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US jobless claims reduce, layoffs decline; US Federal deficit swells but private net worth jumps; China vehicle sales slip; S&P warns Australia; UST 10yr at 1.52%; oil and gold up; NZ$1 = 72.1 USc; TWI-5 = 74

US jobless claims reduce, layoffs decline; US Federal deficit swells but private net worth jumps; China vehicle sales slip; S&P warns Australia; UST 10yr at 1.52%; oil and gold up; NZ$1 = 72.1 USc; TWI-5 = 74

Here's our summary of key economic events overnight that affect New Zealand, with news of a wide range of variation in the major economies, and their prospects, as they exit the pandemic.

US jobless claims fell slightly last week, down to 709,000 and slightly less than expected. That was their lowest level in four months. There were another 478,000 initial Pandemic Unemployment Assistance claims. That leaves 4.6 mln people on these benefits which are being extended in the stimulus bill just passed by Congress. It will be signed into law today. Hopes are high it will transform the situation for millions and kickstart their economy. Equity investors are betting it will.

January layoff rates declined more than expected too, also a positive sign for the US economy.

The February US Federal Government deficit was -US$311 bln, and far higher than the same month in 2020 (-US$235 bln) and much higher than the -US$265 bln expected. For the twelve months to February, this deficit has swelled to almost -US$3.6 tln or -16.5% of US GDP. It is certain to go much higher before it starts to decline. A huge repair job is ahead of them after a long period of truly awful mismanagement.

But in the private economy, households are recording larger surpluses. Their net worth rose +10.2% in Q4-2020 from the same 2019 quarter to a record high US$130 tln. Rising prices for equities, real estate and other assets have erased losses inflicted by the pandemic and more, and half that gain was recorded in Q4 alone. One thing is very clear however; these stellar gains are not being shared equally among all households.

In China, February vehicle sales were 1.46 mln. That makes them the largest vehicle market in the world even though these February sales were sharply lower than for January, and even lower that the February 2019 level.

The ECB said it would ramp up the pace of its purchases of euro zone debt as it seeks to support the region’s flagging economic recovery. But 'faster' may not necessarily mean 'more' in the long run.

Australia consumer inflation expectations rose to +4.1% in February, a rise back to levels last seen a year ago. This measures consumers’ median expectations for price growth over the coming 12 months. It regularly overshoots actual CPI inflation which in Australia is currently running at 0.9%. A year ago actual CPI inflation was 0.7% pa, so consumers answer these perceptions surveys in an ironically inflated manner.

And S&P has warned Australia it must lower its deficit quickly or it will lose its coveted AAA credit rating. They are pointing out that federal and state deficits of about -14% of GDP forecast for fiscal 2021 are “inconsistent with a triple-A rating". About -10% of that is by the Federal Government and it seem to need to get back to about -3% quickly to satisfy S&P.

In New York, the S&P500 has opened today with a +1.4% rise in early afternoon trade. Overnight European markets closed with +0.5% average gains. Yesterday in Asian markets Tokyo closed up +0.6 and Hong Kong was up +1.7%. The Shanghai was up +2.4% with a big push in "home team" buying. The ASX200 ended its session yesterday unchanged and the NZX50 Capital Index gained just +0.2%.

The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 118,222,000 and up +505,000 in one day, especially in Brazil, so no let-up globally. Global deaths reported now exceed 2,613,000 and +10,000 in a day. Vaccinations in the first world are rising however and in the US more than a quarter (94.9 mln) have now had this protection. That is quelling their daily death rate although it did stay up at +1600 yesterday. The number of active cases there is down to 8,680,000 (-31,000 fewer in one day).

The UST 10yr yield is up +1 bp at 1.52%. The US 2-10 rate curve is unchanged at 138 bps. Their 1-5 curve is still at +69 bps, while their 3m-10 year curve is stable too at just on +150 bps. The Australian Govt 10 year yield is down another -3 bps at 1.66%. The China Govt 10 year yield is unchanged at 3.27%. But the New Zealand Govt 10 year yield has fallen another -9 bps overnight to 1.73%.

The price of gold starts today firmer in New York, up +US$6 to just on US$1724/oz.

Oil prices have risen more than +US$2 overnight to just under US$66/bbl in the US, while the international price is back up to just over US$69/bbl.

The Kiwi dollar opens today noticeably firmer at 72.1 USc mainly because the greenback has weakened. Against the Australian dollar we are softer at 92.8 AUc. Against the euro we are little-changed at 60.2 euro cents. That means our TWI-5 is at 74 and a small overall firming.

