Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
TERM DEPOSIT RATE CHANGES
None here either.
SETTLED
The dairy auction earlier today brought no change in overall prices in US dollars, but a -1.7% dip in NZ dollars. This is the fourth consecutive event where prices have basically held on to the large March jump. Fonterra said today that it will give a business update next Wednesday, and that will be where it sets its 'final estimate' of the current season's milk price, a milk season that ends at the end of May. ASB said today that the 2021-22 milk price might be as high as $8.20/kgMS. Where each analysts stands with this year's and next year's payout forecasts, is here.
COST PRESSURES BUILD
Business input costs are starting to move up in New Zealand, mirroring what is happening in other countries. In the March quarter they rose +2.1% higher than the December quarter, to be +1.8% higher than a year ago after the pandemic suppression. Output prices aren't rising as fast, up just +1.2% from a year ago. That absorption can only go on for so long before there will need to be a catchup. Interestingly, electricity costs were one area where pressure was high, up +21% year-on-year. Transport costs were up almost +10% year-on-year, featuring a +28% jump for "rail, water, air" transport. Road transport costs rose only +1.1% on the same basis. Remember, this data release is for the March quarter and the real impetus has come after that.
CAPITAL GOODS PRICES UP TOO
The cost of 'capital goods' isn't rising very fast, up just +0.6% from December, and up +1.9% from a year ago. The main pressure here is coming in the house building industry, with those up +3.4% in a year, and land clearing siteworks up +2.6%.
BUT NOT ON THE FARM
Farm operating expenses remain very much under control, except perhaps on dairy farms where costs (excluding livestock) are moving up faster than +2% pa.
HNZ BONDS POPULAR
Kāinga Ora/Housing NZ offered two sets of $50 mln in bonds today. The June 2025 attracted $191 mln in bids and was done with a yield of 1.18% pa. The April 2030 one attracted bids of $155 mln for an average yield of 2.19% pa. Both of today's yields are higher than the equivalent previous results. These issues benefit from a scarcity of bond supply generally. HNZ will only issue another $100 mln before the end of June 2021.
GOLD HOLDS STEADY
The gold price is now at US$1867 in early Asian trading and very little different from this time on yesterday. And this is very similar to the New York close earlier today at US$1869; London closed at US$1867/oz.
EQUITIES SHARPLY LOWER
The S&P500 fell away right at the end of Wall Street trading today, ending down -0.9%. Tokyo has opened -1.3% lower. Hong Kong is closed for National Day. Shanghai has opened -0.5% lower. The ASX200 is down a chunky -1.9% in early afternoon trade. The NZX50 Capital Index is down -0.9% in late trade.
SWAPS & BONDS LITTLE CHANGED
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. The 90 day bank bill rate is down another -1 bp at 0.34%. That is a -4 bps fall in a week. The Australian Govt ten year benchmark rate is down -1 bp since this time yesterday at 1.72%. The China Govt ten year bond is little-changed at 3.16%. And the New Zealand Govt ten year is down -1 bp at 1.90% but still above the 1.89% in the earlier RBNZ fix (-1 bp). The US Govt ten year is down -1 bp at 1.64%.
NZ DOLLAR MIXED
The Kiwi dollar has dipped today slightly and is now at 72.3 USc. Against the Aussie we have firmed marginally since this time yesterday to 93 AUc. Against the euro we are softer at 59.2 euro cents. That means the TWI-5 is holding at 73.7.
BITCOIN FLIRTS WITH $40K ON WAY DOWN
The bitcoin price is now at US$40,210 and down another -9.6% from this time yesterday. It is back to levels first reached in early January 2021. Volatility in the past 24 hours is back at extreme levels of +/- 6.5%. Update: Yes, it now has fallen to US$39,544, at 4:29pm.
