Here's our summary of key economic events overnight that affect New Zealand, with news New Zealand's ambitions to be a green hydrogen superpower are making real progress.
But first up we should note that today is a national holiday in the US, "Juneteenth", commemorating the end of slavery, an end that started in Texas in 1865. (Until last year, it had only been a regional holiday.)
Meanwhile, Chinese authorities reviewed their Prime Loan rates yesterday, and left them unchanged. In late May, their Premier released a 33-point rescue package to avoid an economic contraction in Q2-2022. But rate hikes by global central banks make it difficult for them to ease monetary policy to boost a weak domestic economy. However, analysts expect rate cuts in the second half of 2022 anyway.
The impact of that package of stimulus measures hasn't kicked in yet. One consequence may be that with car sales struggling there, the lithium price is wavering. A sudden new rush in supply seems to have overwhelmed demand and a price correction is expected soon.
And the Chinese price of iron ore is still sinking. And that isn't helping the share price of Aussie miners.
This weakness is also showing up in Chinese consumer sentiment. The latest data released officially is for April and that showed their survey reporting a very sharp drop in confidence from a positive +13 in March to -13 in April. In a record that goes back to 1991, we have never seen a plunge like this in the official survey. Kudos to them for actually releasing such survey data that shows a vast leakage in confidence in the Middle Kingdom.
After a surprise dip in April, Taiwanese export orders bounced back to +US$55 bln and +6.0% higher than a year ago. Orders from American and ASEAN customers were very strong. They were very weak from China and have been all year, a traditional source of strength.
Annual producer price inflation in Germany surged to almost +34% in May from the same month a year ago, breaking a new record peak for a 6th straight month and fractional higher than in April or market forecasts. The figures reflect the effects of the Ukraine war so they are not really a surprise.
In key progress for Southland, Southern Green Hydrogen, a joint venture between Contact Energy and Meridian, has announced that Western Australia's two largest miners would enter final negotiations to develop what could be the world’s largest green hydrogen plant with a reported cost of about NZ$5 bln.
The UST 10yr yield has started the week unchanged at 3.23%. The UST 2-10 rate curve is marginally flatter at +6 bps and their 1-5 curve is unchanged at +48 bps. Their 30 day-10yr curve is also unchanged at +205 bps. The Australian ten year bond is up +4 bps at 4.12%. The China Govt ten year bond is -2 bps lower at 2.81%. And the New Zealand Govt ten year will start today -6 bps lower at 4.23%.
The S&P500 futures indicates Wall Street will open in its Tuesday session about +1.1% above the level it closed at last week. Overnight in Europe, that positive mood prevailed too with markets up more than +1%. Tokyo closed yesterday down -0.7%, Hong Kong was up +0.4%, and Shanghai closed flat. The ASX200 ended its Monday session down -0.6% while the NZX50 ended unchanged.
The price of gold ended yesterday at US$1836/oz and down -US$4.
And oil prices are little-changed from this time yesterday to just over US$108.50/bbl in the US, while the international Brent price is now just over US$112/bbl.
The Kiwi dollar will open today at just on 63.2 USc and +20 bps firmer than this time yesterday. Against the Australian dollar we holding 91.1 AUc. Against the euro we are also holding at 60.2 euro cents. That all means our TWI-5 starts today at just under 71.3, a gain solely due to the retreating greenback.
The bitcoin price has moved sideways from this time yesterday and is now at US$19,866 and up +2.4%. Volatility over the past 24 hours has been very high again at +/- 4.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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129 Comments
The Bank of England blinks first....
https://www.telegraph.co.uk/business/2022/06/20/bank-england-rips-mortg…
Actually, they've bigger problems.
https://tomluongo.me/2022/06/17/russia-new-rules/
' Today’s “Inside Money” standard, known colloquially as the Dollar Reserve standard, is actually what I like to call “Milton Friedman’s Nightmare.” It is nothing more than a system of competitively devalued and inflated debt-based scrips running around drinking each other’s milkshakes until everyone’s glass is empty.'
' The game of nominal value of money is over, as this system does not allow to control the supply of resources. …'
This is the problem, in a nutshell. It is worth a serious read.
