What happened Monday

A review of things you need to know before you go home on Monday; no retail rate changes, sagging business confidence, rising Chinese inflation, swaps stable, NZD soft, & more

10th Aug 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
None here either.

'TEETERING'
Latest preliminary results from the ANZ Business Outlook confidence survey suggest the post-lockdown economic rebound may have run its course. Business confidence deteriorated 10 points to -42%, and own activity slipped 8 points to -17%. However, it wasn’t all one-way traffic in the indicators.

CHINESE INFLATION BENEFITS US
Inflation in China is rising. In July it was up to 2.7% pa, a rise from 2.5% in June and more than the 2.6% expected. Food prices are rising fast (+11.9% pa) driven by pork prices (up more than +100% pa). Beef prices however seem to have stopped rising in recent months but lamb prices are still going up, up +11% year-on-year and up +1.1% in July from June. The cost of medical care, and education, both are rising at only modest rates. Rent is declining. Petrol went up sharply in July, but is down significantly year-on-year (-12.6%).

LEVELING OFF
The number of people missing payments on consumer debt fell again in the week to July 31, according to the latest RBNZ update, and this level is now the lowest since data was first collected in late March. But the number of homeowners missing mortgage payments is holding, and the number of businesses missing loan payments are both virtually unchanged in this update.

70/30 SPEND/SAVE IMPULSE
One in three Australians (32%) received a Federal stimulus payment in May. These payments were intended to stimulate spending, but many (29%) used them to add to their saving. However, using them to pay household bills was the next most common use (28%) and 12% of this money was used to buy food.

FULL-ON CRACKDOWN
Hong Kong police have been sweeping up the owners of an independent news organisation, Next Digital, accusing them of endangering national security and working for foreign powers. They were handcuffed, removed and denied access to lawyers. Independent reporting out of Hong Kong is now suspect.

EQUITY UPDATES
The NZX50 Capital Index started its Monday session up +0.5%, but those gains have withered since. This is the week that major earnings results will be released, so it could be a bumpy ride. In Australia, the ASX200 has opened up +1.4% but hasn't reached a withering stage yet. The Shanghai market has opened up +0.4%, Hong Kong has opened down -0.4% and Tokyo has opened down -0.4%. According to the futures index (SPX), Wall Street is looking like it will open tomorrow flat.

SWAP RATES UPDATE
Swap rates were probably little-changed again today. We don't have final wholesale swap rates movement details yet, but we will update this later in the day if they show a significant different movement. The 90-day bank bill rate is unchanged at 0.30%. The Aussie Govt 10yr is up +2 bps at 0.87%. The China Govt 10yr is unchanged at 3.00%. And the NZ Govt 10yr yield has held on to all of last week's gain and is still at 0.77%. The UST 10yr is also unchanged at 0.57% today.

NZ DOLLAR SOFT
The Kiwi dollar has stayed at the lower level it reached on Saturday, now still at 66.1 USc. And against the Aussie we are softer as well at 92.1 AUc. Against the euro we are at 56 euro cents. And that means the TWI-5 is softer at 69.2.

BITCOIN RISES STRONGLY
The price of bitcoin is firmer today, now at US$12,022 and a +5.2% rise from this morning. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

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

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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53 Comments

by lonewolfnz | 10th Aug 20, 4:26pm 1597033609

I think 12k is my lucky number :) (for the record I took profits just below, at 11955, and just above at 12,045).

by printer8 | 10th Aug 20, 4:35pm 1597034154

Hi lonewolf
Saw bitcoin hit that 12k and immediately thought of you. You will be smiling.
Where to from here?

by lonewolfnz | 10th Aug 20, 4:40pm 1597034430

Hard to say. My prediction here in Jan was for EOY $10k, I made another one somewhere for $12k. Personally I don't see an all time high this year, and if we approach it we'll blow off top. I have a large amount in gold, silver and ethereum (the latter which has been the best performer). My best buy for BTC this year was $4.7k so I'm a happy hodler. But like I said, I'm a seller at the moment. We are post halvening though - if we get two weekly closes above 12.5k, then clear $14k, could be another parabolic run.

by J.C. | 10th Aug 20, 5:11pm 1597036301

I have a large amount in gold, silver and ethereum (the latter which has been the best performer). My best buy for BTC this year was $4.7k so I'm a happy hodler. But like I said, I'm a seller at the moment.

