No US election result; more US jobless claims; China touts its import demand - and economic gains; Singapore retail shrinks; Australia's trade all about China; UST 10y at 0.79%; oil down and gold jumps; NZ$1 = 67.6 USc; TWI-5 = 70.5

No US election result; more US jobless claims; China touts its import demand - and economic gains; Singapore retail shrinks; Australia's trade all about China; UST 10y at 0.79%; oil down and gold jumps; NZ$1 = 67.6 USc; TWI-5 = 70.5

Here's our summary of key economic events overnight that affect New Zealand, with news markets are speculating on a change of administration in the US.

The US election result is still uncertain this morning, and the US dollar is falling at the same time speculative asset prices are sharply higher. Gold and bitcoin have made substantial gains overnight. Equity prices are racing higher too. It may all be about an upcoming gridlock and stalemate in Congress.

Firstly, the US Federal Reserve board is meeting and their decisions will be announced at 8am NZ time. We will update this item then but no major changes are expected today. Update: Their Statement is here.

The number of new jobless claims for last week were +751,000 and higher than expected. The prior week tally was also revised higher. This surge of new claimants is matching the numbers who are dropping off the rolls as their benefits expire.

Tomorrow we get the October US non-farm payrolls report and these are expected to have grown a relatively small +600,000 as the bounceback effect tails off. That would still leave a net loss since February of more than -10 mln jobs during the pandemic.

Job cut totals in October were lower than in September but still historically high.

US vehicle sales came in at 16.2 mln annual rate in October and holding its recent levels. And General Motors is making a substantial financial comeback.

China is touting its import demand over the next ten years in a claim that it will replace the US as the center of global trade. It is using that as a magnet for diplomatic power. And the size of their economy is drawing huge inbound investment.

In fact, a new American analysis shows that within five year, the majority of China's households will be "middle class" in a very rapid transition out of developing country status. Not having a pandemic handicap is giving it clearer current advantages.

Singapore's retail sales fell a sharp -10.8% in September from a year ago, and the month-on-moth decline was sharp as well.

Australia has posted another large +AU$5.6 bln trade surplus in September for both goods and services, boosted by a +4% rise in exports and a -6% fall in imports. Their surplus with China however was +AU$4.8 bln for the month and AU$63 bln for the year to September. This annual surplus reached its peak of AU$73 bln in March and since then has declined as China started using trade as a defensive weapon to try and punish Australia for its security and human rights criticisms. Aussie wheat exporters are nervously watching the escalating trade dispute with China amid fears they could be Beijing's next target.

Despite all the election uncertainty, the S&P500 is rising strongly, up another +2% so far today and unfazed by the strong likelihood of a change in the Presidency. And unworried by the raging virus. Overnight European markets rose by a similar amount (except London). Yesterday Shanghai rose +1.3%, Hong Kong rose a stellar +3.3%, and Tokyo was up by +1.7%. The ASX200 closed up +1.3% while the NZX50 Capital Index lagged again with only a +0.4% rise.

The latest global compilation of COVID-19 data is here. The global tally is 48,280,000 and a very sharp +624,000 rise overnight. It is still grim in Russia and Western Europe with serious stress on their hospital systems (and especially in Belgium and now the UK and France). Global deaths reported now exceed 1,228,000 and up +10,000 in just one day in an accelerating shift.

The largest number of reported cases globally are still in the US, which rose a very worrying +113,000 since yesterday to 9,817,000 as the momentum in their surge rises and the US returns as the epicenter of the virus. The pandemic is now particularly sever in Midwest states. The number of active cases is surging at 3,282,000 so many more new cases more than recoveries. Their death total now exceeds 240,000 and up by +1000 in one day.

In Australia, they are not getting any resurgence. There have now been 27,633 COVID-19 cases reported, and that is just +11 more cases than we reported yesterday. Reported deaths are unchanged at 907.