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78 Comments
People are catching on that cryptocurrencies are worth only what the next fool will pay
That's how markets are supposed to work. The good thing with crypto is that there are no circuit breakers. It's a 'free market' compared to the hugely manipulated asset markets that most people are familiar with.
Yeah, tulip bulbs were a nice free market at the time too. There is no inherent value to crypto - or diamonds for that matter. Diamonds hold their value because we think they're pretty and supply is tightly controlled. Crypto are also hard to mine - but inherent value is hugely dubious. I remember the DotCom boom and bust well - I strongly suspect that this one will end in tears too.
I just don't understand why people say there is limited supply, hence why it doesn't devalue. But when there are an infinite number of different crypto coins that can be created, how is there limited supply? And depending what Elon Musk tweets, depends which is flavour of the month with speculators.
Because all that claimed “wasted energy” goes to protecting the only truely decentralised public ledger protocol that NO single entity can alter without consensus. It is an adiabatic/mathematically pure monetary network without any leaks (inflation). What is not to like about that?
I think until people are allowed to pay personal and business taxes in bitcoin then its simply a speculative mania. And if it becomes too threatening to the aims of major central banks and their policies to support fiat currency, then we may see intervention in terms of the legal use of it to trade. I don't see any other options from the position of central bankers otherwise and their current monetary policies.
Do you pay your taxes in gold bars? The bitcoin network will be the settlement later for the digital financial system. There will still be CB digital fiat currencies that everyone will use in their mobile/crypto wallets. They may also hold other crypto “assets” as well. But the bitcoin network will be how all the second layers apps sync/settle transactions. Banning crypto will be like countries banning the internet in the early years. Those countries who are brave and who adopt and shape its future will win (eg Hungary has cut its crypto taxes by 50%), and those who bury their head in the sand will lose. Classic game theory.
Can anybody enlgihten me as to what's going on with Bitcoin over the last month?
Exactly the same thing that's been going on for the last 12 years. Everything, nothing, BAU.
While I somewhat agree, the fiat currencies are being magicked out of thin air by hopeless policy from feckless leaders.
In that environment, a scarce item, no matter what it is, has value. It's why you see artists and others going wild making NFTs etc. In reality, the Mona Lisa doesn't have any intrinsic value and can be used as toilet paper if someone desired. But there is only 1 of them, it's scarcity makes it particularly valuable.
Yeah but how many of these can be created? You could make an infinite number of coins that have the same characteristics as Bitcoin. So supply isn't limited. And one tweet from Elon Musk causes a store of wealth to lose 20% of its value....well not sure it has the timeless characteristics of a long term store of wealth.
Dogecoin to the moon? (is that the saying?)
The network effect ensures the strongest competitor prevails. This is the one that all the miners and nodes have chosen to “support” and maintain. Doge hasn’t had any significant developer support for the past several year, and is a classic pump and dump, like the several thousand others that have tried to gain traction in the space. Surely you’re smart enough to see that? The bitcoin network is still in the relative early days of adoption, so yes there is definitely volatility there as the pricing of it via a free market (people seem to have forgotten what that looks like these days). There are over 5 billion people with smart phones in the world who are discovering crypto assets that can be stored and traded via mobile wallets, and only circa 120million users on the bitcoin network so far. Plenty of room to grow.
Do you think the recent arrival of wall street and institutional investors into bitcoin is coincidental with this latest “sell off”? And do you think they would arrive without using every trick in the book to shake out the paper-handed retail investors/traders, and grab their bitcoin at cheap prices? I’m not so naive. Whales are behind this dump. They move large quantities onto the exchanges to initiate sell-offs and liquidations, and then hoover up the cheap coins. It’s the oldest trick in the book, and one that doesn’t rattle hodlers. As the saying goes...I ain’t *** selling lol.
