Growing China keeps commodity prices high; US factory activity rises; Japanese sentiment improves; Aussie retail sales jump; rate rises elevate investor risks; UST 10yr at 1.34%; oil down and gold holds; NZ$1 = 73 USc; TWI-5 = 74.2

Growing China keeps commodity prices high; US factory activity rises; Japanese sentiment improves; Aussie retail sales jump; rate rises elevate investor risks; UST 10yr at 1.34%; oil down and gold holds; NZ$1 = 73 USc; TWI-5 = 74.2

Here's our summary of key economic events overnight that affect New Zealand, with news both commodity prices and interest rates are rising sharply.

But iron ore prices slipped on Friday after hitting their highest level in more than nine years just a day before. A local survey of stocks of steel products in showed a significant increase, turning around the idea steel mills would ramp up output after their Spring Festival holiday.

Copper prices have however also touched a nine year high on Friday and are not that far off an all-time high. Aluminium prices are rising too. (Remember, when copper reached its 2011 high in February of that year, it then fell by a third over the next eight months.)

And staying in China, the results of their holiday week consumption are now showing up and they have been positive. Online spending, express deliveries, box office revenues and local tours received a strong boost during the Lunar New Year holiday period this year, thanks to the large number of people who shelved travel plans and switched to other forms of celebrating.

A Chinese official says they are looking at relaxing restrictions on outbound investment in a bid to facilitate two-way capital flows as it opens capital markets to more overseas investors. They are to raise the quota on its Qualified Domestic Institutional Investor scheme later this year.

China kept it Prime Rates unchanged at the latest central bank review. That's ten straight months it has been held unchanged.

But they have stepped up their regulation of online lending by domestic commercial banks with a new set of regulations and limits.

In the US, factories there expanded at a healthy rate in the latest update of February activity, and underpinned by rising demand. Their service sector expansion is strong too. The current icy storm is however likely to curtail some of this improvement when the final February data is released.

Risks are remain elevated however. The US Fed says insolvency risks at small and medium-sized firms “remain considerable” even as their economy emerges from the pandemic.

US existing home sales rose more than expected in January when actually a dip was expected. A severe shortage of listings is being attributed to the market perception of demand.

In Canada, data for December retail sales shows they ended on a grim note, far lower than the decline they were expecting. It was their worst retail situation since the start of their pandemic in April.

In Japan, business sentiment is improving in February, largely on the back of new export orders in factories. Their factory PMI was back in expansion mode, but their services sector is continuing to struggle, contracting at a faster - and worrying - pace.

EU business activity fell for a fourth consecutive month in February, driven lower by a further slump in their service sector as pandemic restrictions continued to restrict many businesses. The service sector downturn was offset, however, by faster manufacturing growth, led by Germany.

Although it has fallen back a little, the Australian factory PMI for January has stayed at an elevated level, now at 56.6. (NZ = 57.5) and their services PMI is at a similar level. Holding both up are good level of employment. New order levels are good too.

Australian retail turnover was +10.7% higher in January 2021 than January 2020. That makes it its highest gain since 2015.

Last week most equity markets slipped slightly but are still at or near record highs.

But can these high levels last? The mantra of ‘lower for longer’ is coming under pressure as investors realise the potential damage inflation could inflict on complacent portfolios. Equity prices could be affected if P/E ratios adjust lower and interest rates rise (and private equity firms are making the risk higher), but bond prices face even more risk of a downgrade.

The latest global compilation of COVID-19 data is here. The global tally is still rising at a little-changed pace, now at 111,204,000 and up +255,000 in one day. But it seems to be easing in some notable places in the first world. Global deaths reported now exceed 2,463,000 and +6,000 since yesterday.

Russia has said it has found the first case of bird flu H5N8 in humans although the spread is low at this time.

More countries (101) have started their vaccination programs. About 204.8 mln doses have been given so far (+10.4 in the past day). There is clear evidence the vaccines are working to reduce or even eliminate deaths for those who have taken it.

