Here's our summary of key economic events overnight that affect New Zealand, with news that the rest of the world doesn't actually need an expanding China. Their financial market struggles are - so far at least - having little impact elsewhere even as some investors take sharp losses in the Middle Kingdom, especially on bonds.
The strength of the US labour market is on display again with jobless claims falling more than expected last week. There were 233,000 new claims last week a decrease of -32,000 from the week before. There are now still 2.1 mln people on these temporary benefits but that is slightly above year ago levels - although not when you account for the growth of their labour force over that time.
Overnight, the USDA released its February World Agricultural Supply and Demand Estimates (WASDE) report. They raised ending stock estimates for American corn, soybeans, and wheat more than traders expected. And they noted a bumper Brazilian soybean harvest. For 2024, beef import estimates were raised largely on higher expected imports from Oceania. 2024 milk production forecasts were lowered and the US expects to export less.
The US Treasury had a big 30 year bond auction earlier today, one that was well supported. But the median yield rose to 4.31% from the 4.16% at the prior equivalent tender a month ago. Increases like this are evidence that global rates are still pushing higher.
The Reserve Bank of India held its benchmark policy rate at 6.5% for the sixth consecutive meeting at its overnight meeting. This was as widely expected and comes amid persistent price pressure. Indian inflation rose to a four-month high of 5.69% in December due to rising food prices. But that is still within the RBI's generous 2-6% target range "in the medium term". However, dominating this review were questions about how they handled the blocking of Paytm.
China released its January CPI data and it isn't calming nerves. Consumer prices fell by -0.8% in January from a year ago, marking the fourth straight month of decline which was the longest streak of drop since October 2009. This data came worse than market forecasts of a -0.5% fall, and is the steepest retreat in more than 14 years. Food prices declined at a record pace with beef prices down -7.7% in a year and lamb prices down -5.9%. Milk prices were more insulated, down just -0.8% in the year.
Meanwhile the -2.5% drop in producer prices is actually an easing of the declines in the factory sector, even if it is running more deflationary than consumer prices.
Global container freight rates dropped by a marginal -1% last week to remain very high on the shipping crisis induced by military actions and droughts. This minor shift overall masks big changes both ways on many key routes. Meanwhile bulk cargo rates are little-changed again at historically low levels.
The UST 10yr yield starts today at 4.17% and up +6 bps from yesterday. The key 2-10 yield curve inversion is little-changed at -29 bps. Their 1-5 curve inversion is less at -74 bps. And their 3 mth-10yr curve inversion is also less at -122 bps. The Australian 10 year bond yield is now at 4.16% and up another +3 bps from yesterday. The China 10 year bond rate is unchanged at 2.45% and still off its lows. But this looks manipulated - all other durations around it are falling now. The NZ Government 10 year bond rate is unchanged at 4.82%.
Wall Street is in its Thursday trade and little-changed from yesterday holding its record high but not able to breach the 5000 level yet. Overnight European markets were bookmarked by London's -0.4% fall and Paris's +0.7% rise. Yesterday Tokyo ended its Thursday session up a really strong +2.1%. However Hong Kong fell -1.3%. But Shanghai rose +1.3% on aggressive ("unprecedented") action by the home team to arrest their slide. Singapore was down -0.4% yesterday. And the ASX200 rose another +0.3% while the NZX50 gave up -0.7% in tough afternoon trade.
The price of gold will start today down -US$8/oz from yesterday at just on US$2031/oz.
However oil prices are on the move up, up +US$2.50 to just under US$76/bbl in the US while the international Brent price is now just over US$81/bbl.
The Kiwi dollar starts today at just under 60.9 USc and down a bit less than -¼c from this time yesterday. Against the Aussie we are up nearly +¼c at 93.9 AUc. Against the euro we open at 56.5 euro cents and down -20 bps. That all means our TWI-5 starts today at just on 70.4 and essentially unchanged from yesterday at this time.
The bitcoin price starts today at US$44,991 and up a notable +4.2% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.
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127 Comments
Growth needs an expanding SOMETHING, David.
Hard to see the West taking over slave-wage manufacturing, and being able to support wages commensurate with Western rent/mortgage/debt demands while doing so. .
So the West needs China, or someone else to repress.
And the Elite cannot do it on their own; so the West cannot divest too much of its consumer echelons.