The bitcoin price will start today little-changed from this time yesterday at US$56,577. Volatility in the past 24 hours has been +/- 2.8%. 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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56 Comments

Crappy day for alt-coins - seems we might be seeing some bag-packing instead of people chasing stupid short-term returns like in previous alt-seasons. Nano has also had a sustained spam attack on its network, which has slowed transaction speed to a massive 3 - 4 seconds. Many BTC maxis have written it off as having had its day, but someone cares enough to try to bring it to a halt with transaction volumes BTC has never seen before. The joke will be on them if it drives improvements to the point where the only real technical weakness is no longer an issue.

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We're two days into a new bull run on btc though, so not surprising to see alts pull back. Wouldn't be surprised for this to continue for at least 3-4 weeks from here. I'm not sure we've even gone through the first sell off part of the cycle yet - https://d1-invdn-com.akamaized.net/content/pic9e47b3178eaae3e804090323e…. A notable exception is $ZIL up 18% in 24hr. Alts will pick up again during the next consolidation phase of btc as per the cycle where btc holders take profits and diversify their portfolios.

But picking 75k btc by the end of March from here. After that:

☐ 100k by May :)

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Could just as easily be 25k by end of march and 10k by may.

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Not if it follows the same identical log patterns its been following for the last 10+ years. By your logic you might as well say it could be $10M by the end of the year, but the data just doesn't point to that unfortunately.

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It's tempting to extrapolate, but as we know past performance is no indication of future performance

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Well that would be news to every single managed fund and market research company in the industry Brock. Although, I'm actually with you on that one - most of their "market research" is good for nothing in the current financial climate.

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Bring on new ATH's today!! less than 1k off. If we get some weekend trickery it could be really fun to watch :)

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Depends which alt coins you’re looking at. PayPal acquainted Curv earlier this month, just two weeks after IOTA partnered with Curv. IOTA’s integration with Curv means any application leveraging Curv’s institutional custody solution will have the ability to support the IOTA token.

IOTA is up 10% over the last 24hrs. PayPal moving into the crypto space is really a huge deal for the normalisation of cryptocurrency.

IOTA is crazy volatile right now.

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It seems there's still a lot of rational behaviour i.e. people responding to announcements (VET, IOTA etc) as opposed to buying whatever the cheapest thing you can find is and waiting a few days for someone else to pump it like we saw in late Jan/early Feb. It's possible that the late Jan rally was really the first shot of Alt-season; look at the way ADA pumped and then has just kind of gone off the boil. I don't know if we'll see explosive rises for the sake it like we have previously, but it's going to be an interesting few months.

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Buying crypto can be described as rational behavior?

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Maybe sitting it in a term deposit and losing out due to inflation is rational?

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France opening up, thankfully with no draconian vaccine passport rules.
"The foreign ministry said those flying to or from Australia, South Korea, Israel, Japan, New Zealand, the UK and Singapore will no longer need to have a compelling reason to travel.
All other restrictions, including the requirement for a negative test less than 72 hours before travel, would remain in place"
https://news.sky.com/story/france-to-ease-coronavirus-travel-restrictio…

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Would be great if we saw some proactive planning on how travel might open up for NZ.
For those vaccinated and arriving after at least 14 days in Australia just self isolation and home for 7 days and a negative test?
With our vulnerable population vaccinated within the next 12 weeks some sharing of plans would be helpful for business and communities to prepare for economic growth.

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Australia consumer inflation expectations rose to +4.1% in February, a rise back to levels last seen a year ago. This measures consumers’ median expectations for price growth over the coming 12 months. It regularly overshoots actual CPI inflation which in Australia is currently running at 0.9%. A year ago actual CPI inflation was 0.7% pa, so consumers answer these perceptions surveys in an ironically inflated manner.

Same in US - outsize expectations pinned to doubtful QE efficacy.

Year-over-year, the headline complete CPI bumped up to 1.68% broad consumer price inflation during February 2021. That’s up from 1.40% in January as annual comparisons in the energy parts of the bucket turned positive for the first time since last February. CPI energy gained nearly 2% year-over-year last month, from -4.0% the previous month, as the gasoline (motor fuel) index was 0.7% higher compared to -8.5%.

Despite these outsized contributions from oil and energy, just the 1.68% topline – even after nine months of +20% M2.

The primary reason was that the core CPI rate in February sank to just 1.28% year-over-year, the smallest since last June and one of the lowest rates on record. In the services sector, stripping out rent prices, this other “core” rate improved (1.23%) from January’s just about lowest on record (1st percentile) to nearest the lowest on record (3rd percentile).

