Here's our summary of key economic events overnight that affect New Zealand with news US hiring has bounced back strongly - but so have inflation concerns
First up, the headlines say the US economy added +227,000 jobs in November, compared to upwardly revised +36,000 in October which was heavily influenced by Boeing strikes and the disruptions caused by Hurricanes Helene and Milton. The November rise was above market expectations of +200,000. Employment trended up in health care, leisure and hospitality, government, and social assistance while the retail trade lost jobs. Meanwhile, the jobless rate inched up to 4.2%.
Looking behind these headlines, total employer payrolls rose to 160.6 mln, a +525,000 rise from October and a +2.2 mln rise from a year ago. This is a significant swelling of employer payrolls. More broadly, their household survey has the employed workforce at 161.5 mln (which includes the unincorporated self employed). But that survey is not growing in 'actual' terms even if it is in seasonally-adjusted terms.
Average hourly pay is up +4.0% in November from a year ago. Average weekly earnings were up +3.7% as overtime worked slipped. These are better gains than expected.
This overall bullish labour market report was reinforced by the University of Michigan sentiment survey for December which rose for a fifth consecutive month to its highest level since April. Current conditions sentiment drove this. But rather than a sign of strength, this rise was primarily due to a perception that purchasing now would enable buyers to avoid future price increases. Consumers see inflation trouble ahead.
Canada also released employment data for November overnight. Their employment rose +54,000, almost all of it full-time jobs. But their jobless rate rose to 6.8% and a seven year high, as more people entered their labour market as their participation rate rose.
This probably means a -50 bps rate cut when the Canadian central bank next meets on Thursday NZT, taking it to 3.25%.
The widely-watched local PMI from Canada's Ivey Business School found a small rise in their expansion although not by as much as was expected. A modest but steady expansion is the best you can say about this.
In China, home loan interest rates are being driven down into the 3% range (depending on borrower financials) and there is talk that they may fall below that in coming months. There is widespread 'news talk' about how their housing market (and land sales to developers) are recovering, but the real evidence is yet to emerge.
We have noted this before, but it has suddenly got worse. The Indian rupee has fallen -0.8% in the past week, -1.6% over the past six months, extending falls that compounds the long-running decline that started 45 years ago, but has gotten particularly problematic now.
As expected, the Indian central bank kept its key repo rate at 6.5% for the 11th consecutive meeting in December. But they did cut the Cash Reserve Ratio by -50bps to 4%, the first reduction since April 2020, but basically aimed at boosting liquidity ahead of advance tax payments. That CRR cut was not expected. The rupee moved little after the central bank decision.
In Argentina, their central bank reduced its benchmark interest rate by -300 bps to 32% earlier yesterday as part of efforts to curb high inflation. This decision follows a -500 bps rate cut the previous month and marks the eighth reduction since President Javier Milei assumed office in December. The central bank policy rate is down from 126% in October 2023. Inflation in Argentina is down from a peak of 292% in April 2024 to 193% in October. Monthly inflation is however now running at an annualised rate of 32%. Many readers will remember Milei's election vow to dollarise the Argentine economy. That hasn't happened and probably won't now.
The OECD has released its latest update of its Economic Outlook. While it doesn't specifically cover New Zealand, it does point out in a release note that tensions are creating headwinds for international trade in both advanced and emerging markets, and it will probably get worse. They have a rather stunning chart about trade policy uncertainty, here.
The UST 10yr yield is now at just on 4.15%, down -5 bps from yesterday. A week ago it was at 4.18%. The key 2-10 yield curve is still positive but less so, now by +3 bps. Their 1-5 curve inversion is unchanged by -15 bps. And their 3 mth-10yr curve inversion is also little-changed, now at -34 bps. The Australian 10 year bond yield starts today at 4.29% and up +1 bp. The China 10 year bond rate is at 1.96% and -1 bp lower. The NZ Government 10 year bond rate is now at 4.46%, and up +4 bps from yesterday. A week ago it was at 4.47%.
Wall Street has opened its Friday session with the S&P500 little-changed again, up +0.1% and heading for a weekly +0.7% gain. But these are enough to claim a new all-time high. European markets were mixed overnight with London down -0.5% and Paris up +1.3%. Through all the political crisis, Paris is up +3.9% for the week. Tokyo ended its Friday session down -0.8% but up +2.3% for the week. Hong Kong was up +1.6% in Friday and up +2.2% for the week. Shanghai rose +1.0% on the day to be up +2.3% as well. Singapore was down -0.7% yesterday. The ASX200 ended its Friday session down -0.6% for a weekly dip of -0.2%. And the NZX50 fell -0.7% on Friday for a rather painful -2.0% weekly retreat.