Economic policy in a nutshell...
"Even so, who would dare begin to admit that another global crash might be just months away? Far better to carry on as if tomorrow will be just like yesterday, while hoping that clever people somewhere else have got your back. And if the proverbial does hit the fan, council bureaucrats, government ministers, and central bankers can just claim that “nobody could have seen it coming."
Hopium
Be very very careful when you age without children to look out for you.
Although kids are not always wonderful, I have been involved in terrible situations where the ageing infirm elderly are looked upon by those around them as a lump of assets to be exploited. And their lawyers and accountants have been part of it. Sign them up and them dump them in any old rest home type stuff - and forget about them.
Financial elder abuse and pressure on elderly to vary Wills is a huge problem in NZ. It is under reported and very difficult to deal with. Lawyers hold power which they abuse. The Law Society needs the regulatory role removed and handed over to an independent body.
Yes shit can absolutely happen. But comitting to a huge proportion of your time and money for your best decades, just in the hope that for your last one, you might have someone help take care of you (if they even live in NZ) doesnt make any sense. If you really feel the desire to have children I doubt many are thinking about this as the reason.
As I age I look at my (adult) kids and life seems worthwhile.
I can't say this about anything else in my life (perhaps if I'd taken in orphans)?
As you age the permanent blackness of death creeps inevitably closer.
Having family helps with the nothingness of it all.
The West made need China, but the US has Mexico-NAFTA. Mexico has now surpassed China in Exports to the US. If US leadership was on the ball they would do for the Central American bleeding economies what they did to boost China in the 90's. Would solve Southern Border Problems while further reducing dependence on Red China.
I posted this yesterday.
There is NO meaningful decoupling of global trade from China. China's trade surplus with countries like Mexico (black) and Vietnam (blue) is up massively. Those goods don't stay in Mexico or Vietnam. They're trans-shipped to the rest of the world. No decoupling, only rejiggering. Link
Far too shallow Baywatch. Mainstream Government backed currencies (US$, NZ$ etc) are backed by all the assets of those countries. What backs Bitcoin or Etherium?
There is the slightly deeper problem of mainstream currencies continuing to grow in $ value, backed by ever reducing resources. But that is another discussion.
What backs the value of Bitcoin is much simpler, and far easier to understand than the concept of what backs the vaue of a dollar. Think of it in these terms:
Bitcoin is backed and protected by the worlds most powerful computer network. Currently processing 600M TH/s (Terrahash's per second). 1 Terrash is a trillion hashs per second.
"To highlight the enormity of this number: - For every star in our galaxy, the Bitcoin network is calculating 5 billion computations per second. - It would take ~2000 years for the entire global population, each performing one hash/second, to match the Bitcoin network's hash rate. - The Bitcoin network performs ~67 times more hashes per second than there are grains of sand on Earth. - By number of raw operations/second, Bitcoin is ~500x more performant than the world's most powerful supercomputer."
All of that computer power requires electricity to produce. Electricity also has real world value. So Bitcoin is a digital representation of all that value. We know energy cannot be created or destroyed, only changed from one form to another. So Bitcoin is Digital energy that is able to be transfered from person to person instantly anywhere in the world. All without permission from a government or a third party company at little to no cost. All those things are what gives it value.
You realise that nothing is worth anything if no one wants to buy it.
Much like the fiat currency from many countries. It doesn't matter if is 'backed' by a state, it's absolutely worthless outside their borders. Even within their own country no one wants to hold Argentinian pesos, or Turkish Lira, or Cuban Pesos, or Zimbabwean dollars, or Peruvian Sols. People will always look for harder money that holds its value over time. Now we are seeing the same thing starting to happen in western nations as our trust in our money erodes (along with its purchasing power).
I don't buy this - it's not as if you can turn the bitcoin back into energy at will. There are plenty of examples of products that took a lot of energy to produce that no one wants now - take a trip to your local dump for examples. Their value was not underwritten by the energy required to produce them.
I don't buy this - it's not as if you can turn the bitcoin back into energy at will. There are plenty of examples of products that took a lot of energy to produce that no one wants now - take a trip to your local dump for examples. Their value was not underwritten by the energy required to produce them.
Yes, it takes energy to produce a motherboard. However, there is potential for a motherboard to become worthless or need replacement.
