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American PMIs signal modest gains but rising inflation; China eases up on emergency debt support; Thailand takes a sharp trade knock; EU PMIs rise strongly; UST 10yr yield at 0.58%; oil lower and gold jumps again; NZ$1 = 66.4 USc; TWI-5 = 70.1

American PMIs signal modest gains but rising inflation; China eases up on emergency debt support; Thailand takes a sharp trade knock; EU PMIs rise strongly; UST 10yr yield at 0.58%; oil lower and gold jumps again; NZ$1 = 66.4 USc; TWI-5 = 70.1
Lake Matheson, West Coast

Here's our summary of key economic events overnight that affect New Zealand, with news the gold price is making a run for a new record high price today.

But first, early indications of factory and service sector activity in many major economies were released overnight. In the US, firms showed a stabilisation of business activity at the start of the third quarter, with the contraction in service sector output slowing and manufacturers signalling a modest upturn in production. But the rate of decline of new orders gathered steam. And a feature of this report was the rise in inflation in both input and output prices. The combination of the pandemic and trade tensions seems to be working to make American goods less competitive, and quite quickly.

The sales of newly-built single family homes in the US were back to pre-pandemic levels in June and +7% higher than the same month in 2019. It was a bounce that caught up some of the very sharp falls in April and May.

In China, they have started to withdraw the emergency monetary policies introduced to offset the impact of the coronavirus outbreak as their economy continues to recover. Given the stronger-than-expected economic rebound in the second quarter, and with concerns looming of creating excess debt and financial bubbles, the need for easy cheap debt is easing now.

But their rebound is still threatened by wild weather in July. They are bracing for torrential downpours and hurricane-force winds across large parts of the country in the coming week, and 93 major rivers are still above emergency warning levels. There are no new updates on risks to major river dams.

Not every Asian country is recovering well. For example, Thailand has suffered a massive fall in trade in June, with imports down -18% year-on-year, and exports down -23% on the same basis and a worse result than in May. Still, they managed to keep a positive trade balance despite the very sharp reversals.

Singapore's rebound is disappointing, with industrial production in June not showing the gains analysts were expecting.

In the EU, business activity is rising in July, and strongly too, at the best rate since February. Orders in both their factory and service sectors are rising, but inflation isn't. France led the upturn, but Germany joined in too. 

In Australia, the easing of lockdowns prior to the latest reimposition saw a very strong rebound in economic activity. But events may have overshadowed this impressive result.

Wall Street is heading for a small loss on the week. The gains in the first three days have been unwound on Thursday and now Friday, with the daily retreat a modest -0.6% and taking the weekly retreat to -0.2%. This current level is also marginally lower that where we started 2020.

Overnight, European markets were all down sharply, nearly -2%. Yesterday, Shanghai ended the week sharply lower, down -3.9% on the day to take the weekly loss to just -0.5% and wiping out almost all the fat gains posted earlier in the week. Hong Kong ended Friday down -2.2% on the day and a -1.5% weekly drop. Tokyo ended yesterday down -0.6% for a small weekly rise of +0.2%. Locally, the ASX200 was down -1.2% yesterday for an unchanged week. And the NZX50 was down -½% yesterday but it still held a weekly gain of +½%.

The latest compilation of COVID-19 data is here. The global tally is 15,589,000 and that is up +287,000 since this time yesterday. Global deaths reported now exceed 635,000 (+10,000).

A quarter of all reported cases globally are in the US, which is up +69,700 from this time yesterday to 4,205,500. It took the US 98 days to reach the first million cases. 2 million cases came in 44 days. 3 million cases in 26 days, and 4 million cases in just 15 days. US deaths now exceed 147,900 and a death rate of 447/mln (+4/mln) with the expected rise now kicking in to well over +1000/day as their lack of personal responsibility starts to have consequences. The number of active infections in the US is up +29,400 in a day to 2,064,500.

In Australia, there have now been 13,595,cases reported, another +289 since this time yesterday, and still concentrated in Victoria but growing in NSW in Sydney's suburbs. Their death count is up to 139 (+6). Their recovery rate has slipped back further to under 66%. There are now 4527 active cases in Australia (up +129 in a day) and almost all are community transfer.