The largest number of reported cases globally are still in the US, which rose +46,000 over the past day for their tally to reach 28,714,000. The US remains the global epicentre of the virus although there is clearly some easing. But the number of active cases actually rose overnight and is now just on 9,304,000 and +21,000 more overnight, so more new infections again than recoveries. Their death total is rising at a slower rate and is up at 510,000 (+1000) in one day. More Americans have died from COVID than on the battlefields of World War I, World War II and the Vietnam War combined. The US now has a COVID death rate of 1535/mln, and that compares to the disastrous UK level (1770) where deaths are also still rising (121,000 and +1000) but a bit more slowly now their vaccinations are rolling out.

In Australia, their community control remains impressive. Their all-time cases reported is now 28,926 and only +6 more case overnight, but with no new cases in the community over the weekend and the rest new arrivals, and all in managed isolation. 39 of these cases are 'active' (unchanged). Reported deaths are unchanged at 909.

The UST 10yr yield is up +5 bps at 1.34% today from Friday and now its highest in a year. It has risen +15 bps in a week. Their 2-10 rate curve is a lot steeper at 123 bps and it hasn't been this steep since March 2017. Their 1-5 curve is also steeper at +52 bps, while their 3m-10 year curve is steeper as well at +132 bps. The Australian Govt 10 year yield is at 1.50%. The China Govt 10 year yield is up at 3.30%, but the New Zealand Govt 10 year yield is up at just over 1.52%.

Economists are raising their expectations these benchmark rates will rise a lot further. Some have lifted their target for the US 10 year bond rate by end 2021 from 1.5% to 1.8%. In turn the expected rate by end 2022 has been increased from 1.75% to 2.40%.

The price of gold will start today up a relatively minor +US$5 at US$1785/oz after a late runup in New York at the close of the final session last week.

Oil prices are lower by about -US$0.50 and are now at just on US$59/bbl in the US, while the international price is just on US$62/bbl.

And the Kiwi dollar opens at 73 USc as commodity currencies twist back into favour. Against the Australian dollar we are at 92.8 AUc. Against the euro we are up at 60.3 euro cents. That means our TWI-5 has risen to just under 74.2.

The bitcoin price is now at US$57,692 and +5.6% higher than this time Saturday. That puts it just shy of its new record high achieved just a few hours ago. And it is closing in on NZ$80,000 for one bitcoin. Volatility was a relatively high +/- 3.5%. The capitalisation of this market now exceeds US$1 tln, but remember about 1000 major holders control most of it. 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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59 Comments

Tourism and Climate Change Commission targets.

Here is my idea - I can only see positives.
How about that as of now, only NZ residents or citizens can drive/rent/buy petrol & diesel vehicles.
Visitors can only drive/rent/buy EVs.

This will:
1. Put up the price of renting/buying vehicles for tourists and hence reduce tourism demand.
Hopefully cutting out the budget tourists.
2. Force poorer tourists to use public transport.
3. Force rental companies to buy more EV's.
4. After several years, provide a source of second hand EVs for citizens/residents.
5. Force a quicker roll out of charging stations.
6. Force an improvement in public transport services. Particularly long distance sevices.
7. And as a side issue, will put an end to the awful motorhome rental market.(until EV versions are available)
Just how dumb is it to cart a motel room several thousand kilometers around the country?

What's not to like?

Congo, child labour and your electric car
https://www.ft.com/content/c6909812-9ce4-11e9-9c06-a4640c9feebb

We have been staggeringly blind to China’s rare earth dominance
https://www.telegraph.co.uk/technology/2021/02/16/west-has-staggeringly-...

We were just as arrogant taking other folks' oil.

Indeed we had to call the fight-back 'terrorism'.

Yes, why develop our own oil and gas fields when we can just support some despot with no environmental laws.
It's not like we have a military industrial complex to keep ticking over.
https://www.npr.org/sections/president-biden-takes-office/2021/01/27/960...