"The bitcoin price has moved sideways from this time yesterday and is now at US$19,866 and up +2.4%. Volatility over the past 24 hours has been very high again at +/- 4.2%."
Fascinating highs last year. Or shall we say the peak of a ponzi. Certainly not for Mary Holmes readers.
It seems pretty obvious now that bitcoin is not "going to the moon". It really needs to become useful rather than just a speculative play and maybe the understanding that it's not going to 500k will help that happen. If it remains stable at around 20k USD it could perhaps start to be used for, like, transactions?
I doubt the crypto pundits here actually use it much if at all. Young people may use it to buy drugs. It can be used to make donations to demonetized and censored Internet personalities or pay ransoms but that's a limited market surely.
You can live in a house, you can rent out a house, capital gains have been consistent at a modest 7% pa. The last two years have been stupid.The actual product, houses, are very useful and earn money apart from having a speculative component.
Wealth is tied to actual things like houses, minerals, energy, human labour. We need to get away from the get rich quick mentality as it turns the economy into a gamble, a lottery, where people have to take too many risks. It has reached it's apex with the scooters you see everywhere. Peak stupidity.
Property only produces yields if you have another buyer (money creation). So in that sense it is a Ponzi. The yields are produced by more bank loans (money creation). Sorry Zack it is a Ponzi. Housing is consumption, not productivity. Money creation in NZ has been geared towards consumption and speculation hence our trade deficit. How in the hell can we have a trade deficit when we produce more than we consume. Interesting, aka USA.
I'm old and yes I use cash, have gold and am planning on buying some BTC to put in my wallet with my ETH. My wallet has an on/off ramp to and from fiat money and as I make a number of overseas purchases, I believe that BTC would be a great way to hedge against the US/NZ dollar.
Do you need blockchain for that tho? I could setup a currency with a central database hosted by Amazon cloud etc available world wide with millisecond response times and incredibly low transaction costs. Users could be anonymous. Is there actually a proper reason to get rid of a central database? Everything these days is in the cloud, why not money?
No there is no reason at all but the distributed ledger architecture has a different use case. It offers high visibility of the transactions (verifiable) and immutability of the transaction (can't be changed as the ledger is distributed).
A central database has neither of those features.
Yes absolutely. Because I don't trust you (sorry) and that would be tens of millions running through your system.
There is also the chance of a hack, or more likely officials shut you down as its just a centralized point of attack. That happened to several pre-block chain digital money platforms - I forget the names - I think gold money, and something called digital reserve.
Plus I need to be able to pay you. I imagine the bank transfer process (and your bank opening process) would be a nightmare.
It seems pretty obvious now that bitcoin is not "going to the moon". It really needs to become useful rather than just a speculative play and maybe the understanding that it's not going to 500k will help that happen. If it remains stable at around 20k USD it could perhaps start to be used for, like, transactions?
The ol' rat posion is far too early in adoption to be "stable." Long may the volatility exist. It works in your favour, even if you don't understand why. But it's relatively simple: Less of your fiat can be traded for BTC today compared to 6 months ago. That's a good thing, right?
The proposals received from both final counterparties during the initial selection process made it clear that large-scale production and export of green hydrogen or green ammonia in Southland is technically feasible and commercially sound, according to Meridian Energy CEO Neal Barclay.
Technically feasible, sure. Commercially sound, absolutely. But in no way is "green hydrogen" any solution to our energy or environmental issues, which is how it's being sold to the public.
I understand that. And it works if you have a centralised depot or logistics centre, so freight, trains, boats etc. Great. But there simply isn't any getting around the inefficiency inherrent in hydrogen itself, and people who use "But hydrogen EVs are coming!" as an excuse to tear down battery EVs that already good enough for a bunch of people are the kind of people who insist self-driving technology is only 'a couple of years away' so why build mass transit. It's the tech-bro do-nothing argument that really only makes sense if you're a long-haul trucker or running a global shipping line, which most people aren't.
Such as?
Aviation is a maybe for small scale, probably not anytime soon for large scale, shipping is probably not viable, but neither of those run on regular diesel.