You sound like a brother from another mother. I own all those assets too and my lowest price purchase for BTC was USD4,800.

Never sold any of my crypto holdings except for the last 'boom' 10 days ago or so when I sold some XRP and distributed to ETH and BTC. Working out entry / exit strategies if we go parabolic.

by RCD | 10th Aug 20, 5:16pm 1597036563

will you all feel just as good when you file your tax returns and pay 33% on the profits

by lonewolfnz | 10th Aug 20, 5:19pm 1597036781

Only fair. Less good is having to pay my accountant $4,500 to spend weeks working through my trades. I have figured out to split my trading stash and hodl stash between different entities, so no tax on the hodl stack until I sell.

by J.C. | 10th Aug 20, 5:27pm 1597037267

will you all feel just as good when you file your tax returns and pay 33% on the profits

10% as a non-resident for tax purposes but nothing sold on my behalf. Incidentally, as a 'global citizen', we slip through various cracks.

by Shamino | 10th Aug 20, 5:21pm 1597036896

I have those too - plus a few others like Pax Gold. My best buy this year was Nexus Mutual. My god. It was $1.50 in march, today it was $31 for a brief moment - and its a security token so pays dividends!

by gingerninja | 11th Aug 20, 6:50am 1597085442

I'm HODLing ,,,

by J.C. | 10th Aug 20, 5:28pm 1597037328

No LINK?

by gingerninja | 10th Aug 20, 6:50pm 1597042247

Yeah but nothing substantial.

by Masher | 10th Aug 20, 5:52pm 1597038725

DGB

by Shamino | 10th Aug 20, 6:02pm 1597039364

Dinosaur coins hehe. If you wanted to speculate on crypto right now, its all about the defi coins. YFI did x100 in one week, and is now worth $5000 with six forks already!

by gingerninja | 10th Aug 20, 6:57pm 1597042634

Shamino, they so are, practically prehistoric! I'm not ashamed ;-)

by Ezy | 10th Aug 20, 5:35pm 1597037728

Looking at the patterns between halvings my prediction for BTC is rising to 80-100k within 6-9 months then dropping to 40-50k. https://masterthecrypto.com/wp-content/uploads/2019/10/bitcoin-halving-…

by J.C. | 10th Aug 20, 5:39pm 1597037973

I don't like this stuff. Too simplistic. It's like Ashley Church's 7-10 year prophecy.

by Ezy | 10th Aug 20, 5:49pm 1597038573

The code is complex so the rules are simple. Bitcoin is an immutable force. It should follow very consistent patterns.

by solardb | 10th Aug 20, 4:45pm 1597034725

good gambling

by blobbles | 10th Aug 20, 4:58pm 1597035490

Yes, much like on housing/stock market/bank accounts... hang on, they are "investing" right? Nothing speculative about them at all right?

by RCD | 10th Aug 20, 5:17pm 1597036665

Its not gambling, as far as the NZ taxation service is concerned, it is holding a cash equivalent and as such is no different to holding $US and any change in the return is seen as a currency gain and taxable, of course any loss is your own business and not claimable.

by Shamino | 10th Aug 20, 5:22pm 1597036950

Actually they treat it like gold - so you are taxed on resale. But make a loss and you can claim it against your PAYE, get the refund in cash, and invest in it again! (I may or may not have done that...)

by Hook | 10th Aug 20, 5:28pm 1597037313

You would need to declare yourself as an active Trader for that to happen. Besides that's a pretty backwards way of doing things, you'd still get taxed on any gains you made on your refund

by Gold Kiwi | 10th Aug 20, 8:59pm 1597049976

Nope. The IRD's guidelines on gold and cryptocurrency are crystal clear. They don't differentiate between traders and investors. With very few exceptions, gold and cryptocurrencies are assumed to have been acquired for the dominant purpose of disposal. I've declared profits and losses over the years and I'm not an active trader.