We don't just 'support some despot'; we organise coups and put those despots in there.

As to why we don't 'develop' here, firstly it isn't 'developing', it's extracting. There is no other word for the removal of a one-off in-ground stock of anything. Then it's the burning, residues thereof. Which YOU have to deny, or obfuscate or weasel out of, given your pre-need. A bit like Hook, reliant on farming as currently practiced. In the case of FF, the burning is an offloading of the cost to future generations. So too, is the fact that they won't have the stock any more. And if you do the right thing by them (mitigating your energy-use 100%, leaving them as many per-head energy options as you inherited) you will find your proposal has invalidated itself.

With implications........

So EV batteries are way better, WUWT -Weakest link to EV growth. Avg EV battery, 25 lbs lithium, 30 lbs cobalt, 60 lbs nickel, 110 lbs graphite,90 lbs copper. Earth mined about 500,000 lbs avg per EV battery. This is for the light vehicle fleet, also add in heavey vehicles plus wind, solar and grid storage. Be very careful what you wish for.

Obviously the NZ oil and gas sector needed to employ you, instead their own geologists, to find this mysterious oil and gas bonanza?

There is nothing mysterious about it, NZ is one the most under-explored regions on the planet. I guess we can just bludge off Aussie like we do for defense.
"The government has also hiked royalties to 42% of profits through royalties, levies and fees. At the time private investment swiftly contracted.

Now the government seems to have identified a major gas shortage, leaving its gas-fired generation and wholesale gas market undersupplied."
https://www.energynewsbulletin.net/outlook-analysis/news/1403458/new-zea...

"NZ Oil and Gas has relinquished an oil exploration permit in the Canterbury Basin that could have earned the country $32 billion in royalties and taxes over its lifespan.

The company, along with partner Beach Energy, applied on Tuesday to relinquish its Clipper permit, which covered an area known as the Barque prospect, 60 kilometres off the shore of Oamaru.

The Barque prospect was estimated to contain the equivalent of 530 million barrels of oil."
https://www.stuff.co.nz/environment/climate-news/124265506/massive-oil-d...

Cool. So now that we're moving away from rare-earth metals due to price and ethical concerns, what's the latest talking point about EVs, now that you can't complain about materials we've been putting into consumer electronics that get thrown away every couple of years for decades without anyone caring until now?

There's lot's of other talking points. One could even say moving to EV's/net zero will never be more than a talking point. Though to be fair talking points is what our government excels at. "If this analysis is extrapolated to the currently projected estimate of two billion cars worldwide, based on 2018 figures, annual production would have to increase for neodymium and dysprosium by 70%, copper output would need to more than double and cobalt output would need to increase at least three and a half times for the entire period from now until 2050 to satisfy the demand.

Energy cost of metal production: This choice of vehicle comes with an energy cost too. Energy costs for cobalt production are estimated at 7000-8000 kWh for every tonne of metal produced and for copper 9000 kWh/t. The rare-earth energy costs are at least 3350 kWh/t, so for the target of all 31.5 million cars that requires 22.5 TWh of power to produce the new metals for the UK fleet, amounting to 6% of the UK’s current annual electrical usage. Extrapolated to 2 billion cars worldwide, the energy demand for extracting and processing the metals is almost 4 times the total annual UK electrical output

Energy cost of charging electric cars: There are serious implications for the electrical power generation in the UK needed to recharge these vehicles. Using figures published for current EVs (Nissan Leaf, Renault Zoe), driving 252.5 billion miles uses at least 63 TWh of power. This will demand a 20% increase in UK generated electricity.

Challenges of using ‘green energy’ to power electric cars: If wind farms are chosen to generate the power for the projected two billion cars at UK average usage, this requires the equivalent of a further years’ worth of total global copper supply and 10 years’ worth of global neodymium and dysprosium production to build the windfarms.