The Fear & Greed Index ends the week in the 'neutral' zone and only a minor shift from the 'greed' zone where it was last week.
The price of gold will start today at US$2634/oz and down -US$3 from this time yesterday, and down -US$25 in a week.
Oil prices are -US$2 lower at US$67.50/bbl in the US while the international Brent price is now just under US$71.50/bbl. A week ago these prices were US$68.50 and US$72.50 respectively, so down a -US$1 since then.
The Kiwi dollar starts today at 58.3 USc and down -40 bps from this time yesterday and down almost -1 from this time last week. Against the Aussie we up +20 bps at 91.4 AUc. Against the euro we have dropped -40 bps to 55.6 euro cents. That all means our TWI-5 starts today at just on 68 to be down -30 bps from yesterday and down -60 bps in a week. We are approaching a six month low, primarily driven by the surging USD.
The bitcoin price starts today at US$101,044 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.3%. At one point it reached US$101,690, at another back at $96,747. A week ago this price was US$97,063.
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44 Comments
Meanwhile, in Russia ...
Russian Authorities Anxious Over Holiday Food Prices
Russia’s Sberbank Expects 22-23% Key Rate Hike
Russian Economy Shows Signs of Slowdown, Top Banker Warns
But some are doing just hunkie dory ...
Medvedev Buys $4.4M British-Made Luxury Yacht
Sucks to be a Russian in Pootin's Russia.
edit: Interesting to note too that Syrian rebels are closing in on two of Russia's major regional military bases, Khmeimim Air Base and the Port of Tartus, with the port having already seen the exit of most Russian assets. Pooting is doing so much 'winning' right now.
About that energy transition.
Fressoz, a historian of science and technology, says the fact is that, after two centuries of so-called energy transitions, humanity has never burnt so much wood, coal, oil and gas. The roughly 2bn cubic metres of wood felled each year for burning is three times that of a century ago, and not just in developing nations. The US burns twice as much wood as it did in the 1960s. Likewise, coal had the strongest growth in its history between 1980 and 2010, long after the industrial revolution. And while European countries have pushed coal out of their own energy systems, the coal used to make their imports means they still indirectly drive its growth.
https://www.ft.com/content/b8fb5e6f-ff28-47ce-b6b1-a8a91b94eb85
Bitcoin back over $100k as expected. Sell orders cleared, fundamentals still unchanged. There will be future volatility of course but volatility is required to price any novel asset class.
A question for the Bitcoin skeptics: what, if anything, could change your mind about BTC being a form of money with some clear advantages over other types of money?
The 15 year exchange rate going more or less steadily upwards is supposedly irrelevant. (Although when exchange rates for roubles etc decline this is meaningful apparently).
So what would actually change your mind?
A brave leader would quickly set up a NZ reserve fund in bitcoin..plus set up a data centre in Bluff and start mining BTC using free Hydro electricy.
I would take a tax hike if this was implemented...now que the fossil comment stream (aka David "BTC is no store of value").
I genuinely was wondering about a path via Bitcoin/crypto to a revitalised NZ.
Plan would be:
- Govt creates BTC strategic reserve
- Use over next decade price rises to clear mortgages for NZers (to primarily foreign banks)
- Simultaneously implement land taxes as mortgages are cleared
Would resolve issues around Treaty land ownership, put NZ on fairer taxation path with a focus on productive land use, and bail out the unfortunate sods who've bought into the NZ market recently.
NZ as a small nation could be a first-mover here and effectively hijack the global financial systems systemic changes occurring to launch into a far more prosperous future.
So crickets to the question too?
Let's say the EU declared Bitcoin a legal tender in the Eurozone, or Russia utilised it in trade, or Chinese government started mining it, or the USA went ahead with the strategic Bitcoin reserve.
You're saying none of these would change your view that BTC is just a ponzi? If so, you are emotional not analytical.
What if the EU created their own CBDC? And made it illegal to trade with Bitcoin?
I know you're just throwing a hypothetical out there, but it's extremely unlikely they'd make Bitcoin legal tender as they'd lose economic control. Also the volatility and Ponzi like characteristics of BTC make it fairly impractical for daily transactions.
Not really for me personally. If it does become legal tender great, but I'm not going to fill my boots with Bitcoin on the rare off chance that it does. Have nothing against those who believe it could become legal tender and are "hodl"ing. Risk and reward.
