Here's our summary of key economic events overnight that affect New Zealand, with news from Apple and GM that is being overshadowed by the daytrading frenzy.
Firstly, the American economy expanded +4.0% in Q4 2020. But it wasn’t enough to prevent a full-year contraction of -3.5%, the most since 1946. But full year growth is expected to return in 2021, and depending on your analyst, it seems to have gotten off to a positive start in January.
But you may not know that from the latest jobless claims report. 874,000 people filed for the first time last week, while many more fell off as their qualification for benefits ended. Another 427,000 applied for Pandemic Assistance claims. There are now 5.2 mln on these programs.
The US merchandise trade balance was a deficit of -$82.5 bln in December, just shy of the record deficit set in November. Exports fell and imports rose on a year-on-year basis, so no improvement yet on this front.
Sales of new homes remain at high levels even though they missed expectations, and are +15% above the year-ago level in December.
The Kansas City Fed factory survey is also positive reporting expanding growth and at a faster pace.
In China, a new report by Morgan Stanley says private consumption there will more than double in the next ten years, with the service sector outperforming the goods sector. Private consumption is likely to reach US$12.7 tln by 2030, making China a global consumption powerhouse and matching the size of the 2020 US market.
China is preparing for a very much slimmed down Lunar New Year travel season with 'only' 1.15 bln trips, -20% fewer than last year and the smallest figure since at least 2003.
Retail sales in Japan in December remained weak and not quite at year-ago levels, and a worrying confirmation their domestic economy is in a real funk.
We are starting to see falls in iron ore prices now, not large, but starting. However, it is unclear whether this is due to destocking ahead of the Chinese New Year shutdowns, or a real market shift.
Not falling however are food prices in China, and they remain a concern to authorities there.
Equity markets have roared back today in New York and shaking off yesterday's risk-off mode with the S&P500 up +1.9% in afternoon trade. Platform operators and exchanges are trying to curb daytraders making fools of themselves, but that just seem to have made them wilder. Meanwhile and somewhat overshadowed, Apple has posted impressive results again. Overnight, European markets were up by about +0.5% on average, although London fell -0.6%. Yesterday, things were ugly in Asian markets with Shanghai down -1.9%, Hong Kong was down by -2.6% while the very large Tokyo market was down -1.5%. In Australia, the ASX200 also fell -1.9% yesterday, while the NZX50 Capital Index was the worst, falling -2.2%.
The latest global compilation of COVID-19 data is here. The global tally is rising faster, now at 101,068,000 and up +626,000 in one day. The UK variant is increasing its grip, and other variants are emerging too. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,180,000 and +18,000 since yesterday. More countries have started their vaccination programs. And although 81.7 mln doses have been given so far (+10.5 mln in a day), nowhere has the tide turned on infections or deaths yet - except perhaps in Israel, and maybe just starting in the US.
But the largest number of reported cases globally are still in the US, which rose +155,000 over the past day for their tally to reach 26,193,000. The US remains the global epicentre of the virus. The number of active cases fell overnight and is now just on 9,806,000 and -25,000 fewer than yesterday, so more recoveries than new infections. Their death total is up to 440,000 however (+4000). The US now has a COVID death rate of 1326/mln, awful but made to look 'good' by the disastrous UK level (1515) where deaths are still raging.
In Australia, their community outbreak is over. That takes their all-time cases reported to 28,794, and only +8 more cases overnight, all new arrivals and all in managed isolation. 92 of these cases are 'active' (-14). Reported deaths are unchanged at 909.
The UST 10yr yield will start today up +5 bps at just on 1.06%. Their 2-10 rate curve is steeper at +94 bps, their 1-5 curve is also steeper at +35 bps, while their 3m-10 year curve is steeper as well at just over +101 bps. The Australian Govt 10 year yield is up +3 bps at 1.07%. The China Govt 10 year yield is up +2 bps at 3.21%, while the New Zealand Govt 10 year yield is up +1 bp at 1.09%.
The price of gold will start -US$8 lower today at US$1838/oz.
Oil prices are softer by -US$1 at just over US$52/bbl in the US while the international price is also softer and now just over US$55/bbl. General Motors says it plans to eliminate petrol and diesel cars by 2035, be carbon neutral by 2040.
