Weekend briefing: This is bad, and it isn't the bottom

Economy / news

China retaliates, compounding the US tariff mistake; reactions are fierce everywhere; the world faces severe stagflation and markets are pricing that in; UST 10yr at 3.99%; gold and oil drop hard; NZ$1 = 55.6 USc; TWI = 65.6

5th Apr 25, 8:09am by David Chaston

Milford Sound / Piopiotahi

Here's our summary of key economic events overnight that affect New Zealand with news today is all about fear for the future, rather than looking at recent past data to get a sense of economic trends. The immediate past is irrelevant today. Tomorrow will be quite disconnected to the recent past.

Today's big news is that China has responded to the US tariffs with its own sweeping restrictions on trade with the US, with more to come. In all, we count eight major announcements on restriction of trade with the US.

China placed export restrictions on rare earth elements squeezing supply to the West of minerals used to make weapons, electronics and a range of consumer goods. That leaves American manufacturers scrambling for fresh supplies of the critical minerals they have relied upon for decades.

Yesterday we reported that Canada retaliated. But so far, we haven't heard of EU retaliation.

Fed boss Powell was speaking overnight and said the economic impact of new tariffs is likely to be significantly larger than expected, and the central bank must make sure that doesn’t lead to a growing inflation problem. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth."

All this will have very large secondary effects on New Zealand, and our currency dived sharply on the news. It was an even larger negative reaction for Australia.

Commodity prices have taken outsized hits, all consistent with pricing for a deep recession. Copper is down -16.5% since its late-March peak. It is far from the only one, and the adjusting is still underway. Gold wasn't immune. Trump supporters are trying to create a narrative of 'success' leaving them even further in their deluded echo chamber, disconnected from the real world.

Secondary reactions will be widespread. The airfreight market is expected to be thrown into turmoil, up in the immediate scramble to get ordered goods, then a deep drought, as will shipping. Collapses will further hinder the reduced trade expected.

The key takeaway from all this is unsettling - this isn't the bottom. It may only be the start of a steep decline. It certainly is a 'Black Swan' event. Everyone should be worried, especially savers. Stagflation is the most likely future we face.

For the record, there were economic data out overnight. The US non-farm March payrolls came in better than anticipated with a +228,000 seasonally adjusted rise in the month. Canada reported a -33,000 drop in March employment. Deeper rate cuts are the likely Bank of Canada response, and soon - on April 17, NZT.

And across the Pacific, Japanese household income rose more than expected in February from the steep drop in January. But it wasn't enough to show a gain year-on-year.

German factory orders remained low in February, and unchanged from January in an undershoot.

But none of this recent-history data really means much any more.

The following changes are outsized, and still moving. But this is what we see now.

The UST 10yr yield is now at 3.99%, down -5 bps from yesterday at this time. A week ago it was at 4.25%. The key 2-10 yield curve is steeper at +34 bps. But their 1-5 curve is inverted by -19 bps, holding the sharp deepening. And their 3 mth-10yr curve is very much more inverted, now by -37 bps. The Australian 10 year bond yield starts today at 4.16% and down -11 bps from yesterday. The China 10 year bond rate is now at 1.79% and unchanged due to their Ching Ming Festival holiday. The NZ Government 10 year bond rate is now at 4.35%, and down -8 bps from yesterday at this time. A week ago it was at 4.66% so a -31 bps dump since then. We should also note that wholesale swap rates tumbled yesterday by about -10 bps, and after today's news are likely to fall sharply again on Monday. Every one of these moves is outsized in a fear-induced way.

The VIX volatility index has jumped suddenly, moving up towards an extreme level.

Wall Street is in its Friday session down another -6.0% on the S&P500 after the tariff announcements and showing no signs of improving. It is down -8.2% for the week, down -17.0% since Inauguration Day. It's facing a full bear market declaration. One stock hard it today is Tesla, down -10% on the day, down -50% from its end of 2024 peak. Overnight, European markets all fell about -5.0% too. Yesterday, Tokyo ended its Friday session down -2.8% for a weekly drop of -7.3%. Hong Kong was on holiday for their Ching Ming Festival to be down -3.5% for the week and Shanghai was on holiday too, and down -0.9% for their short week. Singapore fell -3.0%. The ASX200 ended its Friday session down -2.4% to be -3.9% lower for their week. But the NZX50 'only' fell -0.9% on Friday to be down a modest -0.5% for the week. But more reaction will come Monday in response to today's news.

The Fear & Greed Index ends the week hard over in the 'extreme fear' zone, and at a record-breaking level. They are going to have to invent a new extreme category.

The price of gold will start today at just on US$3020/oz and down a net -US$88 from yesterday, a huge move as gold is just being classed as "another commodity".

Oil prices have dropped another huge -US$5 from yesterday at just on US$61.50/bbl in the US and the international Brent price is now just under US$65/bbl. This market faces steep demand drops just as it wants to increase production.

The Kiwi dollar is now at 55.6 USc and an enormous -250 bps dump from this time yesterday, down -4.3% overnight. A week ago it was at 57.2 USc and the last time it was down at today's level was in March earlier this year. Against the Aussie we are up +110 bps at 92.6 AUc because the Aussie dollar has taken an even larger hit. Against the euro we are down -170 bps at just under 50.9 euro cents. That all means our TWI-5 starts today now just on 65.6 and down -140 bps to its lowest since the brief pandemic dive on March 20, 2020, and before that in March 2011 as the GFC bit hard..

The bitcoin price starts today at US$83,808 and up +2.0% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.9%.

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Source: RBNZ

Source: CoinDesk

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108 Comments

by NZGecko | 5th Apr 25, 8:14am 1743794087

The trade war Krakken is unleashed, like nothing seen since the early 1930s.

All bets are off and would not be surprised to see the Dow drop -10,000 or much more, when the dust settles on a much lower shelf, in comming months.........

by Foxglove. | 5th Apr 25, 8:33am 1743795216

Bit like covid isn’t it. That is the lockout and lockdown was the easy part, the rest not so much. Whatever the USA is trying to achieve the first part, the tariff impositions, won’t simultaneously create the solutions being sought. Straightaway for instance is the question of what the USA doesn’t possess itself such as rare earth minerals. Furthermore the once strong industrial manufacturing base and requisite skill set can hardly be re-established overnight.

by powerdownkiwi | 5th Apr 25, 2:18pm 1743815922

The US cannot produce stuff which it can afford - neither can we. They and we have constructed our consumption around 'cheap', and that intrinsically involved slave-level wages. Can their politics survive slave-level wages at home? Unlikely.