The UST 10yr yield is little-changed at just under 0.59% and still near its three month low. Their 2-10 curve is unchanged at +44 bps. Their 1-5 curve is soft at +13 bps, and their 3m-10yr curve also unchanged at +49 bps. The Aussie Govt 10yr yield is unchanged at 0.88%. The China Govt 10yr is down -2 bps at 2.90%. The NZ Govt 10 yr yield is down -2 bps at 0.83%.

The gold price is now at a level that if it closed right now it would be at a record closing high of US$1,901/oz. (The record intra-day price is US$1,925/oz). Today's rise is +US$13/oz. In New Zealand dollars, the record high price for gold was reached in mid-May. (It has taken gold nearly ten years to return to these levels, and on an after-inflation basis gold would now need to be US$2,093/oz just to be even with inflation - although in New Zealand currency it has managed to beat inflation, but not because of the intrinsic price of the yellow metal, but because of fx changes.)

Oil prices are soft again today. They have slipped to just on US$41/bbl in the US and the international price is just on US$43/bbl.

And the Kiwi dollar will start today unchanged at 66.4 USc. Against the Australian dollar we are now at 93.5 AUc. Against the euro we lower at 57 euro cents. That means our TWI-5 has dipped to 70.1 but still in the range it has found itself over the past two months.

The bitcoin price has slipped today, down -0.5% since this time yesterday and now at US$9,580. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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72 Comments

“As the massive monetary and massive fiscal stimuli (over $15T globally) conjoin to save the economy from a deflationary depression, they will cause instead a hyperinflationary economic collapse.... if the government were to figure out that such a collapse is coming and decide to change the course of its policies, then a deflationary depression will follow — one “much more severe” than if the powers-that-be hadn’t intervened at all."

Sounds about right. Which do we think 'they' will plump for? Because The World won't survive a hyperinflationary economic collapse, but it can a Deflationary Depression.
https://www.thebeartrapsreport.com/blog/2020/07/21/the-cobra-effect/

Everyone and their mother is bullish on gold. Time to take some profits off the table.

Interesting thing with gold I have found not so easy to sell physical. And when you do the comission is huge...not so with BTC which I can sell in seconds.

Agreed Frazz.

11
up

I can sell any currency in seconds as well with a low buy / sell margin. You don’t buy physical Gold/Silver to trade it. It’s a long term apocalypse strategy. If you want to change your market position you simply hedge what you hold in physical.

Understood - but at some time do you simply trade it? How much for your goat?

Absolutely you could, but not in physical. BTW The Goats not for sale. Are you an MP?

What flavour of MP?
Green would have offered mung beans.
Labour would have wanted them for the greater good.
National maybe.

My gold is held via Pax-G on FTX exchange (or safely in my ethereum wallet). I can move my gold across the world within seconds, and convert in seconds, with transaction fees in the pennies.

Ah paper gold..thats different.

It's super easy to buy, sell and store physical through the Perth Mint.

I can do it instantaneously over the phone.
Don't know what everyone talks about whinging about spreads and cost.

Unless you're a mining company or manufacturer what's the BIG attraction with gold? Yes its (unspectacular) up .5 percent on the day. And up 6.7 percent over the last month.... unfortunately the currency gained value and muted the return to 2.5 percent, a fairly run of the mill dividend in a coronavirus environment will pay twice that. It's a hedge against all out war I get that, but even then people have to live somewhere.

You learn how to efficiently use the combination lock on your new 100kg safe. ( the price and installation of which gets factored into the holding cost of the metal!)

Using a safe is newbie territory.

There'll be a holding cost somewhere:) Besides, a safe comes in handy for all that cash people want to sock away in case the banks collapse!

I regret to report that holding cash is a flawed strategy in my household. My wife has been using ours as a convenient ATM. I don’t bother to count it anymore because I know how much is leaking out each week :(

You dont need a safe. There is little to no chance you are going to have your door kicked in and your stash be taken. The majority of burglars breaking in when you are not at home arent going to go into every nook and cranny looking for a stash that 99% will not have anyway.
Anyone could hide a 100kg's in a house easy with a bit of thinking, I'm sure there would be a few hundred You Tube videos showing you simple hiding spots.
If you are still concerned, pull off some wall lining, pop it in and re-line, plaster and paint. No one is going to find that ever.
Put in the ceiling under some insulation, bury it under the house, behind the kick board under the kitchen, pull put a draw there is space beneath the bottom one that will take 20kg's, in a large pot plant you could throw in 10kg's.