Regardless, the energy used in producing a motherboard is value.
“’But how is [Bitcoin] digital energy; how do you get it back to being energy?’ The answer is, I send a billion-dollar block of it to Tokyo, I run it through an exchange … I convert it back into yen and I take the yen and I buy electricity from the Tokyo Power Company.” - Michael Saylor
Mainstream Government backed currencies (US$, NZ$ etc) are backed by all the assets of those countries. What backs Bitcoin or Etherium?
Since when have govts had the authority to appropriate pvte assets in a national debt crisis? I guess that depends on each country and culture. For ex, South Koreans handed in their personal gold holdings to support their country during the 97 financial crisis. The gold was used as security to borrow from the IMF. Korean nationals voluntary gave their own gold holdings as it was a matter of national pride. But people were not 'forced' to hand in their gold.
BTC is not a fiat currency therefore it's not backed or "propped up" by a central bank or govt. It's also not backed by a military or rules-based order.
Either you don't understand the concept or are deliberately being obtusive. Governments manage a real economy where trade is enabled and supported. They provide infrastructure and regulation and laws to support and enable industry to happen and for people to benefit from it. All that is what backs a sovereign currency. That also explains why poor or corrupt governments undermine the value of their currency. Tell us again what backs and supports the value of things like bitcoin?
So if you say that NZD is backed by the "real economy", if I own 10% of base and / or broad money, does that mean I can lay claim to 10% of a nation's value; for ex, current productive output or the nation's milk powder, power stations, etc?
At least with BTC, if I own 10% of the existing supply, I think that it's fair to say that I own a similar proportion of the network and its value.
F'more, you say that govts can corrupt the value of currency. I wholly agree but this is either govt or its agencies like central banks. The BTC protocol does not have similar governance.
What do you mean by 'base'? If you are suggesting that if an economy has an established value of $1 000 000, and you hold $100 000 then you could claim that. But remember the total number of $ available is constantly changing and is not a fixed or even effectively controlled amount. Bitcoin is similar with so many trying to 'mine' it, the number available is always changing. So at any one time you may hold 10% of the available bitcoin, but that will not last, unless you are continually buying at the rate the supply is growing at.
But that is not really the point of discussion. As PDK tells us money is really just a substitute for ever diminishing supplies of real resources, either stuff made or the raw materials from which it it made. Note that the value of those resources is very dependent on the demand for them. Government owners of sovereign currency have control (sometimes indirectly as they are privately owned) of real resources throughout varying parts of the value chain. This is what backs 'money'. Bitcoin cannot claim that.
What do you mean by 'base'?
To understand the fiat monetary system, you need to understand the fundamental building blocks. It's very important. Here we go:
Base money refers mainly to bank reserves and to a smaller extent, currency in circulation, and this combined number is mainly controlled by the central bank. When you see the Fed's balance sheet going vertical, that’s basically causing base money to go vertical. Huge increase.
Commercial banks take that base money, and multiply it via lending in a fractional reserve banking system to create broad money. Broad money includes currency in circulation, checking accounts, savings accounts, and similar cash-equivalents, and is a much larger figure than base money. This broad money is what people and companies actually have as money to save and spend.
No. It's not correct. "The economy" is a construct, not an entity that has a fiduciary obligation to you.
It's also important to remember that as a bank account holder, you're really just a creditor. It's so basic and fundamental, but most people don't seem to understand this.
Where within the bitcoin 'construct' is there a fiduciary obligation to you? A NZ$ has an established value backed by the NZ Government.
Where does being a bank account holder come into it? It is well established that bank account holders are just creditor to the bank. Something that I believe needs to be addressed. Where are your bitcoins held? What is the guarantee they will be available when you need them?
Bitcoin’s computational power soared to unprecedented heights this week, climbing to 609 exahash per second (EH/s) on Thursday, as per the seven-day simple moving average (SMA). Over the last year, figures reveal a staggering increase in Bitcoin’s hashrate, surging by 332 quintillion hashes per second. Bitcoin’s Computational Power Skyrockets On Feb. 8, 2024, the hashrate […]
It is an interesting concept. Proposed as a disruptor to government / big bank controlled and supported, commonly accepted trading mediums we call money, these digital currencies have really achieved very little other than to make a small number of people varyingly richer, and an awful lot more significantly poorer. Why would you?