Outside of crude and other commodities, only a conspicuous absence of inflationary pressures (see also: rent). Link

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Going back to the original comment: "so consumers answer these perceptions surveys in an ironically inflated manner." (how do you do italics and stuff?) Have you considered that the consumers, the people actually buying the goods, perception of future inflation might actually be the correct measure instead of the official CPI?? We all know that it is a load of shit, manipulated to show low consumption inflation where as inflation for anything you might strive for is ramping up at over 7%pa.

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The RBNZ (monetarist central banks in general) care not where the inflation lands they simply require the expansion....all the 'measurements' (CPI and the like) are window dressing.
If you look at broad money the past 12 months we have in excess of 12% inflation....and we know where thats ended up.

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(how do you do italics and stuff?

You post like a tech-focused expert on crypto but you don't know simple HTML tags?

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Yep, not really bothered with the coding side of it

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Not every car nut is a mechanic J.C.

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Still waiting for fhb’s to get off their chuff and organise a national rent strike. I cannot understand why they are not doing more than just posting comments.

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The problem is Jacinda.

A rent strike will not help with that problem.

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Jacinda would flinch at the first sign of anti-govt public opinion. She's HATES the though of any realistic push back to her government so much, she's cancelled her regular slot with Mike Hosking. A snowflake in Prime Ministers clothing.

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Burn her effigy on the stairs of parliament?

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Ezy, an example of the ever increasing disconnect.The pressured Christchurch City Council commits its even more hard pressed rate payers to $45mill to bare land in Central Otago for a pie in the sky international airport. Hardly an investment into the chronically afflicted basic infrastructure in their own city, but the government too has a part share in the airport venture, believe it or not. So the good people of Tarras, Wanaka and surrounds write to the PM advising over 70% of them don’t want a bar of it. And in reply oh I haven’t got around to thinking about reading the letter, or words to that effect. Right there for the people this one, not.

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Ironic, innit. CCC owns 75% of CIAL, has declared a Climate Emergency, and then CIAL goes and buys another airport-to-be.....

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Crosslegged I would call it. And that’s even without the input of the cocktail cabinet.

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Of course it would as it would add risk to an investment that the govt and central bankers have eliminated.

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No time - too busy working to pay the rent - minus the student loan, looking after elderly boomer parents, and "saving" for a deposit on that imaginary home.

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Renters United is a rising voice.

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The Prime Minister strategy is to handle younger voters with lollipop policies and bribe their parents generation with "moderate" house price gains. It's proving very effective!

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They are dong something...

Eco-friendly skydivers recite 100 strategies to stop global pollution during jump

https://play.stuff.co.nz/details/_6238841270001

I mean, cmon
How did they get up in the air?

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Haha, hilarious. Get woke go (morally and intellectually) broke

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Yesterday in Asian markets Tokyo closed up +0.6 and Hong Kong was up +1.7%. The Shanghai was up +2.4% with a big push in "home team" buying.
A global necessity - just last week: PPT? Stocks Rescued By Biggest Intraday Dip-Buy Since 2011 EU Crisis Bailouts
CCP, US Democracy? - both are in need of a dash of crony capitalism support from the state.

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Has anyone heard anything about the bryderwyns bypass? I thought there was meant to be an announcement last year but...

Not in today's news, but I seem to recall that several commentators on here were quite knowledgeable about roading issues.

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Hi realterms - are you talking about the road from Auckand to Whangarei?
I have not commented on roads previously - however
At this stage
4 lanes from Auckland to stop at Warkworth
4 lanes from Whangarei to stop at Ruakaka intersection
Planning/consultation for road between Warkworth and Ruakaka at this stage only to identify future path and designate land for future highway.
No money allocated by Waka Kotahi (NZTA) to fund actual build.
Moving from facts to my opinion - I would say 10 years before further 4 lane road construction and only if it gains political support.

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Thanks. I mean the Te Hana to Marsden Point section, specifical the bypass of the current bryderwyns route between kaiwaka/bryderwyns and Finlayson Brook Road. The sections north and south seem to have been announced but this bit left out (and arguably the most important bit.)

Ps. I think I have the official facts, so informed opinions and rumours most welcome.

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There is no commitment to spend money north of Puhoi or south of Marsden Point - except for improved safety features. The route is continuing to be consulted/planned in stages. The latest stage under discussion is Wellsford to Kaiwaka. The current conversation includes how to tie the next highway segment back into the existing road at Kaiwaka. One proposal is similar to the old junction at Albany where the highway just stops and a side road ties into the existing road. There has been no discussion beyond preliminary investigation of alternate ways past the Brenderwyns.
The highway is no longer a Road of National Significance and Waka Kotahi's funding reflects this.