My plastering & painting!? Might as well paint a bullseye on the spot.

You do a small wall and paint the lot from corner to courner, in a matching paint.

I am sure that this owner didnt expect to lose his gold coins but he did
https://www.thesun.co.uk/news/3376384/tuner-piano-gold-coins-treasure/

I went into a bank and asked if my decreased mother had any Bonus Bonds, handed over all the required paper work and they checked it out. No was the answer, no record of BB's for that person or the given address.
I found a scrap of paper later and went in with the number of the account and there was money there under the same name and address as given.
Or a USB with Bitcoin that got deleted, lost or destroyed.
Bank acc details stored on a computer that no one can find the password for.
Stocks that went broke.
I can't think of a way that is fool proof. A house is hard to loose but forget an insurance payment after a death of the owner / old age and a fire would decrease the $ return.

Good on you for finding that bit of paper, if not the money would end up in govt coffers as unclaimed funds I believe.

Being told outright that there is nothing there was verging on criminal in my view.

Or a USB with Bitcoin that got deleted, lost or destroyed.

You cannot keep Bitcoin on a USB. You cannot download Bitcoin. The Bitcoin itself can never be 'lost' or destroyed. This is an urban myth.

The only thing that is potentially 'lost' is the private key to your Bitcoin.

It can be lost in some way then.

It can be lost in some way then

Yes, but that's one of the features of Bitcoin. The individual has full control and responsibility, not some 3rd party (even though that has changed if you want to give control and responsibility to someone else). You're looking at a very secure asset in terms of safety of poessession if you take care of your keys propery and keep your coins in cold storage. You can be your own central bank.

About as much risk as just about anything else then.

Have been considering a hardware wallet (e.g, Trezor) which is supposed to be the most secure way to "store" cryptocurrency - but the massive weak link is the recovery seed! Anyone can access your crypto if they have that. Any advice about how to securely store the recovery seed? Seems we're kind of back to needing a safe.

Have been considering a hardware wallet (e.g, Trezor) which is supposed to be the most secure way to "store" cryptocurrency - but the massive weak link is the recovery seed! Anyone can access your crypto if they have that. Any advice about how to securely store the recovery seed? Seems we're kind of back to needing a safe.

I use Ledger Nano X. You can apply a security passphrase to the recovery seed. So even if someone has your recovery seed (assuming they know what it is), they cannot accesss your digital assets.

https://support.ledger.com/hc/en-us/articles/115005214529

Lol so then I'll have to safely store my passphrase somewhere too, and obviously in a different place to my recovery seed. Perhaps they need to also add a "passphrase recovery key" to protect my passphrase which protects my recovery seed which protects my hardware wallet which protects my private key which protects my BTC...

For your amusement, a story in Wired about someone who lost their recovery seed and forgot their passphrase:
https://www.wired.com/story/i-forgot-my-pin-an-epic-tale-of-losing-dolla...

Hardware keys seem too cumbersome and flawed to me, I might just take a gamble and leave my crypto on Coinbase. They supposedly have good protection, and insurance.

I'm going to be honest and wrote down my recovery seed incorrectly.....on two occasions. For someone who thinks of themself as having a high attention to detail, this scared the crap out of me. Am I being conned? Am I dyslexic? On the first occasion, I needed someone to help me recover my seed phrase (one word was transcribed incorrectly). The second time I solved it myself using a Mnemonic Phrase Recovery Tool. Usually, you should generate your seed and reset your device 1 or times to check if it's correct (before transferring any coins).

For your amusement, a story in Wired about someone who lost their recovery seed and forgot their passphrase:

Great read. Some really fundamental errors there (not ensuring multiple copies of seed recovery phrase and storing in a secure place).

Also, I personally know Dave (Wallet Recovery Services) quoted in the article. He helped me in my first f-up and I paid him 20% of my XRP holdings about 2 years ago. Somehow I had f'd up again, but solved the problem myself.

