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Non-China Asia rebounds; building consents fall in Australia; drought inhibits global energy progress but world's largest economy improves anyway; UST 10yr 4.23%; gold jumps but oil slips; NZ$1 = 61 USc; TWI-5 = 70.3, bitcoin surges

Economy / news
Non-China Asia rebounds; building consents fall in Australia; drought inhibits global energy progress but world's largest economy improves anyway; UST 10yr 4.23%; gold jumps but oil slips; NZ$1 = 61 USc; TWI-5 = 70.3, bitcoin surges

Here's our summary of key economic events overnight that affect New Zealand, with news that non-China Asia seems to be on the rebound, and it is not just India driving it.

Japanese corporate spending on plant and equipment in Q4-2023 jumped an unprecedented (and surprising) +16.4% from the same period a year earlier. It was very much more than was expected and will ease some concerns about weak domestic demand. Companies are clearly looking ahead with optimism. It is not as though it is off a low base; a year ago they reported a very creditable +8% rise. This latest gain is the largest since this data series started in 2009.

In South Korea, their PMI factory survey shows conditions continued to improve during February. They have a sustained expansion in both output and new orders amid the launch and manufacture of new products, while also seeing a boost in confidence. Payrolls are rising too.

In Australia, they got some disappointing building consent data for January, particularly for building new houses. Apartments seem ok. Levels were weaker than expected, recording a -1% decline vs expectations of a +4% rise from the prior month. These consent levels were coming off a sharp fall in December which was revised sharply lower. The absence of a rebound and the approvals detail suggest there has been an underlying weakening, although we should to be careful with housing data over the summer holiday period.

The IEA released its 2023 Global Emissions Report overnight. Emissions increased by +410 million tonnes, or 1.1%, in 2023 – compared with a rise of +490 million tonnes the year before – taking them to a record level of 37.4 billion tonnes. An exceptional shortfall in hydropower due to extreme droughts – in China, the United States and several other economies – resulted in over 40% of the rise in emissions in 2023 as countries turned largely to fossil fuel alternatives to plug the gap. Had it not been for the unusually low hydropower output, global CO2 emissions from electricity generation would have declined last year, making the overall rise in energy-related emissions significantly smaller.

Total advanced economy GDP grew +1.7% but emissions fell -4½%, a record decline outside of a recessionary period. Having fallen by -520 Mt in 2023, emissions are now back to their level of fifty years ago in these advanced economies. Total CO2 emissions from energy combustion in the United States declined by -4.1% (-190 Mt) despite its drought and hydro hesitations, while the economy grew by +2.5%. Two-thirds of the emissions reduction came from the electricity sector. More from the IEA here.

The UST 10yr yield starts today at 4.23% and up +4 bps from yesterday. The key 2-10 yield curve inversion is deeper at -39 bps. But their 1-5 curve inversion is still at -78 bps. And their 3 mth-10yr curve inversion less at -117 bps. The Australian 10 year bond yield is now at 4.13% and up +1 bp. The China 10 year bond rate is now 2.37%, and back at its all-time low. The NZ Government 10 year bond rate is unchanged at 4.81%.

Wall Street has opened its Monday session with a minor -0.1% slip on the S&P500. Overnight European markets were mixed and bookended by Paris's +0.3% rise and London's -0.6% fall. Yesterday Tokyo ended up +0.5% to a new all-time high. Hong Kong ended unchanged. Shanghai ended up +0.4%. Singapore was down -0.4%. The ASX200 ended its Monday session down -0.1% and the NZX50 was down almost -0.2%.

The price of gold will start today up +US$35/oz at US$2117/oz. That is a new record high, eclipsing the previous all-time high of US$2,087 at the end of 2023 by +1.5%.

Oil prices are down -US$1 at just over US$78.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.

The Kiwi dollar starts today at just on 61 USc again, little-changed. Against the Aussie we are holding at 93.6 AUc. Against the euro we have eased to 56.2 euro cents. That all means our TWI-5 starts today at just on 70.3 and down about -10 bps overnight.

