of course, anyone who has sat through one of the Federal Reserve’s press conferences this year understands that inflation has been receding - not advancing - this year. Which means, if anything, 17% is a lowball figure.

To be sure, spending on life’s little luxuries is still far below its post-WWII peak (according to Whitehouse, conspircuous consumption in the US peaked in 1959)...

...But the fact that this subset of discretionary household spending is still growing, even as household debt rockets to all-time highs, is indicative of how consumers are burning the fiscal candle at both ends...
 

Vroom! Ferrari Plans To Double Production Shifts - On Track To Smash Earnings, Production Targets

On 2 November 2017, Ferrari NV, which was spun-off from Fiat Chryslerr, announced a 23% rise in adjusted EBITDA to 778 million euros (629 million euros) for the first nine months of 2017. The company increased its EBITDA target for the full year to 1 billion euros versus the previous estimate of more than 950 million. As Bloomberg notes.

The manufacturer raised its 2017 profit target last month as rollouts of limited-edition supercars, including the FXX K Evo racing model, help it achieve a long-held profit goal two years early.

If, like us, you were wondering what a Ferrari FXX K Evo looks like, here it is. It has a 6.3 litre V12 engine and an electric motors, generates 1,036 bhp with the motor providing an additional 187 bhp and is very fast (last time we checked Ferrari hadn’t released top speed or acceleration data).

In 2013, former Chairman, Luca Montezemolo, said that Ferrari would limit production to around 7,000 cars to defend the brand.

“My focus this year and in the years to come is not to grow volume but to increase the exclusivity of Ferrari,” di Montezemolo said. “This protects our margins and residual values for our customers.”

It didn"t last long. With Sergio Marchionne in control and the prospect of a listing on the NYSE, Ferrari outlined a plan to increase production to as many as 9,000 cars by 2019. Production is expected to reach 8,400 cars (including supercars) in 2017 and the target can be achieved a year early as Ferrari doubles the number of shifts at its manufacturing facilities. According to Bloomberg.

Ferrari NV, fabled for its fast cars on roads and race tracks, is packing some extra speed into its factories, too. The Italian supercar maker, spun off from Fiat Chrysler Automobiles NV in 2016, plans to boost production by doubling assembly shifts to two a day in 2018 as deliveries are on pace to reach its 9,000-vehicle target a year earlier than scheduled, according to people familiar with the matter, who asked not to be named as the matter isn’t public. A Ferrari spokesman declined to comment.

The increase is part of Chief Executive Officer Sergio Marchionne’s plan to boost profit by expanding Ferrari’s line-up while maintaining the exclusivity of its $200,000-and-up models. Marchionne, 65, will present the carmaker’s latest mid-term strategy early next year, his final one at the helm of the Italian iconic brand.

The Ferrari IPO in October 2015 priced at $52/share which was at the top end of the $48-52 range. The stock, which trades under the ticker RACE, has more than doubled to $106.9, valuing the company at $20.2 billion.

Bloomberg “helpfully” provides us with an explanation for the ramp in Ferrari production. 

Sales growth is being driven as the population of wealthy individuals surges. The number of millionaires worldwide surged 36 percent to 13.6 million people in the 10 years through 2016 and may rise another 37 percent in the following decade, according to the Wealth Report by real estate company Knight Frank. The number of billionaires increased 45 percent in the period, boosted by gains in the Asia-Pacific area.

Besides the global increase in wealth, the extension to the company’s product range will also have a positive impact on sales volumes during the next few years. For example, Marchionne commented that “We’re dead serious about this” when referring to the potential for manufacturing Ferrari’s first  ever SUV – termed a “Ferrari Utility Vehicle” or FUV. As Bloomberg explains.

The plan will include Ferrari’s first-ever sport utility vehicle as it targets annual sales exceeding a self-imposed 10,000-car limit that until now has enabled it to operate under less-stringent fuel-economy rules, people familiar with the matter said in August. Goals include doubling operating profit to about 2 billion euros ($2.35 billion) by 2022, they said.

For now, there is no threat to Ferrari’s prospects, nor its exclusivity. Waiting lists for most models exceed twelve months. Marchionne has said before that Ferrari can preserve its exclusivity as long as it always sells one car less than the market demand, echoing the words of founder, Enzo Ferrari.

If he was still alive, we question whether Enzo Ferrari would have realised that the biggest risk to his company is probably the bursting of the latest equity bubble.

Eric Peters:"From Here Do You Want To Remain Long Crap? And Short Quality?"

It is Sunday which means Eric Peters, the CIO of One River Asset Management, has published his latest weekly assortment of anecdotes and vignettes selected from the life of a hedge fund manager (always in the 3rd person), which today focuses on the quandary facing the Fed (hiking rates hurts Wall Street, but does it help Main Street?), portfolio positioning (does mean-reversion spell the end of the two best trades of the year, long EM and equities), trapped central banks and the Stockholm Syndrome (the inability by Sweden and ECB to tighten even as they forecast economic growth) and China"s ongoing nationalization of its financial system. In a subsequent post we will also present his 4 anecdotes on the life of a CIO from the perspective of everyday events.