by Hook | 10th Aug 20, 5:24pm 1597037044

Whilst you're technically correct RCD the IRD must prove there was an "intention"to profit and only if there is a declaration of gain in income made. Both things pretty hard to track down and enforce.

by Shamino | 10th Aug 20, 5:28pm 1597037298

Not quite, they just need to say that you acquired with the intention of resale. Any proof to the contrary is on the taxpayer to prove (which MIGHT be possible if say, your crypto produces a passive return)

by Hook | 10th Aug 20, 5:37pm 1597037842

Tell you what.. the audit fees wouldn't be worth the headache and they'd certainly smoke any gains you made. The IRD would just go on trading frequency. Going on the last 12 months of BTC prices, buying and holding would have netted you SFA - 10% Aug-Aug

by Shamino | 10th Aug 20, 5:41pm 1597038080

Not so easy for me. I've probably traded between 100 cryptos. But you could just look at total value at beginning and end of the tax year, thats the sane way to do it. Remember our tax year is 1 April. So IRD would be looking at a BTC price of $4k, and comparing it to 1 April this year ($6.5k I think)

by Hook | 10th Aug 20, 5:50pm 1597038647

Well If you do that then you made good gains - 4.8K/coin very nice. I wouldn't declare it or sell it though - you'll just lose about 25% of your holding.
1 April '19 - 6K, 1 April '20 - 10.8K x 100 (480K) = about 120K tax liability

by Shamino | 10th Aug 20, 5:50pm 1597038600

Yep. With all my other cryptos, my portfolio quadrupled over that time, and believe it or not, has more than doubled again this side of the tax year.

by J.C. | 10th Aug 20, 5:52pm 1597038751

Going on the last 12 months of BTC prices, buying and holding would have netted you SFA - 10% Aug-Aug

That's not how to invest in cryptocurrency. For example, with BTC,

past 1 month=+30%; past 3 months=+37%; YTD=+67%; past 12 months=+6.4%; past 5 years=4,585%.

by Hook | 10th Aug 20, 5:56pm 1597038993

Well all I can say is well done. You've obviously done the right thing but remember we did start talking about taxation liabilities. Obviously if you're not selling there is no actual realised gain therefore no liability. I do admire risk takers who get it right.

by J.C. | 10th Aug 20, 6:02pm 1597039338

Yes. BTC fell 50% in March. Many people cannot handle this kind of volatility. Others see it as an opportunity on a path to price discovery.

by Ezy | 10th Aug 20, 7:32pm 1597044737

There's a saying I've heard - if you can't handle price fluctuations of 1k at 10k, you won't be able to handle fluctuations of 10k at 100k.

But if you hodl for 20 years the pattern is 10s of millions per BTC. Bitcoin is more scarce than gold, and if you look at the gold market cap, that's probably not unreasonable.

The only test Bitcoin has left, is whether it can beat governments. But good indictors from China, Lebanon, Argentina and Venezuela that it definitely can.

by thebrian | 10th Aug 20, 8:34pm 1597048460

"Bitcoin is more scarce than gold"
Bitcoin2 could be made tomorrow...There is no gold2

by J.C. | 10th Aug 20, 9:18pm 1597051096

Bitcoin2 could be made tomorrow

You mean like Bitcoin Cash? Thanks but no thanks.

by thebrian | 10th Aug 20, 9:57pm 1597053464

"You mean like Bitcoin Cash?" No i didnt.

by Ezy | 11th Aug 20, 7:19am 1597087156

That's called a hard fork and it's happened 3 times already, one of which was called Bitcoin cash that JC is referring to https://en.wikipedia.org/wiki/List_of_bitcoin_forks

And no surprises people don't understand Bitcoin. No one understood the internet in the late 90s either.

by Hook | 10th Aug 20, 4:21pm 1597033311

A concerning development in HK if it can be verified. China has crossed a line there.