The UST 10yr yield is unchanged today at 0.79% and it made its big risk move yesterday (down) and has held since then. Their 2-10 rate curve is unchanged at +63 bps after yesterday's unusually big move, their 1-5 curve is marginally steeper today at under +22 bps, while with their 3m-10 year curve is is also marginally steeper at +71 bps. The Australian Govt 10 year yield will start today unchanged at 0.77%. The China Govt 10 year yield is also little-changed at 3.20%. But the New Zealand Govt 10 year yield is down -6 bps at 0.52% and late to the readjustment.

The price of gold has firmed sharply today and up by a significant +2.7% or +US$52 to US$1946/oz. It is an unusual move for the yellow metal. Silver is up proportionately more

Oil prices have slipped about -US$0.50/bbl and are now at just over US$38.50/bbl in the US, while the international price is now just over US$40.50/bbl.

And the Kiwi dollar is firmer this morning from this time yesterday at 67.6 USc and that is a +1½c rise in a week and all down to a declining greenback. Against the Australian dollar we are a little softer at 93 AUc. Against the euro we little-changed at 57.2 euro cents. That means our TWI-5 has risen to 70.5 and nearing its 2020 high.

The bitcoin price starts today at US$15,215 and a stunning +US$1200 higher than it was at this time yesterday. It will probably have changed further when you read this. That is an overnight gain of nearly +9%. Since this time last week it is up +12%. (It is behaving a bit like Auckland house prices.) It was last at this level almost three years ago. The record high in US$ was US$19,343 on December 16, 2017. 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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55 Comments

BTC well on track for 20k before Christmas

Ezy
What is the rationale for asserting BTC will hit $20k by Christmas?

Personally I disagree. If we hit say, 17-18k in a month, that is too fast and will likely trigger a blow off top, back to say 12 or 13k.

But I assume he is thinking of fundamentals (a Christmas 2.2 trillion stimulus could do it) and comparing to 2017, when the price went from around $5k in November to $20k 5 weeks later.

I was bang on last time you asked me about BTC when we touched 12k and I said a correction was likely - luckily I learnt to take profits.

I can't see any valid reason for extrapolation (e.g 'on track').

You can extrapolate (sort of) because of the halvenings every 4 years. That would suggest a bull-run to 80k + next year. But I prefer the view that the halvenings cycles are widening and getting shallower. So more conservatively we end up around 40-50k in 2 years. But that doesn't prevent a fomo / tesla style run for a month or two and lots of volatility.

So more conservatively we end up around 40-50k in 2 years.

Conservative indeed. Winklevoss brothers would not be surprised if it's USD500K or even USD1 mio within 2 years. For them, it's not about 'if' but 'when,'

People need to start rethinking about how they save money. BTC could be vastly more valuable than an Auckland house. One is extremely scarce and has global demand. The other is a fiat-driven bubble of the worst excess. Take your pick.

> One is extremely scarce and has global demand. The other is a fiat-driven bubble of the worst excess.

Are you sure you know which is which? I would suggest they're not that different.

Are you sure you know which is which? I would suggest they're not that different.

Yes, I do. One of the main reasons insitutions have steered clear of BTC is that they don't understand how to manipulate it easily into something they can make money from by leveraging fiat money.

It sounds like someone is caught up in the mania.

It sounds like someone is caught up in the mania.

Are you referring to the WInklevoss bros? You may be correct. But they have put their reputations on the line so you have to respect them for that. Anyway, they're not the only people who suggest these prices. Tim Draper is another.

It's definitely moot, but supply right now is looking extremely limited.With more and more large orgs buying OTC the exchanges have less and less to sell https://imgur.com/gallery/CtE5zOC

I heard the Micro Strategy buy itself boosted the price floor by $700. And that is 1 company

Not to mention that Michael Saylor himself (as an individual, not the company) owns 17,700 BTC.
We are only just starting and 100k is an actual reasonable target this cycle. Research Plan B's work and the stock to flow model.
https://bitcoindynamic.com/news/michael-saylor-microstrategy-owns-17732-...

I heard the Micro Strategy buy itself boosted the price floor by $700. And that is 1 company

What is the rationale for asserting BTC will hit $20k by Christmas?

Log charts between the last 4 halvings https://twitter.com/RaoulGMI/status/1324310557474885632

They follow the golden mean, and are almost a perfect fractal which is a design pattern prevalent in all of nature. With the US election and QE BTC is probably a little bit ahead of where it should be, but it's inevitable.