So without further ado, here is Eric Peters with his latest weekend notes.

Real Wealth:

“The irony is that the people who are least sensitive to interest rates are the most affected by low interest rates,” said the CIO. “In most cycles, the collapse in interest rates would have sparked a massive real estate cycle, driven particularly by those who need loans.” But not this time.

“The real activity has been in places like NYC where people are least in need of mortgages.” But their wealth has exploded indirectly through low rates via the rise in asset prices. “I wouldn’t bank on that lasting for much longer, though I’m not sure what’s next.” 

“The real economy hasn’t gotten over-leveraged as a result of low rates,” continued the same CIO. “But the financial economy sure has.” Corporate debt issuance, share buybacks, financial engineering of all stripes. “But what is the Fed going to do? Hike rates to hurt rich people?” he asked.

“Maybe that helps restore a sense of social fairness over a 20yr timeframe, but I’m not sure that it helps anyone in the near-term.” He fired up his Ferrari, heading to the Hamptons. “High rates hurt Wall Street, but how do they help Main Street?”

Old Dogs:

“Examine portfolios that have worked,” said the CIO. “And then mean-revert them to see how they make you feel.” Dogs of the Dow was a well-known example of a mean-reversion system. “Long emerging markets and long equities are the portfolios that have worked this year.” Short bonds and long dollars are the 2017 losers. “So do you still want to be long EM and equities from here? And do you want to be short bonds and long dollars?” Sometimes it’s helpful to look at the world simply. “From here, do you want to remain long crap? And short quality?” 

Stockholm Syndrome:

Sweden’s central bankers left overnight rates at -0.50% and forecast no hikes until Q3 2018. They did, however, lift 2017 GDP forecasts +1.0 to +3.2% and 2018 GDP +0.3 to +2.7%. Industrial production is surging +5.3% annually, and services output is rising +4.1%. Inflation is right on target at 2%. The economy is booming. Real rates are deeply negative, in desperate need of normalization.

But you see, European central bankers have set overnight rates at -0.40%. And the Swedes are hostage to fears of a strong krona.

Big Brother:

“China completely renationalized its financial system,” said the CIO. “They turned their backs on markets.” For a time, the PBOC had come to accept the West’s belief in the wisdom of free markets. No more. “They closed their capital account and have no plans to even reconsider the decision until 2020.” Perhaps much later.

“Allowing markets to determine exchange rates and interest rates is not part of Chinese culture.” No nation in Asia really believes in free floating financial markets.

“They can continue running this game until they open up.”

UN To Trump: Obamacare Repeal Would Violate "International Law"; Would Also Be Racist

A confidential memo from the United Nations, sent shortly after Trump moved into the White House, made an "urgent appeal" to the Trump administration that a repeal of Obamacare could violate international law.  Oh yeah, and it would also be racist as well.  Unfortunately, this is not hyperbole. 

The letter was written by Dainius Puras whose official title is:

“Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health"

Unfortunately, that also is not hyperbole...that is his real, official title as signed on the letter below. 

Apparently the letter was originated after Puras received some "information", undoubtedly from the Obama administration, suggesting that a repeal of Obamacare would leave 30 million people without any access to healthcare and doomed to a sudden, painful death.

"I would like to bring to the attention of your Government information I have received concerning the possibility to repeal core elements of the Affordable Care Act (ACA) with negative impacts on the right of everyone to the enjoyment of the highest attainable standards of physical and mental health in the United States, in particular those with moderate or low income and in situations of poverty or social exclusion."

“Recent reports have assessed the negative impact that this reform may have on the right to health of almost 30 million people in the U.S."

"In this context, I would like to draw the attention of your Government to the Universal Declaration of Human Rights (UDHR).  The UDHR has become a source and expression of international customary law and all States, including the United States of America, are obliged to protect and guarantee the rights enshrined therein."

Why do we suddenly feel like Brandt in regards to Puras" revelation of "certain information, man."

Then, just when you think Puras" letter couldn"t get any more ridiculous, you get to the part where he suggests that anything short of universal, taxpayer-funded healthcare is just racist.

"In this connection, I would like to refer your Government to article 5 (e) of the International Convention on the Elimination of All Form of Racial Discrimination, ratified by the United States of America in 1994.  Under this article, States parties undertake to guarantee the right of everyone to a number of economic, social and cultural right, without distinction as to race, colour, or national ethnic origin."

Of course, taking the most loose interpretation of the guidelines above, as we"re sure Puras does, we would speculate that roughly 100% of the countries in the world are in violation of "international law."

And don"t even get us started on the irony of this letter in light of the fact that the UN, in it"s infinite wisdom, has just appointed Saudi Arabia to the "UN Women"s Commission."  As one person noted, "electing Saudi Arabia to protect women"s rights is like making an arsonist into the town fire chief."

Finally, while we would never argue "international law" with Puras, as he"s clearly an expert in the irrelevant, we would offer the following observation from the U.S. Declaration of Independence.  