by Glitzy | 10th Aug 20, 4:27pm 1597033661

When this new National Security Law came into effect I pointed out HK would become a police state. It's happened.

by Hook | 10th Aug 20, 4:37pm 1597034224

I'm not sure if it's there yet but incarcerating independent media is certainly a big step towards it. Having said that, the increasingly violent and destructive "protests" certainly opened the door to this type of action. I personally think the protest movement got ahead of itself.. should have pulled back a notch or two when the extradition law was rescinded.

by Glitzy | 10th Aug 20, 4:56pm 1597035374

I don't think the issue was the protests per se but the Xi policy of trying to annihilate all opposition wherever it may manifest itself.

Calamity Lam unlike her predecessors who trod a line between appeasing Beijing and trying to keep the local population content has completely ignored the wishes of the majority of the HK electorate. This has caused the protests and the absolute horror show of the actions and inaction of the HK Police has only made matters worse.

If we look at the South China Sea, Xinjiang, HK, political positioning re Taiwan, general Wolf Warrior rhetoric, it is all overly aggressive and unnecessary action.

Xi is set to become the new Mao not because he has taken China to the next level but because he is butchering his own people and creating chaos in ways the leaders between Mao and Xi have avoided.

by Hook | 10th Aug 20, 5:18pm 1597036717

Lam showed herself to be a puppet.. no doubt about that. But look at the BLM protests in the US. Increasingly violent and destructive and got a response in a similar vein.. National Guard. If those types of protests had happened here we'd see the same response - curfew and arrests (remember the Auckland riot). HK cannot change what happens in mainland China nor should they attempt to IMO. All HK did was provide an excuse and opportunity for Xi to implement his crackdown. As I say, they should have taken the wins they got in the State Councils and picked their time better. Because they overreached they are now much the poorer for it.

by xingmowang | 10th Aug 20, 4:39pm 1597034348

Do not worry Hook.

HK without spies from CIA and MI6 will be a much prosper place.

by Hook | 10th Aug 20, 5:15pm 1597036519

Haha Xingmo, The CIA and co maybe many things but dumb and easily identifiable isn't part of it. If Xi thinks he can use that as an excuse I'm afraid he needs new advisors

by powerdownkiwi | 10th Aug 20, 8:49pm 1597049347

Just ask Allende

by frazz | 10th Aug 20, 4:22pm 1597033329

I think Bitcoin will hit new highs in the coming months. If I was fleeing HK I know how I would transfer my $$ out of the country quickly and easily.

by lonewolfnz | 10th Aug 20, 4:25pm 1597033539

Feeling like 2017 again with the alt coins, except this time is defi rather than ICOs. Many are up 1000% this year, just insane. I guess their profits will at some point come back to BTC.

by Glitzy | 10th Aug 20, 4:29pm 1597033756

HK has no capital controls. If you have a foreign bank ac you can transfer what you want when you want without buying crypto.

by frazz | 10th Aug 20, 4:49pm 1597034988

Good news - would still use BTC to aviod the banks cut if sending large sums however (which CCP must be monitoring?)

by Boatman | 10th Aug 20, 5:35pm 1597037732

If Business Confidence was a human , I would arrive to the conclusion he (or she ) was a P-Addict .

From a high one day to a low the next ...................looking for the next fix of QE or a wage subsidy maybe ?

The reality is the Business has every reason to not be confident , and should be very wary right now , erring on the side of caution , at least until the pandemic has gone away or a vaccine found

by Boatman | 10th Aug 20, 5:37pm 1597037848

Wow , Pork in China up 100% , but to be fair Chicken and Pork were really very cheap in China

by Hook | 10th Aug 20, 6:01pm 1597039315

Pork was, until ASF got in. Hopefully our Bio(non)Security people are looking at NZs import standards for pork, but I'm not actually expecting much.

by Glitzy | 10th Aug 20, 6:09pm 1597039746

NZH ... "Addressing the WHO, President Xi Jinping of China supports the idea of a comprehensive review of the global response to COVID-19. Video / WHO"

Presumably only if the WHO conducts the investigation.