Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
BNZ trimmed its key home loan rates but not below what others are offering. More here. The Co-operative Bank will also be trimming home loan rates tomorrow.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ also cut some TD rates, but apart from the 1 year rate, their other cuts were to rates 2 years and longer and did not affect the most popular shorter terms. The Co-operative Bank will also be trimming TD rates for terms 2 years and longer tomorrow as well.
DAIRY PRICE WATCH
Today's dairy auction brought a small -2.3% reduction in prices, as signaled by the weekly Pulse event last week. We should keep an eye on Chinese inventories, because they could rise quickly as their economy slows, and their lack of demand would hurt us. In a parallel environment of minerals processing, China's production in many sectors has been very high recently while demand hasn't followed - so inventories are rising quickly. They aren't out of range yet but unless demand picks up or production falls soon, they will quickly become a problem. The Aussies are watching nervously. We should pay the same attention to dairy inventories too.
NOT A DRAG AT ALL
Stats NZ is into its final updates ahead of the big Q4-2023 release on Thursday, March 21. Today, building work data was released and there were no surprises. Westpac's economists note: "Construction activity was broadly steady in the December quarter, falling just -0.1%. That was close to our forecast, with residential activity slowing but resilience in non-residential building." Q4-2023 residential building values were -1.3% lower than the same quarter a year ago, but non-residential completes were up +14.3% on that same basis.
TIME TO TAKE THE HINT
Spark told its Xtra email users that it will start charging for the service from May 16, 2023. The costs will be steep, $5.95/month if you are a Spark customer, $9.95/month if you are not. Basically they want you to go away - and you should. There are much better (and free) alternatives. Analysts have guessed there may only be as few as 20,000 active Xtra email accounts in operation, mostly legacy accounts from when the service started in 1999.
RBNZ SETTLEMENT ACCOUNT REVIEW UPDATE
The Reserve Bank (RBNZ) has provided an update on the review of its Exchange Settlement Account System (ESAS), which processes and settles payments between banks and other financial institutions. It says two significant issues have been raised through consultation being requests for ESAS accounts for non-settlement purposes, and clarification on how the policy would balance objectives around innovation and competition relating to requirements for integrity and reliability. This feedback warrants more research, the RBNZ says, leading to a revised approach aiming to "balance our initial risk-based approach with considering the benefits ESAS access brings, particularly around innovation and competition." The RBNZ is now targeting late 2024 to release the final policy and open invitations for new ESAS applications for non-bank applicants at the end of the year.
JUMPING TO A WRONG CONCLUSION
Readers of this column will recall us suggesting the the good Australian current account data was likely enough to ensure a good Q4-2023 growth outcome for economic activity (GDP) in Australia. Well that was a misplaced reading. The GDP data today disappointed many, with real economic activity up just +0.2% in the quarter, up +1.5% over the year. Clearly, the contribution from households was lower than expected amid budget and rate pain.
STICKY
We should perhaps note that the South Korean inflation rate ticked up above 3% again in February. They are having "last mile" problems too.
SWAP RATES HOLD
Wholesale swap rates will probably be little-changed again today. Our chart below records the final positions. The 90 day bank bill rate is down a minor -1 bp at 5.65%. The Australian 10 year bond yield is down -2 bps from yesterday at 4.10%. The China 10 year bond rate slipped an unusual -4 bps, now just under 2.33%. And the NZ Government 10 year bond rate is down -6 bps to 4.76%, while the earlier RBNZ fixing was at 4.69% and down -7 bps from yesterday. The UST 10 year yield is now at 4.22% and up +2 bps from this time yesterday. The UST 2yr is now down to just on 4.61% and so that key inversion is out to -39 bps.
EQUITY WINNERS & LOSERS
Wall Street ended down a full -1.0% the S&P500, dragged down by tech stocks. Tokyo has opened down -0.3% today and is now back below the 40,000 index level on the Nikkei225. Hong Kong has opened up +0.3% after yesterday's large fall. Shanghai is holding the line, unchanged. Singapore has opened up +0.8%. The ASX200 is down -0.3% in afternoon trade. And the NZX50 is down -0.4% in late trade today.
OIL SOFTER
Oil prices are about -US$1 lower at just over US$77.50/bbl in the US while the international Brent price is now just over US$81.50/bbl.