'Stagflation is the most likely future we face.'

DC - I've been pointing that out for years, but be very sure, stagflation, like Trump, is a consequence, not a driver. And this one may well lead to full collapse; notenough planet left to underwrite the collection of forward bets.

by Pa1nter | 5th Apr 25, 11:16am 1743804970

Furthermore the once strong industrial manufacturing base and requisite skill set can hardly be re-established overnight.

The options are grim

- kick the can around, make murmors about "investing in productivity", all the while ratcheting up debt for lifestyles that cannot be afforded

- set it all on fire and hope what's picked out of the ashes is of better promise than the present

by Foxglove. | 5th Apr 25, 11:18am 1743805121

Ah, you are back live on here. Good show.

by Yvil | 5th Apr 25, 4:10pm 1743822618

Agreed, I've always ENJOYED Pa1nter's contributions.

Edited because of a weird autocorrect.

by Pa1nter | 5th Apr 25, 11:22am 1743805378

Well, I walked off into the wilderness for a month or so, and it appears the world managed to make itself more interesting in my absense

by Kate | 5th Apr 25, 11:42am 1743806526

It did indeed.

by Pa1nter | 5th Apr 25, 11:53am 1743807201

Didn't take me that long to regret coming back.

I've spent 5 years in a commercial holding pattern, waiting for conditions to become clearer/more predictable since COVID, now it's murkier again still.

One way tickets to the Himalayas are a bargain right now.

by IT GUY | 5th Apr 25, 2:10pm 1743815456

this winter is a great time to sail up into the pacific for a loop, not much will happen while you are away, I went during the GFC, easier to be connected with starlink now days as well.

by Pa1nter | 6th Apr 25, 5:36am 1743874562

Most of my income gets earned over NZs warmer months, so winter fairly often involves parking up somewhere warmer.

I'm having to contemplate whether I really want to persevere with being in business at all. A bunch of what I produce is export orientated and I can't determine the future impact on that, and I certainly wouldn't dream of investing in any productivity there, for at least the duration of the Trump presidency.

The other larger parts of what I do, requires other businesses to have the confidence to make the same sorts of capital investments I'm mulling over (or much larger), and it's hard to determine their appetite over the coming years also.

So parking up somewhere cheap and quiet, and throwing my phone in a river is sounding relatively attractive.

by Threecents | 5th Apr 25, 8:30am 1743795029

The price of gold will start today at just on US$3020/oz and down a net -US$88 from yesterday, a huge move as gold is just being classed as "another commodity".

No doubt some traders/funds etc would have been struggling and needed to sell anything in a hurry, however the above statement is simplistic. Ed Steer has a PM newsletter and these were some of his comments..

The powers-that-be knew all too well what would happen when Globex trading began in New York yesterday evening -- and they were loaded for bear and laying in wait...helped along by an 11.1% margin rate increase in gold...plus an astronomical and totally unnecessary 25% increase in the margin rate for silver.

As Ted Butler pointed out years ago, the CME Group's sole purpose is to protect the big shorts -- and they did so by greasing the skids on the engineered price declines of Biblical proportions in the Big 6 commodities... particularly in silver, their No. 1 problem child above all others.

As a result -- and despite the fact that the dollar index tanked by the most in one day that I can remember, the President's Working Group/PPT prevented the mad rush from paper assets to hard assets that would have ensued if they hadn't. Only the bond market was allowed to benefit.

by IT GUY | 5th Apr 25, 9:54am 1743800050

Gold always has a margin increase as markets crash (justified by vol increasing) , next few months create great buying as the way out of this is likely qe down the path.

Also there is always a buyer and margin clerks know that.

by Threecents | 5th Apr 25, 10:42am 1743802957

Yes I could see QE occurring as it did after the GFC. My understanding is that the futures margin increase has increased the cost to traders with existing contracts. If the cost to hold the contract increases then some traders will sell out as the increased cost will reduce potential profit etc. So this margin increase has encouraged further selling and helped decrease the PM prices. Anyone holding the contract with the expectation of taking delivery of physical is less likely to be concerned.

by Threecents | 6th Apr 25, 6:04am 1743876267

In case it isn’t clear, one method to make the metals price fall is for bullion banks and other parties to buy short futures contracts (effectively selling the metal) on the futures exchange. Some of the bullion banks are net short (net between their long and short contracts) a large number of precious metals contracts and are unlikely to hold the physical metal to cover all of these, ie they are naked short. The following is from Ed Steer's newsletter.

The April Bank Participation Report [BPR] data is extracted directly from yesterday's Commitment of Traders Report data. It shows the number of futures contracts, both long and short, that are held by all the U.S. and non-U.S. banks as of Tuesday’s cut-off in all COMEX-traded products.

For this one day a month we get to see what the world’s banks have been up to in the precious metals. They’re usually up to quite a bit -- and they certainly were again this past month...but not as much as earlier months, which I found quite surprising considering the run-up in gold and silver prices.

[The April Bank Participation Report covers the four-week time period from March 4 to April 1 inclusive]

In gold, 5 U.S. banks are net short 97,959 COMEX contracts, up only 1,219 contracts from the 96,740 contracts that these same 5 U.S. banks were net short in the March BPR. This is not a lot considering how much gold ran up in price during March.

Also in gold, 23 non-U.S. banks are net short 127,926 COMEX contracts, up a further 8,858 contracts from the 119,068 contracts that these same 23 non-U.S. banks were short in March's BPR...their largest short position since August 2019 -- and their second highest short position on record. In the last three months these non-U.S. banks have added a net and whopping 86,528 short contracts.

by J.C. | 5th Apr 25, 12:13pm 1743808386

No doubt some traders/funds etc would have been struggling and needed to sell anything in a hurry, however the above statement is simplistic.

XAUUSD down approx 2.4%. But a different story against the Aotearoa Peso and Aussie dollar - up over 2%.

And look at JPY go. People have been warned but they pretend not to care.

