Here's our summary of key economic events over the weekend that affect New Zealand, with news the pandemic is getting a dangerous new surge after incompetent management.
First in the US, investors wonder whether pandemic infections and worsening economic data will actually result in a Federal coronavirus aid package. A breakthrough last night on the Federal Reserve’s emergency lending powers clears a path for Congress to approve a roughly US$900 bln pandemic aid package, leaving lawmakers hours to finalise the agreement and vote on it. The latest snag is over a last-minute Republican bid to curb the Fed’s ability to restart pandemic relief programs and fight future financial crises, and is part of their effort to hobble the incoming Administration. It appears it has been partly successful, and may be more so as the vote result remains uncertain.
The updated Federal Reserve stress tests on banks has resulted in banks being allowed to restart share buybacks (a tactic that pumps up the share price), but with limits, and there will still be restricted dividend payouts. These stress tests showed that large banks had strong capital levels under two separate hypothetical recession scenarios.
The pandemic spread remains out of control in a number of countries, including the US where 'Operation Warp Speed" seems to be bogged down by Trump Administration incompetence. Distribution is chaotic and contested by the wealthy who want to be first in line, they have fewer doses than expected, they are paying more for them than other countries, and crony Administration friends are getting wealthy out of the chaos. That out-of-control situation in the UK is even more dangerous because a new mutation is spreading faster, caused by politicians there making incompetent decisions for the holiday season. They are about to get an even bigger surge, just like the Americans did following Thanksgiving.
Taking advantage are the Russians who it is now clear have hacked vast areas of the US Federal Government. There only seems to be one person in denial, their President, who always turns a blind eye to Russian cyber warfare. Even Trump poodles can't deny the Russian involvement.
Microsoft said it found malicious software in its systems related to the massive Russian hacking campaign, adding a top technology target to a growing list of attacked agencies.
In Europe, there is still no Brexit agreement, so a hard separation seems the most likely result. That will just compound the British woes as their pandemic crisis bites. Borders with the England are being closed, even internal ones, as the country is being isolated for multiple failures.
In Canada some good news; their October retail sales numbers came in better than expected, up +7.5% from the same month a year ago. And that is much better than the September +5.6% rise.
In China, all eyes are on their Central Economic Work Conference, and it is clear that Beijing is going full-steam ahead with stimulus (or what they call "necessary support") to try and embed their recovery. They are worried about growing imbalances. However, they seem to be targeting an +8% growth goal for 2021.
And staying in China, demand for coal is high and rising in their winter due to demand for extra electricity, and as their economy booms especially in steel making and for building materials. They are now ignoring their recently-touted GHG climate goals. The price of iron ore and coal rose even higher over the past week, enriching the miners. But pushback on those high prices is starting to get serious now.
In Australia, the NSW community transfer outbreak of COVID has authorities on edge and other States have closed their internal borders. There is a desperate scramble on to trace infected people who are on the move for the holidays. It is an event that took billions off their share market on Friday. It is a sudden development that has thrown many businesses into chaos
On the international scene, and in a review of hundreds of global CFO comments at their earnings call, Bloomberg has noticed that an outsized number of them are planning to shrink their workforces in commercial office space. The trend is so large, they say, that it threatens the valuation of commercial real estate and that will have an international knock-on impact in 2021.
And the World Bank has released an audit of its rankings system for "ease of doing business", the one where New Zealand is scored #1. It turns out in earlier years, managers pressured staff to improve the rankings for China, Azerbaijan, Saudi Arabia and the United Arab Emirates.
The latest global compilation of COVID-19 data is here. The global tally just keeps on rising, now at 76,532,000 and up +1,353,000 in two days. At this rate, we will top 100 mln in a month. It is very grim in Russia, the UK, Eastern Europe, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe, notably in Belgium, although not in the UK, Sweden, or Germany. Global deaths reported now exceed 1,690,000 and up +23,000 since this time Saturday as death rates spike everywhere.
But the largest number of reported cases globally are still in the US, which rose +434,000 in two days to 18,104,000. The US remains the global epicenter of the virus. The number of active cases is still surging and now at 7,229,000 and that level is up +174,000 in two days, so vastly more new cases more than recoveries. Their death total is surging now and exceeds 324,000, up +5000 in two days. The US now has a COVID death rate of 975/mln and approaching the disastrous UK level (990).
In Australia, their Sydney-based community resurgence is from an as-yet untraced border breach from an American strain. There have now been 28,171 COVID-19 cases reported, and that is +77 more cases over the weekend. Parts of Sydney are in lockdown. Other states have closed their borders. Now 120 of their cases are 'active' (+50). Their fast reaction might just be effective but the impact will linger. Reported deaths are unchanged at this stage at 908.