Solar power is also problematic – it is also resource hungry; all the photovoltaic systems currently on the market are reliant on one or more raw materials classed as “critical” or “near critical” by the EU and/ or US Department of Energy (high purity silicon, indium, tellurium, gallium) because of their natural scarcity or their recovery as minor-by-products of other commodities. With a capacity factor of only ~10%, the UK would require ~72GW of photovoltaic input to fuel the EV fleet; over five times the current installed capacity. If CdTe-type photovoltaic power is used, that would consume over thirty years of current annual tellurium supply.

Both these wind turbine and solar generation options for the added electrical power generation capacity have substantial demands for steel, aluminium, cement and glass.
https://www.nhm.ac.uk/press-office/press-releases/leading-scientists-set...

The difference is obvious (and there's always a difference when spin-doctors do spin, eh Profile?)

The difference is that with renewable-energy technology, you can go on beyond the demise of fossil energy. In a way, they're a store of oil which can be used longer-term. Whereas oil, when depleted, is............gone.

34
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Jacinda Ardern this morning, when asked a question:

“Well. Let’s remember when we took over in 2017…….”

Get over it woman, and start governing the country for today and tomorrow.
Blaming policy settings from 4 years ago isn’t the answer to anything.
The actions you take today are.

27
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When Ardern-Labour took over, in 2017, property prices were 40% cheaper

And, oh my goodness!, isn't it a beautiful thing people? There are people who said it couldn't be done, our economy would become fundamentally "unbalanced", but the courage of this government to push house prices to a new dimension - hasn't it been extraordinarily beautiful people?

I'm really looking forwards to the RMA being multiplied into three separate bits of complex, restrictive legislation later this year. That rate of newly consented dwellings has just got a bit high for my liking given we don't yet have the immigration tap fully turned back on to mop up the excess houses.

There is some irony in that too. Because to quite a degree, Winston Peters took over Labour. Perhaps we can now see why and how the participation of NZF provided both moderation, direction and some commonsense. Wasn’t an ideal government admittedly but personally had more confidence in it than the present lot.

14
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Trotting out Winston as an excuse? Labour couldn't organise their own policies. They were dead in the water before NZ First got a say at Cabinet Level. Look at the total mess that was Light Rail. What part of that botched procurement process was NZ First involved in, other than euthanising it? It's easy to blame NZ First because they're no longer there, but most of Labour's promises were already fading fast or unrealistic before NZ First came into play. You can test this theory by looking at how many of them are now back on track. Light rail? No. Sanctions for welfare recipients? Still in place. Kiwibuild? Absolute goneburger. CGT? Still ruled out - as long as Ardern is PM, not for as long as NZ First was in government. Why? Because Labour were the problem, not NZ First.

11
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Yep, they're fast turning into 'ashtry on a motorbike' material and Ardern is nigh on the female version of John Key.

But as useless as they are I'm still greatful Judith Collins isn't leading the country.

The sad thing is, as Chris Trotter said - Adern is now in her comfortable place. She was never going to do any heavy lifting.

10
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Yep NZF were the only option to curtail immigration and the RBNZ.

We had a female version of John Key who did bugger all as house prices exploded - prices rose faster under HC than they did under JK, I believe. And yet we persisted with adding people, let the leaky building crisis drag on and offer no certainty to a generation of Kiwis about multi-story developments and almost el-zilcho infrastructure in Auckland to help - with the notable exception of the North Shore busway (no one else in Auckland got one, but the relatively well-off North Shore got one somehow) and electrification of rail. Other than that, it was more people, more sprawl and no mention of property taxes until they were voted out - at which point, not having a Capital Gains Tax was apparently criminally negligent.

Nor were National much better, and totally botched the further electrification and North Western (no busway) upgrades, but Labour always seem to understand the need for reform as soon as the door hits them on the way out. National apparently take a little longer. Or a lot longer. I'll let you know if it happens.