Emergency vehicles that need to work when infrastructure is borked (post earthquake etc) should probably stay fossil fuelled for a while longer, but anything on land that is operating in area with permanent infrastructure probably can go electric, and mostly should. Its good enough for mining these days. https://www.komatsu.co.nz/equipment/dump-trucks/electric-mining-trucks.
Linus Tech Tips crunched the numbers, a trucking Hydrogen nozzle has an "effective charging rate" (factoring in 50% loss factor) of 3.5MW (60g/s of hydrogen). To achieve that with 800 volt battery you'd need 4400 amps. I'm not an expert in electrical, but to give an idea the dude created a circle with his arms to illustrate the diameter of the cable you would probably need.
The problem is the amount of energy required to create the hydrogen in the first place. Once you've got it, sure, sticking it in a tank is quicker, but that's only if you're determined to overlook the huge flaws in the argument you need to overlook to get to the point where that matters.
Fully understand that aspect of it, which is why the 50% reduction in energy throughput. The actual throughput at the nozzle is 7mw but the energy loss was taken off that.
The EROI for hydrogen might be a bitter pill we need to swallow for certain applications. Battery might not be feasible for certain heavy vehicles, and if other types of fuel are not obtainable/clean, then it'll have to be Hydrogen ICE. If the infrastructure is set up to generate Hydrogen from renewable energy sources, you set it up, get over the idea that it's not 100% efficient and move on.
If you're having to decide whether that energy can be used to force-feed far more EVs far more efficiently than it can be used to create hydrogen then it's still relevant. I'm not saying hydrogen has to be 100% efficient, what I'm saying is there's no getting around the fact that it doesn't even come close to just using that power directly.
Until we have a proper electricity surplus and peak demand for EV charging is met, it's a relevant question of priority. But I think it's something we should be looking to set up now e.g. distribution points in the centre and in remote parts of the islands for long-haul users so that we can take advantage of it as soon as the time is right.
Agreed. But if we're going to wait until we have a proper electricity surplus, we might find that occurs when people stop driving their cars to the shops because we've kneecapped our supply chain distribution capacity by not investing soon enough in alternative fuel.
That was a good thread and you are both right. Let's hope the Aus process (95% conversion, Hysata company) is actually achievable on a mass scale and rolled out as it would be a game changer for electrolysis. Hydrogen will still only be good for heavy applications (ships/trucks/trains/planes) where storage and production can be centralised/co-located and safe, which it can be for heavy (airports/water ports/train stations/truck refueling/mining etc). Not so much for consumer use. Too many losses in a non centralised fuel distribution network and parked vehicle energy losses to make it feasible, compared to batteries. But the energy density of hydrogen and the ability to deliver it quickly makes it worthwhile with high capacity and heavy load vehicles.
You might want to look at the MCS connector, 1250V and up to 3000A. It already exists (prototype only I think, but not that far away), cable looks to be about an inch, maybe an inch and a half in diameter. Perhaps half-assed podcasts aren't the best place for information. Even if LTT is quite amusing at times.
https://insideevs.com/news/592360/megawatt-charging-system-mcs-launch/
That's pretty awesome.
Honestly I only stumbled across it on my YouTube suggested videos, I wasn't actively trying to seek this information via "half-assed podcast". Thought I'd share it and see what responses I receive from informed commentators such as yourself.
It’s possibly an even bigger scam than biofuels at this point. Just a nice way for the prime minister to cut ribbons with energy executives and look like they’re doing something. Note they never talk raw numbers.
The infuriating thing is that the Climate Change Commission’s report is littered with references to hydrogen and biofuels, but doesn’t mention nuclear (fission or fusion) even once.
Try talking raw numbers yourself.
https://www.sciencedaily.com/releases/2008/03/080304100413.htm
There is a valid reason that nothing has been done in the interim (14 years).
And what’s that reason? That we need to improve the uranium supply chain? So what? Did you even read the 14-year-old low quality article that you posted?
Fission is a proven green energy source. Unlike hydrogen and biofuels which are vapourware. It’s not the same category. Even fusion is demonstrably a more realistic prospect as a major energy source than these fuels.