But biggest surprise / question in all the turmoil: Has the ol' rat poison decoupled from everything?

by Pa1nter | 5th Apr 25, 12:05pm 1743807958

Well, it's not performing a parallel function with gold presently.

So either the investors don't overlap well, or the motivations. Possibly both.

I don't think anyone really has a good take on what really drives BTC value, other than hyperactivity.

by Colin Maxwell | 5th Apr 25, 12:21pm 1743808915

Blind faith in credit on credit, perhaps, Pa1nter???

by J.C. | 5th Apr 25, 12:40pm 1743810017

Blind faith in credit on credit, perhaps, Pa1nter???

Look at what we do know alongside what we don't know.

Counterparty risk is in play, even with the mighty gold. But that risk is potentially even greater with the Ponzinomics plays of Aussie and Aotearoa, hence the trouncing of the currencies.

As for ratty, counterparty exists now, but maybe not to the extent that it can be controlled / behave like a puppet on a string. And maybe you need to think of BTC as a liquidity smoke alarm.

by Pa1nter | 6th Apr 25, 4:35am 1743870948

Yeah I think I actually floated that concept to you a while back.

If your barometer for the value of Bitcoin is dependent on surplus money looking for a home, you might find that's a trend that may not have as many legs left in it than you'd be anticipating.

What's a Bitcoin worth when you're struggling to buy the same goods that were previously cheap and abundant?

by J.C. | 6th Apr 25, 9:49am 1743889787

What's a Bitcoin worth when you're struggling to buy the same goods that were previously cheap and abundant?

Good question P. My reckon is that the majority of people living paycheck to paycheck are probably the last people to own BTC. And even if they do, their hands are likely to be weak and will exchange for fiat as soon as they feel its fiat value may fall.

by Pa1nter | 6th Apr 25, 10:13am 1743891205

I would imagine the vast majority of Bitcoin holders are the less well healed, aspirationally wealthy types hoping for a big short term windfall with almost no effort required, in lieu of obtaining financial independence the slow and hard way. Do you know the distribution curves of all the wallet holders? I.e. do 1% of wallets own 20% of the coins, and 90% of wallets own 5% of the coins?

It's the herd mentality of this demo which is setting a lot of the values, while the whales sit back happily watching the price get pumped up.

If it is all about liquidity as we both posit, then isn't Bitcoin really just a proxy investment in the efficacy of "the Ponzi"?

by J.C. | 6th Apr 25, 11:29am 1743895764

I would imagine the vast majority of Bitcoin holders are the less well healed, aspirationally wealthy types hoping for a big short term windfall

Disagree P. if you're betting on 'short-term windfalls', you're likely to be further out the risk curve than what ratty can do for you.

If it is all about liquidity as we both posit, then isn't Bitcoin really just a proxy investment in the efficacy of "the Ponzi"?

Not necessarily. The Ponzi itself is the debt ledger that expands with money supply. That is fundamentally different to BTC. Greater fiat liquidity itself should drive the fiat price of BTC higher.

by Pa1nter | 6th Apr 25, 11:39am 1743896367

Disagree P.

I would assume you'd have a fairly decent picture formed via data of the distribution of BTC.

A quick squizz indicates 30 million plus wallets, the average wallet value is less than half a Bitcoin, but the median value is only .005 BTC - implying the vast majority of Bitcoin owning entities own very little Bitcoin, with a smaller group of disproportionately larger owners.

So the bulk of owners are more inclined to not have much behind them, having a crapshoot flutter. Helping set high prices for those sitting on much larger stacks.

Not necessarily. The Ponzi itself is the debt ledger that expands with money supply. That is fundamentally different to BTC. Greater fiat liquidity itself should drive the fiat price of BTC higher.

Sounds pretty damn similar to what I'm implying. Both BTC and housing require ongoing liquidity of new entrants. If they're as inexorably linked in this way, either are a bet on the continuity of the status quo.

by J.C. | 6th Apr 25, 11:58am 1743897500

I would assume you'd have a fairly decent picture formed via data of the distribution of BTC.

Yes. But rule of thumb is that 98% of wallets contain < 1 BTC. Non-on-chain research estimates 2/3 of BTC owners hold less than 0.01.

Another rule of thumb is that approx 50% of people across the Anglosphere have approx $1,000 in cash savings.

Would it make sense for these people to consider owning BTC? Probably not. They're better off holding fiat for an emergency situation.

And they may be more enticed by the speculative opportunity offered by cryptos that might 100x or 1000x.

by Pa1nter | 6th Apr 25, 12:18pm 1743898728

Non-on-chain research estimates 2/3 of BTC owners hold less than 0.01.

Yeah, so this statement

My reckon is that the majority of people living paycheck to paycheck are probably the last people to own BTC

Is the inverse of reality. The majority of Bitcoin holders will be more on the "hand to mouth" end of the wealth spectrum. If things get more expensive while the economy is also stagnating, the majority of Bitcoin holders will struggle to retain, let alone seek more BTC.

The next step would be trying to establish how much of the transaction activity of these economically marginal "investors" has been dictating the market value. Again, we can refer to data, that shows the median BTC transaction is small, like .006 or $200. So the market activity which is determining the price, is being done by a large amount of owners making very small trades.

by J.C. | 6th Apr 25, 1:23pm 1743902622

If things get more expensive while the economy is also stagnating, the majority of Bitcoin holders will struggle to retain, let alone seek more BTC.

Who knows P. If 99% of the world would struggle to buy BTC, perhaps you're right. The 1970s was a period of stagnation but very few Aotearoans bought or owned gold, even though its USD fiat price appreciated approx 1,400%. Over the same time period, the S&P 500 appreciated approx 17% in nominal terms; adjusted for inflation, the index lost nearly 50% of its value.

by IT GUY | 6th Apr 25, 1:03pm 1743901434

Your bank will never recommend you own gold, rather they will recommend a diversified portfolio via their kiwi saver scheme.

To me gold is two things, an insurance policy on the failure of your local fiat currency, and a hedge against inflation.

BTC offers the same characteristics.

by Pa1nter | 6th Apr 25, 1:04pm 1743901490

Who knows P.

We do, don't we? The average BTC holder is not generating a sufficient cash surplus to be concerned about monetary inflation devaluing their savings, because they have little to begin with. So a reasonable assumption is that the bulk of the investing is more on the premise of turning $1 into $1000, than finding a more lucrative place to store significant amounts of wealth.