One of the things in the article that I could identify with was not so much about losing the coins (which is pretty painful), but the shame of being seen as careless with something that some people look at as being a scam anyway. I think that anyone who thinks that they're tech literate can be careless as messing up with tech is so easily solved these days (entering wrong p'words, etc). With crypto, it's important to really focus and understand what's really going on with cold storage.

Eventually, there will be online custodians with impenterable security. The Winklevoss bros will probably be involved in some way.

Which is effectively the same thing.. burn the only written copy of your private key and its the same as burning a stack of notes.

Your private key is never written down. Your seed phrase is. Even if you lose your seed phrase, you can still access your digital assets if you have your password.

There is no customer service number to call. With digital assets like Bitcoin, you're on your own. That's all changing fast with investment companies like Grayscale. But effectively, you don't own the digital assets. In some ways, similar to GLD.

How many passwords are required to just get by. I doubt I would remember a special one, even if it held the keys to riches. and looking at my computer right now I wouldn't trust it.

How many passwords are required to just get by. I doubt I would remember a special one, even if it held the keys to riches. and looking at my computer right now I wouldn't trust it.

You only need 1 password and your device. You never need the seed phrase when buying / selling digital assets.

Ah, yes. The Charlie Chaplin method of gold storage. He buried his in the back garden. It wasn't traditional thieves that got his but the Gold Act of 1933 that confiscated all private gold holdings. But of course, that's not going to happen again.....

Theres no confiscation laws in NZ.

Plus, only a small percentage of private holdings was confiscated in the US in the 30s. Not trusting the government aint a modern phenomenon.

Laws can be changed especially if one Party wins outright and has a 'mandate' as JK put it, to do whatever they want.

You dont need a safe.

No you don't. You can also own PMGOLD where the Perth Mint takes care of your holdings. People will say "but that's just an ETF where a single oz might be sold to 100 other people." No it's not. PMGOLD is fully redeemable for physical where GLD is not. It is audited transparently and it is also guaranteed by the Western Australia govt, not the Federal govt of Australia. Yes there is some risk that the govt will confiscate your gold but I'm not convinced we're at that time yet.

I sold GLD in Jan this year and bought PMGOLD the same day. After 15 years of owning GLD, I did make the move because I do realize that I didn't really own gold. I just had exposure to the price and my distrust of JP Morgan (the custodian) has got to the point where I would prefer not to have anything to do with them. And even with PMGOLD, it's not really in my hot little hands, but I am at least a little more 'secure' now.

Yea the PMGOLD is a decent setup. Was thinking of doing the same myself.

Singapore may be a safer place to buy and store gold than Australia (see article below). BullionStar has low storage fees and has a "Bullion Savings Program" similar to PMGOLD.

The Australian government similarly nationalized gold.

The law, part of the Banking Act in 1959, allowed gold seizures of private citizens if the Governor determined it was “expedient so to do, for the protection of the currency or of the public credit of the Commonwealth.” In other words, they made it legal to seize gold from private citizens and exchange it for paper currency.

The country’s Treasurer stated in a press release that followed, “All gold (other than wrought gold and coins to a limited extent) had to be delivered to the Reserve Bank of Australia within one month of its coming into a person's possession.”

The law also said you weren’t allowed to sell gold, except to the Reserve Bank of Australia (their central bank). Nor could you export any gold (send it outside the country) without the bank’s permission.

While it is unclear whether or not the country moved ahead with active seizures, or just how many citizens complied, the law still destroyed the local private gold market overnight.

Like the US ban, this rule wasn’t short lived either. Reports indicate it stayed on the books until 1976, a full 17 years, before being “suspended.”

https://goldsilver.com/blog/gold-confiscation-history-myths-and-real-sol...

HistoryRepeats, a similar thing happened in the US and I am sure you know about that.

At the end of the day ANY government can seize gold, silver, bitcoin etcetera, or do the alternative: tax it to death.

But hush.. don't tell the goldbugs and certainly don't drop this knowledge in a crypto echo chamber.

Taxes and Death are certain, the rest is just smoke and mirrors.

Bottom-line: .govt ALWAYS gets her money.

At the end of the day ANY government can seize gold, silver, bitcoin etcetera

No they cannot seize Bitcoin. All they can really do is make the blockchain illegal and the transfer of bitcoin illegal.

What's your opinion of the cryptopia exchange saga

The thing is it's not only about you, Kezza. What if you die? How would you transfer the stuff to your offspring. Tell them where to dig it up?