What a nonsense study. No statistical calculations for heat/energy consumption to produce uranium etc. Uranium enrichment is energy intensive, but only at the third stage which is electromagnetic diffussion, used for enriching uranium from the energy generation grade to the nuclear weapons grade.
I completely believe the oil/coal lobbying to over regulate nuclear power hypothesis, imposing extremely high costs for building based on fear of nuclear is the only logical explanation for why Nuclear hasn't been adopted. Also that people just assume nuclear power is an atomic weapon plugged into the grid.
The eco-loons abhor cheap energy - they would sooner spend $700 billion on useless renewables in Germany and buy their natural gas from Russia - and fund Ukrainian war - than crank up nuclear or frack their vast gas fields. Instead today Germany Is running on lignite to keep the lights on.
"Had Germany spent $580 billion on nuclear instead of renewables, and the fossil plant upgrades and grid expansions they require, it would have had enough energy to both replace all fossil fuels and biomass in its electricity sector and replace all of the petroleum it uses for cars and light trucks."
https://www.eia.gov/analysis/studies/worldshalegas/
https://www.forbes.com/sites/michaelshellenberger/2018/09/11/had-they-b…
How is this not anti competitive and subject to investigation. Two power producers are getting together to sell their power for a lower cost to remove it from the market and raise the prices for everyone else?
This transaction should be overseen by the commerce commission to ensure power is not sold to these companies for less than it would be sold to other consumers.
The curious thing is I don't see tiwai point closing anytime soon. Perhaps this is just to strengthen their negotiating when the supply contract comes up in 2024.
I think 2023 could be the first election in decades that Rio tinto doesnt threaten to close down in order to extract some further subsidy from the taxpayer.
That’s because:
(A) the government finally called their bluff
(B) coal and natural gas are up so much they would be mad to exit a smelter powered by clean green hydro
(C) aluminium is important for electric cars and solar and in hot demand.
The funny thing about the smelter is that playing games seemed fun when you were the only option. Now they don’t want to muck around find out because once they give up that spot it’s gone for good. It forces a much more stable and long term approach to the relationship.
And to add spice, hydrogen will be used primarily in ICE applications. Tweaks to ECU, exhaust systems etc will prolong the effective reign of ICE and avoid the spectacle of stranded assets.
And there's a simple use principle for electrification. It can be used in applications where:
- motive power is relatively static irrespective of load (large draglines, irrigation rigs, ferries, tugs, fixed industrial plant),
- loads are light and the need for much mobility is there (cars, urban deliveries, light horticulture)
- Infrastructure for both charging and point delivery of large loads exists. Large electric draglines use a laid-behind HT cable and transform the voltage down in the crane house. This technique can be applied only where the source of the HT is adjacent. Charging needs careful consideration of peak loads, possibly swappable batteries for which standard pinouts and configuration are decades away, and swap stations.
Hence the hydrogen enthusiasm. It neatly fills the gaping holes in electrification use cases: long haul trucking, most heavy agricultural machinery, isolated yet energy intense circumstances, etc. And the ICE motive power is available and well understood.
The world's largest white elephant.
So-called green hydrogen, is energy negative. It requires more energy to make, than it returns. The problem is that while positive energy resources remain, they can carry a loser. When they don't, we can't.
This is where economics - allied with very narrow vested interests - gets it totally wrong.
Because in a hydrogen world, money will have a negative value (all wealth requiring positive energy).
And the number of NZ journalists (claimed) going to investigate this nonsense? Nil.
No energy presents itself without some cost to harness and distribute. That cost is paid by consumers for such as propulsion or heat. There have been billionaires aplenty created along the way out of that process. For instance the coal owning aristocracy in the UK & oil barons and royalty. So if and when hydrogen becomes up for general distribution and use then the consumer will foot the bill as before. An advantage though, it seems, is generally accepted that atmospheric emissions are greatly less harmful than those of fossil fuels. Until people think they don’t need to go places, keep warm or cool, hard to see that the human race is not going to buy into what it always has.