The bitcoin price starts today at US$67,311 and up +7.2% from just yesterday. That is another big gain and puts it just about its all-time high in November 2021. Volatility over the past 24 hours has been very high at +/- 4.0%. (It is very volatile as we post this, so it has likely changed again since.)

Daily exchange rates

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Source: CoinDesk

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96 Comments

Only just started....BTC..., OTC desks nearly empty.

And I see Luxy and Symone have spent my tax cut already announcing new fuel and regon fees. But glad the country is now back on track.

Edit...BITCOIN new all time high in the next 2 days....😂

 

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Good for you Bay (and lonewolf and 21trillion and J.C.)  I imagine you all rolling in digital dough. 😄

At least some people are celebrating. Good luck! 

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I have spent the last couple of days in between showers cutting and splitting firewood, while Mrs Bean has been bottling peaches. The neighbours popped in to tell us how well their  bitcoin is going and they will be buying firewood from the merchant in town. Who is the mug here?

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Oh bitcoin is pure speculation no doubt. You are right in your views Mr Bean. But sometimes you do feel happy for that reckless gambler who wins big at the casino.  

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Bitcoin will end in tears, but when? Who knows?

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When Black Rock owns them all!

This could be just Black Rock trying to suck up all that remain?

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You know Blackrock doesn't own them right?

I keep coming across people that think Blackrock is this some evil dominating entity that is the top owner of most of the companies worldwide. They simply hold stocks on behalf of others people through ETFs and charge a small fee to do so. Many Kiwisaver investments will be part of Blackrock holdings too. Far less exciting than some conspiracy theory. 

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Have you thought about who is buying Black Rocks ETF's Murry? Hint Boomer super funds..so your theory is suspect?

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Jesse and BW, didn't you get my sarcasm? But consider this, a few weeks ago it was commented on how much Blackrock was pumping into BTC. That this is because they hold investment vehicles for people, but that is an irrelevance at the end of the day, because if they end up owning, on behalf of their investors, all BTC, what then is BTC worth? 

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Well it could finish up like the diamond market where De Beers controlled the supply and price

or the silver market where the Hunt bros failed to control supply and price

either way its a gamble

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Except diamonds do look pretty, and they also have some very practical uses in industry. I've never seen a BTC, and being digital, no one else has either. As to usefulness ... not much I think unless you like to drool over the virtual value of your digital wallet.

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You need to work on your sarcasm and again you have asked the same question?

 

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Even if they do only own on behalf of their investors, how much influence do they wield to promote their own agenda?  Virtue signalling the ESG, stakeholder capitalism mantra, which is ultimately the agenda of WEF, which is leading us where?  You will own nothing and be happy, but these institutions will own everything, and they'll be taking as much as they can get.  They're just another financial institution with ultimate power and if we haven't had enough evidence of how that operates in our economy/society then we're blind.

https://thespinoff.co.nz/politics/08-08-2023/what-is-blackrock-and-why-…

https://www.investopedia.com/sec-charges-blackrock-over-investment-fund….

https://blackrocksbigproblem.com/the-problems/#:~:text=Forests%20are%20….

https://www.washingtonpost.com/business/2023/05/06/blackrock-esg-climat…

https://www.usatoday.com/story/money/2022/12/19/what-are-esg-investment….

https://www.crowell.com/en/insights/client-alerts/tennessee-ag-sues-bla….

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The NZD will end in tears, but when? Who knows?

That one is guaranteed. What happens with BTC long term really is an unknown. 

I think its going to outlive the NZD though. 

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Well if the NZD plummets, our BTC will increase in "value"

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No sure how a digit on a screen can outlive a currency back by 5 million people, ample food and water and lots of untouched minerals?

What ever happened to those fungible tokens?

We Asked The Experts: What Happened To NFTs? - TechRound

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Your currency is just a digit ..

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I think its going to outlive the NZD though. 