And the Kiwi dollar will open at just under 71.7 USc. Against the Australian dollar we are unchanged at 93.5 AUc. Against the euro we are softer at 59.1 euro cents. That means our TWI-5 is lower at 73.2.
The bitcoin price has recovered over the past 24 hours and is now at US$32,164 or a rise of +5.5% since this time yesterday. Volatility remains high at +/- 4.8%. 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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78 Comments
Platform operators and exchanges are trying to curb day traders making fools of themselves
"Whatever it takes."
Even if that's banning some parts of the free market from participating.
Is there any wonder that the NYSE is up today - a protected species, given that whatever threatens the establishment, can be seen as seditious, and so is banned, vilified and then sidelined?
https://www.vice.com/en/article/m7ak7y/robinhood-stops-users-from-tradi…
This is outright cronyism. Another regulatory body that has failed their mandate, alongside GCBs. Interestingly Ray Dalio has come around on Bitcoin. . There's a bunch of DeFi trading platforms starting to come online like Synthetix that will compete directly with these rigged market casinos where the house always wins. Meanwhile the establishment are doubling down on the behavior that will cause a mass transition.
Yeah, it's a free country. "The president of a literary agency based in New York City said Monday on Twitter that one of the agency's employees was terminated after her use of conservative social media sites Parler and Gab was discovered."
https://www.msn.com/en-us/news/world/agent-fired-from-literary-agency-f…
The American Right wing are an odd bunch at the moment.
They fought tooth and nail for the right for a private business to refuse service to someone whose beliefs go against their own, all the way to the Supreme Court. Yet they bawl and flounce when another private business decides not to serve them.
They cry censorship when folk aren't interested in giving them a platform even though they remain free to speak and can propagate their opinions by their own efforts. Then most of their forums seem to be fenced off as Safe Spaces and ban any disagreement (Parler, r/conservative), while they whine that others are denying them free speech.
In place of principles they have desires; in place of self-awareness, projection.
It's total bulls$#t. Robinhood are now doing the exact opposite of their name and the exact opposite of their Mission statement which is: "Robinhood's mission is to democratize finance for all". Instead they are acting as facists, essentially: "You can vote, but you can only vote one way".
It would not surprise me if there is a severe backlash against them from their user base, potentially even lawsuits.
Hedge funds collectively shorted OVER, yes OVER 100% of GameStop stock - pretty much attempting to bankrupt the company and throw their workers on the street. Reddit said NO, let's invest our capital, we like 'gaming'.. Hedge fund managers cry and beg for a bailout. Yet they'd happily see GameStop staff unemployed, giving HJ's behind a Wallmart dumpster tomorrow.
Not financial advice.. but BlackBerry is shaping up to be a 2021 Meme Stock.
Well, it's likely them looking at the numbers and making decisions like HSBC obviously has on occasion (when money laundering for drug traffickers and terrorists). It's more lucrative to pay the relatively cheap fines for illegal behaviour than the alternative.
https://www.marketwatch.com/story/netflix-documentary-re-examines-hsbcs…
It is absolutely already the reputation and culture of the subreddit to make a fool of yourself. The professional traders are once again testing the waters of just how illegally they can behave.
Whether or not you think the retail traders are stupid or not, do you support the small and powerless combining together to protest and attempt to influence the financial system?
When a financial system is set up to supposedly support everyone, but fails in this as it can be manipulated by the big players, then absolutely i support the ordinary people for playing those big players at their own game. I do not support the big players been bailed out when they get burnt by their own hubris. The rules are there for a purpose and they must apply equally to all. Anything else is just corruption and should be flagged as such.
From Michael Every of Rabobank.
"What we are currently seeing, as a wag on Twitter put it, is how to REALLY Occupy Wall Street; and you get their attention and you get the whole system’s attention.
This is what happens when tens of millions of people are locked down and given stimulus cheques to play with. But it’s also what happens if tens of millions of people grow up seeing that outside of Wall Street (and Tech), there are no jobs that pay as well and tax as little as playing with asset prices; when TV is full of ads for stock-trading and how amazing it is to be rich, rather than anything about public service and communities or culture; when homes and rents are unaffordable, and quality public housing no longer gets built; and when even Joe Public talks about the fact that Wall Street has had central banks channel billions of dollars at them every day for years, and get bailed out when things go wrong."
https://www.zerohedge.com/markets/rabobank-what-happening-will-end-tears
Exactly! This is the problem, when you can short more than 100% of a companies shares and regulators have allowed it basically forever, you don't have a free and functioning market. But as soon as retail investors spot the loopholes that the big investment firms have been exploiting for years, it's the retail investors that are in the wrong?