Yes the globe’s population is going to eat and power itself into oblivion, eventually. Yes they have been going at it ever since they learnt how to light a fire. History before recorded time reveals and describes that reality and it has grown and grown hasn’t it. Read & broadcast what you like, but it ain’t going to change despite your admirable knowledge & efforts. Must be awfully frustrating getting around every day as if Laocoon?
... what ? ... who rattled the green hydrogen bucket ... so , Rio wanna keep the smelter going ... well stuff them , we have better uses for that electricity ... self sufficiency for the power to run our heavy vehicles would strengthen our industrial base ... gotta do it ... with co-governance , of course ...
An example to help decode:
Hydrogen fuel cell EV is 38% efficient
Battery EV is 80% efficient
https://www.lexology.com/library/detail.aspx?g=1bf1cbf0-ac2f-4b39-a3de-….
The main attraction is how "environmentally friendly" it is - but how environmentally friendly are the processes required to make the equipment store the stuff? Might work out very-long-term if the equipment is infinitely durable... but I suspect it'll be just like batteries, if not worse.
Green. That’s a word that goes AWOL often enough. For instance NZ’s Green Party. On here very often we all debate carbon footprints, CO2 emissions and today simplistically fossil vs electric. Chloe, Julie Ann and entourage insistently promote how NZ can lift its squeaky clean international image if we all bicycle and hike everywhere for example. Yet that Green Party has raised not one iota of objection to the installation of a completely new wide bodied jet international airport on open country in Central Otago. Just how much energy, concrete/asphalt, iron/steel/metals, plastics, glass, silicone, diesel goes into that construction and then maintenance. What is every New Zealander then going have to pay in “carbon tax” to compensate all of that? Hypocrisy abounds.
Green in name only , witness James Shaw swanking off to Glasgow for a climate change symposium , with 11 or 12 hangers on ... rather than Zoom his speech ... as he told the Gnats to do during Covid , when they didnt want parliament to sit unless they're actually there in person : Hypocrisy of the highest order , Greens !
Funny isn’t it. Not really actually. On the Christchurch City Council there is one elected member known as a cycling fanatic and the attached strident message is that pursuit is of the most vital importance to combatting climate change. Yet that particular member is a signatory to the go ahead of the Tarras Airport concept. Go figure! Still if the Council cannot even raise themselves up to even begin to build a sports stadium in downtown Christchurch, how the heck do they propose to upskill sufficiently in order to build a $billions airport 400km distant. Go figure again.
Been to Tarras ? ... it's no where near anything ... about 45 minute twisting road into Queenstown ... the resident hillbillies , the Tarrasians , want us city slickers to scoot back to our highfalutin Fendalton mansions , and leave them be ... with their best dog Cleetus , and their half sister Pearl ...
Conflict of interest? Director tied to Kiwibank contracts to RBNZ
Well well well, what do we have here...
https://www.nzherald.co.nz/business/conflict-of-interest-director-tied-…
Free article: https://i.stuff.co.nz/business/129030675/criticism-after-reserve-bank-b…
Lessons for National from the Australian Power Crisis
"There are three key points to take away from the recent power debacle in Australia.
First, take a look at this graph of indexed electricity prices in Aussie from 1955 to 2017. After decades of steady reduction the rise in price has been steep and unrelenting since the start of the age of unreliable power in the mid-2000’s.
Remember this every time some Green tells you that Wind and Solar are cheaper than traditional base load, utility-scale power sources; “cost” is about more than just the Capex of the equipment. It’s about the cost of power shortages, limited growth, potential grid collapses, shorter plant lifetimes (25 years), and the cost of maintaining reliable backup power sources.
Second, note that the Liberal-National’s have been in government during much of this time, including the last nine years just ended. So when Labor and the Left hold them responsible for much of this nonsense they will be correct.
Third, hidden by such truth is the fact that Labor and the Greens wanted to go harder and faster on all this, which may have been a better idea since the crash would have come harder and faster, with appropriate lessons learned.
Best of all it should be noted that this is all a complete waste of time and money."
https://nominister.wordpress.com/2022/06/20/lessons-for-national-from-t…
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