14
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Yes. It now has an incredibly weak foreign policy position where "conversations and reflections" are being called for and Aussi and its strong backbone is being criticized.

Agreed, Labour seemed a bit more restrained with NZF around. Now with Badjelly unleashed they are full throttle on the crazy-train to dystopia

Bollocks. It was the neoliberal nonsense ( that you can have unlimited growth withing a bounded system, that you can mysteriously substitute for depletion even in an exponentially-expanding consumption within said bounded system) that will lead us into dystopia.

Correction: has led.

What we have now, is a choice between slowing the impact, or hitting the wall at speed. Oh, and some of us have a few questions to ask of a few who had the chance to know better. Questions re culpability...

"but remember about 1000 major holders control most of it".

Is this some sort of warning? To what end? The whole BTC network is decentralised and individually sovereign. Why does it matter if there's some whales that include large investment companies, governments and some savvy individuals? They're unlikely to sell. Besides no one is selling at the moment. More BTC is moving off exchanges into cold storage than ever. With institutional investors piling in even if a whale were to dump a whole lot and drop the price this would be the opportunity of a lifetime.

"Why does it matter if there's some whales that include large investment companies, governments and some savvy individuals?"

It doesn't matter...until it does.

That's what "A Crash!!" in any market or asset class is - a liquidity squeeze. One of those times when all the holders of the assets need cash, to settle other commitments, all at the same time.
It's when everyone else does as well. And when buyers evaporate as sellers need to realise their investment.
It's what will happen to the local property market at some stage, and in all likelihood, Bitcoin.

Your possible answer?:

"But look at all the funds being pumped into The System by Central Banks across the Globe! There won't be a Liquidity Squeeze"
That's exactly what we have, and why they are doing it, even if we refuse to recognise it as that. It's because liquidity is scarce that interest rates have been dropped to 0% and mass funding of economies is going on. It's because there aren't enough 'productive' funds in The System to keep it afloat otherwise.
It's like you running out of cash to pay the rent and borrowing from your parents, and you just buy more Bitcoin and borrow more. You haven't the Liquidity to keep your daily life going otherwise, and once the lending stops....... you will have to sell, if you can find a buyer.

The System needs a clean out; a flushing of malinvestments. Everyone knows it, and everyone is trying to find that pot of gold; that asset that will escape the cleansing. You see it as Bitcoin in a way that other see it as residential property, and as others before you saw it as gold.
All of them suffered the same fate eventually. And just as surely as **South Sea Company shares did, so will whatever today's safe haven is.

**The South Sea Company was a British joint-stock company founded in January 1711, created as a public-private partnership to consolidate and reduce the cost of the national debt.
https://en.wikipedia.org/wiki/South_Sea_Company

And just for added drama. From that link above:

The price of the stock in the " company for carrying out an undertaking of great advantage, but nobody to know what it is" went up over the course of a single year from about £100 to almost £1000 per share. Its success caused a country-wide frenzy—herd behaviour as all types of people, from peasants to lords, developed a feverish interest in investing.
The price started to fall, dropping back to £100 per share before the year was out. This triggered bankruptcies amongst those who had bought on credit, and increased further selling.
A scramble for liquidity appeared internationally as other "bubbles" were also ending.

But of course, that couldn't happen today with all of our sophistication and all.....

Nice comment bw, appreciate the time taken. Although would you agree property and gold are hard to turn liquid because of the logistics involved turning them into something with value that is easily portable and transferable? In that regard crypto is liquid by design - remember that 1 bitcoin can be split into 100M units, and even though it's not designed to be a currency I can pay my peer in BTC using only an internet connection and a time delay. At any rate - no one knows the breadth and scale of fallout that's coming. So any discussion is somewhat moot.

Also note that the overwhelming adoption of crypto in terms of population percentage is in places like Nigeria and Peru who have real world problems of liquidity and currency control. So many different factors to South Sea Company.

