New step for Bitcoin’s wild ride: Futures trading

For more than four decades, the Chicago Board Options Exchange has allowed investors to place their bets on commodities from corn to steel.

On Sunday, the exchange began offering options to bet on something very different: bitcoins.

Why is it different? With stocks and commodities, there’s an underlying asset. For stocks, it’s a company and the goods or services they produce. For commodities, it’s the actual item, like oil, fruit or copper.

With bitcoin, there’s nothing like that. Unlike traditional commodities, there’s not a physical asset behind it. And unlike currencies, there isn’t a central bank ready to back bitcoin up.

Bitcoins live on computer servers. They are produced by complex algorithms and recorded in a digital ledger.

The U.S. Commodity Futures Trading Commission, which certified bitcoin futures for trading, acknowledged the unprecedented step taken by the Chicago Board Options Exchange.

Bitcoin “is a commodity unlike any the commission has dealt with in the past,” CFTC chairman J. Christopher Giancarlo said in a statement December 1.

There’s more to come. Bitcoin futures will also begin trading on the Chicago Mercantile Exchange on December 17-18, while the Nasdaq will debut the options sometime next year.

Bitcoins are bought and sold on unregulated virtual exchanges — and it’s been extremely volatile.

The price of a single bitcoin recently soared on some exchanges from less than $10,000 to $17,000 before dropping back to near the $15,000 mark, spurring renewed warnings of a bubble.

Nobel laureate Joseph Stiglitz told Bloomberg TV that the currency “ought to be outlawed.”

But some people — particularly in the hedge fund world, where there’s a healthy appetite for risk — say bitcoin futures present an opportunity.

Futures are contracts that let investors buy or sell something at a specific price in the future — in this case, bitcoin. Trading in futures contracts makes bitcoin more accessible to fund managers who don’t want to own bitcoin directly but do want to speculate on whether it will go up or down in price.

Stephen Bielecki, an attorney with Kleinberg Kaplan, said his law firm received two inquiries last week, amid the wild price swings, about setting up new bitcoin-focused funds.

“I think the volatility presents opportunity,” he told CNNMoney. It “makes those bets via futures feel more extreme, or feel more pronounced, because you might be saying, ‘We’re betting on an 80% gain three weeks from now.'”

And Joshua Klayman, who heads the cryptocurrency unit at law firm Morrison & Foerster, said bitcoin’s debut on the futures market means investors can bet on bitcoin’s performance without having to actually own any.

“I think if it is a bubble, my impression is that we’re just getting started here,” she said. “I do think there’ll be continued volatility, but I’m bullish on cryptocurrency in general.”

While interest in bitcoin is growing, some establishment players are warning about futures trading.

Last week, the Futures Industry Association, which represents brokers and big banks like JPMorgan and Goldman Sachs, wrote an open letter to the CFTC. It warned that the certification of bitcoin futures “did not allow for proper public transparency and input.”

The association said that a “more thorough and considered process” would have allowed exchanges and trading clearinghouses more time to study ways to protect against extreme price swings.

The group is worried that banks could be on the hook if something goes wrong.

For its part, CFTC head Giancarlo said in his statement this month that futures exchanges have agreed to “significant enhancements to protect customers and maintain orderly markets” for bitcoin.

He also warned investors “should take note” that the underlying bitcoin market is “relatively nascent” and remains “largely unregulated.”

–CNNMoney’s Ivana Kottasov and Daniel Shane contributed to this report.

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Sirius XM faces celebrity backlash after Steve Bannon rejoins radio show

Steve Bannon’s return to a radio hosting gig is kicking up some celebrity backlash.

Actors Seth Rogen, John Leguizamo, and singer-songwriter Melissa Etheridge have all promised to boycott SiriusXM for allowing Bannon to appear on the subscription radio service.

The outcry started after SiriusXM announced last Tuesday that Bannon, the former chief strategist for President Trump, would be a host on the “Breitbart News Daily” radio show. It airs on Patriot, a conservative station.

“I can’t bring myself to appear on the same service that has decided to support Steve Bannon,” Rogen tweeted Friday, adding that he canceled a scheduled press tour on SiriusXM. Rogen stars in the new film “The Disaster Artist.”

Etheridge also suggested Friday that she would abandon her involvement with Volume, a SiriusXM music channel. She has hosted an interview program on the channel called “Melissa’s Basement.”

“After news that @SIRIUSXM has given #SteveBannon a show, I can no longer in good conscience be a part of my show,” she tweeted, later adding, “I will fight for anyone’s right to free speech. I will not be a part of amplifying or normalizing hate speech.”