So think through what would be required for the collapse of our sovereign currency, the collapse of government, systems and services and subsequent cutoff from international technologies and trade. Dictatorship from an outside influence is more likely, then owning 0.00237 bitcoinz won't really count for anything anymore. You will be mined as a resource or left to fend for yourself. The value of that 0.00237 might buy you a jazzy apple if you live close enough to the tree.

What will outlive either is a matter of control, and there is already control over both. It's simply more convenient to them when you cannot withdraw your "worth". You're more than welcome to pick an apple from a tree though, there's value in that.

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We don't have a sovereign currency - we lost it when we gave the power to banks to create debt.

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Yeah. I cashed out in 2022 at 42k.  It was a tough time back then but back at my ATHs.

But got back in super low.  Not with everything.  But paid off my huge mortgage and I have a nice 300k or so nest egg in equities. 

Will have to jump off the ride at some point :)

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Really glad to hear this. 
Good Luck 👍👍

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Jump off with half when the BTC price is double what you paid for it. The other half will be risk free returns!

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Already risk free!  I only put back one quarter of my after tax proceeds from 2022.  Will never have a mortgage again and set for life even if it goes to zero 

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I used to think like that but changed my mind. It's very hard to get a 100 bagger in any investment when you take money off the table early. It makes a big difference to your long term returns.

If you have conviction in an investment, just choose the right position size for you and leave it alone. I'm prepared to lose it all when I make it.

The only reason to take your initial investment off the table, is if it makes it easier pschologically for you to hold the rest. But it will cost you a lot in the long run.

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Does anyone have any idea why gold surged? Bitcoin I understand.

I think this has to do with recent comments by governor Waller when he said he would like to see more short dated treasury on the Fed balance sheet. 
 

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Its rampant speculation, no logic is involved other than "looks like people are buying XYZ so I will". 

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Gold doesn't behave like a speculative asset. It goes up during a crisis or when Fed is monetising government debt.

Case in point, during 2021-22 speculation frenzy when all speculative assets surged, gold didn't go anywhere. 

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Generally, gold goes up as real US interest rates fall.

A big picture macro chart to always bear in mind. As total economic debt increases over time, the level of real yields at which the economy can remain functional becomes lower and lower. Link

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Were can I buy the Jimbo coin...be quick!

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US is adding 1 trillion of debt every 100 days might do it

 

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Soon to be every month!

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😄. Yes I guess. 

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Gold up ?  I see it as a flight to safety.

If you hold it physically, then you are separate from a. Wealth as something you see on a screen.  Vulnerable to some rule or law change.  b.  Equities, which look top heavy and somewhat crazy.

I'm thinking not many people have this view, but there is buying.

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https://www.stuff.co.nz/business/350195183/boat-retailer-receivership-i…

Boat retailer with 6 branches in receivership. Harbinger of recession or just a survivor finally losing its grip on the edge of the Covid cliff?

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The multiple speculation ponzis mentioned upthread - including bitcoin (an energy-sapping zero-otherwise-sum-game) - all had to run their course - as indeed does any exponential betting. The discretionary spends are the first to be shed (remembering the pages of Porsches for sale, late '87) but usually the house is falling right behind that. Globally, this has been coming - but artificially staved-off by QE and low rates - since 2008. They've done well, but were on a hiding to nothing; every year the boat was lower in the water, every year more passengers, every year more debt....

 

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Powerdownkiwi, have you ever given serious thought to getting into politics?

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Greenies in local politics are the worst for funking up the city, only have to watch Wellington CC since the 90s

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That's more caused by folk who insist they shouldn't have rates rises so defer necessary investment.

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Who needs water when you have Bike Lanes!

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Suggests a lack of actually looking at the orders of magnitude difference in investment in the two.

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Yes - then no.

I was a County-Councillor until '89, so right through '87. Advocated public transport and recycIing; I had a ways to go with my existential thinking. I was the only one at the table, without shares..... Thought it was a ponzi, couldn't see what was backing it - I have the Ariadne book somewhere, which confirmed my thoughts....