" I can pay my peer in BTC"

And will you be able to tomorrow? That's really all that matters.
Let's say the markets get a bit iffy.
Someone wants to pay YOU in BTC but you need cash to pay your Visa bill this month . Are you going to take their Bitcoin off their hands at what might be some indeterminable future value, and pay the 29% interest on your overdue credit card balance?
Maybe you will. But I'll suggest you'll at least give consideration to it. And some will answer that question with "I'll pay of the Visa Bill" and when enough do that, the conversion price for BTC will snowball downhill.

Well, to use Nigeria as an example again (as it's a real world case of this scenario) the price for 1 BTC there right now is about 30% inflated, north of $100K USD. This is directly related to it's ability to be liquid on a personal scale IMO.

I also have crypto accounts with an IBAN number where I can receive and pay into traditional bank accounts. I'm in the process of getting an international MasterCard that I can store a balance of multiple crypto assets on, but use to pay in any fiat currency anywhere that accepts MasterCard. The sophistication of the crypto space is very mature and is starting to make traditional banking look prehistoric in comparison. For my part, I feel like I have many more payment and reconciliation options on a global scale using crypto. The fact that it all runs 24/7 without any intervention is a nice side effect.

"..mass funding of economies is going on"
Makes it sound like savings are being invested back into economies to keep them productive. It's all just pixie dust now isn't it?

We made our first trade in bitcoin two weeks ago. We made our second trade a week later. The first trade was ill timed. Although it is not unusual, particularly with crypto, two of the platforms we use, have reached their internal limits over the weekend, in essence allowing only sell orders. Whether due to a shortage or out of self preservation, is unclear given its parabolic increase.

Yes, there's a big supply crisis incoming. Miners are starting to talk about holding any mined BTC indefinitely and using fiat loans to fund day to day operations. Meanwhile Tesla's hedge of 1.5B has increased in value by 1B making them more money on paper than an entire years of car sales. The flood of institutional investors hasn't even properly begun yet, but many are in the process of executing their hedging strategy right after 1400 firms that attended Michael Saylor's BTC playbook presentation just a few weeks ago.

For anyone starting out with BTC, make sure you have a non-custodial wallet where your coins are stored. There's no guarantee exchanges are holding the equivalent amount of BTC deposited and if they're not, things could get ugly. Remember - not your keys, not your coin.

And dont forget MicroStrategy just raised $1.05b at 0% interest to use exclusively to buy more Bitcoin.
Supply side liquidity crunch incoming.
This is a contributing factor to why I might never sell my coins, will I actually be able to buy them back in the future??

NOT YOUR KEYS, NOT YOUR COINS!

And why wouldn't you just borrow Fiat? Its losing value against Bitcoin at a phenomenal rate, and only costs 2-3% if you are adding to to your mortgage for example.
I have locked some Bitcoin up as collateral to borrow USD back in November. Initially was at a 33% LVR but with the price appreciation of Bitcoin, its now at about 8%. Used that money to.....you guessed it, buy more Bitcoin :) Just another form of leverage.

"Meanwhile Tesla's hedge of 1.5B has increased in value by 1B making them more money on paper than an entire years of car sales."

A nice snapshot of our brave new world under the Musk economic miracle
Output is a sideline
Its leverage, subsidization and paper gains where the game is at

Simply as a trade, ( not only those with bitcoin wallets), and irrespective of the value, the exchanges we use, appear to be trapped presently by the momentum and vol in trades . Unless they can flush out sellers legitimately or by price spikes(crashes), the weight of buyers /holders seems to be pushing up against the wall of traders/ETF trades and institutional/other purchases, exposing them again to some unpleasant realities.. Whether this continues after the same platforms adjust their margin requirements in March is unknown.