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

You see, Mr. Puras, in the United States we don"t "guarantee" people free shit, we simply guarantee them the right to "Life, Liberty and the pursuit of Happiness"...notice, we don"t "guarantee" everyone "Happiness" or healthcare or a free Ferrari on their 16th birthday...what we do guarantee is a stable environment where all people can "pursue" those things on their own if they so choose.

Here is the full letter for your entertainment:

Trump's Old Ferrari F430 Auctioned Off For $270,000

With Trump"s approval rating recently sliding to record lows, it may be impacting various affiliated assets, such as a 2007 Ferrari F430 F1 Coupe (bright red, of course) which was previously owned by Trump, and which left the sale block before meeting reserve at auction on Saturday in Florida. According to Boomberg, bidding on the car stopped at $240,000, $10,000 below its reserve price. Hours later, the auction house issued a statement saying "we can confirm it exchanged hands just minutes after it left the podium" for in a private sale for a final price of $270,000, just barely making the cut.

The 2007 Ferrari was purchased new by Trump a decade ago. He didn"t drive the Ferrari much. Trump sold the supercar in 2011 with fewer than 2,400 miles on it.

The company did not say who purchased the vehicle and offered no further details about the off-the-record sale; we await the usual anonymous WaPo sources to report that it was an agent of the Kremlin who ended up buying the car above the gavel price to prevent Trump"s assets from looking deflated.

Despite missing the reserve in the regular auction, this was still the most ever paid for an F430 Coupe with semi-automatic transition at auction according to Hagerty Insurance. It had been expected to take as much as $350,000.

Bloomberg notes that prices can vary widely on this exotic V8, 490-horsepower stallion. RM Sotheby"s sold a 2008 Ferrari F430 GTC for €459,200 ($490,310) in January in Paris; a 2008 Ferrari F430 Scuderia sold for $182,600 at a Motostalgia sale in Amelia Island, Fla. And Sotheby"s sold a yellow 2007 F430 Spider for $357,500 in 2016. Other F430s in various conditions can found online, for as much as $234,500 and as little as $121,000. 

Pristine, low-mileage versions—especially those with manual transmission or special craftsmanship—hold value better than lesser examples. Trump’s included Daytona-style seats and Scuderia crests on the fenders; it had yellow dials, a radio with a CD changer, and a carbon dash insert.

This 2007 Ferrari F430 F1 Coupe was formerly owned by Donald Trump

Since the car belonged to Trump, speculation immediately emerged as to why the price disappointed as much as it did.

The low price could have been affected by the fact that the car belonged to a "polarizing" president who used it himself, said Jonathan Klinger, a spokesman for Hagerty.

Trump purchased it new in 2007 and owned it for four years, enough to add on 2,400 miles. (Total mileage is near 6,000.) It’s certainly the only supercar to have been owned by a sitting president. Maybe it would have been worth more if Trump still owned it. (The car was offered to the auction house by its second and current owner.)

“The appeal is slightly lower than if [bidders] were buying the car directly from Trump,” Klinger said.

Perhaps Trump just got ahead of himself: according to Bloomberg, most sales of presidential memorabilia come after a former chief executive"s death. Last year, a pair of cowboy boots owned by Ronald Reagan carried a high estimate of $20,000 but sold for $199,500; a concrete shard of the Berlin wall signed by Reagan sold for $277,500. It had been expected to take $20,000.

Saturday"s disappointing auction appears to have been on outlier as previously Trump-owned cars have fared better at recent sales.

Trump"s Cadillac limousine took $68,261 at a Bonhams sale last month in England. The total was four to seven times the average value of an American limo from the same era, according to Hagerty data. His Lamborghini Diablo took $460,000 in September last year—on EBay. That was 75 percent higher than today"s current average price for Diablos.

Trump aside, the auction results suggest that the F430 is not necessarily a superior investment, something the vintage car market has shown for some time. Average values at auction for this model have fallen 15 percent over the last five years, according to Hagerty, hovering near $120,000 to $130,000 for a car with an F1 (paddle-shifter) gearbox. The original MSRP ranged from $185,000 to $215,000.

The biggest depreciating asset: the gearbox, which according to Klinger is the key to holding a car"s value, specifically whether a car has a true manual transmission vs. the six-speed paddle-shifter in Trump’s Ferrari.

“I would expect the cars with the F1 gearbox, like this one, to continue to depreciate for the near future,” Klinger said.

“These were some of the last Ferraris available with manual transmission, making them worth considerably more than the F1 cars,” Klinger continued. “A manual car is worth somewhere from 50 to 75 percent more than the F1 gearbox cars.”

The Ferrari"s new owner will get the car with just over 6,000 miles on it, and the purchase comes with a copy of the original title boasting Trump"s recognizable "bold signature," Auctions America said.

And with that piece of trivia out of the way, here are some more gratuitous photos of a red ferrari.

Trump bought the car new in 2007 and registered it to Trump Tower

The former Trump Ferrari uses F1-style paddle-shifting on a six-speed gearbox

The car has a 4.3-liter, 490-horsepower V8 engine. Top speed is 196 miles per hour

The car has Daytona-style sport seats

In 2009, Ferrari discontinued the F430, which it had launched at the Paris Motor Show in 2004