Bitcoin has been through 3 parabolic cycles on a log scale over the past decade and emerged as the dominant digital monetary network. There have been over 5000 failed challengers in this space over that time (incl the likes of dogecoin). It provides a way for billions of unbanked people in the poorest countries, whose currencies are collapsing, to trade their monetary energy into a digital store of value that they can access in a permission-less way on their mobile wallets. And it is protected by a wall of encrypted energy that is cheaper and less destructive than the armies and war that protect the petro-dollar legacy system. If you don’t believe in the future of what it will achieve, fair enough. But it certainly isn’t a bubble. The 200% average gains every year for the past decade don’t come without volatility. Those who do their proper DD understand that it is a treasury reserve asset to be held for the next 10+ years. Those being flushed out at the moment are the ones speculating on quick gains who have bought without true understanding and for the wrong reasons.
Bitcoin is just ON SALE
Buyer exhaustion kicked in during Bitcoin's extended stay between 50k and 60k. Couple this with profit taking and people swapping/selling Bitcoin to speculate on alt/s**t coins - price goes down. Bitcoin is the only 24hour, 7days-a-week, free-market on Earth.. NO Plunge Protection Team, NO sallow end of the pool.
A lot of detracting stories in the news cycle too. Holders will keep holding and add to their positions. Buyers just get more Bitcoin for their dollars.
Absolutely, just the first of a few 30-40% pull backs we will experience this cycle.
The newbies are selling this dip hard. They can not handle the physiological pain of seeing their $ value go down 40%.
1BTC = 1BTC
https://cointelegraph.com/news/1-1m-noobs-panic-sell-but-bitcoin-hodler… Note: HODLERS DGAF
Just for the sake of levity and giving Printer-8 something to comment on, I'm pretty sure (although I don't have any record at hand) that I made a sneaky buy of BTC around $62,500. Having said that I probably chucked it into something like Sushi-token that has done quite well
Still clinging to the horse and cart IO? The young and talented are building a new digital financial system that will be fit for purpose, right under your nose and you can’t see the forest from the trees. It was sad seeing Munger have the same attitude a few weeks ago. The legacy system is broken beyond repair, and smart money follows where the brains go.
Ouch! Lets hope Elon Musk doesn't tweet any more otherwise it might be the end of Bitcoin and then Dogecoin to the moon (is that the saying?)
I fully agree with you on fit for purpose etc - but the problem you will have is the central banks around the world who will find it threatening - nothing to do with me personally. You can take your argument up with the Fed. But if they decide they are doing to create their own digital currency, and outlaw the use of other coins, good luck. If it gets to a point where everyone (personal and business) can pay taxes in bitcoin, I'll agree with you. Until then, its just a speculative mania.
I think you are right. Inflation will arrive (already in the front door in truth) and get up & really going in a hurry. RBNZ will though just sit on its hands. Same scenario prior 2008 GFC, Dr Bollard & Co commenced rapid OCR hikes very late in the day and anyway the GFC itself addressed that particular problem effectively enough. The saying at the time, the RB arrives at the party too late, does too much and stays too long. Bet your bottom dollar, there will be a repeat scenario.
The 2021 register of pecuniary interests shows that the bulk of MPs are property owners, and that only a small number do not own a home at all.
Only five Labour MPs, three Green MPs and one ACT MP declare no interest in any real estate.
Act leader David Seymour does not own the property he lives in but lists family trusts, of which he is a beneficiary, in the register.
Yeah and noticed a significant no. held multiple properties also. Likely the same deal at the RBNZ. No wonder there is no rush to get any changes in to bring prices down!
RBNZ and Government are no better than companies running share buy backs. Filling their owns pockets at the expense of the market! Some serious moral issues going on here!
Bitcoin is the best hedge against inflation.
Yea right.
Great for a print out if you ran out of dunny paper.
Just moved all my alts back to BTC. Not worried about a drop to 33k which could be on the cards but unlikely given the RSI so I'm calling the bottom. From here BTC is going to a new ATH within the next month. I may even just sneak in with my 100k in May prediction, although a long shot as 100k more likely to be June at this rate.
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