The way the ownership is structured, the people who are turning $1 into $1000 have already been determined, so subsequent entrants will face diminishing net returns.

I believe there's a geometric shape used to simply illustrate this model.

by J.C. | 6th Apr 25, 1:31pm 1743903092

So a reasonable assumption is that the bulk of the investing is more on the premise of turning $1 into $1000

1000x P? That puts 1 BTC at approx USD83 million. I've seen long-term price predictions that suggest this is possible. But not near term.

I think most people looking for 1000x are in the low-cap alt space.

Mind you, if you have bought BTC proxy MetaPlanet 12 months ago, you would have returned 1,800% of today. Not 1000x, but not a bad speccy.

by Pa1nter | 6th Apr 25, 2:27pm 1743906453

1000x P?

Insert some sort of other super high multiple that the average investor (of pretty much anything) hasn't got a shit show of reaching. By the time the masses are chasing lofty profits, the bulk of the gains are already gone, and they're the source of the profits, not the recipients.

by IT GUY | 6th Apr 25, 3:24pm 1743909858

B A G H O L D E R S

They walk amongst us!

by J.C. | 6th Apr 25, 3:56pm 1743911794

Insert some sort of other super high multiple that the average investor (of pretty much anything) hasn't got a shit show of reaching.

Easily could have 15x'd in ratty since 2020 P. You could have done that on MetaPlanet in past 12 months.

by Pa1nter | 6th Apr 25, 4:02pm 1743912168

Yeah, as I said, insert any sort of lofty, unpredictable multiple to chase. If there's some cherry picked examples to help you think you can emulate, all the better.

Statistically, more likely to end in tears than prosperity. The vast majority of parabolic wealth chasers would be much better served improving their ability to reliably and consistently generate a net financial surplus than trying to turn their $200 of scraps into 3 grand.

by J.C. | 6th Apr 25, 5:02pm 1743915776

If there's some cherry picked examples to help you think you can emulate, all the better.

Some asset classes behave differently. It's not cherry picking. Even bottom of the barrel altcoins can 100x. Just how it is.

by Pa1nter | 6th Apr 25, 7:01pm 1743922889

If it's not cherry picking, what percentage of Bitcoin collectors would you think have 15x'd their money since 2020?

If it were that common, you'd expect the average Bitcoin collectors wallet to be much larger.

by Zachary Smith | 6th Apr 25, 1:16pm 1743902206

the less well healed

I recommend chicken soup.

by Yvil | 5th Apr 25, 8:40am 1743795656

China placed export restrictions on rare earth elements squeezing supply to the West

A further incentive for the USA to make a selfish peace deal in Ukraine, and to invaded Canada and Greenland.

by Antz | 5th Apr 25, 8:57am 1743796633

A sea of red: https://tradingeconomics.com/shares

by Yvil | 5th Apr 25, 8:57am 1743796645

Well, I'm certainly not crypto fan, but I'm happy to point out that Bitcoin is just about the only asset to not have crashed !

by Albert2020 | 5th Apr 25, 9:12am 1743797533

US dollar?

by Pragmatist | 5th Apr 25, 9:24am 1743798284

Its down 15% since the Feb 1st, it just took a healthy headstart on the rest.

by Yvil | 5th Apr 25, 9:19am 1743797999

All this worldwide chaos and turmoil because of one single idiot!

by IT GUY | 5th Apr 25, 9:28am 1743798528

Called "LEVERAGE"

by powerdownkiwi | 5th Apr 25, 9:36am 1743798999

No, it isn't.

Some people have trouble learning - especially when their mana/lifestyle might be compromised...

Trump is a symptom, not a cause. He got in the second time, because of the cause.

Got it?

Edit - What a lot of folk think of as 'normal' (3% growth in consumption) was an aberration; an anomaly. That era is closing - as those of us who study the physical aspects, have long foretold. People who fixate on proxy-numbers are in for a shock - again, entirely predictable, and predicted. This era, and readjustment, was/is inevitable. Strap in for the ride.

by IT GUY | 5th Apr 25, 9:43am 1743799396

get some solar panels while you can

by interesting1234 | 7th Apr 25, 6:38am 1743964739

Got some ordered this week finally

by Yvil | 5th Apr 25, 11:30am 1743805841

I wonder what excuse you will use PDK, when the next, less crazy administration, takes power in the US, after Trump gets assassinated?

by Zachary Smith | 5th Apr 25, 1:57pm 1743814660

PDK could write his comments at practically any point in the history of human civilization.

by powerdownkiwi | 5th Apr 25, 2:23pm 1743816219

Excuse?

The planet, in resource terms, is half-depleted (the best half).

I need no excuse - you (Yvill) are the one excusing; pretending that a person is somehow the problem, not the depletion.

As for the ZS comment - totally wrong. There have NEVER been 8 billion on the planet. Never. Ever. We had only gotten to 1 billion, by 1800. We've overshot and collapsed locally - but never globally. This is a never-to-be-repeated moment.

by Yvil | 5th Apr 25, 4:08pm 1743822514

As long as you believe you're right PDK, it's all that matters. You are not open minded enough to consider any other views, apart from your own.

by powerdownkiwi | 5th Apr 25, 4:45pm 1743824724

Look in the mirror.

And ask who is the believer?

Exponential growth on a finite planet.

Human overshoot.

The first impossible, the latter already here. If you need to believe, fine, but accept that that is what you are doing, OK?

by Yvil | 5th Apr 25, 5:30pm 1743827400

Who, out of you and me, has only one singular view on life and disbursement accept any other opinions ?

by Zachary Smith | 5th Apr 25, 6:49pm 1743832190

PDK constantly uses the term "exponential growth" instead of just "growth" which is a big red flag. Many interpret exponential growth as rapid, out of control, growth. Like that tale of a guy that did a deal with an ancient king where grains of rice were doubled on each square of a chessboard. It ends up being 300+ billion tons of rice. Readers should be aware that even a growth rate of 0.001% would be "exponential". However, let's use 3% for the chessboard example. There would end up only being 5.9 grains of rice on the 64th square.