A lot of the talk about the US adding it to the reserves stems from how much the DOJ has been confiscating, and rather than flicking it off they could hold on to it.
Bitcoin is considered legal tender in Japan. The country recognized Bitcoin and other cryptocurrencies as legitimate property under the Payment Services Act 2017. Although cryptocurrencies are not classified as fiat currency, they are treated as "crypto-assets" and can be used for transactions.
No such thing as "global money supply" because many of those monies share foundationally different characteristics.
What we are observing is the data that was traditionally represented in fiat currencies draining into a variety of crypto (and other assets such as housing etc).
But it will drain form housing into crypto too, because housing makes very poor form of money and money is one of humanity's most important social technologies.
"No such thing as "global money supply" because many of those monies share foundationally different characteristics."
Really? Tell me how they are so different in the way they can be used? If a currency can be converted immediately - with no questions asked - into another currency - how is that not a currency?
I have one too.
I'd sold out. Muldoon came out and said it was all froth. My friend's father - staunch National Party supporter pretended he'd vote Labour because he said Muldoon had lost it. Anyway, he agreed to a bet I made with him that I'd buy one of each worthless share certificate off him for $1. He thought that was hilarious and agreed. There's a few of these around. No idea how much they're worth. .... They're as rare as Bitcoin. ;-)
The best BTC investors are the ones who sit and do nothing. Those who trade get rag dolled in taxes, trading fees, and bad emotional decisions.
When you borrow against it, the chances are not zero you will get liquidated at exactly the worst time. And many who diversity into other coins risk a complete losing proposition.
Naturally those who strike gold in sh*coins are winners when recycling their gains into ratty.
Because more and more people pouring into the Ponzi is in the interests of existing holders
This is true Z. A rising BTC price is in the interests of existing holders. If the BRICs nations continue to buy gold hand over fist, it's also in the interests of existing gold owners. Imagine if the Aotearoa Ponzi were a global reserve asset? That would be a silly idea I guess.
Anyway, the current chest beating around ratty is amping up. If we see a dump back to USD70K, things will quieten down.
Year to date up 136% so every reason to be happy for some. But as I pointed out before, the most hated crypto XRP is up 301%. And here's the thing. Do I believe in it compared to BTC? Not really. Does it have functional power? Yes it does but I don't know how to value it. So why do I own it and not sell it? Because I bought it for a pittance a long time ago. It's speculation pure and simple.
I understand what you are saying but it's important to differentate between Ripple and its technologies and XRP as a token. You can own the latter but you can't own the former (unless there's an IPO). I'm reckoning that XRP might strengthen as the ETFs emerge. People who believe it will 100x are fantasists. That only will happen with different tokens primarily in the defi space. If people want to play in that space, it's a 24/7 gig in my opinion and you need to be able to tap into the narratives.
So what would change your mind? If a strategic Bitcoin reserve was made? If Bitcoin was used to settle and pop transaction between countries? If a G7 nation made it a legal tender?
Lots of crickets to my original question, even though there are things that would clearly change the mind of any honest broker. The silence is deafening.
It's the competition from all the other crypto currencies that pose a risk to Bitcoin. Further, a few significant failures, thefts, hacks, collapses, etc. in the others will dent confidence in Bitcoin ... assuming it's not one of them. (And in four years time - the US will be forced to regulate to track crime and state malfeasance.) Fascinating stuff. Can't wait to see how it turns out.
My mind was made up when the taxi driver driving me back from a Christmas do was giving me crypto advice. ;-)
... Felt just like the Dot Com boom and the 1980s share market boom ... getting financial advice from taxi drivers is a very reliable sign that the something is very wrong.
Okay, so a random taxi driver permanently forged your view? And you proudly stand by this?
What about if the following happens:
- USA createa strategic Bitcoin reserve
- Microsoft starts holding BTC as proposed recently by Michael Saylor
- China settles an oil deal with a middle Eastern nation in BTC
Would any of those change your mind? Or are you saying no matter what occurs, you will not update your view? Cause that is quite a statement.
T&T: "Didn't really answer the question there."
I did answer your question. You chose not to think it through. So let me put it another way - There isn't really anything special about Bitcoin.
You mention the EU using Bitcoin in some way above. But why would they use Bitcoin? There is nothing stopping any government, state, company or even an individual from setting up their own. And central banks most likely will at some stage. And how could they use it? Goodness knows. There are many, many options. Fun times ahead. (And probably some extremely painful ones for latecomers as the starters of what has become Ponzi Scheme sell out.)
This reading comprehension is tragic. It's a simple question: What would change YOUR mind? Not "what are the potential outcomes in all possible worlds?"