As a comparison, Forbes estimates that there are 2095 Billionaires in the world, who funnily enough "control most of the worlds wealth", what a surprise. https://www.forbes.com/billionaires/

Here are some reasonable estimates of Bitcoin distribution for anyone who is interested. If you can't be bothered reading, the summaries are:
"An unprecedented experiment in fair distribution"
"Bitcoin the most equitable cryptoasset in existence"
"The growing distribution of assets such as BTC and Tether is a positive sign that these assets may find real use cases and eventually end up in the hands of a higher number of individual users. In general, the above data suggest that Bitcoin may act as a base for a more honest economy."
"Bitcoin is fair distribution by design."

https://3commas.io/blog/distribution-of-wealth-in-bitcoin-and-other-cryp...
https://coinmetrics.io/bitcoin-an-unprecedented-experiment-in-fair-distr...
https://news.bitcoin.com/this-is-how-much-btc-you-need/

Hi PDK the link didn't work directly but there is an item about aTiwai environmental risk, was that the read of the day?

Might have run afoul of the Aussie stoush - was via MSN. Try this:

https://www.newsroom.co.nz/ecological-decline-can-no-longer-prop-our-eco...

Fantastic article, finally this stuff is getting into mainstream press. Unfortunately the general public will be too dumb to understand the "ratchets", let alone think about how to respond.

I warned about that on these pages ten years ago. Look at the google earth and see all the vacant land to the East of the smelther, and their exclusive access to it. That is where it is all buried, in lined pits just back from the sea. Leaving the mess for some future generation to deal with the clean up, while extracting the profits today. There probably isn't a better example of how the environmental cost isn't priced in to modern economics, to the way we conduct our affairs.

Here is an interesting theory...what if the US government actually wanted the Bitcoin price to pump?

https://youtu.be/Yfx_VPgcRpg

How is the USA going to fund it's deficit spending? Or New Zealand for that matter.

15
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To all you forecasters out there rushing to predict interest rate rises in the near future (next 12 months) have a closer look at the TWI. At 74 it is over 3 above RB forecasts for 2021. That is a major tightening.
On the farm we are feeling it. Despite US prices being higher than expected and strong China demand for beef, farmers are currently being paid less than the 5 year average price per kg. Venison for different reasons is well below, and the recent star of our red meat industry, lamb, is barely bouncing along at the 5 year average.
Apart from dairy everything is not rosy down on the farm yet we are being held up as NZ's economic saviour.
And with dairy many of us have had a below average production season.
Tourism is in the toilet. The economy is adjusting to new work practices, including working from home and internet shopping, these could have significant unforseen impacts on employment rates.
The ONLY part of the economy that warrants higher interest rates is housing and I trust the RB wont strangle the rest of the economy to fix that problem.

Seriously unbalanced economy.

Aye, a general sense of a country in a cul de sac.As for housing, not a good place to be hoist by your own petard either.

We'd had promises of interest-rate increases for years:
https://www.businessnz.org.nz/__data/assets/pdf_file/0009/68319/Forecast...

"Therefore the future direction of interest rates is likely to be up rather than down as global demand for credit increases. Escalating government debt both locally and internationally will also continue to boost long-term interest rates."

You have to understand that these are economists, this is a finite planet, and their counting fails to factor it in. AT ALL. They're not just flying blind, they're totally ignorant. Every time they try to 'raise rates' from here on, the system will cave-in. Debt is maxed-out on the basis of zero rates, the defaults and knock-on no-spends would KO the whole shaky edifice.

And you're right; housing - along with shares, bitcoin and collectibles - is what is soaking up the debt, without which the reduction in real underwrite would be transparent. Stop that little sponge, and the carnival is over.

The latest loony suggestion from Eric Crampton on housing:
https://i.stuff.co.nz/business/opinion-analysis/124314094/time-to-stop-c...

Actually looks quite sensible. Continuing the current policy settings is loony the loony option.

Why is it 'quite sensible'?
Anyone who knows anything about planning and urban development knows you are lucky if you get one person in a street supporting high density zoning/housing, let alone 60%.
It's just more neoliberal nonsense.
Oh, but it all sounds so nice!!!