Props for keeping up the education JC. People will buy Bitcoin at the price they deserve depending on when they put the work in to understand it.
Fidality is now allocating between 1-3% of their conservative/aggressive funds into Bitcoin. Only a matter of time until the rest do the same.
The ETFs are doing insane volumes.
People arnt ready to have their faces melted yet. Need another crash first so I can buy more :(
Interesting and somewhat amusing paradox of and in the American debate on immigrants and the border. America does not have the problem of too little births as does China, for now the number crunches are saying the high immigration in the US is fueling growth.
Can't say New Zealand high immigration is being seen as driver of growth, but then maybe it is because many of those immigrants are either filling service industry jobs and or are on the job seeker benefit?
Maybe we need to speed up these people getting into skilled work?
You were alive then?
At that time we had very good relations with the motherland. Now we’d be more similar to Fiji than Australia: a tiny nation of very little significance struggling to provide its citizens with a decent standard of living and healthcare. We’d struggle to invest in technology with only 2 million people to pay for it and we’d be too small to attract overseas investment.
Id argue the opposite: we’d be better off with 10 million people, but only if they actually invested in infrastructure.
Jimbo Jones - I'm well aware of the protocols hereabouts, but your comment, at this stage in the gross overshoot of our species. ..
demonstrates a lack of intellect.
Come on - 'investing in infrastructure' is merely forward betting that said infrastructure can be maintained and energised.
I repeat, we are an OVERSHOT species. Money doesn't solve that, and adding MORE population clearly makes it worse.
What's the cause of the overlook, considering what has been put up hereabouts, re the Limits to Growth?
I would go even further and suggest 15-20m would be idea size for NZ. That's simply a large Chinese city spread out over 100x the area. Though Auckland would/should be a city of 5m, Christchurch another 4m, Wellington 2m, Hamilton 2m, Dunedin 2m... we would still have huge open spaces, but be able to attract the things we want and have a better economy with things like functional infrastructure.
Hell Singapore has more people than us and its about the size of North Shore of Auckland!
All of that is if we ignore limits to our growth and overshoot...
Jimbo I suggest the opposite is required. All things must be in balance. without venturing into the religion BS i would suggest the truth in the Genesis story of the Garden of Eden is that the Garden is the beginning and end of our journey. When we have learned to live fully in balance with our environment then we have learned all we need to. 2000 + years on, as smart as we are, we still cannot learn that basic survival requirement.
I suggest this country's ideal population is around 3 million, but despite PDK's comment, I also believe we need to invest in high quality infrastructure that does not bleed our environment and allows us to live efficiently with minimal impact.
"What is this technology we need to invest in?" - depends if we want to be competitive with the rest of the world, or just do our own low tech shit and have virtually no capability to trade. Even farming is becoming high tech. If we lose our ability to trade, then we won't be able to buy cars, oil, TVs, MRI scanners, etc.
With just 2 million people NZ would be little more than low tech farmers in the middle of nowhere struggling to make money from wool and sheep.
We are never going to be able to compete with the high tech volume manufacturing sector from New Zealand, we are simply too far away to ship goods too then have it shipped out again. We need to stay focussed on what we are good at and that's agriculture. When it all hits the fan you don't need that EV but you do need food.
Rubbish:
- Some costs are fixed, having a lot of heads helps pay for them.
- Gaining overseas investment would be very hard with a few heads and very little revenue to be made.
- Few heads does not encourage many companies to operate which stifles competition and increases prices
- Young people don't want to live in a tiny place of little interest, they will all leave (even more than now).
Bollocks.
They only want to leave, because the propaganda tells then GROWTH is possible. Where the world is headed - and Gaza and Ukraine and fracking and tar-sands and China's bubble-prick are all concurrent symptoms - is degrowth. Had to happen, we ramped into a finite planet at an exponentially-increasing rate - what did you expect? The question is whether controlled or uncontrolled - and with comments like yours still prevalent, he latter looks more likely.
You need to study physics more:
https://www.thegreatsimplification.com/
Assuming he can get on the waiting list....after obtaining a position in the assessment queue....after getting a delayed GP appointment ....and assuming the op isnt postponed for an acute case....assuming their are sufficient trained medical staff available in the country....
