Here's our summary of key economic events overnight that affect New Zealand, with news that oil markets are shrugging off the tit-for-tat drone missile confrontation between Iran and Israel. In fact, Iran said it now won't respond and that has taken some heat out of the situation. (But also see this.)
Meanwhile in the financial world, yet another key voting Fed member is out dampening down prospects of rate cuts. The Atlanta Fed boss said US inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate cuts.
In the US earlier this year their National Labor Relations Board ruled that Google, among others, was in fact a 'joint employer' of many contractors' employees who worked with it. Therefore it had employer obligations to them. Google lost the case because it has a longstanding requirement that contractors pay a living wage and cover its own employees with health insurance, among other benefits. But the NLRB decision forced Google to adopt a far more inclusive relationship and responsibility with its contractor's employees. Today, to put more normal distance between itself and those contractors, it has dropped those in-house standards with contractors so it "is not, and has never been, the employer of our suppliers’ employees." Pushing better conditions for contractor employees turned into an own-goal trap.
In China, and in all of March in all of the country, their incoming foreign direct investment was only +NZ$20.7 bln in March. But that was far better than the tiny +NZ$3 bln in March a year ago. Still the total for the the first three months of the year was down a startling -26% compared to Q4-2023, up just +3.9% from the same quarter a year ago which was unusually weak. From Q1, 2022 the current levels are -28% lower. It will worry Beijing policymakers that these levels are embedding in so low.
Japan's March inflation rate eased to 2.7% from 2.8% in February. This was what markets were expecting. Their core rate, excluding food and energy, dipped to 2.6% and a shift lower by a bit more than was expected.
In Germany, March data shows that their producer price deflationary impulse is easing. Their PPI was down -2.9% from the same month a year ago, but that was far less than the February equivalent of -4.1%. And those March producer prices actually rose +0.2% from the prior month and that was better than the no-change expected.
In the UK, retail sales volumes were unchanged in March from the prior month when a small rise was expected. Basically they spent more on fuel but that was offset by spending less on food.
In Australia, ASIC released data that showed 1131 businesses went bust in March, the most since they started collecting these statistics in 1999. The latest March data is up from 830 in March 2023, and just 439 nationwide in March 2021.
We should also note that it is not only the aluminium price that is rising at present (which is up +20% since the end of February), but the copper price is on the move higher too, up +16% in the same timeframe and actually approaching its all-time high set a year ago.
The UST 10yr yield is now at 4.63% and down -2 bps from yesterday but up +10 bps over the past week. The key 2-10 yield curve inversion is 2 bps more inverted at -36 bps. But their 1-5 curve inversion is unchanged at -51 bps. Their 3 mth-10yr curve inversion more inverted at -78 bps. The Australian 10 year bond yield is now at 4.34% and down -5 bps. The China 10 year bond rate is unchanged at 2.27% and still its lowest level since at least 2002. The NZ Government 10 year bond rate is now at 4.92% and down -5 bps from yesterday and down -3 bps for the week.
Wall Street is lower on the S&P500 in their Friday trade by -0.9% and heading for a sharp -3.5% weekly loss. Overnight European markets were mixed with London up +0.2% and Frankfurt down -0.6%. Yesterday Tokyo ended down a very sharp -2.7% for a weekly dump of -5.1%. Hong Kong was down -1.0% at the end their Friday session, down -1.6% for the week. But Shanghai only fell a minor -0.3% and managed a good net +1.7% gain for the week. However Singapore ended -0.4% lower. The ASX200 ended its Friday session down a fill -1.0% to book a -2.8% weekly retreat while the NZX50 fell -0.3% yesterday to be -1.1% lower for the week.
The Fear & Greed index has shifted much deeper into the "fear" range.
The price of gold will start today up by another +US$11 from this time yesterday at US$2394/oz, up +US$45 for the week.
Despite continuing Middle East tensions and uncertainties, oil prices have stayed lower at just under US$82.50/bbl in the US while the international Brent price is still down at US$86.50/bbl. Over the past week these prices have fallen -US$2.50 respectively.
The Kiwi dollar starts today at just on 58.9 USc and another minor -10 bps from yesterday. But that is down nearly -½c in a week however. Against the Aussie we are down -20 bps at 91.7 AUc. Against the euro we are also marginally softer at 55.3 euro cents. That all means our TWI-5 starts today just on 68.8 and a now -20 bps lower on the day, -30 bps lower for the week..
The bitcoin price starts today back up at US$64,323 and a +1.7% gain from this time yesterday. A week ago this price was US$67,601 so a -4.8% retreat from then. Volatility over the past 24 hours has been very high at just on +/- 4.9%.
