Here's our summary of key economic events overnight that affect New Zealand, with news underlying inflation pressures seem to be easing in both the US and Europe.
But first, it looks like the US is heading into a Federal government shutdown after all with partisan rancour paralysing Congress. Markets are skittish, although not primarily from that, although perhaps some of it is priced in. Markets are more worried that interest rates will stay high because inflation isn't beaten yet in most of the major economies, held up by strong labour markets.
However, the American core PCE inflation level came in at 3.9% from a year ago, the lowest since May 2021. And the recent track has it running at an annualised rate well below 2%. So some inflation progress here.
US personal income growth however is running faster than that, picking up in August to be +4.6% higher than a year ago, and a faster pace recently. This is not a sign of stress among most households. Personal expenditure remains strong and is continuing to underpin the global economy.
US wholesale inventory levels are not rising, but retail inventories are although broadly in line with inflation. And the American merchandise trade deficit is falling.
The manufacturing heartland Chicago PMI fell back in September to July levels. The strikes at carmakers won't be helping.
But consumer sentiment held in the month, as measured in the widely-watched UofM survey, and is +16% better than a year ago. This result confirms its earlier 'flash' reading.
In Japan, August retail sales rose +7% from a year earlier, unchanged from an upwardly revised July result. This August increase was much higher than the consensus forecast for +6.6% growth and was the fastest pace since February. Consumption continues to recover solidly after the pandemic-induced retreat. Japan has CPI inflation at 3.2%.
We should keep an eye on this technology; lab meat production costs might be taking a significant step lower.
In China, their Mid-Autumn Festival has started and they are on holiday from yesterday (Friday) until the end of next week. This year, the National Day holiday spans from September 29 to October 6, overlapping with the Mid-Autumn Festival. To partially offset the seven consecutive days of the National Day holiday, Saturday, October 7 and Sunday, October 8, have been designated as official workdays, resulting in a 7-day working week. But Hong Kong will only be closed for National Day, on Monday, October 2, 2023.
EU inflation fell more than expected in September, down to 4.3% year-on-year and reaching its lowest level since October 2021. Analysts had expected a 4.5% rate.
In Germany, retail sales unexpectedly fell -1.2% (real) in August from July, missing market forecasts of a +0.5% rise and following an upwardly revised flat reading in the previous month. It was the steepest decline in retail trade since December 2022. Interestingly, on-line sales slumped more than -8% in August.
NSW and Victoria, South Australia, Tasmania and the ACT will start summer time this weekend and we will revert to being two hours ahead of them again. These same states will be on holiday on Monday, their Labour Day. Northern Territory, Queensland and Western Australia do not observe daylight saving.
The UST 10yr yield starts today down -5 bps from yesterday at 4.57%. But that is up +12 bps from a week ago, up +38 bps in a month.. The inverted curves have stopped flattening. Their key 2-10 yield curve is little-changed from yesterday at -49 bps. And their 1-5 curve is now at -86 bps and a bit more inverted. Their 3 mth-10yr curve inversion is more inverted too, now at -82 bps. The Australian 10 year bond yield is now at 4.48% and down -5 bps from yesterday. And the China 10 year bond rate is unchanged at 2.71%. But the NZ Government 10 year bond rate is +8 bps higher at 5.39%. This is up +13 bps in a week, up +50 bps in a month, so big movements here.
Wall Street's Friday session is soft to end the month, with the S&P500 up -0.2% today to be -0.5% lower for the week. That makes it -4.6% lower for the month however. Overnight, European markets were all up about +0.3%. Tokyo ended yesterday unchanged to be -2.0% lower for the week, -2.3% lower for the month. Hong Kong rose +2.5% on Friday, but ended its week down -1.3% and its month down -3.1%. Shanghai was closed yesterday for a public holiday and so ended its week up +0.8% and its month down a modest -0.3%. The ASX200 ended its Friday session up +0.3%, its week also up +0.3%, but its month down -3.5%. The NZX50 ended yesterday up a strong +1.1%, for a weekly loss of -0.7% and a monthly loss of -2.2%. End of quarter portfolio squaring influenced Friday's trade.
The Fear & Greed index has moved well over to the 'fear' side this week. A week ago it was just in the 'fear' zone; a month ago it was 'neutral'.
The price of gold will start today at just on US$1850/oz and down another -US$15 from yesterday. This is a new low since February 2023, all driven by the sharply rising yields. A week ago this price was US$1923/oz. A month ago it was US$1941/oz, so almost -5% lower since then.
Oil prices have retreated again today, -US$1.50 lower than this time yesterday at just over US$90/bbl in the US. The international Brent price is just over US$92/bbl. A week ago these prices were very similar. A month ago they were -US$5 lower.