Leguizamo, the Broadway and screen actor, followed Sunday. He tweeted to his more than 800,000 followers that he “just canceled my #SiriusXM because they hired #Bannon ! No hate mongers!”

The hashtag #BoycottSiriusXM, meanwhile, was posted or shared by thousands of social media users over the weekend, according to the tracking site Keyhole.

SiriusXM said in a statement Friday that the network “has promised to deliver a diversity of opinions and viewpoints, from conservative to progressive to everything in between.”

“Free speech is vitally important. We ardently believe that by allowing a virtually unlimited platform of viewpoints, we are doing our best to uphold that core value,” SiriusXM said.

The company declined to comment further on Sunday.

Bannon is familiar with radio. The Breitbart News executive chairman was a host on Patriot before the 2016 election. He joined the Trump campaign in its final months and served in the administration until August.

In its announcement, SiriusXM also said Breitbart would expand its presence on Patriot with a new daily weeknight show and additional weekend programming.

The financial terms of Bannon’s relationship with SiriusXM are not clear. When asked if Bannon is paid by the network, spokesman Patrick Reilly said SiriusXM does “not discuss the terms of our programming deals.”

Bannon did not provide a response to the potential boycott when asked by CNN on Sunday.

Bannon is a controversial figure in politics. He’s long been bent on upending the political establishment, and he’s often considered one of the harbingers of the populist movement that vaulted Trump into the nation’s highest office.

His far-right website, Breitbart, has also been defending the Alabama Senate candidate Roy Moore, who is now embroiled in a sexual misconduct scandal.

“I feel jacked up,” Bannon told the Weekly Standard when he left the White House. “Now I’m free. I’ve got my hands back on my weapons. Someone said, ‘it’s Bannon the Barbarian.’ I am definitely going to crush the opposition.”

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A warning about bitcoin’s wild price swings

The person atop one of cryptocurrency’s most popular exchanges pleaded with people to invest responsibly.

In a blog post on his site, Coinbase CEO Brian Armstrong sought to “remind customers of some of the risks associated with trading digital currency” — which include wild price swings.

The price of a single bitcoin soared this week from under $10,000 to more than $17,000 before slumping back down to around $15,000, according to data from CoinDesk, which values bitcoin based on data from four exchanges, including Coinbase.

On Coinbase’s exchange the price soared past $18,000 at one point.

Armstrong warned in his post on Thursday that the increased interest in cryptocurrencies, which was punctuated by a stunning bitcoin rally earlier this week, has led to “extreme volatility and stress on our systems.”

During the frenzy, Coinbase’s valuation was consistently higher than the CoinDesk index — at one point by a $2,000 margin. Even Saturday afternoon, Coinbase listed the price of a bitcoin around $15,000, while the CoinDesk hovered around $14,700.

Bitcoin’s rise is mind-boggling considering just one year ago it traded for less than $800. At one point in 2011, it traded for about three bucks, according to CoinDesk.

Its stunning ascent was driven in large part by increasing attention from mainstream investors. And bitcoin’s valuation has continued to balloon — with a few sharp dips — despite a smattering of warnings from top economists and business leaders.

Beginning Sunday, investors will be able to trade bitcoin futures via the Chicago Board Options Exchange. And they’ll debut on the Chicago Mercantile Exchange a week later.

–CNNMoney’s Jethro Mullen contributed to this report.

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Hedge fund manager: Trump asked me if Amazon is a monopoly

President Trump’s beef with Amazon came into view again this week.

Hedge fund billionaire Leon Cooperman of Omega Advisors, in a television interview on CNBC Thursday, spoke of a comment he says Trump made to him about Amazon at a White House dinner with business executives last summer.

“Twice he asked me if I thought Amazon was a monopoly,” Cooperman said. “I said, ‘No Mr. President I don’t think it is. I think they’ve out executed people and done a very good job.’ ” (CNNMoney was unable to reach Omega Advisors for comment, and Amazon declined to comment.)

Trump at times mingles his grievances with Amazon with his criticism of the Washington Post. Amazon’s founder and CEO, Jeff Bezos, owns the Post.

On Twitter, Trump has referred to the “Amazon Washington Post.”

Trump has claimed that Amazon is using financial losses at the Post to lower Amazon’s tax bill, but Amazon does not own the Post.

Trump has suggested that Amazon doesn’t pay taxes. Amazon collects sales taxes in every state.

Trump has also claimed that Bezos is using the Post to stop congressional investigations into Amazon’s “no-tax monopoly.”

Then there’s Trump’s antitrust claim.

During the campaign, he told Fox’s Sean Hannity that Bezos has “a huge antitrust problem.”

In August he tweeted that “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”

In August, the Federal Trade Commission, which still doesn’t have a Trump appointee as a commissioner, declined to block Amazon’s purchase of Whole Foods.