He similarly uses "entropy" and "2nd Law of Thermodynamics" in an attempt to blind the reader with "science" as well. A cultist for sure.

by powerdownkiwi | 5th Apr 25, 7:19pm 1743833976

Foolish comment.

Doubling-time is the problem with exponential growth, when attempted within a bounded system.

All exponentil growth will cease thus - it's not 'out of control', it will simply cease. You whole vernacular is wrong.

Blind? I can tell how old people are by looking at them - as can you. That's entropy.

Blind? I can tell you a cup of coffee will cool, and the room it is in will get equally warmer - except it isn't worth expending energy getting the dissipated energy together again. So we don't, and won't.

If people want to believe this or that - that money is a store of wealth, for instance - good luck to them. I'll stick to physics.

by redcows1 | 5th Apr 25, 8:08pm 1743836902

Sometimes I waver from your message questioning its sanity. Then someone tries to argue/knock it down, at which point they prove you correct and I'm back :)

by Zachary Smith | 5th Apr 25, 8:17pm 1743837433

Can you explain how my comment achieved that?

by redcows1 | 5th Apr 25, 9:03pm 1743840231

Your belief that 6x an original number is not exponential. Apply it to population or energy use or whatever, it is.

by Zachary Smith | 5th Apr 25, 9:10pm 1743840654

I didn't say it wasn't exponential. I made it clear that just because something is "exponential" that doesn't mean it is necessarily a problem.

by powerdownkiwi | 5th Apr 25, 8:26pm 1743838013

Thank you. :)

When I was quite young, my old man taught me how to think. He was Mensa territory, I'm not, but how to think is something anyone can learn.

He told me to mentally turn things 'inside out, upside down and back-to-front' (this would have been 1965 or 6 - lateral thinking wasn't a phrase we knew then).

Most folk don't disentangle thoughts from emotions/beliefs, most don't grasp time, most don't conceptualise the exponential function. This may be the key:

https://dothemath.ucsd.edu/2015/04/programmed-to-ignore/

by Zachary Smith | 5th Apr 25, 9:16pm 1743840968

I wish people would stop freaking out about exponential growth. Saying something is growing exponentially is meaningless without specifying the rate of growth and the time interval over which it's measured

Also, there's nothing wrong with entropy you know, in fact it is essential. Life uses energy as it flows toward entropy. Like a waterwheel in a river.

by IT GUY | 6th Apr 25, 8:45am 1743885925

Saying something is growing exponentially is meaningless without specifying the rate of growth and the time interval over which it's measured

just wow

by Zachary Smith | 6th Apr 25, 1:59pm 1743904773

It's very easy to understand. It's like you're hung up on the fact that, given enough (t), exponential growth, no matter the (r), would fill up the entire universe. We all know this, smh. However, we are talking about a realistic (t) like years, decades, centuries...In this context it's not such a great problem.

PDK doesn't really commit to much in the way of context. Given enough time he is likely to be right but that may turn out to be a billion years or more.

by Zachary Smith | 5th Apr 25, 8:11pm 1743837094

I pointed out that it is your vernacular that is wrong. I defeated entropy by marrying and producing children. I can use the sun to reheat my coffee. My money continues to be a useful store of wealth.

by powerdownkiwi | 5th Apr 25, 8:34pm 1743838473

Marrying was irrelevant.

Having children does not parry your entropy.

Yes, you can - and I live off-grid, mostly on solar. But you don't, and the system your collection of wealth-tokens counts, doesn't.

Money is respected until it isn't.. Which has to be soon, the system is playing in injury-time. Your money is a claim on future energy and resources - as is everyone else's, and every day there are more claims, every day less resources.

Useful? Until it isn't, which cannot be far away given the above sentence.

by Zachary Smith | 5th Apr 25, 9:06pm 1743840367

Life uses the energy flow toward entropy to reproduce and evolve.

I heat my coffee using electricity generated from hydro dams. The sun puts the water in the dam. I'm expecting this process to continue for a few billion years.

by powerdownkiwi | 6th Apr 25, 2:38pm 1743907121

Yes, it does. That's the whole point; life only circumvents entropy via reproduction.

Your second comment is (and it is typical) illogical. What built the dams? Stored (low entropy) fossilised sunlight. Yes, real-time solar will keep arriving. But the stock was a one-off.

I see it as flawed thinking - just consistently plain wrong. Was it learned? Or wishful thinking extrapolated?

by Zachary Smith | 6th Apr 25, 4:08pm 1743912506

You're like those Christian folk who use the fact that entropy exists to prove the existence of God. I haven't seen you prove wrong anything I have written.

We can build dams using fuel derived from coal if we want to. We have over 16 billion tons of the stuff in New Zealand. That could be used to make four trillion litres of petrol.

by Let me be Frank | 6th Apr 25, 7:19pm 1743923957

How are you going to extract that coal and transport and convert it? and at what rate and over what time frame? We can (and did) dig it by hand and transport it by horse/ox wagons to be converted by machinery made by the same process but how long and how much do you think we may produce under those circumstances?

The abundance of cheap easily accessible fossil fuels enabled us to supercharge all our extraction/production processes (and support non productive activities)...remove or reduce that cheap fossil fuel and what do you have?

by Threecents | 5th Apr 25, 9:58am 1743800296

My 3 cents. On one level I understand that the US’s economic long-term future isn’t healthy, hence the measures with tariffs to try and improve their trade and DOGE to remove inefficiencies etc. However the presentation and delivery of these measures appears to be a shambles and doesn’t help what they are trying to achieve.

by Pa1nter | 5th Apr 25, 11:13am 1743804829

The good people want:

- the benefits of capitalist creative destruction

- long term stability including safe havens for surplus savings

- cheap goods

- high wages

These are not compatible aims, and we've been trying to sugarcoat reality for decades.

by Yvil | 5th Apr 25, 11:27am 1743805664

I like your generally balanced views 3cents. (you're also 1 cent up on all of us 😅)

by Threecents | 5th Apr 25, 6:50pm 1743832254

Thank you Y

by profile | 5th Apr 25, 12:24pm 1743809059

Delivery has kicked off.