The Kiwi dollar starts today at 59.9 USc, up +¼c from this time yesterday. A week ago we were at 59.6 USc and at the start of the month 59.7 USc. Those indicate very little net movement. But against the Aussie we are up +¼c to 93.2 AUc and to a four month high. Against the euro we are softish at 56.2 euro cents. That all means our TWI-5 starts today at 69.9 and up +30 bps from yesterday, up +60 bps from a week ago, and up +140 bps in a month. We have had significant rises against almost all others except the greenback.
The bitcoin price has moved back down today from yesterday, and it is now at US$26,862 and -1.2% lower from then. A week ago, this price was US$26,812, and a month ago US$27,303. So the net movements have all also been very minor. Volatility over the past 24 hours has been low at just under +/-1.0%.
Go the ABs !
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58 Comments
ABs by 40-50
Flat track bullies that we are
You meant by half time, right??
Haha. Well, most were predicting a 15-20 point kind of win.
It’s the general direction of predictions that matter. I predicted a thrashing, but it was a total humiliation
And now people will get carried away. Suddenly many kiwis will think we are cup favourites again 😂
Long steep flight of stairs between floors in that competition. Going downstairs much easier than going up.
As soon as we come up against teams that don't know/aren't prepared our standard game plan, its a hiding. As soon as we do come up against teams that know our standard game plan, it's 50/50.
Am I reading this right that after a month of carnage, despair and losses, the leading asset class for September was crypto? (Edit - perhaps not for bitcoin but it seems from its dip on 12 September its been pretty much uptrending). I see Ethereum is quite strong at the moment.
Its been impressive looking at my US stock and ETF holdings. Down around 5% this month plus the NZD has recently been surging to compound NZ based losses. Again though, I was surprised that the NZD is actually flat over 1 month.
Am I reading this right that after a month of carnage, despair and losses, the leading asset class for September was crypto? (Edit - perhaps not for bitcoin but it seems from its dip on 12 September its been pretty much uptrending). I see Ethereum is quite strong at the moment.
And Aug / Sept always tough for the ol' rat poison Wolfie.
On the plus side, avge returns for Q4 over the past 9 years is 35% for BTC. You can't put that in the bank as these are unprecedented times.
That, and if something reliably returned 35% seasonally, everyone would be doing it.
It's Q3 everyone, better stock up!
That, and if something reliably returned 35% seasonally, everyone would be doing it.
Which is completely different from the fact that BTC has averaged 35% in Q4 over the past 9 years.
That's right, it's just an average. So not bankable irrespective of how precedented the times are.
The only asset class that is 'bankable' is the rate of return promised you by the centralized monetary system.
Any net gain is bankable. Your issue is you're trying to determine returns based from historic interpretation. In your chosen asset class, that doesn't appear to be something you can do at much better than blackjack odds.
The centralised monetary system doesn't really factor into it. The best way to build wealth is find a way to reliably make net positive returns, and keep doing it.
The centralised monetary system doesn't really factor into it
Yes it does. It influences every asset class, including rat poison (indirectly). Bank deposits and govt bonds are the most 'bankable' assets in the Anglosphere.
Bitcoin is different because it generally doesn't have a rate of return, therefore it doesn't fit within the definition of 'bankable'.
Anyway, the U.S. 10-Year Treasury bond is down 3% this year - heading towards its 3rd consecutive annual decline. That has never happened before going back to 1928.
Bitcoin is different because it generally doesn't have a rate of return
Yet you are constantly trying to define one.
'Bankable' in the context originally being referred to alluded to a bankable return. I.e., net return. It's hard to determine whether your approach is motivated by financial reward or just being an aficionado.
Bitcoin is fundamentally different to fiat. Unlike cash or bonds, it is not created as a debt liability. These are the basics most normies struggle with. They don't understand what money is.
I'm not sure why you keep reverting back to fiat and central bankers.
You're taking about making a gain relative to an initial investment. Deducing the pitfalls of fiat, does not necessarily correlate to making a positive return elsewhere.
I'm not sure why you keep reverting back to fiat and central bankers.
Naturally. As the money supply is the foundation for "fiat" and central banks set the price of money. Without either, you have no 'bankable' assets.
But we were talking about ROI, 35%, etc. That 35%, is your bankable return. Whether you trade it for fiat, more bananas or whatever, makes no difference.
Although enlighten me, what is the observable relationship to Bitcoins value and central bank activity? In fact, what relationship have you observed between Bitcoin movement, and externalities?
BTC is not 'bankable' unlike cash or bonds. They cannot be compared, except if your goal is purchasing power perhaps.
If your goal of investing is to protect and grow your purchasing power, then cash and “riskless” sovereign bonds do have a risk, and can go a decade or two with negative purchasing power returns. Cash is a position. Bonds are a position. Both have benefits and risks that are worth measuring and managing.