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116 Comments
Something, something, economies of scale, something, specalisation, something, something, efficiency, something, increasing productivity, something, global market place, borderless movement of cash, something........ irrational ideological extremism, tenant economy bled of life and sovereignty, oops, full circle back to fuedalism.
We should also note that it is not only the aluminium price that is rising at present (which is up +20% since the end of February), but the copper price is on the move higher too, up +16% in the same timeframe and actually approaching its all-time high set a year ago.
The U.S. Treasury Department and the British government on Friday prohibited the 147-year old LME and the Chicago Mercantile Exchange (CME) from accepting new Russian production of aluminum, copper and nickel. Link
Cocoa’s futures price has doubled since the end of February (quadrupled in 12 months) due to reduced crop yields. Experienced chocolate hoarders know that a stash of the dark stuff has a shelf life of 2 years.
https://african.business/2024/04/resources/cocoa-prices-hit-records-as-west-african-yields-decline
This is concerning: The FT is mobilising people to stay invested, at the peak of the bubble... Quote Financial Times @FT · 7h Don’t let your pension run out of money https://on.ft.com/3U7sbOr | opinion Link
Equities extended their slide from a record, with the S&P 500 breaking below 5,000 and the Nasdaq 100 falling over 2%. More than half of the “Magnificent Seven” cohort of tech megacaps will report earnings next week — leaving investors wondering whether those firms are going to live up to the high expectations set for artificial intelligence. Just Friday, a pair of AI darlings — Nvidia Corp. and Super Micro Computer Inc. — sank at least 10%. Link
Shipping is a tiny, tiny fraction of the total cost.
And I'd add that we'd still need to load and unload from wherever the FFs were harvested from and the owners of new infrastructure would still require a RoR for the whole, not just the distance travelled. Were NZ to use our own FF the price difference by reduced shipping distances would be negligible.
"extract it" is the key point not the shipping. Check out open pit Borneo jungle coal mines, coal multiple handled on river barges and offshore ship loaders due to lack of deep water ports. All done with a fraction of the environmental constraints imposed on NZ mines. It was kind though, so all good.
Shipping is a tiny, tiny fraction of the total cost.
Flying high was talking about climate cost, not financial cost.
- somewhere else extracts it dirtier
- we burn more FF transporting it here
We are really good at devising standards (labour, health and safety, environmental), then exporting the problem away in the sake of cheaper living costs.
You introduced shipping cost. I responded. I also used "total cost" which includes both financial and environmental. And if I was replying to FH then I would have replied directly to his comment, not yours. Your ego is so massive that any correction to your folksie wisdom you take as an affront. Which then results in in even more nonsense as you try and weasel your way out. Grow up.
Its better for the climate that we supply our own O&G needs
That's the post I was referring to, that you replied to. And that was replying to the ethics of domestic FF extraction. You bought price into it.
Perhaps try tracking the conversation like a grown adult, rather than being too keen to jump on things in isolation.
If what I said was wrong, show me how it's better for the environment for us to outsource our resource needs and transport it here, compared to being done domestically.
Thats the reason I cant support greenies. When PDK makes anti-BAU remarks he has no alternative to offer except cull a third of the population and turn back the clock 250 years
I am in favour of being responsible with resources, we have a hybrid for example. We use less fuel
Fundamentally we have a system that promotes wastefulness that is actually making most poorer and the planet less well off. The only real solution is for people to dial back lifestyles, which won't happen because it'd be horrendously unpopular.
PDKs contention is resources drying up (which they have to be, given they're finite), but the problem is I think that's a lot further away than he believes. And that many of the issues we're facing are due to diminished returns from energy, which I also don't agree with, because it ignores so many other economic and demographic externalities.
About that "exponential growth" - you have run out of punters for the mindless exponential growth meme. Time to start planning for "asymptotic decline". At the rate we are going working age farmers, miners and care home workers are going to be scarce not oil or coal.
"Assuming the continuation of the current trajectory of our fertility and mortality (and even with some variation), the exponential population growth of the mid-20th century (doubling time of 37 years) is about to flip to an asymptotic decline, with the population halving every about 40 years."
https://insightplus.mja.com.au/wp-content/uploads/2024/02/Picture4-1.png
It really is.
There's no way for most people to be net consumers and be better off. If someone else is providing most of what you need, and the mechanisms to do that are so complex to be beyond your ability to acquire or operate them, the only logical conclusion I can see is that more people need to shift into being net producers and that would require a certain level of technological renunciation.
Far less resource intensive also.