But in hindsight, the machine rolls on, until it can't. Having learned about Systems, I know now that the bigger System will continue to override all others - until it hits some limit(s). So I stopped trying to alter the existing System (the aim of which is economic growth) and decided to raise awareness of it's temporariness, and to engender a discussion as to how to live post-growth. 

Cohen was right - you cannot change the system from within (First we'll take Manhattan). 

One of the discussions in my circles - I'm part of a think-tank looking at the Limits to Growth, implications thereof - is how to address the sheer ignorance exemplified in the 'flying high' comment above. It is very obvious why and how that ignorance has been achieved - they have been told the planet is infinite, and chose to believe same, essentially - but what to do for them when it all falls away beneath their ideological feet, is an interesting question? Required skills will be food-production, practical health, low-tech infrastructure build and maintenance skills, and inspired local leadership. Speculation, not so much.... Belief in tokens having intrinsic value, not so much. 

 

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Sure you can try vilify people who don't understand you  but one thing for sure is that Tory Whanau and the wacky Wellington councillors are not the answer to Wellington. If the woke youngsters want to band together and vote en-masse for green pollies then good luck but don't come back despairing about the subsequent messes

For examples of recent debacles look at the politics around the theatre purchase and the town hall EQ upgrade

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Fair enough, it is questionable how much effective change could be made at the top. Sometimes one must cultivate one’s own garden.

It would have been entertaining though hearing you repeatedly say ‘bollocks’ to political opponents.

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I didn't work like that. I gave away a few to gather brownie points for what I considered important. 

But I did occasionally close the door. They could dish it back, too; I once came back from lunch to find a 5l pack of Tordon on my section of the table. I laughed, long and hard. 

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I hope the container was empty, that stuff is effective but expensive. Was it because you are anti chemicals

Whats your views on cars and roads.

Alot of young people say one thing but dont follow through such as Greta who flies to global warming conferences instead of online attendance. 

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Very true

it all brings back memories of 87, all everyone talked about at work was how their shares had gone up the previous day and they were looking at new cars and boats etc

Being a conservative banker I kept saying this can’t last but finally succumbed and went down to see the local sharebroker who I knew well

i know you are very conservative so I will only sell you some blue chip shares he advised

It was only a matter of a week later that the sharebroker had closed his doors and my “blue chip” shares  were worthless 

Luckily I had only invested a small amount but the broker went bankrupt because he was buying shares in advance with the intention of selling at a big profit 

It all happened so quickly and them the toys all started to appear for sale

 

 

 

 

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So true about the fever Harry.  All round it was a weird time.

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Boats are luxury goods. Fine for when the economy is tickety-boo. Also likely to contribute to improving the balance of payments deficit in a very small way.

With all those other luxury goods demand falling and added up together will make some impact on the balance of payments deficit.

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Cars and oil are the biggest drain on our balance of payment deficits and the new coalition just doubled down on them with their Transport GPS.

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Had it not been for the unusually low hydropower output, global CO2 emissions from electricity generation would have declined last year, making the overall rise in energy-related emissions significantly smaller.

There is no evidence that climate change is man-made, nor that CO2 is the culprit. Link

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Your sad link aside, the thing is an oxymoron, and the IEA (I'll read it to confirm) seem to miss offshoring.

The oxymoron is that the hydropower shortage will be traceable to less snow-melt. There's a hole in that bucket, dear Liza... Feed-back-loops have long been foretold, they're a 'thing' in the physical sciences. 

As for the First World reducing emissions - we've just offshored them (to others who make the stuff we consume and discard). Without accounting that, the claim is bollocks (as David C should be well aware).

As a knock-on, using ever-increasing debt to 'pay' those offshore folk, via the ratchetting-up of our 'valuations'  of our existing, aging houses - was a bit of bollocks too (as others above allude, vis US debt). We're increasingly being called...