Again, I'm referring to starting with X, and hopefully returning Y net positive profit. The 35% you mentioned, as a for instance.
Again, I'm referring to starting with X, and hopefully returning Y net positive profit. The 35% you mentioned, as a for instance.
OK. Let's simplify things.
1. With cash and bonds you more or less know what ROI is over the short term. It's 'bankable.'
2. With ol' ratty you have no idea. Because probability suggests that the fiat value may increase in Q4 by approx 35%, that is 'un-bankable'.
2. With ol' ratty you have no idea. Because probability suggests that the fiat value may increase in Q4 by approx 35%, that is 'un-bankable'.
If probability suggested that, and you don't achieve it (or come anywhere close), then the method used to determine probability should be discarded.
Basically, there's no reliable way to forecast an increase in relative value of BTC, because most of the large shifts in value you're averaging against the plateaus and falls happen at random. For the parabolic increase in early 2020, you needed a pandemic, subsequent cash stimulus, and lots of people sitting at home wondering where they could put money. That's not something you can forecast for.
The next acid test will possibly be this much anticipated global recession. In theory, a nice rise in BTC as other assets like stocks shit the bed, but my suspicion is there's not going to be the same liquidity or motivation amoung Bitcoin fanciers to support it.
You missed the daily issuance of new Bitcoin halved in 2020 from 1800 a day to 900, and in May 2024 will halve again from 900 to 450.
This does have both an economical and psychological impact on Bitcoin.
JC is right though. Fiat standard players can't seem to grasp that Bitcoin is like no other asset. Complete finality, it's not like anything else.
You will get the price you deserve.
You missed the daily issuance of new Bitcoin halved in 2020 from 1800 a day to 900, and in May 2024 will halve again from 900 to 450.
So what was the corresponding value movement in light of these baked in anniversaries?
JC is right though. Fiat standard players can't seem to grasp that Bitcoin is like no other asset. Complete finality, it's not like anything else.
Interesting sentence. In order to make sense of it:
- what's a "fiat standard player"?
- explain "complete finality"
If probability suggested that, and you don't achieve it (or come anywhere close), then the method used to determine probability should be discarded.
Correct. An average alone is not enough for a probabilistic estimate. You would want to understand variance over the same data set.
For the parabolic increase in early 2020, you needed a pandemic, subsequent cash stimulus, and lots of people sitting at home wondering where they could put money.
That's just a reckon. And the reality is that the 2020 boom is not as big as the previous booms. 2018: +11,470% 2014: +56,900%. The only probability you can assign to BTC booms is that they tend to happen in 4-year cycles and have a tendency to get smaller.
That's just a reckon
Pretty sure that was a significant attributing factor. You feel it's just totally coincidence?
The small amount of dabbling and gains I've made from crypto for shits and giggles have been off the back of front running news cycles, and that seems to be way more profitable than your attempts to determine probability.
This is also why you encounter (and then relay here) a steady stream of Bitcoin related "news", because there's a vested interest in trying to make viral stories to try and spur value jumps. Not that Bitcoin is alone in that, but it's why there's so much noise about it, most of which comes to nothing.
And the reality is that the 2020 boom is not as big as the previous booms. 2018: +11,470% 2014: +56,900%
Well yeah, your percentage movements show the booms have diminishing percentage increases. But a jump to nearly 70 grand a coin sounds a lot more appealing to the masses than going from $150 to $1000.
These "spikes" is what totally screws up most of your modelling. 2013 and 2017 were both results of dubious manipulation, and 2020 was underpinned by covid mania and stimulus. Remove them, and I don't know what you have.
Well yeah, your percentage movements show the booms have diminishing percentage increases.
Correct. And another interesting thing is that the magnitude of busts (peak to trough) are consistent: 2011 -- -83%; 2014: -- -85%; 2018 -- -84%; 2022 -- -77%
There's potentially some sort of phenom with many parabolic rises that don't result in going to zero. Price goes to X, you attract a certain amount of new interest, price deflates, you retain a certain level of that interest.
But again, this is all retrospective measurement, and very little to do with determining probability of future action. It does imply that the magnitude of assymetrical action diminishes over time though - i.e. future entrants are unlikely to enjoy the same sorts of percentage gains as the earlier entrants.
future entrants are unlikely to enjoy the same sorts of percentage gains as the earlier entrants.
While it seems that the 56,900% booms are possibly gone, we now have is a new paradigm with more money printing having occurred while BTC has been in a brutal bear market.
The total derivatives is now estimated at well north of $1 quadrillion. Do the math and make up your own mind.