The UST 10yr yield will start today little-changed at just under 0.95%. Their 2-10 rate curve is unchanged at +82 bps, their 1-5 curve is still at +29 bps, while their 3m-10 year curve remains at +86 bps. The Australian Govt 10 year yield will start today firmer at 1.01%. The China Govt 10 year yield is unchanged at 3.32%, while the New Zealand Govt 10 year yield is holding at just under 0.97%.
The price of gold is -US$3 lower today at US$1881/oz. It is up +2.7% in a week. Silver is down less today at US$25.70/oz.
Oil prices are staying up at just on US$49/bbl in the US, while the international price is to just over US$52/bbl. Rig counts are still rising, both in the US and internationally.
And the Kiwi dollar is a little firmer today at 71.4 USc. A week ago it was 70.8 USc. Against the Australian dollar we are marginally firmer too at 93.7 AUc. Against the euro we are holding at 58.3 euro cents. That means our TWI-5 is now at 72.8 and a small rise from where it was at this time last week.
The bitcoin price is more than +US$1000 higher today than where we left it on Saturday. It is now at US$23,745, a +4.5% gain from then. In a week it has risen +25%. 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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Robert M. Gates who served as secretary of defense for Presidents George W. Bush and Barack Obama from 2006 to 2011 had something to say at the weekend.
President-elect Joe Biden appears to be framing his foreign policy around three themes: re-engaging with America’s friends and allies, renewing our participation in international organizations and relying more heavily on nonmilitary instruments of power. Considering the challenges posed by China and other countries, as well as transnational threats that range from pandemics to climate change, these are, in my view, the correct priorities. (Though, of course, unparalleled military power must remain the backdrop for America’s relations with the world.) Link
Russia responded with an unparalleled show of force.
The outlook is grim.
Trump has presided over an enormous, record-shattering increase in the US trade deficit with China. The one thing he genuinely appeared to give a shit about, he failed at spectacularly. Look at what’s actually happened with all his plans for US industrial expansion — companies have taken the tax breaks and left empty fields instead of factories. A humiliating failure of a President, even in his own terms.
I agree and suspect that in time Trumps offer to pay re location costs of Chinese based US business's that return to the US will gather pace as will the exclusion of Chinese students involved in technologies that have a possibly military use and this globally now the list of Chinese CCP related people is known. Xi Jiping may have so overplayed his hand that the backlash and retaliations overt and covert will do much damage.
Maybe if you read local rags like Bloomberg https://www.bloomberg.com/news/newsletters/2020-10-22/supply-chains-lat…
Perhaps a little bit of conflict of interest there though!
The wealthy are always going to get first dibs, it's biblical and the way of the world.
King James 2000 Bible
For unto everyone that has shall be given, and he shall have abundance: but from him that has not shall be taken away even that which he has.
Matthew 25:29
Its broad & relevant discussion across them all.
https://www.amazon.com/God-Not-Great-Religion-Everything/dp/0446697966
With eloquent clarity, Hitchens frames the argument for a more secular life based on science and reason, in which hell is replaced by the Hubble Telescope's awesome view of the universe, and Moses and the burning bush give way to the beauty and symmetry
of the double helix.
Not far back in Matthew 19:30, He states "But many who are first will be last, and the last first." They may have first dibs right now, but that verse is not about money at all or any other worldly wealth and is far from suggesting the merely financially rich will continue to be made richer. If you forget entirely the context and who is speaking there, then it would suggest a rather cynical maxim of this worlds general philosophy. When the opposite is true.
The example being used is the common ancient practice of a master entrusting his slaves with his wealth, with great responsibility and to represent him in his absence. Many supposed houses of God like to preach this, but Jesus is not saying here that he will hand out money, like all the other masters, expecting a return on this and giving out more money to those who already have.
In very simple terms He is saying: we are all gifted in different ways and with various degrees of ability, that we are to make good use of and improve for the benefit of all, which naturally benefits us too. To those who can be trusted with what they have, they will be entrusted with more, to those who abuse or squander what is entrusted to them, what they have will be withdrawn.
Just as more and more people will withdraw their support from Jacinda, the longer she refuses to use the power entrusted to her for the good of everyone and continually squander all opportunity to make any real difference.
Andrewj
i think we should stay away from biblical sayings on this forum. It is surely beyond argument that belief in the bible requires an act of faith. Just one example should suffice. In Matthew CH15, it says that a stubborn and rebellious child may be stoned to death. It would be both immoral and illegal to take that at face value. i could provide other examples, so let's leave it out of this forum.
but the fact remains, once you have money it's much easier to make more, ie, John Key buys a house in Auckland for 4 mill and sells it a few years later for 20 mill without the tennis court. Hard for a person with no money to do this, if you are poor your money goes on essentials and you don't get the time you need to educate yourself or your children.