@GeorgePapa19

UNITED STATES AND ARGENTINA BECOME THE FIRST ZERO-TARIFF COUNTRIES Presidents Trump and Milei will sign the first international trade agreement free of tariffs for both American and Argentine products.

by Let me be Frank | 5th Apr 25, 12:47pm 1743810436

Lol..." zero tariff " calculated how exactly?....and didnt Canada/Mexico and Australia have trade agreements with the U.S.?

by profile | 6th Apr 25, 4:10pm 1743912631

Vietnam's leader called Donald Trump, offered to cut import tariffs on US goods to 0% in a bid to ease heavy reciprocal tariffs from the US.

https://www.reuters.com/markets/asia/vietnam-foreign-ministry-says-regr…

https://www.nationthailand.com/blogs/news/asean/40048383

by Let me be Frank | 6th Apr 25, 7:25pm 1743924346

And what 'tariffs' do Vietnam currently impose on US imports?...0% perhaps?

How do you propose Vietnam balance their trade with the US...start buying billions of US made goods they neither want nor can afford?

by KH | 5th Apr 25, 6:08pm 1743829707

"one single idiot"

So easy to blame it all on a single figure. But wrong. So many examples.

by Yvil | 5th Apr 25, 6:22pm 1743830575

Fair, he has been elected by many other idiots.

by Kate | 5th Apr 25, 11:53am 1743807221

My guess is we'll see a lot of capital flight from the US.

No one would invest money in a start up manufacturer there now.

Dictators are troubling enough, but a coterie of insane dictators is a recipe for collapse.

Though, they could bounce back if fair elections are allowed to run in the midterms. Trump and his insane Cabinet members will all be impeached. And the rule of law restored.

- always the optimist.

by Pa1nter | 5th Apr 25, 11:59am 1743807583

No one would invest money in a start up manufacturer there now.

I'd say a lot of entities from mercantile nations are going to plow money into the place.

I'd also say future geopolitical guesses are factoring into US decisions. If we get the sort of global instability we're heading towards, a relatively safe place like the US isn't the worst place to park money.

by Kate | 5th Apr 25, 12:37pm 1743809824

Who do you consider to be mercantile nations?

For interest - biggest holders of US Treasuries;

https://www.statista.com/statistics/246420/major-foreign-holders-of-us-…

WMDs?

by Pa1nter | 6th Apr 25, 4:41am 1743871281

Germany, Japan, and China would be the biggest off the top of my head.

If their domestically produced goods are going to struggle getting sold in the United States due to tarrifs, then they will have to shift manufacturing to America (assuming they cant find another buyer)

It's why half a million Toyotas are currently made in Kentucky

by Let me be Frank | 6th Apr 25, 7:27pm 1743924424

"It's why half a million Toyotas are currently made in Kentucky"

With components supplied from global supply chains....subject to tariffs.

by Pa1nter | 6th Apr 25, 8:29pm 1743928163

We will see if America also reverses it's behaviour of offering concessions and subsidies to foreign businesses who are implored to establish manufacturing there.

Put it this way, extremely unlikely there wouldnt be carrots to go with all these big sticks. They will also have to overcome these tariff issues for their own domestic manufacturers, some US cars have components cross the border a dozen or two times before a car is complete.

by J.C. | 5th Apr 25, 12:46pm 1743810393

My guess is we'll see a lot of capital flight from the US.

No one would invest money in a start up manufacturer there now.

You're obviously not referring to the likes of Honda.

By the way, Treasury Secretary Scott Bessent was telling Tucker Carlson:

- The top 10% of Americans own 88% of equities, 88% of the stock market

- The next 40% owns 12% of the stock market

- The bottom 50% has debt

by Colin Maxwell | 5th Apr 25, 12:10pm 1743808217

Thanks for the excellent summary, David.

My 2 cents worth of observations...

THE MOART AND THE PERFECT STORM - The Captain Chao$ obsession with "burning down the house to roast a pig".

Yes, the house is burning - amongst all of the symptoms of a terminally ill empire, there is arguably one statistic that couldn't be more tragic - ie, the largest asset on the U$ Federal Govt's balance sheet is student debt, and last time I checked it amounted to almost as much as all the other items combined.

If you took all of the most prominent economists of the last 200 years, there is likely only one subject that they would all universally agree on - ie, that tariffs are NOT a sound way to address sovereign trading account challenges.

In my eCONomics Part IV, written almost one year ago to the day, I listed 12 events, any combination of which could combine to create the perfect storm that could bring down the entire Western financial casino.

Rock on April 2, 2025, and the abject idiocy of Trumponomics shoots straight to the top of that list - it could well accomplish this quest singlehandedly.

https://globalsouth.co/2024/04/11/economics-part-v-2024-if-man-is-still…

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

My understanding of the calculation of the percentage of the tariffs is as follows -

The U$A has a trade deficit with Country 'XXX' of $100 million (TD)

Country 'XXX' exports to the U$ $300 million (EX)

(TD $100m) divide by (EX $300m) = 33%

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This calculation of how Admin #47 arrived at these figures is as superficial and idiotic as the notion of tariffs being capable of solving trade imbalances in a positive spirit in itself. This chainsaw approach is moronic even by Trumpian standards.

Besides, services which are also GDP, are excluded from the calculation and yet the services component of global trade appears to be in the region of around 30% of total trade.

Expanding industries look to countries that are economically stable and predictable to invest in because building factories is a long-term commitment, and in some cases, it could take as long as a decade or more to recoup a serious return - in the case of a car assembly plant, the total long-term investment could be in the $-billions.

The U$ under Trump has proven itself to be as predictable as the last rapacious gazillionaire who spoke to him, or for that matter the last brainwave as to how King Donald could think up another plot to bash another entity to extort even more free lunches in exchange for endless paper promises.

The facade of economic stability is being lifted as the true extent of U$ indebtedness is revealed and the "predictability" factor has just gone up in smoke too, as Trump sets fire to the house.

U$ GDP will drop because of the dual effects of tariffs and the DOGE chainsaw - as someone recently stated, Muskrat's approach is tantamount to a brain surgeon operating with a chainsaw rather than a scalpel - clearly, they aren't expecting the patient to live.

The only presumed immediate winners (everyone will be a loser in the long run), are the dancing neofeudalist Trumpistadors and their cult club, just as it was with the 0.001% who cleaned up during Trump #45.

The short-term winners will be the multinational corporations that produce in many different countries - they will escape most of the effects of the tariffs as well as the retaliations. As usual, the workers won't benefit, that is the whole idea in this #47 brand of abject continued wealth transfer.