We can't avoid the limitations on resources, so we have to figure out how best to address them. We could cut all the cedars down in Lebanon but that's not the brightest idea, it turns out.The discussion of better use of resources vs squandering them is not a call to destroy tech.
(Luddites were not actually about how they're traditionally perceived either, funnily enough.)
We're hoping to maintain or improve a lifestyle by trying to green swap into a significantly less impactful and resource depleting way of being.
Very hard to view that as much more than trying to get a square peg in a round hold.
It's how we're living, not what we're using to do it.
"When PDK makes anti-BAU remarks he has no alternative to offer except cull a third of the population and turn back the clock 250 years "
Try turning the clock back around 60 years...1960s energy consumption was around 1/3 of todays and the likes of Simon Micheaux estimates we will end up with energy production somewhere around 25% of todays as oil declines.
https://www.encyclopedie-energie.org/en/world-energy-consumption-1800-2…
Yes, shows how extreme the growth forever types are, that they can't imagine a smaller society, consuming less, with the energy footprint of a few decades ago. It's got to be grow until we fill the known universe, or a mass culling of the human population. Nothing in between.
In fact, Iran said it now won't respond and that has taken some heat out of the situation. (But also see this.)
Hmmmm...
Just Like Democrats And Joe Biden, Mike Johnson Supports An Open Southern Border
House Speaker Mike Johnson supported shutting down the Southern border until it got in the way of his real priorities: sending money abroad.
Meanwhile in the financial world, yet another key voting Fed member is out dampening down prospects of rate cuts. The Atlanta Fed boss said US inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate
Proof The Fed is FLAT Out Lying to You
The Fed is all over the place, flip-flopping sometimes within a matter of weeks. They're confident about inflation then they're not. What's the real reason for so much back and forth, the obvious insecurity? It's the story no one really knows and what actually ties the current day with the past Great Inflation.
Indeed, I was actively debasing fiat currency to the point I was no longer willing to accept it as payment for services rendered to my bank employer. I am happier being in receipt of unearned income than engineering rehypothecated US government debt collateral chains.
I keep more of an eye on business listings than house listings.
Seems like there's more coming to market recently, boomers getting to the end and wanting to exit the market coming into a down cycle.
Could be some good opportunities out there for those wanting some mahi.
Our Agri industry would be a good study in this and perhaps an indicator for others. With the average owner hitting 60 plus and the farm prices well beyond giving good returns there's been an inevitable drop off the cliff reaction in sold units.
Where to from here if no one wants to buy?
Be a great shame if we went in a generation or two from many Kiwi farmers on their own land, to few Kiwi farmers on the worst land and most prime farming owned by foreign companies.
A failure of governance and land speculation, presumably. Will we have sold our country out from under our own people, for short term gains? That would be a terrible legacy to leave.
Not quite sure where these so called beautiful farms are. The people who sold those properties were making no money with dry stock farming. so what do you suggest they should have done?
Oh that's right, they should have sold to someone else for FA so they can go broke also. And the cycle goes on, YAHOO!
Do not worry I am speaking from 40 + years of farming hard hills.
I was referring to Huiarua on the east coast.
That is about where we are at Palmtree, carbon is the NZ equivalent to subsidies on hard farming areas in pretty much every country we export to.
NZ have not got the economy to support farming, strangely AG is our number one earner. In theory we should be a third world country. Not quite sure how this is all working. What I do know is farmers in Asia, EU, Nth America and UK are all subsidized in one way or another.
They seem to producing a lot of food. Not sure how we can keep up with our eroding landscape, given we have only been farming for 100yrs or so. Looking around I can't help thinking that forestry or something else is the future for much of NZ
It's becoming clearer that the USA is out of step with most other countries that have been tackling inflation.
The big difference between the USA and those countries is that the USA government continues to spend up large, juicing the economy and keeping growth up. But this has come with a slower decline in inflation. These actions have been very different to just about all other countries tackling inflation.
The net result for Europe, and NZ (already in Recession), and others, is that by waiting further for the US government and/or the US Fed to act is only going to result in the non-US economies shrinking and doing untold lasting damage. (And I'll not mention that an inflated USD allows US interests to buy up non-US stuff while ensuring the wealthy doing the lending get wealthier as they extract higher interest and rents.)
The enthusiasts of the 'higher for longer' nonsense would do well to recognize what is going on. Very soon, larger central banks, e.g. the ECB, UK, etc. will act, and the RBNZ can at that time too (if not before). Any inflation from a drop in the NZD will be temporary - probably less than 6 months - and the RBNZ should (IMO) look through it. Further, the US Fed is likely to be forced to drop their funds rate if larger economies' currencies depreciate and give them a trading advantage.