...then I imagine most would go to Auckland.
I agree PDK, its all going to end badly but I would love to hear some predictions as to when. The doomsday clock is pretty close to midnight, its now only 90 seconds away. I always thought we would get to 2050 but we just had the hottest year on record and we have hit the 1.5C rise imposed in 2015. If things go exponential from here there is no way 2050 is doable anymore.
Plenty of countries where more people just means more problems rather than less - including wealthy ones
and as an exporting nation brains should be more important than brawn -smart people will live here if we create a wonderful life environment. Currently we do not and adding brawn (people) isnt going to change that
More problems or different problems?
Imagine if Southland became its own country. That small number of people all having to pay for their infrastructure and organise international trade and run an international airport and provide healthcare with all the needed specialists and technology etc. Would they be better off?
The US Southern Border gates were thrown wide open on Biden's first day in office-why? Overriding reason was to gain Electoral Votes in the inner cities where all these poor 6 to 10 million go to live. Constitutionally Electoral System would be impossible to change in the US, but this "immigration push" was cleverly designed to "game" the system. For every 3/4 million people (not citizens) 1 Congressperson is added + that means 1 more Electoral Vote is awarded to the state that gains in population. Thus by 2030 Census the 100% Democratic inner cities (were all these poor people go to live) will gain and Democrats pesky problems of the "Swing States" being the decider in Presidential elections will be muted.
85% of all new arrivals (millions of single men 18 to 30) who get in by claiming Asylum (only reason allowable to let them in) will eventually in 7 to 10 ears be found not to be Asylum cases and only then returned to their native country. Biden's new bill before Congress aims to supplant Asylum Judges with 'minions at the Border who instead will green light these people and then they will quickly gain work permits. Its quite a sinister plot to insure Democratic control.
A sort of muted mindset of those crazies is still abundant in the form of the 70 million or so that voted for him in 2020. Unless Biden can dredge up a convincing display of cognisance, robustness and charm there is a good prospect for Trump, should he get that far, to overwhelm and beat him. And Trump really needs to because then he can pardon himself for everything he has done, hasn’t done and is yet to do.
I quite like watching the Betfair odds on this - the good news is Trump is considered most likely not to be the next President - about a 44% chance of being elected inferred from the odds. Biden is given a ~31% chance.
Somewhat surprising - next favourite is Michelle Obama who is given a 6-7% chance of being the next President. Way ahead of Nikki Hayley and Gavin Newsom on ~3% and Kamala Harris on ~1%.
Could be plenty of drama to come. Hopefully not of the 'Trump being elected and continuing to lead the World towards chaos' variety.
Yes, that's right. I see Biden's odds have just moved out a nudge, and Harris and Newsom have come in after the classified documents report painting Biden as having a failing memory. Maybe a good prompt for him to step aside and let in someone younger and more popular so Trump can be handily defeated.
Can we have some facts here?
You say "The US Southern Border gates were thrown wide open on Biden's first day in office"
How exactly did this happen? Did the US Border Force lift all their boom gates and just flag everyone through? This is what you comment implies, or are you just spouting the Trumpist BS extremist garbage that so many seem to think is fact?
The border was not thrown open, those people are coming no matter if you like it or not. Conditions in those countries are getting worse by the day, the number trying to cross will quadruple. Pretty much nothing is going to stop them coming as long as the USA continues to let them in. The level of action required to stop them will be unacceptable by the public that are not being affected by the influx. The people in Texas are sick of it and who can blame them.
paradox indeed. The border wall needs roads into the border areas to construct, maintain, and loosely police it.
These new roads mean that smugglers can pick up migrants shortly after they jump the wall or enter via a tunnel. Much easier than before the wall when you needed to trek through the desert for 3 days.
And people wonder why migrant numbers are surging.
I only WOF the car every 2 years. You sync the WOF with the reg so the WOF has not expired because you can reg the car early online before the WOF expires. You sneak in the Reg and just run with no WOF for a year. Chances of getting caught were I am are next to zero. Looking at the kind of crap in my local gas station, I very much doubt it has reg or WOF.
You run the risk of your insurance being invalid (of course if you cause an accident that is not the result of a WOF failure item you may have an argument when your claim is declined).
But yeah, there is plenty of crap on the roads that in no way can have a current WOF.
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