Trump claims he will use the tariff revenues for his tax cuts, but this con will once again benefit his kleptocratic club members, not to mention the shareholders in these corporations. But don't forget that the wealthiest cohorts own more than 90% of these shares anyway.

It's what they do, the same old neoliberal playbook, word for word - heads the thieving gazillionaire club wins handsomely, tails Mainstreet loses horribly. The only difference this time around is that not only has Trump declared economic war on Mainstreet America, but on the entire planet.

Have any of you 'Heard' of penguins?

https://www.msn.com/en-in/news/world/penguin-memes-galore-on-internet-a…

Well, the word is that even those on Heard Island are shocked by this latest idiocy.

The court jesters and the sycophantic appointments (read glorified clerks) that Captain Chao$ has surrounded himself with, can't even open their mouths to let him know how suicidal his 'plan' is - they have seen the #45 score-card - you could be here today and gone tomorrow - that's how the King-God Donald rocks.

Yes I know, as repulsive as this mental image is he will continue to glide around "nekkid" in his gold-gilded golf cart - well, at least that is until Mainstreet brings out the pitchforks when they discover en masse that they have been duped yet again, this time by the MOART (Mother Of All Rich-Man's Tricks).

By all accounts the only 4 countries on the planet, and that includes the penguin colonies, to escape his bludgeon, were Russia, Cuba, Belarus and North Korea - if the aim was simply to create even more confusion, it's certainly working.

YCHMTSU

Col

by J.C. | 5th Apr 25, 1:20pm 1743812403

It certainly is a 'Black Swan' event. Everyone should be worried, especially savers. Stagflation is the most likely future we face.

Black Swan? Surely ye jest. Stagflation scenario possible for sure. Position yourself accordingly. Maybe doubling down on the Ponzi is to some extent our saving grace. But don't quote me on that. I'm just wondering that even if debt servicing is cut to near zero, what good does that really do for the nation.

by Zachary Smith | 5th Apr 25, 2:01pm 1743814864

It seems "Black Swan" has entered the hyperbole lexicon.

by Let me be Frank | 5th Apr 25, 2:05pm 1743815157

It would appear fair to observe that blanket tariffs imposed by Trump could hardly be classed as 'unpredictable' given previous events.

by J.C. | 5th Apr 25, 2:11pm 1743815481

Aussie trying to desperately virtue signal?

Chinese firm Landbridge is set to be stripped of its controversial long-term lease of the Port of Darwin regardless of who wins the election, with the two main major parties pledging to take control of the facility if necessary.

https://www.smh.com.au/politics/federal/chinese-firm-landbridge-set-to-…

by kiwikidsnz | 5th Apr 25, 2:49pm 1743817796

Oz election dog whistling: main parties out - "othering" each other. A century ago it was the "Yellow Peril"

“Our day-to-day operations are run by Australians, operating inside the Australian requirements. Under our security arrangements … there is no input from China.

“There is no input from the Chinese owners. In relation to the day-to-day operation, we're dealing with Australian agencies as we operate the port.”

https://www.abc.net.au/news/2025-04-04/albanese-vows-to-return-port-of-…

by J.C. | 5th Apr 25, 2:31pm 1743816716

The Swiss two year note has gone negative. You get paid to borrow.

https://www.tradingview.com/symbols/TVC-CH02Y/

by powerdownkiwi | 5th Apr 25, 2:57pm 1743818224

I've always said there would be a point where the road hit the rubber

by Colin Maxwell | 5th Apr 25, 3:48pm 1743821311

JC and PDK

The planned US treasury sales this week (6-9th April) will be fascinating - and yet another coincidence that the total just happened to come in at $333 billion!!!

* $70 billion of 6-week bills

* $76 billion of 13-week bills

* $68 billion of 26-week bills

* $58 billion of 3-year notes

* $39 billion of 10-year notes

* $22 billion of 30-year bonds

Best of luck U$ selling the longer-duration notes and bonds.

by J.C. | 5th Apr 25, 4:29pm 1743823757

Cheers boss. You're a kindred soul. We're relegated to the dark corners of the neighborhood BBQ.

by Colin Maxwell | 5th Apr 25, 4:51pm 1743825101

BBQs - tell me what are they like?

:-)

by IT GUY | 5th Apr 25, 5:19pm 1743826793

6 hour ribs are good

by powerdownkiwi | 5th Apr 25, 5:05pm 1743825939

I have referenced this before - but it reminds me of Mack and the Boys, hitching down the coast, haggling for 3 days for a woodstove, then giving the fellow an IOU for $1.98 which he probably still has.

Why they wasted 3 days when they had no intention of paying, is the underlying irony.

Given that future energy is required to honour the collective IOUs, I can tell you they cannot all be. Just who bluffs whom and for how long, I can't say. But the longer it goes on, the less chips in play, and presumably the less people holding them. Comes a time in that scenario when there is no longer a 'middle class', no steadying influence. Then society is in trouble. And then is increasingly looking like now.

by J.C. | 5th Apr 25, 5:13pm 1743826382

Those Aussies again.

The Hong Kong-born wife of Liberal MP Jason Wood - Opposition spokesman for migrant services - owns 50% of a migration agency that boasts about bringing tens of thousands of immigrants into Australia.

You couldn't make this sh^t up.

https://www.noticer.news/liberal-mp-jason-wood-wife-migration-agency/

by J.C. | 5th Apr 25, 5:20pm 1743826850

As I pointed out earlier, the top 10% of American households own 88% of the total equities owned by American households. The next 40% of households own 12%. This means the bottom 50% of Americans have ZERO interest in the stock market, are likely in debt.

This reinforces what Bessent has said that the stock market “is a Mag7 problem not a MAGA problem.”

If fixing the system is about fixing what isn’t working for them, then don’t expect a magic lifeline for equities.

Isn't this what left-of-center thinks about wealth inequality? Does it mean Chloe would support Team Trump?

by Colin Maxwell | 5th Apr 25, 6:04pm 1743829496

Yes, I am watching that Carlson/Bessent interview in instalments, that you are referencing, JC.

It’s kind of like required torture that must be endured just to try to stay informed re 'Independence Day' by watching the God-king fanboy interviewing the new SOT, who I would swear is even dumber than Janet.

