Here's our summary of key economic events overnight that affect New Zealand, with news that non-China Asia seems to be on the rebound, and it is not just India driving it.
Japanese corporate spending on plant and equipment in Q4-2023 jumped an unprecedented (and surprising) +16.4% from the same period a year earlier. It was very much more than was expected and will ease some concerns about weak domestic demand. Companies are clearly looking ahead with optimism. It is not as though it is off a low base; a year ago they reported a very creditable +8% rise. This latest gain is the largest since this data series started in 2009.
In South Korea, their PMI factory survey shows conditions continued to improve during February. They have a sustained expansion in both output and new orders amid the launch and manufacture of new products, while also seeing a boost in confidence. Payrolls are rising too.
In Australia, they got some disappointing building consent data for January, particularly for building new houses. Apartments seem ok. Levels were weaker than expected, recording a -1% decline vs expectations of a +4% rise from the prior month. These consent levels were coming off a sharp fall in December which was revised sharply lower. The absence of a rebound and the approvals detail suggest there has been an underlying weakening, although we should to be careful with housing data over the summer holiday period.
The IEA released its 2023 Global Emissions Report overnight. Emissions increased by +410 million tonnes, or 1.1%, in 2023 – compared with a rise of +490 million tonnes the year before – taking them to a record level of 37.4 billion tonnes. An exceptional shortfall in hydropower due to extreme droughts – in China, the United States and several other economies – resulted in over 40% of the rise in emissions in 2023 as countries turned largely to fossil fuel alternatives to plug the gap. Had it not been for the unusually low hydropower output, global CO2 emissions from electricity generation would have declined last year, making the overall rise in energy-related emissions significantly smaller.
Total advanced economy GDP grew +1.7% but emissions fell -4½%, a record decline outside of a recessionary period. Having fallen by -520 Mt in 2023, emissions are now back to their level of fifty years ago in these advanced economies. Total CO2 emissions from energy combustion in the United States declined by -4.1% (-190 Mt) despite its drought and hydro hesitations, while the economy grew by +2.5%. Two-thirds of the emissions reduction came from the electricity sector. More from the IEA here.
The UST 10yr yield starts today at 4.23% and up +4 bps from yesterday. The key 2-10 yield curve inversion is deeper at -39 bps. But their 1-5 curve inversion is still at -78 bps. And their 3 mth-10yr curve inversion less at -117 bps. The Australian 10 year bond yield is now at 4.13% and up +1 bp. The China 10 year bond rate is now 2.37%, and back at its all-time low. The NZ Government 10 year bond rate is unchanged at 4.81%.
Wall Street has opened its Monday session with a minor -0.1% slip on the S&P500. Overnight European markets were mixed and bookended by Paris's +0.3% rise and London's -0.6% fall. Yesterday Tokyo ended up +0.5% to a new all-time high. Hong Kong ended unchanged. Shanghai ended up +0.4%. Singapore was down -0.4%. The ASX200 ended its Monday session down -0.1% and the NZX50 was down almost -0.2%.
The price of gold will start today up +US$35/oz at US$2117/oz. That is a new record high, eclipsing the previous all-time high of US$2,087 at the end of 2023 by +1.5%.
Oil prices are down -US$1 at just over US$78.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.
The Kiwi dollar starts today at just on 61 USc again, little-changed. Against the Aussie we are holding at 93.6 AUc. Against the euro we have eased to 56.2 euro cents. That all means our TWI-5 starts today at just on 70.3 and down about -10 bps overnight.
The bitcoin price starts today at US$67,311 and up +7.2% from just yesterday. That is another big gain and puts it just about its all-time high in November 2021. Volatility over the past 24 hours has been very high at +/- 4.0%. (It is very volatile as we post this, so it has likely changed again since.)
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96 Comments
I have spent the last couple of days in between showers cutting and splitting firewood, while Mrs Bean has been bottling peaches. The neighbours popped in to tell us how well their bitcoin is going and they will be buying firewood from the merchant in town. Who is the mug here?
You know Blackrock doesn't own them right?
I keep coming across people that think Blackrock is this some evil dominating entity that is the top owner of most of the companies worldwide. They simply hold stocks on behalf of others people through ETFs and charge a small fee to do so. Many Kiwisaver investments will be part of Blackrock holdings too. Far less exciting than some conspiracy theory.
