Here's our summary of key economic events overnight that affect New Zealand, with news the world's factories are giving quite conflicting signals in February.
With an unexpected fall in new order levels, the widely watched American ISM PMI dipped deeper in contraction in February. The companion internationally benchmarked Markit PMI (now called the S&P Global PMI) told a very different story however in the same market, swinging up sharply to an expansion, and one this survey hasn't had since mid-2022. The driver? well it was a surge in new orders. The two surveys could not have been more different this month, an unusual set of views.
The widely-watched University of Michigan consumer sentiment survey for February is clearly upbeat however. Although consumer sentiment moved sideways in the month, slipping just two index points below January, it is holding the gains seen over the past three months. Expected business conditions remained substantially higher than six months ago. And long run expectations are much higher too.
And it will be no surprise, the Indian PMI rose in February, complimenting its economic expansion.
But the Japanese PMI reported 'deteriorating' factory conditions.
After a sharp +18% jump in January, South Korean exports were expected to rise only modestly (less than +2%) in February on that same basis. But they rose almost +5% on the year-on-year basis pointing to resilience in export demand for them. Much lower imports (due to lower oil prices) enabled them to book a sharp rise in their trade surplus.
In China there were two PMI surveys out as well. The official factor one wasn't very optimistic but the private Caixin version reports improving and expanding factory conditions. It is more understandable in China why the two might vary. The official one focuses on large state organisations, the Caixin one more on private businesses. Still, the results are opposite to what you might have expected. The official version also covered their services sector and that part reported an improving expansion.
In China, it now seems it it news that a large property developer actually is able to make payments on their bonds. Also in their news is that you can get arrested for asking local local government authorities to pay their debts.
EU (Euro Area) inflation fell in February but not by as much as expected. It is now at 2.6% pa on falling energy costs. Like everyone, they are finding the "last mile" hard to achieve. Meanwhile the Euro Area jobless rate fell to a record low 6.2%. But these days, governments get little credit for keeping employment high even when economic activity wavers. But in the sweep of economic history, it is a remarkable factor.
However, the Eurozone PMI does not make for happy reading.
The UST 10yr yield starts today at 4.18% and down -7 bps from this time yesterday and down -7 bps from a week ago. In fact that is a three week low. The key 2-10 yield curve inversion is less at -35 bps. but their 1-5 curve inversion is slightly deeper at -78 bps. And their 3 mth-10yr curve inversion also deeper at -120 bps. The Australian 10 year bond yield is now at 4.11% and down another -3 bps. The China 10 year bond rate is now 2.38%, and just off its all-time low. The NZ Government 10 year bond rate is up a mere +1 bp at 4.82% and down -10 bps from a week ago.
Wall Street has started its Friday session up +0.8% on the S&P500, and a new record high. That makes it +0.8% higher in a week as well. Overnight, European markets were mixed again; Paris was up +0.1%, London up +0.7% and the others in between. Yesterday Tokyo ended its Friday session up +1.9% for a weekly gain of +1.5%. Hong Kong rose +0.5% on Friday to limit its weekly fall to -0.6%. Shanghai was up +0.4% on Friday for a weekly rise of +0.8%. Singapore ended down -0.2%. Meanwhile the ASX200 was up +0.6 on Friday for a weekly gain of +1.6% but the NZX50 ended its Friday trade unchanged for a minor +0.1% weekly rise..
The Fear & Greed index is still at the "extreme greed" level where it has been for almost a month now.
The price of gold will start today up with a strong jump of +US$38/oz from yesterday tp US$2083/oz. And that is also up from US$2038/oz a week ago. Silver jumped sharply too.
Oil prices are up +50 USc at just over US$79.50/bbl in the US while the international Brent price is now just under US$83.50/bbl. Both are +US$3 higher than a week ago.
The Kiwi dollar starts today at just on 61 USc and little-changed from this time yesterday. But that is -1c lower than this time last week. Against the Aussie we are down marginally at 93.5 AUc. Against the euro we have softened slightly to 56.3 euro cents. That all means our TWI-5 starts today at just over 70.3 and little-changed from yesterday, but down -100 bps in a week.
The bitcoin price starts today at US$61,992 and down -0.5% from this time yesterday. But it is up more than +US$10,000 in a week or +22%. Volatility over the past 24 hours has been modest at +/- 1.9%.
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44 Comments
"If you can ignore the idiot who styles himself lonewolf,then try this; 60% in a diversified share portfolio-30 holdings with a strong bias to sustainable dividends-20% property-excluding home-15% cash and 5% misc."
Linklater01 - 23 July 2019.
Since then, a $100,000 allocation to btc would be worth $670,000.