GOLD UP AGAIN
In early Asian trade, gold is now at US$2127/oz and up +US$16 in a day, and to a new record high. Aussie gold mining equity prices have had a +10% value rise in March aloe so far.
NZD SOFT
The Kiwi dollar has dipped another -10 bps from this time yesterday, now at 60.8 USc. Against the Aussie we are marginally softer at 93.5 AUc. Against the euro we are softer at 56 euro cents. That means the TWI-5 is down -20 bps today. It is not helpful being a commodity currency.
BITCOIN ALL OVER THE PLACE
The bitcoin price has retreated today, now at US$63,584 and down -7.1% from this time yesterday. But volatility has been extreme at almost +/- 8% today. At one point in the past 24 hours it rose to US$69,209; and at another it fell to US$59,707. Also, see this.
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62 Comments
I assume you mean bitcoin rather than all the defi products that generate real yield.
If so, no its not a zero sum game because the "Game" is measured in fiat currency. Hence we ask how many USD dollars is a bitcoin worth (currently 63k or so).
The reason it is not a zero sum game in fiat terms is that money is infinitely printed which raises the price of all assets.
Thus if we assume that bitcoin remains exactly as popular as it is now, with no halving, it will still go up in price over time in USD. Maybe more in NZD
You assume wrong.
No rentier activity 'generates real yield' (what a self-serving phrase).
That includes all 'financial activity', and much that is parasitic upon it.
If you've 'made money' in such spheres, somebody else hasn't by the same amount. There is usually a delay (before ponzis pop) and it depends on who is holding the Ariadne shares/bitcoin markers/kiwisaver vouchers when the pop happens.
When did you last do something productive? Do you have real skills?
I think you're right on a lot of things PDK, but not this one. You're close, but just thinking about it wrong.
The 'pop' won't happen in bitcoin. It has been, and will continue to happen in fiat currencies. That's the bag you don't want to be holding long term.
It's just a little slower than most people notice (up until the last few years). The air is deflating and people are looking to hold on to it somehow.
by powerdownkiwi | 6th Mar 24, 1:46pm
And in answer to Yvill's question; It's like migrating to the upper deck of the Titanic - a temporary 'save'. He, of course, would use that to argue that the sinking isn't happening....
No, actually I would say I have a better chance to board a life raft on the upper deck, whilst you, PDK would be on the lower deck, trying to explain why the ship is sinking.
I think you are confusing the two again.
If you think bitcoin is a ponzi going to pop, well its been around 15 years and the creator has not touched a single bitcoin.
Most web3 / defi protocols generate yield by a user paying a fee to use a useful product. So you might pay a small fee to acquire tokenized gold bullion for example.
Are you suggesting that the entire financial industry and rental property market (not just crypto) don't generate yield? So my term deposits for example?
"When did you last do something productive? Do you have real skills? " - Yes I work around 50-60 hours a week in a professional industry. I also do around 5 hours a week for charities and non-profits.
What do you do?
Well I'm not quite sure what it produces other than an opinion.
That said, if I concede this point I'm not sure that five opinion pieces in 10 years passes the de-minimis threshold ?
Back to bitcoin / defi - even if I was to concede my crypto adventures are non-productive the IRD would perhaps back me up in saying my tax contributions have been extremely productive (to them at least)
So over half of US mortgages originated in 2020 or later. That's right. 50%. The Fed - which held $0 of MBS in 2008 - held almost $1.4 trillion in March 2020, then nearly doubled their MBS holdings by April 2022 (2.6 trillion).
Great example of how our markets and behaviors are more or less dictated by the whims of central bankers.
Essentially, they have distorted the price of money making financing of real estate ridiculously cheap. This doesn't help FHBers. It helps investors - Ma and Pa / Blackstone.
Banks securitize the mortgages and the Fed pays them with their phony balance sheet money. And the hoi polloi have to deal with an unsustainable bubble that cannot be deflated without enormous real 'asset' losses.
https://www.bloomberg.com/news/articles/2023-03-03/most-us-mortgages-ar…
Super Tuesday appears to confirm that it will be two geriatrics running for the presidency.
One already frail, doddery, and showing visible signs of dementia. The other demented and moronic.
Either choice does not bode well for the "free world" over the next 4 years.
Putin obliquely states he would prefer Biden to remain which of course means the opposite. Interestingly though he reasoned because he considered Trump to be unpredictable. Why should that worry him though. Given Putin’s posturing that Russia is omnipotent, omnipresent and plain unbeatable, whether the USA president is predictable or unpredictable shouldn’t then make any difference should it.