Jesse and BW, didn't you get my sarcasm? But consider this, a few weeks ago it was commented on how much Blackrock was pumping into BTC. That this is because they hold investment vehicles for people, but that is an irrelevance at the end of the day, because if they end up owning, on behalf of their investors, all BTC, what then is BTC worth?
Except diamonds do look pretty, and they also have some very practical uses in industry. I've never seen a BTC, and being digital, no one else has either. As to usefulness ... not much I think unless you like to drool over the virtual value of your digital wallet.
Even if they do only own on behalf of their investors, how much influence do they wield to promote their own agenda? Virtue signalling the ESG, stakeholder capitalism mantra, which is ultimately the agenda of WEF, which is leading us where? You will own nothing and be happy, but these institutions will own everything, and they'll be taking as much as they can get. They're just another financial institution with ultimate power and if we haven't had enough evidence of how that operates in our economy/society then we're blind.
https://thespinoff.co.nz/politics/08-08-2023/what-is-blackrock-and-why-…
https://www.investopedia.com/sec-charges-blackrock-over-investment-fund….
https://blackrocksbigproblem.com/the-problems/#:~:text=Forests%20are%20….
https://www.washingtonpost.com/business/2023/05/06/blackrock-esg-climat…
https://www.usatoday.com/story/money/2022/12/19/what-are-esg-investment….
https://www.crowell.com/en/insights/client-alerts/tennessee-ag-sues-bla….
No sure how a digit on a screen can outlive a currency back by 5 million people, ample food and water and lots of untouched minerals?
What ever happened to those fungible tokens?
I think its going to outlive the NZD though.
So think through what would be required for the collapse of our sovereign currency, the collapse of government, systems and services and subsequent cutoff from international technologies and trade. Dictatorship from an outside influence is more likely, then owning 0.00237 bitcoinz won't really count for anything anymore. You will be mined as a resource or left to fend for yourself. The value of that 0.00237 might buy you a jazzy apple if you live close enough to the tree.
What will outlive either is a matter of control, and there is already control over both. It's simply more convenient to them when you cannot withdraw your "worth". You're more than welcome to pick an apple from a tree though, there's value in that.
I used to think like that but changed my mind. It's very hard to get a 100 bagger in any investment when you take money off the table early. It makes a big difference to your long term returns.
If you have conviction in an investment, just choose the right position size for you and leave it alone. I'm prepared to lose it all when I make it.
The only reason to take your initial investment off the table, is if it makes it easier pschologically for you to hold the rest. But it will cost you a lot in the long run.
Generally, gold goes up as real US interest rates fall.
A big picture macro chart to always bear in mind. As total economic debt increases over time, the level of real yields at which the economy can remain functional becomes lower and lower. Link
Gold up ? I see it as a flight to safety.
If you hold it physically, then you are separate from a. Wealth as something you see on a screen. Vulnerable to some rule or law change. b. Equities, which look top heavy and somewhat crazy.
I'm thinking not many people have this view, but there is buying.
https://www.stuff.co.nz/business/350195183/boat-retailer-receivership-i…
Boat retailer with 6 branches in receivership. Harbinger of recession or just a survivor finally losing its grip on the edge of the Covid cliff?
The multiple speculation ponzis mentioned upthread - including bitcoin (an energy-sapping zero-otherwise-sum-game) - all had to run their course - as indeed does any exponential betting. The discretionary spends are the first to be shed (remembering the pages of Porsches for sale, late '87) but usually the house is falling right behind that. Globally, this has been coming - but artificially staved-off by QE and low rates - since 2008. They've done well, but were on a hiding to nothing; every year the boat was lower in the water, every year more passengers, every year more debt....
Yes - then no.
I was a County-Councillor until '89, so right through '87. Advocated public transport and recycIing; I had a ways to go with my existential thinking. I was the only one at the table, without shares..... Thought it was a ponzi, couldn't see what was backing it - I have the Ariadne book somewhere, which confirmed my thoughts....