It amazing that most people I speak to vaguely know of bitcoin, but not one knows of the halvings and the price effects. It would only take a person 1-2 hours max to get their head around it - would be time well spent.

Agree. Or just 16 minutes on Youtube listening to Dr Saifedean Ammous on The Bitcoin Standard https://www.youtube.com/watch?v=nkNhSPxFsnY

It would only take a person 1-2 hours max to get their head around it -

I don't think so. To understand BTC fully has taken me more than 7-8 years. If you're just talking about how it is created, maybe you're correct. Most people don't care anyway. They think it's pretty mucb hocus pocus.

All that halving and price effects are part of the ponzi scheme you are trying to protect yourself against. Lol.

All that halving and price effects are part of the ponzi scheme you are trying to protect yourself against. Lol.

Not correct. The blockchain can account for the existence of all BTC. If you're suggesting that BTC is a Ponzi because of new market entrants, you're using 'ponzi scheme' incorrectly.

If it is a ponzi scheme, why hasn't Satoshi cashed out? His 1.1m BTC are still there, sitting in 10 year old wallets

Shows how disconnected the markets still are from reality (including unemployment shooting up). Bitcoin and gold surge should be expected considering the potential for election and subsequent social disorder shenanigans by either side.

There's a definite end of days feeling to the euphoria that the world didn't end on November 3. And what better way to celebrate the victory of what passes for normalcy with a manic stock market rally?
It's as if everyone knows there is no returning to the good old days of a well-oiled machine chewing through any and all obstacles, and this realization is so frightening that the need to pretend everything is fine, just fine, overwhelms the last remaining ties to reality.

(CH Smith)

BTC hitting all time highs in dozens of countries now, in some it is 50% or more above.

In NZ our all time high is $27,655. just $4,400 away, or $18,560 USD (thanks to FX movements).

the underlying issue here is fiat money/debt is becoming free ... and ultimately worthless

So no point valuing your Bitcoin in fiat

Bingo!

This dude gets it!
The classic Matrix meme: https://i.redd.it/3525lt9kvir01.jpg
Bitcoin was making new (or close to) all time highs against 14% of the worlds currencies back at the start of October, affecting 9.38% of the worlds population. Fantastic read:
https://medium.com/original-crypto-guy/as-bitcoins-price-hits-a-new-all-...

Thanks, that Medium article is an eye opening read.

thanks Dude

the point being if/when the reserve fiat implodes ... is Bitcoin then worth anything at all?

Nothing in dollars no, but greater purchasing power than zero dollars.

As long as the sellers have a need for a Bitcoin I suppose?

"That is an overnight gain of nearly +9%. Since this time last week it is up +12%. (It is behaving a bit like Auckland house prices.) " - Well, sort of. The difference is BTC did in one night, what Auckland did in one year (plus all the rates and maintenance payments)

And it will probably go down again in one night more than Auckland house prices ever have. In fact bitcoin is still down on where it was 2 or so years ago.

Not even close. 2 years ago BTC was at 5.8k in the middle of the bear market. In fact, 3 years ago it was 7.4k. There was only a very small window of 1-2 weeks were bitcoin was higher than this. Auckland house prices had their worst year in recent decades of maybe a 10% fall - but, most home owners are hugely leveraged so some were even wiped out entirely from that move. That is not to say BTC won't fall (I'm sure it will), but on average, over time, the stats favor the bulls.

Yes it will. At 100K it will drop by up to 70K. At 1M up to 700K. At 100M 70M. Until the supply all but runs out around 2040. Then it's anyone's guess.

Slight correction -2140, we have 120 years to go

Correct, but around 2040 the newly mined supply will be completely minimal compared to levels now. The last 80 years will be mining the remaining hundred odd coins as the difficulty skyrockets with government backed rigs in play like Iran. Might be the point where we flip to measuring BTC in Satoshis though ;)

Might be the point where we flip to measuring BTC in Satoshis though

We already do. Most people will never own a single Bitcoin.