Today as always money makes money.
I don't care for most religious hypocritcal nonsense. But if you're going to use a quote to back up an assertion, and state that "it's biblical and the way of the world", then it is pretty disingenuous to take it utterly out of context. Many of the things Jesus said has been used horribly for this purpose. Ironic, considering that his teachings go entirely against most of what has been done in His name.
The UK has a new and more transmissible form of Covid-19 which is why EU countries are closing borders. Compounding this their testing is still lagging and their vaccination campaign is off to a very slow start so they now have 4-6 million doses of vaccine sitting in a warehouses they have yet to deploy with 40+ million doses due to ship in Q1, 2021.
As for the Brexit deal I think the EU will be happy to wait this out and let the UK enjoy the bed its made for a few months.
The new strain is 1.7 times more infectious. It could spread like wildfire in Auckland. Perhaps we should be following the example of many other countries and banning flights from the UK, and not just flights, put a hold on anyone coming from the UK by any means. At least for a time.
Another weird season on the farm, the orchard it loaded with apricots and nectarines (I need to shoot miner birds), way more than we can eat so Im giving lots away. We have not had a frost in spring for years, I used to average 6 tp 8 frosts a year between the 20 of sept (bud bust in vineyard) to the 30th of October. We now haven't had a frost for 7 or 8 years which is unusual or more like the 70's?
The farm is still miles away from it's average rainfall, I have lots of grass because we kept getting 10-12 mm of rain every few weeks. However if I dig down it's still extremely dry, now we are watering the garden and the farm is browning off.
These seasons are hard to call, I sold 100 bulls and averaged around $1100 dollars for cattle I paid $520 for, %2.5 commission to come out of that. I won't do store cattle again it's just to fickle everything I buy will now be to carry through to kill. That way I can just work on a replacement margin and not put up with this store market which is all over the place, lot's of uncertainty in farming, lots of unknowns.
I can make money buying calves but this area is too dry for me to want to take that risk, also we get grass staggers and pink eye (conjunctivitis). It's very humid here from that cyclone but no rain yet.
Got the pool going, when down south the filter stopped and my daughter didn't notice, $400 of chemicals later it's looking good, I do wonder if pools are worth it, if you could move this one it would probably get sold. A smaller one would be better, the previous owner built this one and its over 85,000 litres and a lot of upkeep, the Kaikoura earthquake shook it round and it needs some TLC, which will cost me 30-40k in the meantime it is hard to see the damage just a few small cracks in the gel-coat.
Im back to fixing water systems on the farm, they always breakdown this time of year, it's for certain.
Wolf at his best
https://wolfstreet.com/2020/12/18/who-holds-the-1-65-trillion-of-apartm…
from the comments
Crypto definitions:
Bitcoin – reference to the entire ecosystem crypto graphically secured. Including CBDC. If you can access the Bitcoin liquidity then you are part of the ecosystem.
Blockchain – reference to the technology.
Distributed ledger – reference to accounting that is verified and not centralized.
Cryptocurrency – jargon to confuse you. If it’s decentralized it’s a currency if it’s centralized it’s a security. These definitions come directly from the SEC, IRS, Treasury,and FTC all saying BTC is a currency. Cryptocurrency just means it’s encrypted. But it doesn’t tell you if it’s a currency. Investing in cryptocurrency is a bad bad bad idea.
Bitcoin currently is a store of value, It is a strictly scare asset with a hard cap supply of 21 million coins and there will never be more. At this stage it is not a currency for every day use (your coffee purchase doesn't need to be immortalised on thousands of hard drives around the world), but that will come with further development and layer 2 solutions eg the lightning network.
Zoom out, take off your short term blinkers. Look at its history (remembering it is only 12 years old) and think about what simple supply and demand means for its price. What does an infinite supply of fiat divided by 21 million bitcoin give you for a price?
https://medium.com/original-crypto-guy/as-bitcoins-price-hits-a-new-all…
Read that article and tell me again that it isnt a store of value :D (I highly recommend that article, very eye opening)
but i am thinking simple supply & demand .... and forward. I cant see it having ANY demand when SHTF re fiat. At that point Bitcoin will lose any reference to its supposed fiat worth & supply chains gridlock ... and then what? A bitcoin for a dozen eggs? I'll want more than some pixel dust thanks
Just because something is LIMITED, doesnt guarantee its of any value
You dont realise how bang on your comment is... https://preview.redd.it/3525lt9kvir01.jpg?auto=webp&s=d0313ea5ec7d3c7d7…
What is the digits in your bank account other than pixel dust that the government just creates out of thin air?