You only need a handful of streets to vote for it to get big progress. Such proposals won't get through in most streets or blocks, don't need to, and probably shouldn't. However getting through in even a few blocks will allow rapid densification and largely remove government, the largest handbrake, from the process. It would also be a needed kick in the backside of landbankers and developers who carefully stage their projects to maximise price to know there is a possibility of unexpected competition coming up from such proposals.

Can we have that conversation about appropriate immigration levels now?

I would say it would get through in almost no streets or blocks, hence it's a stupid idea....
It's just more neoliberal nonsense. Sounds great in the abstract, doesn't work in reality...

Just incentivise councils to consent like many other countries. I suggest an up-front payment to councils for new dwellings completed (per dwelling to encourage approvals) and a cap on rates for older dwellings to encourage redevelopment so cities can densify.

"Grow or die".

" but remember about 1000 major holders control most of it"

I don't think this is really true. Most of those 1000 will be exchanges or entities like grayscale that hold on behalf of investors.

It's not true. The actual answer is no one knows. But as a comparison, Forbes estimates that there are 2095 Billionaires in the world, who funnily enough control most of the worlds wealth, what a surprise.
https://www.forbes.com/billionaires/

Here are some reasonable estimates of Bitcoin distribution for anyone who is interested. If you can't be bothered reading, the summaries are:
"An unprecendented experiment in fair distribution"
"Bitcoin the most equitable cryptoasset in existence"
"The growing distribution of assets such as BTC and Tether is a positive sign that these assets may find real use cases and eventually end up in the hands of a higher number of individual users. In general, the above data suggest that Bitcoin may act as a base for a more honest economy."
"Bitcoin is fair distribution by design."

https://3commas.io/blog/distribution-of-wealth-in-bitcoin-and-other-cryp...
https://coinmetrics.io/bitcoin-an-unprecedented-experiment-in-fair-distr...
https://news.bitcoin.com/this-is-how-much-btc-you-need/

The US Fed says insolvency risks at small and medium-sized firms “remain considerable” even as their economy emerges from the pandemic.

What won’t go away is the nation’s fantastic economic mess. In just a few months since Thanksgiving, the financial system has gone through an epic shift, barely noticed by citizens preoccupied with unpaid bills, skipped rents, and empty refrigerators: the stock markets are now based on Bitcoin, which is to say on less than nothing. A whole new dynamic has emerged with publicly-held companies buying the stuff hand-over-fist. An outfit like Tesla, rumored to manufacture electric cars, invested $1.5 billion in the crypto-currency, which has shot up to over $50,000-a-coin in recent weeks. The move was so splendidly shrewd that Tesla’s stock price also shot up, though they don’t make a profit on those cool cars. Of course, $1.5 billion is chump change for the charismatic Elon Musk, whose share of the American GDP can be seen from outer space, like the Great Wall of China. Link

Popular culture, competence, justice and values and the dream of betterment may have been the pillars on which the USA’s soft power was based, but the ground upon which those stood was success. Success made the others attractive; success is the most powerful attraction. The West is losing its aura of success – endless wars, divisive politics, COVID failure, financial crises, debt. And ever more desperate attempts to hold power against ever bolder dissent. It’s just beginning. And not just the USA, the West doesn’t present well any more: protests in Amsterdam, London, Berlin; a year of gillets jaunes in France. The world is watching. Not efficient, not attractive, not law-based. Not successful.

Patrick Armstrong

Salient points Audaxes. The Elephant in the room is the spiritual decline of the West. We've pursued post-modernism and the empowerment of self as God at the expense of the moral fabric of our society. I've mentioned Howe and Strauss before, but history is increasingly lining up with their 4th turning pattern theorem of events. If Howe and Strauss are indeed right by looking back to look forward, then the big economic question is which system comes next?