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Audaxes,

There is no evidence that climate change is man-made, nor that CO2 is the culprit. Link    Is that what you believe? If so, please provide a simple explanation of your views. Please include your thinking on global glacier melt.

 

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If you were in the market for a Family home, would you buy today or in 3 months time?

...or yesturday?

 

 

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Sooner the better

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Wait till prices are at maintainable levels

:)

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Will our deposit survive the wait? :/

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Ask powerdown what he means by "maintainable levels". It sounds like fudging from a person in a privileged position 

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And more importantly, where?   NZ, Oz, or other?

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NZ, because family and friends.  

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If you need to buy a family home buy it.  Timing it really does not work.  You might win or might not on timing, but there is no certain win.

I have predictions on where house prices will go.  I believe in none of them.

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"Timing it really does not work."

Really? Can I infer you either do not read, or do not understand, CN's great posts on the subject?

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Stay calm and what is CN?

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Not trying to time.  It's 20 years savings, having watched familly homes disappear over the horizon last few years we have had no choice but to watch and wait.  It feels like we are finally nearing affordability but the ground is crumbling.  Do we stretch to get there, or wait just that wee bit longer?

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Tough situation.  But I suggest you buy it when you can.  If it's the right time, who knows.  But immediately in you will reap all the benefits of owning where you live.  Many of which are non financial.

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Buy when you're ready at a minimum of 20% down payment.  Late 2021 in hindsight was a bad time.  I traded up then, and the value dropped 15%ish (according to the bank) but we have plenty of equity to burn.

Too many are scared they'll over pay so sit on the side lines, paying $30k+ p.a. in rent and waiting for the market to tank.  Forgetting the time value of money and subsequent pay rises should inflate the debt away whereas the Landlord will take their cut of your pay rises each year when they jack up the rent.  

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When interest from TDs went to a little over 1%, I bought gold and ETH.  I guess I should be thanking Mr Orr.

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While you boomers are buying IBIT I'm farming the meme coin TRUMP / MAGA (wormhole) on Orca finance on Solana paired with WSOL - my APR is 1,400% APR (max range so lowest risk)  I'm not kidding.

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I'm not a boomer (unless you're familiar with the 30 year old boomer meme, in which case that is me to a T) - how would somebody with modest crypto knowledge and some existing holdings (I just DCA into BTC/ETH each week as a bit of a diversification play and it has been my top performer) go about doing something like you have outlined here.

I used to be far more up-to-speed with some of the more fringe aspects of crypto, but since starting a business haven't had the time to spend hours sitting in front of the screen like I used to.

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Download Phantom.

Buy SOL - send to Phantom wallet.

Go to coin gecko - get Trump SOL contract address (its down the bottom left, click on icon beside ETH address)

Go to jupiter exchange - swap half SOL to Trump

Go to Orca - go to pools, find Trump pool (one with most liquidity).  Click add to pool - click max range.

You are done. :)

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Lonewolfnz good on you for making some good money. But don't you agree that this is all so stupid? You have used energy and money to produce absolutely nothing, just because you can sell it on to someone else who wants to make money like you did. At what point does this nonsense stop? 

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You could say that about most things.

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Examples?

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  • Anything for sale in a $2 shop.
  • 99% of stuff from the warehouse
  • Anything flogged by an influencer.
  • Etc...

What critical part of human survival is reliant on it?

Is planet Earth better off because of it?

How does any of it advance humanity in a meaningful way?

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In most those cases you receive a product or service in return for your money. Sure that product or service may not be critical to human survival, but it has a value that you were happy to pay. In the case of a shitcoin you are buying something of no value in the hope that other people will temporarily demand it and give it value, I think that is quite different. 

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Many (but not all) altcoins have uses and yield.

Take uniswap for example.  A protocol that does billions or even tens of billions of trades in a day.  The protocol makes insane amounts of money and will soon allow token holders to stake their token and receive a dividend.

Ondo is moving treasury bonds and stocks onto the blockchain.