He basically just strings together word-salad slogans and platitudes.

Based on a little more than a wing and a prayer @13:30 he predicts that although tariff income is a moving target, yeah at around Mach 1, they are looking for $300-600 billion a year coming in as revenue – whoop-de-do Scott, when the deficit could be anywhere from $4 – $6 trillion with a capital T what’s that gunnado?

I love the bit @16:00 where he describes how he so graciously came out from behind his previous safe and lucrative (with accumulated wealth of at least $521billion) desk in financial ‘La La Land’, just to lend a helping hand to Orange Man and to work tirelessly for the benefit of the working class – cough, cough.

Yes, I know Soros and Brown Bros Harriman protege’s often turn out to be pillars of society. Married with children to former New York Prosecutor John Freeman, adds even more intrigue to the mix.

Oh dear, and @22:00 it just got worse – this is utter torture now – Bessent...

They (China, China, China) are in a deflationary recession/depression right now.

They are trying to export their way out of it, and we can’t let them do that.

But when you think that the Chinese manufacturing system is like that old Disney movie with the brooms and the buckets, that’s their business model – it’s not gunna stop.

Admin #47 ‘Diplomacy’ on display – yet another complete idiot at the helm.

And this one is 'in charge' of ~$30 trillion ‘GDP’ and $200 trillion debt – what could go possibly wrong? Tucker’s expression was priceless with this spin

I’m taking that hour-long interview in small doses, so as not to completely wreck my entire weekend.

by kiwikidsnz | 5th Apr 25, 6:36pm 1743831368

I've no interest in Carlson/Bessant however this "... the Chinese manufacturing system is like that old Disney movie with the brooms and the buckets, that’s their business model" is complete xenophobic BS.

All countries will have a range of manufacturing technologies that may be appropriate to a particular industry, this comment ignores a few decades of Western product supply chain & technology transfer (eg from cars to IPhones).

In a previous role over 1995 to 2015 I've personally visited many FMCG manufacturing plants throughout Asia from Turkey to Japan, as well as Europe, America's & ANZ. China was world class.

by Kate | 5th Apr 25, 7:01pm 1743832876

China was world class.

As is their transport system.

by IT GUY | 6th Apr 25, 1:10pm 1743901836

IMHO AI, Drone and Quantum they are leading the world....

by Kate | 5th Apr 25, 6:59pm 1743832786

Here's a link to both transcript and audio.

https://singjupost.com/transcript-of-scott-bessents-interview-on-the-tu…

by Colin Maxwell | 6th Apr 25, 8:31am 1743885093

Thanks so much for that transcript Kate - this interview could go down in history as one of the most idiotic own goals of all time...

Bessent is beyond the pale. He tries to spin his own country’s predatory economic incompetence as being in the driver’s seat for the escalating tariff/trade-war, and then proceeds to insult every single aspect of the Chinese economy.

This guy makes Janet look clever by comparison – he appears utterly clueless that his insults will greatly strengthen China’s resolve…

Etch this statement from Bessent in your mind as you read the transcript …

… “I think it’s very difficult for things to go haywire.”

https://singjupost.com/transcript-of-scott-bessents-interview-on-the-tucker-carlson-show/?singlepage=1

… quoted directly from the transcript…

China’s Response to Tariffs

TUCKER CARLSON: So how is China as a nation going to – I mean, this is such a big challenge. It’s directly in their face. It’s every country on the globe. But it’s really more than any other country about China, I think it’s fair to say. How are they going to respond? What’s the retaliation look like?

SCOTT BESSENT: Well, I don’t know if they can retaliate for a couple of reasons. If you look at the history, and I used to teach economic history, and when you look at the history, we are the debtor nation.

TUCKER CARLSON: Yes.

SCOTT BESSENT: We have the trade deficits. The surplus nation is in the weaker position because the Chinese business model and Tucker, by the way, the Chinese business model and the economy are the most unbalanced, imbalanced in the history of the modern world. We’ve never seen anything like this in terms of their export level relative to their GDP, relative their population.

So I think it is going to be very difficult for them to try to change the model. They are trying. They’re in a deflationary recession slash depression right now. They’re trying to export their way out of it, and we can’t let them do that. But I think that when you think the Chinese manufacturing system is like that old Disney movie with the brooms carrying the buckets. There’s nothing you can do. Like, that’s their business model. It’s not going to stop.

Now, what could happen if you were to say, Scott, what’s the dream scenario? That somehow there could be a deal where the US and China, we want more manufacturing, which would mean smaller part of the economy’s consumption. The Chinese have this imbalanced economy with too much manufacturing. And actually the Chinese consumers really get the short end of the stick.

So Chinese households, they’re called in what’s called the middle income trap – could we do something together to say, okay, you rebalance, you consume more, manufacture less. We are going to consume less and manufacture more, and we’ll be military rivals. There’ll still be an economic rivalry, but we’re going to level the playing field by a lot.

Now, that’s not going to happen tomorrow. That’s not going to happen in a month. But over the next few years, they may have to come around because I think their business model is broken. I think President Trump’s broken their business model with these tariffs.

TUCKER CARLSON: So you’re describing, you know, the famous scenario where if you take a bank loan, the bank is in charge, they can repossess whatever they borrowed…. you borrowed against. But if you take a big enough loan, you’re kind of in charge of the bank.

SCOTT BESSENT: Exactly. And they’ve just got such a big deficit with us that they need our markets. They can’t survive without them.

TUCKER CARLSON: Are you confident that there’s like a clear enough channel of communication between the two governments that the details can be worked out and that nothing will go crazy in the meantime?

SCOTT BESSENT: Well, I think what gives me a lot of confidence is the relationship between President Trump and Chairman Xi. That when you have a direct line of communication at the very top, then I think it’s very difficult for things to go haywire.

https://tuckercarlson.com/tucker-show-scott-bessent

Warm regards

Col

by powerdownkiwi | 6th Apr 25, 2:44pm 1743907486

Actually, has a lot of it right.

The US was 'paying' with increasing debt, to consume Chinese production. China 'loaned' much of the money, and have to have been nervous of the arrangement for some time. It could not continue; the US has indeed to be more productive RELATIVE TO ITS CONSUMPTION.

Trump is attempting the reset that clock - the motive ain't all that silly.