US producer prices rise, factory production falls; Canada employment stutters; China clamps down on local govt borrowing; Fitch affirms AA rating; UST 10yr at 2.90%; oil up and gold unchanged; NZ$1 = 73.8 USc; TWI-5 = 74.4, bitcoin leaps

Here's our summary of key events overnight that affect New Zealand, with news bitcoin is back over US$10,000.

But first in the US, the inflation theme is intensifying. Producer prices there rose +2.7% in the year to January, up on the prior month and well above analyst estimates.

Meanwhile, American industrial production sagged in January and was not quite as strong as first reported in December. It fell -0.1% in January from December, the first stumble since mid 2017, and the December gain was revised down by ½%. Both levels are below analysts' expectations. (But having said that, it is still +3.7% higher than the same month a year ago - they are just not adding to those healthy gains.) Capacity utilisation also fell.

In Canada, the latest data on employment growth seems tame and well shy of what they were achieving for most of 2017. However they do have growth in January 2018 even if it is small, and that contrasts with the decline reported in January 2017.

In China, new regulations have been issued to prevent local authorities pledging land rights when they issue new bonds. In the past, many have pledged land-usage rights and other public infrastructure assets such as schools, hospitals and public squares as part of their assets, fueling an explosion of debt-based fund-raising. That avenue is now closed.

In Australia, the Canadian buying dairy company Murray Goulburn is signaling that their artificially low "$1/litre" supermarket milk price will end if his bid is finalised. He is seeking a majority of suppliers to back his bid.

Ratings agency Fitch has affirmed New Zealand's AA sovereign credit rating in a post-election review. It likes our governance standards, policy frameworks and institutions, and the commitment to prudent fiscal management. It sees "high" external debt and "elevated" household debt as vulnerabilities. If the 'prudent fiscal management' (read surpluses) dissolve even if debt levels say similar, that would clearly risk a downgrade.

In New York, the UST 10yr yield has resisted climbing higher and is now at 2.90%, down -1 bp on the day. The Aussie 10 yr is also at 2.90% and parity which last occurred 18 years ago, while the NZ 10 yr is at 3.02%.

Measures of market volatility however have been trending higher in today's trade. The Fear & Greed Index is strongly on the fear side.

The gold price is virtually unchanged this morning at US$1,351.

Oil prices are up more than +US$1 with the US benchmark now just under US$61/bbl and the Brent benchmark over US$64/bbl.

The Kiwi dollar is also higher, up nearly ½c again at 73.8 USc. That's a gain of more than 1½c in a week. On the cross rates we higher too at 93.3 AUc and 59.1 euro cents. That puts the TWI-5 at just up to 74.4 and nearer the top end of its 2018 range.

And can you believe it? but bitcoin is back over US$10,000, an +8% rise on the day. Remember, it was at at US$6,914 ten days ago so the rise from then is +45%. Investment guru and Warren Buffet partner Charlie Munger overnight called bitcoin 'noxious poison'.

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9 Comments

The young killer in Florida was on anti-depressants, SSRIs
https://market-ticker.org/akcs-www?post=232986

It's sometimes hard to explain the sickness enveloping the West and sometimes poorer countries too..

So off the top of my head, 20 years ago diabetes was running at 3 in 1000 people, today in the USA it's one in 7 in the UK it's one in 16. Something like one in 6 people in the USA have taken anti depressants at some time in the last ten years, now Meth is back with a vengeance.

It's the 'unspoken' threat to our future.

https://www.nytimes.com/2018/02/13/us/meth-crystal-drug.html

https://medium.com/skhs-rebellion/prescription-drug-abuse-rising-among-t...

Can I believe Bitcoin back over 10K?...yes never had any doubt on that one.

25% of Americans own guns, there are as many guns as people, 3% own 50% of the guns.....40% of households have a gun.
Happiness is a warm gun.

Not a warm one - a locked and loaded one! Makes it ready to use. 2nd amendment and all that.

This is the reality of the USA, a country where 140,000 people in California sleep in tents every night. A country that since 1999 has lost 5700 soldiers in wars while 128,000 soldiers have committed suicide. Where every bridge in town has vagrants sleeping under it.

A country with little welfare except food stamps which 50,000,000 are on, a country where beggars are on street corners where in Ca, the only way to get a benefit is if you can somehow wrangle a disability benefit.
Where walking at night without a gun would not be advisable. Areas like Vallejo are becoming more gang controlled, it's not as bad as Modesto of Stockton or San Bernadino.

"Oakland was ranked the sixth most dangerous city in the study despite having the largest amount of violent crimes. For every 100,000 residents, 1685 violent crimes were committed in Oakland"

Vallejoans reported 865 violent crimes per 100,000 residents in 2014.
Violent crimes are defined by the study as any instance of murder, non-negligent manslaughter, forcible rape, robbery and aggravated assault"

Parts of the USA are dangerous, you bet you need a gun.

.. get the wall built, another across Canada and leave them to it. The place needs a revolution.

I wonder what sort of hit the Cullen fund has taken in recent days. Could be very ugly.

Of course bitcoin is back. When everyone is selling you should be buying.

Just dont be left holding them when the music stops