There are decentralized insurance platforms, personal ID solutions, games, AI protocols, stable / FX coins, commodities tokenized (PaxG), index funds on chain etc.  

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If you owned a million NZ dollar home. Would you sell it for 10 bitcoin?

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Right now yes because I'd get 1,070,000 NZD.

Would I buy 10 BTC now?  No because I did all my buying in the bear market when BTC was in the teens and everybody was laughing at it 

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That is the key though, doesn't matter what you or I think (I tend to agree with your assessment) there are plenty out there who do see the value, and are willing to pay.

If someone is willing to buy something, then there will always be someone willing to sell it and make a bit of cash.

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Almost no energy involved (I assume you are thinking of bitcoin mining)

What I have done is act as market marker.  Essential I am my own exchange in a way.

I take a risk (deploying capital into the base asset - SOL, USDT, ETH etc) and then I take on the other side of the trade.

I provide a service which is providing liquidity so other participants can trade to each other.  In exchange I take (usually) a 1% of each trade. Sometimes I lose money, usually I make money.

It is no different to the NZX, Easy Crypto, Binance etc.

And yes meme coins are silly (I agree) but there are plenty of non-silly stuff out there that attracts buyers and sellers and not always available on a CEX exchange (remember FTX?)

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1% seems like quite a large transaction fee. Crypto never seems to live up to the hype IMO. 

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Its the standard fee for exotic DEX swaps.  Larger pools are 0.03%, stable pools or huge pools (BTC / USDT) are 0.005%.

It may seem like a lot but remember these coins can make 1000% moves.

The reason people pay that fee is they don't want to use a centralized exchange or (more likely) the coin isn't even available on a CEX yet.  Early bird gets the worm etc.

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I totally agree.  CEX Is for dummies :)

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No. Depends on the CEX. Bitbank is fit for purpose on many levels. Thanks to the Japan Financial Services Agency. 

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Sounds more like a bragger in reality.  Reading an interesting book "The Courage to be Disliked", which suggest that those boasting about their superior achievements have a superiority complex rooted in inferiority.  It's ultimately a societal conditioning thing when one looks at the "values" of our culture.

Your comment does lead to other questions about "good" money, "honest" money and all that.  

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My D.o.B is clearly wrong, because after reading that, I now identify as a boomer.

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We need you to publish an article here giving some insight to the various wallets, coins and financing/repo trades.

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That would be a big article.

Part: 1:  Bitcoin.  Next week look forward to article 2 out of 35,000

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Better get writing then.

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lonewolf,

I didn't understand a word of that.

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Lonewolf:  *autistic rocking* ...... "lol Boomers are such noobs".  

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"Japanese corporate spending on plant and equipment in Q4-2023 jumped an unprecedented (and surprising) +16.4% from the same period a year earlier."

Tell me again, what are interest rates in Japan?

So the cost of capital is extremely low so businesses can invest for further growth?

Meanwhile ... back in NZ .... :-(

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The population of Japan is declining. There is political resistance to immigration. So Japanese companies have no choice but to invest in technology to maintain production. As a result the productivity per person will rise over time. They don't have to expend resources building endless housing developments. They can just make and sell stuff that the world wants. The X and Y generations of Japan will be very wealthy again by world standards. Once the boomer bubble exits. 

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Gold record high

Bitcoin record high (any second)

Breakevens soaring

And the Fed hasn't even started cutting rates yet.

People should be asking the central banks "if you can just print money, why are we paying taxes." It's a fair question to ask. Remember, Adrian Orr was laughing at you in front of his mates. And most people don't care. 

Unfortunately a financial and / or banking crisis appears to be on the horizon. 

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In case this helps in understanding; another way of putting this, is not that these assets are worth more, but rather people are dumping the dollar. The perceived value of fiat is dropping like a stone in anticipation of further devaluation to come. And it is coming. Just like when everyone thought their houses were worth more, no they weren’t. The NZD was just worth less because they made a lot more of them. 

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