Bitcoin halving happened about 4 hours ago - the block reward is now 3.125 BTC. In basic terms, new supply has been cut in half. In reality this is a non-event in terms of near-term price action. But we shall see what happens if the ETFs start gobbling it up like it's going out of fashion.
However, for the first time in history, humans have a form of money whose supply increases by <1% per year.
I didn't think Bitcoin was money...
Max Azzarello, the man who set himself on fire near the NYC courthouse where Trump is on trial, uploaded a video to social media railing against crypto. Max accuses Josh Kushner and Anthony Scaramucci of being involved in cryptocurrency, which Azzarello says is history's "largest Ponzi" scheme.
https://www.newsweek.com/max-azzrello-donald-trump-trial-fire-instagram…
Depends what definition you are using. Bitcoin can be 'money' due to its ability to be used as a medium of exchange, store of value, and unit of account.
Bitcoin is not a product of a central bank framework drawing from Maori deities. But then it never claimed to be.
Anyway, the USD price of ratty was $8,618 on the day of the last Bitcoin halving. So you could argue its monetary policy is working to strengthen its value.
So to be clear, the definition you use of Bitcoin is money. But others use other definitions?
If you want to define what money is, you need to start with the properties of money. The 3 most common properties of money are:
1. Medium of exchange: Facilitates exchange of goods and services by acting as a means of payment
2. Unit of account: Can serve as a standard measure of value, allowing for the comparison of prices, debts, and assets
3. Store of value: Enables individuals to save and store purchasing power for future use
People tend to go for 1, because "currency" is in Cryptocurrencies' name.
Very hard to have a system where your currency is mainly viewed as an appreciating asset and still have it used for actual trade.
Likewise, you can't have something who's primary reason to exist is to mostly trade, and have it appreciate. Unless the trade was also appreciating.
Sure. But let's think about it. If you walk into Starbucks or Maccas in Nu Zillun and hand over a USD100 bill, it's unlikely to be accepted, even though it arguably is the currency with the best store of value property among fiat currencies.
That doesn't mean USD is not 'money'.
The USD is used fairly widely as currency.
The NZD also.
Both have jurisdictions that accept them, and there's not a lot of crossover.
USD is widely accepted and used in the Global South. I would expect NZD less so. Perhaps the Pacific Islands.
Still doesn't invalidate BTC, USD, NZD as money.
USD are accepted in many places worldwide. In some parts of the world, it's being used more than domestic currencies.
NZD is extremely widely used in NZ
Where is bitcoin being used as money?
Two are really similar, once is largely currency in theory rather than execution. You can see the distinction, right?
So do you have any specific information about how widely?
I've heard so many stories over the years of entities that'll accept it for trade, but for the most part it's more of a novelty (i.e for those that do accept it, its involved in a very small number of their transactions).
How do you hand over a Bitcoin at Starbucks?
Starbucks does not directly accept Bitcoin as a payment method in their stores. However, in the US, Starbucks enables users of the Starbucks application an easy way to pay with Bitcoin.
Starbucks in NZ will unlikely accept USD.
This does not invalidate USD or BTC as money.
How much BTC is being used for actual trade and commerce, and where.
Much <1% of global trade and commerce. Only USD22 billion exchanged in past 24 hours.
NZD FX pairs are among the most traded globally, despite NZD only being used for a fraction of global trade in goods and services.
Still doesn't disprove that ratty doesn't share same properties as fiat currency.
22 billion changed hands, but in exchange for what? For the most part, likely other currency. As opposed to goods and services.
The foreign exchange market has a daily trading volume of approx USD6.6 trillion. More than any other instrument. And while ratty is only USD22 bio P24H, that is all 1:1 minus derivatives.
That still doesn't mean ratty is not money.
NACTNZF : the public service cuts will be from back-office staff not front line jobs.
Hiring freeze on doctors and nurses announced. They must be back office doctors and nurses....
https://www.stuff.co.nz/nz-news/350251921/hospitals-being-blocked-appoi…
At current rates of advancement, in about 5 years we will have an AI as smart as our best in any ONE field
About 5 years after that, (assuming same rates of advancement) we will have a single operational AI that's as smart as all of our experts combined... this will be interesting as you can expect some serious scientific advancement after that.... and then things will really go exponential.
Along the way it may learn to act dumb.... no way of looking inside to see what its thinking.... should be great at standup comedy.
Lets hope it plays nice.
Meanwhile, in NZ;
https://www.stuff.co.nz/politics/350252507/ministers-promise-it-will-so…
And might this be a candidate for quote of the year?;
“This will help bring back flexibility and discretion for banks to help customers in need,” said Banking Association chief executive Roger Beaumont.
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