But in hindsight, the machine rolls on, until it can't. Having learned about Systems, I know now that the bigger System will continue to override all others - until it hits some limit(s). So I stopped trying to alter the existing System (the aim of which is economic growth) and decided to raise awareness of it's temporariness, and to engender a discussion as to how to live post-growth.
Cohen was right - you cannot change the system from within (First we'll take Manhattan).
One of the discussions in my circles - I'm part of a think-tank looking at the Limits to Growth, implications thereof - is how to address the sheer ignorance exemplified in the 'flying high' comment above. It is very obvious why and how that ignorance has been achieved - they have been told the planet is infinite, and chose to believe same, essentially - but what to do for them when it all falls away beneath their ideological feet, is an interesting question? Required skills will be food-production, practical health, low-tech infrastructure build and maintenance skills, and inspired local leadership. Speculation, not so much.... Belief in tokens having intrinsic value, not so much.
Sure you can try vilify people who don't understand you but one thing for sure is that Tory Whanau and the wacky Wellington councillors are not the answer to Wellington. If the woke youngsters want to band together and vote en-masse for green pollies then good luck but don't come back despairing about the subsequent messes
For examples of recent debacles look at the politics around the theatre purchase and the town hall EQ upgrade
I didn't work like that. I gave away a few to gather brownie points for what I considered important.
But I did occasionally close the door. They could dish it back, too; I once came back from lunch to find a 5l pack of Tordon on my section of the table. I laughed, long and hard.
I hope the container was empty, that stuff is effective but expensive. Was it because you are anti chemicals
Whats your views on cars and roads.
Alot of young people say one thing but dont follow through such as Greta who flies to global warming conferences instead of online attendance.
Very true
it all brings back memories of 87, all everyone talked about at work was how their shares had gone up the previous day and they were looking at new cars and boats etc
Being a conservative banker I kept saying this can’t last but finally succumbed and went down to see the local sharebroker who I knew well
i know you are very conservative so I will only sell you some blue chip shares he advised
It was only a matter of a week later that the sharebroker had closed his doors and my “blue chip” shares were worthless
Luckily I had only invested a small amount but the broker went bankrupt because he was buying shares in advance with the intention of selling at a big profit
It all happened so quickly and them the toys all started to appear for sale
Boats are luxury goods. Fine for when the economy is tickety-boo. Also likely to contribute to improving the balance of payments deficit in a very small way.
With all those other luxury goods demand falling and added up together will make some impact on the balance of payments deficit.
Had it not been for the unusually low hydropower output, global CO2 emissions from electricity generation would have declined last year, making the overall rise in energy-related emissions significantly smaller.
There is no evidence that climate change is man-made, nor that CO2 is the culprit. Link
Your sad link aside, the thing is an oxymoron, and the IEA (I'll read it to confirm) seem to miss offshoring.
The oxymoron is that the hydropower shortage will be traceable to less snow-melt. There's a hole in that bucket, dear Liza... Feed-back-loops have long been foretold, they're a 'thing' in the physical sciences.
As for the First World reducing emissions - we've just offshored them (to others who make the stuff we consume and discard). Without accounting that, the claim is bollocks (as David C should be well aware).
As a knock-on, using ever-increasing debt to 'pay' those offshore folk, via the ratchetting-up of our 'valuations' of our existing, aging houses - was a bit of bollocks too (as others above allude, vis US debt). We're increasingly being called...
Not trying to time. It's 20 years savings, having watched familly homes disappear over the horizon last few years we have had no choice but to watch and wait. It feels like we are finally nearing affordability but the ground is crumbling. Do we stretch to get there, or wait just that wee bit longer?
Buy when you're ready at a minimum of 20% down payment. Late 2021 in hindsight was a bad time. I traded up then, and the value dropped 15%ish (according to the bank) but we have plenty of equity to burn.
Too many are scared they'll over pay so sit on the side lines, paying $30k+ p.a. in rent and waiting for the market to tank. Forgetting the time value of money and subsequent pay rises should inflate the debt away whereas the Landlord will take their cut of your pay rises each year when they jack up the rent.
I'm not a boomer (unless you're familiar with the 30 year old boomer meme, in which case that is me to a T) - how would somebody with modest crypto knowledge and some existing holdings (I just DCA into BTC/ETH each week as a bit of a diversification play and it has been my top performer) go about doing something like you have outlined here.