We've established though that the big jumps in Bitcoin don't correlate to money printing. "Combatting inflation" is floated as one of Bitcoins roles, but it's really only a loose association. The stronger association with value seems to be with spikes and introduction of new collectors. As the number of financially underwater new collectors increases, the harder it is to gain new interest.
Evidence-a-plenty of companies and oil oligarch countries extracting huge amounts of profit from the current inflation spell, and yet all we get from the commentators is that inflation is due to the continued strength of the labour market!!
I love how Europe is now solely dependent on American LPG, happy ending after all...as long as America can keep feeding the fires of the war, slow burner for many many years. Just don’t mention the body count.
Given the body count love might not be the appropriate word
or are dead people just collateral damage for keeping the "economy" operating
My comment is obviously sarcasm.
Of course it’s a tragedy for young soldiers on both sides. Greed has no limits. The war was avoidable, but hey, we have LPG to sell.
Why else would America blow up that pipeline ?
We are all essentially subsidising the build of The Line
I see a major apartment complex has been shelved in Auckland.
I thought property investors were supposed to be lining up to buy new builds, losing money year-on-year and speculating on capital gains.
Rates vs price expectations equals no pre-sales. China in free fall so no leveraged cash from there either. Flood of low wage immigrants are not buying. Spec crowd cannot access more debt. Construction costs still under inflation pressure.
Math done...so is the development. DONE.
Welcome to stagflation.
Ah apartments, none of the capital gain, more risk and now negative cash flow (with a tax liability on top!) Plus the risk that the Government decides to put HNZ tenants next to your investment.
Now imagine instead you just parked it in say a QQQ ETF and were enjoying the (almost tax free) 35% gain this year. Instantly sellable should you choose to do so. Or my own investments which are up 30-70% this year or so.
Speaking of my I see my rental property premiums are up another 40% this year. Time to sell is not far away
B-b-b-but the higher the risk the higher the reward...
And unfettered self interest would uplift everyone else...
Don't tell me it was a lie.
Your comment sounds more of a brag than a discussion of the issues. Careful that might be why tall poppies got chopped down...
If you look at what living standards are like today, everyone is better off, just some are much better off than others.
We can talk about issues ad nauseum, life can be and is fairly brutal. Ideally we need more successful people, who are more adept at navigating capitalism.
Everyone was 'better off' on the Titanic, too.
It wasn't a permanent arrangement, though...
Nothing is?
I'm sure you have a manifesto for a better society. I do also. Actually, I have a better manifesto for myself, and even that's hard to pull off.
Things will keep going, till they won't. Until then, it's a bit like Willy Wonka's half attempt at stopping Augustus Gloop from falling into the chocolate river.
Labour, materials, financing and revenue. These have all gone the wrong way with no solution in sight.
Mark Todd is a really nice guys and produces great building yet because he doesn’t sell to KO his business will probably go in to hibernation.
This is not a business issue specific to Ockham, this is a structural issue that is being felt by the entire industry, developers, construction and every supporting service.
2024 is going to be very rough in terms of layoffs.
Collateral damage and the mounting risk of a global ‘Liz Truss’ accident
A perfect storm is emerging in America’s turbulent bond market
Just America's Bond Market ...or the worlds???
Lower much quicker
Rates higher for longer
Oil price will drive inflation up and detract from growth.
Germany showing real condition of China
Check level of German exports to China
Stagnation outside USA on cards next year
There is a lot of talk in Europe about "Greenflation". Perhaps I'm unaware, but I didn't hear much of this being talked about in NZ. The basis for "greenflation" is that it's expensive in the short term, to build renewable energy like solar, wind etc (including finding/paying for the land for such projects) and the benefits are only reaped in years to come. So the claim is that the move from fossil fuel to green energy is a significant contributor to inflation at present and in the foreseeable future. I thought this was an interesting claim.
We should keep an eye on this technology
This is a good example why I don't share Powerdownkiwi's extreme worries about scarcity of resources due to our planet being finite. Of course the earth is finite, but mankind's innovations and progress in efficiencies is not.
Innovation and technology is fine but nothing is going to support the increasing human population on this planet. The 1.5 Degree C temperature rise is already a given and the modelling cannot predict the positive feedback loops so its getting worse faster than predicted ask anyone in New York. World population needs to be in a sharp decline, should have started probably 20 years ago but there is a bizarre human mentality that somehow we will go extinct the second it starts falling instead of rising. Basically as a species with are as thick as a brick and doomed to failure long term. There will be a massive "Reset" at some point, just hope I'm not still alive to see it.
You hit the nail on the head, the ONE cause of all our troubles is the ever increasing population.
Thank you David for publishing the monthly variations in the various stock markets. I'm aware you reporting on weekly changes so far, but I very much welcome the monthly changes as well, they're a great way to smooth out the daily or weekly noise. I hope you will keep doing this at the end of every month, thanks.
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