The Trump administration’s Justice Department has filed an antitrust lawsuit seeking to block AT&T’s purchase of Time Warner, owner of CNN, which Trump has repeatedly criticized.

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Hedge fund manager: Trump asked me if Amazon is a monopoly

President Trump’s beef with Amazon came into view again this week.

Hedge fund billionaire Leon Cooperman of Omega Advisors, in a television interview on CNBC Thursday, spoke of a comment he says Trump made to him about Amazon at a White House dinner with business executives last summer.

“Twice he asked me if I thought Amazon was a monopoly,” Cooperman said. “I said, ‘No Mr. President I don’t think it is. I think they’ve out executed people and done a very good job.’ ” (CNNMoney was unable to reach Omega Advisors for comment, and Amazon declined to comment.)

Trump at times mingles his grievances with Amazon with his criticism of the Washington Post. Amazon’s founder and CEO, Jeff Bezos, owns the Post.

On Twitter, Trump has referred to the “Amazon Washington Post.”

Trump has claimed that Amazon is using financial losses at the Post to lower Amazon’s tax bill, but Amazon does not own the Post.

Trump has suggested that Amazon doesn’t pay taxes. Amazon collects sales taxes in every state.

Trump has also claimed that Bezos is using the Post to stop congressional investigations into Amazon’s “no-tax monopoly.”

Then there’s Trump’s antitrust claim.

During the campaign, he told Fox’s Sean Hannity that Bezos has “a huge antitrust problem.”

In August he tweeted that “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”

In August, the Federal Trade Commission, which still doesn’t have a Trump appointee as a commissioner, declined to block Amazon’s purchase of Whole Foods.

The Trump administration’s Justice Department has filed an antitrust lawsuit seeking to block AT&T’s purchase of Time Warner, owner of CNN, which Trump has repeatedly criticized.

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Americans keep waiting for bigger paychecks

Americans got a boost to their paychecks in November. But the increase in wages remains frustratingly low given the health of the overall job market.

Average hourly earnings rose 2.5 percent over the past 12 months. That’s a slight improvement from the 2.4 percent increase the government reported for October. Still, it remains below the 3 percent increase that most economists (not to mention workers) would like to see.

People are finding jobs. That’s not the problem. The economy added 228,000 jobs last month and the unemployment rate remained at 4.1 percent — its lowest level since December 2000.

But for whatever reason, employers aren’t showering workers with big pay raises.

Even President Trump’s National Economic Council Director Gary Cohn seems puzzled by this trend. He noted in an interview with CNBC Friday morning that “we’re still not growing wages in this country.”

However, it seems that many Americans are still just happy to have a job and are not demanding bigger paychecks.

“Slow wage growth is the biggest conundrum here,” said J.J. Kinahan, chief market strategist with TD Ameritrade “Small wage increases are still able to attract talent. Most of us thought this would have changed by now.”

Kinahan noted that one potential factor at play is that the jobs report does not take into account other perks that workers want, things like the ability to work from home more often, free meals at the office and better insurance options.

“People are increasingly looking for other benefits, and not just wage growth,” Kinahan said.

Another reason why paychecks may not be growing? Inflation is still not much of a problem.

The government said in November that consumer prices rose just 2 percent over the past 12 months. So even a meager 2.5 percent pay raise is more than enough to offset the relatively small cost of living increases that many Americans have faced.

Still, Andrew Chamberlain, chief economist with job search site Glassdoor, wrote in a report Friday morning that based on inflation trends and productivity growth, wages should be rising between 3 percent and 4 percent.

There may be some hope on the horizon though.

Mark Hamrick, senior economic analyst at Bankrate.com, said that if employers keep adding jobs and the unemployment rate inches lower, companies will have no choice but to finally start paying more since workers will demand higher salaries.

Hamrick wrote in a report that wage increases “are likely headed closer to 3 percent in the coming year as long as the economy continues to expand and no dramatic black swans emerge.”

There are hopes that tax reform might push companies to start paying workers more too.

But there’s a debate as to whether big businesses will really start to give employees raises and hire more or just use any potential savings from a lower corporate tax rate to reward investors instead with dividend increases and more stock buybacks.

Nonetheless, there should come a point where employees will demand better pay and even feel comfortable enough to leave and find another place to work in order to get a salary boost instead of sticking at a low-paying, dead-end job.

Companies may have the bargaining edge now but it may not stay that way for much longer.

“It’s not going to be an overnight change but there eventually will be pressure to increase wages,” said Bodhi Ganguli, lead economist at Dun & Bradstreet. “You will have to offer people more money to fill jobs if the overall economy keeps improving.”

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