I used to be far more up-to-speed with some of the more fringe aspects of crypto, but since starting a business haven't had the time to spend hours sitting in front of the screen like I used to.
Download Phantom.
Buy SOL - send to Phantom wallet.
Go to coin gecko - get Trump SOL contract address (its down the bottom left, click on icon beside ETH address)
Go to jupiter exchange - swap half SOL to Trump
Go to Orca - go to pools, find Trump pool (one with most liquidity). Click add to pool - click max range.
You are done. :)
Lonewolfnz good on you for making some good money. But don't you agree that this is all so stupid? You have used energy and money to produce absolutely nothing, just because you can sell it on to someone else who wants to make money like you did. At what point does this nonsense stop?
In most those cases you receive a product or service in return for your money. Sure that product or service may not be critical to human survival, but it has a value that you were happy to pay. In the case of a shitcoin you are buying something of no value in the hope that other people will temporarily demand it and give it value, I think that is quite different.
Many (but not all) altcoins have uses and yield.
Take uniswap for example. A protocol that does billions or even tens of billions of trades in a day. The protocol makes insane amounts of money and will soon allow token holders to stake their token and receive a dividend.
Ondo is moving treasury bonds and stocks onto the blockchain.
There are decentralized insurance platforms, personal ID solutions, games, AI protocols, stable / FX coins, commodities tokenized (PaxG), index funds on chain etc.
That is the key though, doesn't matter what you or I think (I tend to agree with your assessment) there are plenty out there who do see the value, and are willing to pay.
If someone is willing to buy something, then there will always be someone willing to sell it and make a bit of cash.
Almost no energy involved (I assume you are thinking of bitcoin mining)
What I have done is act as market marker. Essential I am my own exchange in a way.
I take a risk (deploying capital into the base asset - SOL, USDT, ETH etc) and then I take on the other side of the trade.
I provide a service which is providing liquidity so other participants can trade to each other. In exchange I take (usually) a 1% of each trade. Sometimes I lose money, usually I make money.
It is no different to the NZX, Easy Crypto, Binance etc.
And yes meme coins are silly (I agree) but there are plenty of non-silly stuff out there that attracts buyers and sellers and not always available on a CEX exchange (remember FTX?)
Its the standard fee for exotic DEX swaps. Larger pools are 0.03%, stable pools or huge pools (BTC / USDT) are 0.005%.
It may seem like a lot but remember these coins can make 1000% moves.
The reason people pay that fee is they don't want to use a centralized exchange or (more likely) the coin isn't even available on a CEX yet. Early bird gets the worm etc.
Sounds more like a bragger in reality. Reading an interesting book "The Courage to be Disliked", which suggest that those boasting about their superior achievements have a superiority complex rooted in inferiority. It's ultimately a societal conditioning thing when one looks at the "values" of our culture.
Your comment does lead to other questions about "good" money, "honest" money and all that.
"Japanese corporate spending on plant and equipment in Q4-2023 jumped an unprecedented (and surprising) +16.4% from the same period a year earlier."
Tell me again, what are interest rates in Japan?
So the cost of capital is extremely low so businesses can invest for further growth?
Meanwhile ... back in NZ .... :-(
The population of Japan is declining. There is political resistance to immigration. So Japanese companies have no choice but to invest in technology to maintain production. As a result the productivity per person will rise over time. They don't have to expend resources building endless housing developments. They can just make and sell stuff that the world wants. The X and Y generations of Japan will be very wealthy again by world standards. Once the boomer bubble exits.
Gold record high
Bitcoin record high (any second)
Breakevens soaring
And the Fed hasn't even started cutting rates yet.
People should be asking the central banks "if you can just print money, why are we paying taxes." It's a fair question to ask. Remember, Adrian Orr was laughing at you in front of his mates. And most people don't care.
Unfortunately a financial and / or banking crisis appears to be on the horizon.
In case this helps in understanding; another way of putting this, is not that these assets are worth more, but rather people are dumping the dollar. The perceived value of fiat is dropping like a stone in anticipation of further devaluation to come. And it is coming. Just like when everyone thought their houses were worth more, no they weren’t. The NZD was just worth less because they made a lot more of them.
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