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I share the interest and have given up on the Bryndwyns, west from Wellsford through Helensville is a nicer drive.
On the gossip front is the rail rejuvenation extending to Moerewa or was it electioneering spin, like the four bridge replacements?

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I don't know why we bother to read David's effort to produce the overnight statistics any more. They are totally divorced from whatever the real economy used to be. As we all know, the financially markets - all of them, including ours, have been Globalised - answerable to no one country or ideology. And those that thought they knew better in that enterprise are starting to panic.

Lagarde ramps up bond purchases to battle market turmoil...as the European Central Bank fights to prevent a surge in borrowing costs that could tip the Continent back into crisis

That smell of that fear must be noticeable on The Terrace in Wellington; in the halls of Threadneedle Street and the corridors of Constitution Avenue. Even we; the people, can smell it in the auction rooms across the country, and it's a fear well-founded.

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From my perspective it was interesting to hear how carefully Christine Legarde avoided the phrase "stimulus" when making her announcement. Perhaps the public are starting to realise that stimulus is for the wealthy while they must make do with austerity.

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But in the private economy, households are recording larger surpluses. Their net worth rose +10.2% in Q4-2020 from the same 2019 quarter to a record high US$130 tln. Rising prices for equities, real estate and other assets have erased losses inflicted by the pandemic and more, and half that gain was recorded in Q4 alone. One thing is very clear however; these stellar gains are not being shared equally among all households

Without doubt - US Household Wealth Hits Record $130 Trillion As "Top 1%" Have Never Been Richer While Poor Drown In Debt

Has the gap between unearned and earned income ever been so wide? So called front line essential workers must feel like discarded chumps.

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400 comments on a single article , and a housing one, possibly a sign that the team is divided , no longer along the lines of the probables and possibles , but the haves and have nots.
400 comments in 24 hours - a record?

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I've stopped reading the comments on property articles. It's just the same people saying the same things ad nauseum. Has been for quite a while now.

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Until the silent majority resorts to kinetic action in public.
This type of decision making shows ill-intent - Sunak defends budget plans and insists 1% rise for NHS staff is fair

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The rage in Interest's property articles comments keep me going

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Haha rage against the sighing of the plight

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Rosenstein,

Very good. I'll use that somewhere and claim it as my own. If I mention Dylan, will most think I'm referring to the ageing song-writer?

One of the best theatre nights i have had was Under Milk Wood in Glasgow, but with all Welsh actors.

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That sounds like a good time

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That is a reflection of public views on housing in New Zealand however, 'reducing house prices' isn't a policy. Rent controls, abolishion of zoning laws, taxes on second houses are all policies but at that level there doesn't appear to be any broad agreement across society where a majority would back any one policy. Compounding this is that most of the current political generation view housing a problem and not an opportunity.

As one writer on this site noted, it may be that we have a crash long before we make any progress on housing.

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:) Not sure, but it will be close to a record if it isn't. It is not a stat we monitor. But we do monitor the speed that Comments come in. It is the fastest to 200 comments (in 156 minutes), but it wasn't the fastest to 100 (that was a 2020 LVR article).

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Notice the difference compared to here on interest.co.nz
In all the media elsewhere, the screaming heads are dominating the headlines demanding the borders be opened

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Actually I wondered why Australian indices where up a lot yesterday, it look like they are going for border reopening in October:
https://www.goodreturns.co.nz/article/976518271/travel-stocks-rally-on-…

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" Rising prices for equities, real estate and other assets have erased losses inflicted by the pandemic and more"

Paper wealth papering over more and more of the widening gap between real production, and growth expectation.

Tell it like it is, eh?

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There is a reason it is grown south of the border. Such a dilemma.
"Their research shows that U.S. indoor cannabis cultivation results in life-cycle greenhouse gas emissions of between 2,283 and 5,184 kilograms of carbon dioxide per kilogram of dried flower.
The life cycle GHG emissions are largely attributed to electricity production and natural gas consumption from indoor environmental controls, high-intensity grow lights and the supply of carbon dioxide for accelerated plant growth."
https://phys.org/news/2021-03-insatiable-demand-cannabis-giant-carbon.h…
https://www.nature.com/articles/s41893-021-00691-w

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The supply of carbon dioxide for accelerated plant growth. Hahaha. Ironic. Right. So the green solution ;) is bush weed

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