Leave a sealed letter with your lawyer.

Two points I'm getting at.
No need for a safe.
All investments have risk. PM's no greater than the others.

It’s a small part of a portfolio. The weekly CoreLogic estimation on my home swings more in value than my total holding.

Attraction?
Bought in August 2019
Gain thus far 30%
Better than any other asset class but silver
Plus it goes up as Usd drops. And that currency has a big drop to come

Loving the big gains :) not hypocritical at all

Me too, at the same time. In PMGOLD as well, good physical ETF, government guaranteed.

Can any experts forecast now, what is happening and will happen to economy in next 3 months, 6 months, 9 months and a year from now as we are already 6 months into panademic.

Panademic and with Chinesse leader hell bent on world war, may be worse is yet to come. For once coronavirus may be content but not Chinesse leader as will not go down without a war

https://www.theguardian.com/world/2020/jul/23/chinas-actions-are-a-refle...

Nth Korea after blowing up that border meeting house some weeks ago, has been very quiet. That was about the same time as the barbaric border incident China had with India. Perhaps NK has since been immobilised with CV19, who would know. If China wants to create real trouble, prodding their vassal NK into conflict with SK has definite advantages over other potential military fronts.

Never witnessed so much resentment against any one country as China.

Anti China feeling is very much on the rise as evident even on this platform and it is True check any news and article and will not miss out threat comming from Chinesse leader to one and all.

Have many Chinesse friends who are nice but is pity as have been brainwashed by CPP that literally worship them and not able to see beyond for now, may be in future for now they are blinded by money and power that comes with it.

We're not at the 'AXIS OF EVIL' stage yet.

The war that China is worried about is the opposite of
Tiananmen Square Tank man. This time it could be the leader standing alone in front of the tanks.

Not sure about china but the Trump man shurly wod lik to go down wid a fight.

I'm certinally not an expert but here is my view.
US / China attention esulates, US encourages friendly nations to partake in pushing china down.
CV in the US gives hyperbolic creating fear, combined with the typical election slow down in the 'wait and see' that typically happens waiting on the outcome.
Money printing continues unabated.
Job losses, lack of liquidity starts to bite, loan repayments hurt banks and they are uneasy.

At the start of the year the globe had multiple flash points, bubbles, and all the rest on top of a ten year expansion that was due for a slow down as indicated by the 2 to 10 year dipping showing a recession was coming, then CV hit and the issues of the past are a hell of a lot bigger now. The writing is on the wall that we are in for some serious pain in some way, shape or form.

Anecdotal account of flu mortality in the Kaitaia District. I was advised in a phone conversation yesterday that they have 10-12 fatalities per year. The hospital services about 10,000 people, so flu mortality runs at a rate of 1000-1200 per million annually.

Be good to know the stats for New Zealand. Whether the official stats are the same as the view from someone at the coalface is another thing.

About 500 in NZ in an average year. Kaitaia hospital services at least twice as many people as that, and in any event it would not be terribly useful trying to extrapolate from such a tiny sample.

Forward workload for building starting to look grim.
Why aren't the government buying consented sites and building?

https://i.stuff.co.nz/business/122242392/builders-starting-to-see-future...

''But people get spooked because of what they hear in the media. It's not the media's fault, it's just what they hear. So the critical thing is, can we provide information so people make a more informed decision about whether it's the right time for them.''

More critical information would slow the pipeline up further. What I hear in the standard media is a hell of a lot better than what is really going on I hear on.

Well if the Government waits until things actually get grim, then maybe they'll get themselves some bargains.

Matakana market consumer confidence gauge: advancing every weekend
Kiwis returning plus not leaving means pent up demand til election
National toast

Must be far better places to live than Matakana for cashed-returnees. IMO, it's just a place that people who want to be seen want to live (and proximity to Auckland).

Some MPs have been creaming it. Now they're toast

Don't vote, it only encourages them

Vote to legalise and then we wont care what they do mon

St Heliers was heaving this morning, with its market

Yes, restaurants full there last night. Traffic jams on Kepa Road. Mitre 10 and Bunnings parking lots full. I wonder what the bank card data is telling them.

Days to the General Election: 26
See Party Policies here. Party Lists here.