To continue being the biggest hegemony, requires you to acquire - by any means - more resources than any challenger. If we ask who has the most resources, it's Russia by a country mile. Hence the vilification and niggling and the presence of Nuland/Biden Jr. Be very sure; what 'our' leaders do to others, is just as bad as what Putin is accused of doing.
Putin is smarter than both of them put together, and knows what is inevitable. Read his Thesis -
https://www.researchgate.net/publication/250171761_The_Putin_Thesis_and…
Note he didn't do economics - so he isn't energy/resource blind. But he knows the US will need what's under him, or die. That's how it works; Lebensraum fur Herrenvolk at global scale, 4x bigger and half a planet later.
At present yes, but the Chinese people want the lifestyle of their american compatriots, and to obtain that, they need more of everything.
We know USA's ascendency is on the wain, the question is will China achieve the same lofty heights. My guess is no, but that wont stop them from having a good ol' fashioned try.
The Khan family. Genghis & grandson Kublai founded the Yuan dynasty. Preceding that the Mongol Empire at its peak it had mopped up all of China and extended westwards as far as northern Ukraine. Now therein lies the opportunity of a big precedent for any spokesperson musing about reclamation of old territory. For a start what would be an ideal name to call the currency for the prospective land.
I don't think Biden would even make another 4 years, and Trump may not either, both for health related/age reasons. Trump could have a heart attack as he looks obese and unhealthy. Biden should have retired mid way through the term and given it to the VP so he didn't have to do 8 years. He was always too old and frail and is probably older than his number as he is an old looking 81 year old. Today Obama is 20 years younger than him, and even Bill Clinton is younger than him (he is the same age as Trump) and I don't think he could do the job today. It is not a good look to have an 86 year old president who is struggling at 82.
That Amy Castor article on the BTC halvening is a bit of a joke.
She is feverishly anti-crypto and has been for years and years.
Let's recall back to 2020 when the exact same arguments were put forward - miner's can't survive etc (has she even heard of the difficult adjustment?)
Back then the price was $9600. One year post halving the price was $65,000. Miners did quite well it seems.
She is feverishly anti-crypto and has been for years and years.
This is her schtick. Doesn't mean her position is necessarily right or wrong. And it might be just me, but her arguments are flimsy - not very weighty. Imagine her in a debate with Saylor. She'd be crushed but I suspect it would be too intimidating for her and would be unlikely to debate him.
And on Saylor, he's been pulled up on a number of occasions for his technical weaknesses re to Blockchain technology. But he's a powerful thinker compared to the likes of Amy.
Keep an open mind, be humble, and DYOR.
I would doubt that there are only 20k spark email accounts still in use. Where did that stat come from? If that was the case then I suspect they would cancel it. I know people who have been with spark for decades and haven't moved to another ISP because of the email address. But if they lost that address, I suspect they will shop around. I use one as my disposable junk mail address, to prevent my main email address getting bombarded with advertising emails. But I am not going to pay for it. So I am going to have to go through and update my email address with some of the companies I use it with. I notice a few don't allow the email address to be changed, or I get an error when I try to change it, which is going to be a PITA.
So, it continues...
https://www.rnz.co.nz/news/business/511018/tvnz-to-make-announcement-ab…
Cracks starting to emerge in Aussie (courtesy of The Australian)
Australia’s corporate insolvencies are set to reach the highest level since the Global Financial Crisis (GFC) as a tsunami of struggling businesses fail amid crippling debt levels.
Revive Financial head of business restructuring Jarvis Archer said broken businesses were queuing up to be wound up as the predicted insolvency “clean up” year gets under way driven by aggressive debt chasing by the Australian Taxation Office (ATO).
“With insolvencies forecast to increase, it appears they will exceed GFC levels in the coming year,” said Mr Jarvis. “A prolonged period of reduced consumer and business spending has left bank accounts dry and loaded balance sheets with high interest loans.”
In 1972, a crack commando unit was sent to prison by a military court for a crime they didn't commit. These men promptly escaped from a maximum security stockade to the Los Angeles underground. Today, still wanted by the government they survive as soldiers of fortune. If you have a problem, if no one else can help, and if you can find them....maybe you can hire The A-Team.
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