Ticker: GME% of Float Short: 261% YTD Rally: 1,917%
https://www.businessinsider.com.au/highly-shorted-stocks-soaring-reddit…
There is simply no way that should be able to occur, it defies fundamental market principles. It appears someone has written a lot of large deep out of the money calls and the rally has blown their delta through the roof and they have had to cover at enormous losses. The fund should be shut down.
If I want to buy calls a market maker has to write them (sell) - hence the latter is always going to delta hedge the open short with underlying stock purchases, if possible.
The so called rogue retail players decided this was an alternative leveraged gambit in addition to outright volume stock purchases.
Next POTUS. Handing it to him on a plate, whats wrong with these guys, don't they know they are a tiny minority? I suppose thats why heads need to roll occasionally, just to remind people.
How many soldiers have parents who lost everything in 2008 while Wall street and the banks got bailed, who in the Police/Secret Service has a sick wife who cannot afford cancer treatment, look around you monsters with fear and dread, the enemy is right beside you
Game Over, Man
Andrewj
Do you hold shares and if so, have you sold them?
I already have some 20% of my total portfolio-shares,bonds and property-in cash earning virtually nothing, but in anticipation of a significant correction. Is that enough or should I go further? I doubt if i would go beyond 25%.
Just a thought "Platform operators and exchanges are trying to curb daytraders making fools of themselves, but that just seem to have made them wilder."
If day traders fails why are they not bailed out by the Government as was done with Wall St in 2008?
Quite amusing listening to the Hedge Funds complain that the small guys should be shut out of the game.
The story of Piggly Wiggly
https://twitter.com/dollarsanddata/status/1354561079926550530
Equity markets have roared back today in New York and shaking off yesterday's risk-off mode with the S&P500 up +1.9% in afternoon trade.
This guy talks more sense than anyone on housing solutions. Therefore he's probably ignored by government.
https://i.stuff.co.nz/business/property/124079152/what-labour-must-do-t…
Tell that to the families working full time (or multiple full time) jobs living in cars or garages. House prices are largely a credit problem, but you can't ignore the impact high levels of immigration combined with insufficient levels of construction.
You can't isolate a single factor and say "its only about credit". It's a multifaceted problem.
We have two empty houses in our street alone - have been for years and good homes at that. I see Hamilton has over 600 rentals rentals on trade alone - and this will be understated as they only advertise one or two from a block of new apartments.
There is no shortage, just underutilization and tenants that no one wants.
Ring-fencing capital gains into Kiwisaver won't do much when the investor cohort is getting closer to retirement and will have almost immediate access to that money regardless - the money needs to be put into Kiwisaver instead of the houses itself in the first place. It might encourage divestment, but houses are outperforming Kiwisaver funds, so why would you?
nah, he's talking about a 'free market' model and doesn't realise the 'free market' is not free and never has been. A large excess supply of houses will still be manipulated by the big players, the banks and investors/investment companies. It can't work without robust comprehensive regulation.
Absolute bull* what the MSM, trading platforms and regulators are doing around GME. If people want to spend THEIR money full well knowing the risks that they will likely lose it all then they should be allowed to do what ever they want. They should not be censored so that a few rich and powerful people don't loose suffer a loss of their own making.
Man it is going to be glorious to see when these people find Bitcoin, and they are heading that way.
Also Robinhood have delisted GME, AMC and Nok
https://twitter.com/Melt_Dem/status/1354786661843034121?s=19&fbclid=IwA…
WHAT IS THIS!!
Crazy. There's so much hyperventilation over it that it's hard to tell what's actually happening.
I'm a little surprised at the approach from the powers that be, restricting trading etc. Surely only a handful of big operators write those calls. Wouldn't it have been easier to lean on them to stop?
Ravi, it's broken
https://www.zerohedge.com/markets/rabobank-what-happening-will-end-tears
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