In the past 11 years there is less than a week where the price has been higher than this (due to the blow off top of the 2017 bubble), We have already seen the second highest weekly close in history. Simply saying it has been higher before, so why bother, is certainly one way of looking at it.

When it passes 20k USD next as it inevitably will, (I think 2021 is most likely) then you can start saying it’s a bubble. Then when it peaks at 50-100k and drops 50+% over the following few years you can be vindicated. Meanwhile there will be many investors who noticed they brought in 2020 at 15k USD and it’s now worth 30k USD even after that. Rinse and repeat.

Bitcoin approx yearly lows.
2012 $4
2013 $65
2014 $200
2015 $185
2016 $365
2017 $780
2018 $3200
2019 $3400
2020 $4900

We got more rain another 6 mmm last night and more forecast over the weekend, my regenerative mix is sprouting. Feed is up to my knees, and it's a challenge to figure out how to keep the quality up, humid weather can bring us problems too.

Problem is our beef and lamb markets are not looking flash. I see USA beef exports to China are up 3x over 2018 I hope the Chinese still have room for a few bulls.

This out of the States

'Last time beef 50% Trim was this cheap in November is 2007. Price right now is less than half same time last year. Most of the 20# extra weight in these cattle must be fat !!
Ch and Prime Grading up nearly 3% over a year ago. The 50% trim being this low is a drag on the cutout.'

Where did you source your seed mix from?

I get it from Craig Smith in Timaru, GSB seeds . He is $160 a hectare when up here Im quoted $250 he is really knowledgeable and his wife is also interesting, she works in the soil microbes side of things.
My soils have a lot in common with some of the lighter soils around rivers in Canterbury.

I'm confused by the US election. Why haven't they counted Nevada yet?

I would suggest the reasons are fairly obvious. Trump is having a huge deluded tantrum and manipulating his supporters into believing that there is fraud. Even though, with everything videoed that's next to impossible. And the counters are tired and panicked because of the amount of civil unrest and blame, that Trump is trying to provoke.

Senior Republicans are now coming out and condemning Trump's behaviour, as his most irresponsible and dangerous behaviour yet.

But, it won't matter either way. Each of his baseless claims have so far been proven false, unsurprisingly. And actually, it probably will be best that all the close states are recounted anyway, just to make good and sure that the wind is taken out of sails. Eventually he will have to take his lumps. He is one of those rare incumbent President who has actually lost, he's nearly 4 million votes behind Biden. So he's not just lost a little bit. And worst of all, he's lost to Biden, who isn't impressive at all!

America looks like an utter shambles to the world. Trump is dragging all dignity and what is left of American global prestige through the gutter. Russia and China are delighted. It's so tragic.

This certainly doesn't help. But the problem is also our sense of impatience. Many states which have already been called also aren't fully counted yet -- we just don't care about those.

When you are a Fundamentalist Christian Trump supporter, and you can't take your lumps, so you just lose your s&*t and start speaking in tongues.;

https://twitter.com/RightWingWatch/status/1324175651515949056

What the actual F? That's his spiritual advisor? Seriously?

The world just posted its highest ever daily Covid death toll.

50% of conversations on here today are about Bitcoin.

I find that quite fascinating.

Its only just getting started friend. Wait until it breaks past 20k and then the real FOMO round 2 will start. But this time there are not just retail investors but Institutional investors and publicly listed companies involved, oh and nation states :)

institutional investors love a roulette wheel
ie if theres no where else to put someone elses money

More RBNZ stimulus coming soon, our inflation is still below 1%, need to bring up to 3% for nice warm feel. So they just have to bring down the OCR into -15% to -25% for start. Meanwhile clearly the 100billions money printing made a quick impact, the LVR is business hindrance, so glad to see the back of it & hope it shall never return, if the OCR choose to be -15%? means most likely the bright line test must go to balance it. FLP should kick with minimum 100billions too, the more QE assurances, the more govt can distribute to flexi wage subsidy, even? to potential nationwide wage increases, which is long overdue - NZ must avoid unemployment at any cost (this is mandated to RBNZ) - the longer the subsidy, the bigger RBNZ money printing, the better for NZ economy in short, medium & long term.. that is for sure.