Compared to the portfolio suggested at the time:
Total world shares index up 57% (via ETFs) = $94,200
NZ property= Up 35% = $27,000
Cash = Let's be generous with a 3% after tax yield = $17,250
Misc = Let's be very generous and add QQQ = Up 240% = $12,000
Total = $150,400, although I haven't adjusted for tax, holding costs, management fees, FIF etc.
So $150,400 vs $670,000.
Now the fun part is that the BTC strategy beat the above strategy even if it was 10% BTC / 90% cash.
I'm not good at pricing or trading.
For what it is worth, I see an ATH breach within 2 weeks. Next week not impossible.
I then see a burst to 80k - blow off top, alt coins go wild etc.
Dump in May or June to a lower high. I dunno what. Maybe 50-60k.
Then steady climb. End of year 125k or so.
No idea about next year but a change of USA president would certainly help (Trump has pivoted and likes bitcoin now, hell he made millions from NFTs)
Plan B's Stock-to-flow model is a forecasting model as opposed to a valuation framework (https://www.lookintobitcoin.com/charts/stock-to-flow-model/). I don't vouch for its accuracy. However, the vertical spikes up in the model in 2013, 2016, 2020 were all confirmed by price action within one year.
Suggests a USD550-800k price within 12-18 months. That would be around the median price of an Auckland house.
You appear to have made an assumption about me. I’m no crypto hater. Like Yvil says, the numbers don’t lie. I went big into bitcoin at 28k. Still got it. We’re talking serious money, so I hope you are correct in your prediction. I’m thinking new kitchen, new bathroom, and July in Hawaii for the family.
You appear to have made an assumption about me. I’m no crypto hater. Like Yvil says, the numbers don’t lie. I went big into bitcoin at 28k. Still got it. We’re talking serious money, so I hope you are correct in your prediction. I’m thinking new kitchen, new bathroom, and July in Hawaii for the family.
Which suggests that you're just speculating on ratty's price. No problem with that. It's a free world.
Unless of course, you're borrowing against your BTC to pay for your renos and holidays.
Lol. A "money man" has no concern for those community necessities. A money man only cares about lining his own pockets until those pockets are full and he needs more pockets.
There are those in a position to pay less tax and those that aren't. The proportion is swayed heavily to the latter and the money men don't care about them as they line his pockets.
Rates are merely another tax and their not providing those services. When the quest is to pay less tax, to chase the luxuries and the nice to haves, we fail to see that functioning health systems, healthy education, basic infrastructure, clean and healthy environments (the commons), are the real luxuries and nice to haves that enable a healthy and functioning collective.
What we have now is highly dysfunctional and unhealthy. Yet we're the "wealthiest" we've ever been in history due to the money men.
Good Morning from #Germany, which once again lives up to its reputation of "stupid German money". German real estate lender Aareal Bank warned there was “more to come” after 1 in 4 of its US office loans went into default last year. Deutsche Pfandbriefbank has also been hard-hit by its exposure to US commercial real estate (CRE). The warning highlights how the strains in US CRE are being felt outside North America, especially Germany. https://ft.com/content/de4f0675-c81f-4312-b291-f8018a2bc06d?utm_source=www.execsum.co&utm_medium=newsletter&utm_campaign=new-enron-brewing Link
Before the crash in 1929 this sort of thing had been bubbling along for years and people just overlooked instances as exceptions rather than an indication of a deep seated problem. Ditto 2008 albeit it happened faster. This time probably needs trigger event. What could it be? CRE is an obvious one. A collapse in crypto currencies due to 'technical issues'? Who knows. But we do know that collapses occur a few years after rate inversions. Probably a time to more fearful than greedy.
I hear you CONF. Why can’t more people see it? Honestly I thought there would’ve been a crash around 2012-2013-2014. Can’t be bothered going back and checking exact dates, however around then I thought this is getting out of control. Unbelievably, to me anyway, it has just kept on pumping. And pumping, and pumping. Maybe that is just how it is now, manipulation and money printing wins the day. All aboard, let’s rock on.
How the $30 trillion quantitative easing experiment reshaped our world – from Brexit to the dominance of Big Tech.
I can see this coming, but think they may try to sterilise the impact, ie lend at lower rates to FHBers / owner occupiers but not for investment in NZ, rates could then be a lot lower and reasonably contained. Hone Mae and Hine Mac 20 year loans for owner occupiers only... imagine the squealing of the piggies
Satellite to monitor methane from our farm animals, interesting
Why New Zealand invested $29m in a methane satellite unlikely to improve our farm emission estimates https://www.nzherald.co.nz/hawkes-bay-today/news/why-new-zealand-invest…
No point monitoring something if you cannot improve it. They have satellites up there already for CO2 concentrations, highly seasonal of course as a amount of sunlight affects the forests uptake and it swirls and moves based on weather patterns. Everyone already knows who the big pollution making countries are and hint its not us. New Zealand needs to avoid everything to do with this BS.
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