No, value is allocated by the individuals who buy or use it. It will never go to zero (with out some catastrophic bug being found) as I will buy it all at 1 cent if it ever gets that low, and I know a lot of other people who would do the same lol.
Anyone can create crypto. There’s an infinite supply of it. The rules of supply and demand place the real value at 0. Personally, I suspect we have another spike, another chance for fortunes to be made by those with good timing, but the price will reach 0 within, say, 10 years.
I love comments like these, really make me realise how early we are currently.
Anyone can create crypto yes, but no one can create another Bitcoin. You should learn the difference.
You do know there are over 70 forks of Bitcoin, ie part of the so called infinite supply you talk of. And what are they worth? Zero because they are not Bitcoin are they, they are Bitcoin Cash, Bitcoin SV, gold, diamond etc. All are worthless shit. Just like litecoin which is also a fork of bitcoin but with some parameters changed.
https://www.lynalden.com/misconceptions-about-bitcoin/ rebuttals to some other common misconceptions that you may hold.
these comments in the comments section are on to it
"One mechanism is debt deflation. If you loan me $100, that loan is your asset and worth $100. If I fail to pay, your asset is now worth zero, thus reducing money supply.
When people have no money, demand drops to zero, and so do prices. This deflation mechanism helped wreck agriculture in the Great Depression. No one had money for ag commodities, so crops rotted while people starved. That is a complete system failure on the part of Dear Leaders that control the system.
That is the brick wall we are headed for."
"This is why the FED is shoveling money into the banks and buying up their garbage, while the banks continue to loan massive money for houses, cars and everything else to people who have no prayer of ever paying it back. Because the moment they stop lending, the entire house of cards is toast."
Those definitions are crap:
Blockchain is the distributed ledger technology that is used to record transactions that happen on a cryptocurrency network. With BTC for example each block contain up tp 2mb of data, which contains transaction details. A number or transactions are bundled together by the miners (incentivised by the fees the transaction maker wants to pay, higher fee, higher priority) and the mine/mining pool that finds the mathematical solution for that block get to attach their block of transactions to the blockchain. Each block is cryptographically connected to the previous block so you cant change the block order or insert blocks etc. The miners get rewarded for their work (proof of work) with newly minted bitcoin. the reward was 12.5 BTC per block (on average every 10 min) until the halving that occurs every 4 years, there was one in May this year, brought it down to 6.25 new BTC. See this page for a good overview: https://www.bitcoinblockhalf.com/
Cryptocurrency refers broadly to the ecosystem that is associated with all the distributed ledger stuff. Includes the 3000+ shitcoins. https://coinmarketcap.com/ lists most of them. This also includes stable coins that are supposedly backed 1 to 1 with their respective fiat currency. eg USDT BUSD USDC DAI etc
Bitcoin DOES NOT REFER TO THE ENTIRE ECOSYSTEM. Bitcoin is the one and only truly decentralised cryptocurrency that was released in 2009 and is the only (with the exception of Ethereum) cryptocurrency worth actually investing in. It is the only immutable blockchain with a set supply schedule that we know will never be altered, basically all other shitcoins have a leading developer or someone in charge that can make the decision to/ or be coerced into, changing the rules for that coin.
Bitcoin is the reserve asset for the cryptocurrency system, like how the USD is the reserve currency for the fiat system.
Not buying Bitcoin is a bad, bad idea. It is actually fiduciarily irresponsible to not have some exposure, no matter how small, to Bitcoin.
Yeah, this is what crypto enthusiasts miss about currency. They look at government money and say Its only has value cos everyone agrees it does! Any currency could do that!’ What backs up the value of money is the strength and credibility of a nation state. That’s why the Japanese can’t inflate no matter how they try, while the Venezuelans struggle with hyperinflation despite sitting on a reservoir of oil.
The army of miners who have spent their capital and time to establish 131 TH/s of computing power to support the network.
That's the point, Bitcoin is defensive, it doesn't need an army to force itself onto people, its defense is so high that people will start using it for safety.
Hmmm, food banks in the UK
I never thought I woud hear myself say this; But where is Joseph McCarthy when you really need him? He was responsible for ruining the lives of many innocent people, but if only he were here now, what a target Trump would make.
Trump's absolute refusal to acknowledge Russian interference in the American political process, when even Pompeo accepts it, is beyond strange. Why? could Russia have some hold over him or his family? I don't know, but it would be interesting to see his financial affairs laid bare.
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