And like I can say about all the skeptics in this thread: crickets. Not one of the lot of you can actually be open-minded enough to name something that would happen that would lead them to updating their views.
Maybe I'll ask explicitly and see if you have the flops to actually handle the Q:
- If a Bitcoin strategic reserve is established in the USA, would you change your view?
- If an oil deal between a major industrial nation and a Middle Eastern exporter occurred in BTC, would you change your view?
- If the EU made it a legal tender (even alongside other cryptos), would you change your view?
The cognitive dissonance on display here is highly amusing, people convinced they are right they can't even entertain the question but think extended verbiage doing anything but answering it isn't transparently a sign of cowardice or intellectual limitation.
I'll give an example just to really hold your hand.
I do not believe the moon is made of cheese. I am >99% confident in this point of view and very resistant to having it changed. However these are a few things that would make me change my view:
- If an astronaut on a recent moonwalk was filmed taking a slice of moon cheese and eating it with a cracker.
- If I at some point in the future took a trip into space on a commercial space travel group and went on the moon, and it was made of cheese.
- If a giant space mouse appeared in the sky and started nibbling on the moon one clear evening.
Are these outcomes likely? Personally, I think not. I am very confident none of these will happen. But I have planted flags saying what WOULD change my mind.
Can you (or anyone other skeptic) do the same for Bitcoin? And keep in mind that if only truly outlandish things would change your mind, that is as good as an admission that you aren't a serious thinker. If the EU making Bitcoin legal tender wouldn't change your mind, I question your analytical chops in general. If a USA bitcoin strategic reserve wouldn't change your mind, I wonder what world you live in and how you assess value at all.
Anyway, respond or don't but unless there is a serious attempt to engage the question in good faith and not just petulantly transparent avoidance, I won't be responding. Listening to avoidant skeptics has been one of the easiest ways to miss out on making serious gains in the single best performing asset of the last 15 years so I'm not going to start listening to you clowns now when you can't even talk the talk.
P.S. Little bit of unsolicited advice: avoiding questions or answering only the question you wished you were asked only looks clever to fools. To anyone with an openmind, it is transparent and harms credibility not just here but for future discussions as well.
Thanks I respect the good faith engagement, apologies if I was being a bit rude before. Hopefully understandable considering the tenor of the other responses I received from some other commenters but still no excuse.
A fair enough standard although I'd note that if this is the case I'm curious what you think about only two companies in the S&P500 having AAA rating.
https://www.thewallstreetinsider.com/trends/why-only-two-companies-are-…
Just to be crystal clear, it is the corporate bonds - and not the 'companies' - that are AAA rated.
Both companies have conservative balance sheets and strong forward revenues. Deserved ratings. (discl: have held MSFT for 12 years. So what happened 12 years ago? ;-))
I think you (like most) are unused to thinking in terms of a credit money with unlimited supply vs a commodity money with finite supply. And so are consistently wrong on what happens with BTC.
Every single person on this board would have a line where, if crossed, Bitcoin would be legitimised is their mind. Unwillingness to admit to this implies bias and emotional thinking.
I don't believe that lizard people run the earth. I am >99% confident in this view But if at a televised meeting all global leaders removed their skins and emerged as lizards, my assessment would shift based on new evidence.
Bitcoin being a sounder and better form of money would require far less extreme circumstances for that shift. So what would change your mind?
Dismissing it as a ponzi is one thing in 2014. But in 2024 when BTC has hit 6 figures, US politicians are seriously discussing a BTC reserve, the crypto industry played a key part in the US Election outcome, Putin recently came out saying BTC can't be banned, it is legal tender in El Salvador and Argentina, Blackrock is offering ETFs which were (and are) the fastest growing ETFs in history....
We are at the point of Paul "The Internet will be no more impactful than the fax machine" Krugman.
I know you'll dodge the question again but what would persuade you? Even in a hypothetical? An inability to even entertain a hypothetical is just cowardice and or a sign of intellectual limitation IMHO.
Btw I will absolutely be rubbing it in the next few years. We still have a 10x ahead of us by 2030, a potential 40x by 2040. In a similar vein to your "buy by December 2025" advice, you've now been warned. It is still cheap at $90k-$100k.
Which is not unusual, in a world where things are valued financially at odds with their real world function.
In 2020, WTI crude oil dropped to approximately -$37.63 per barrel - the first time in history that oil prices turned negative. This situation was largely confined to short-term futures contracts due for immediate delivery, as traders sought to avoid the costs associated with storing physical oil amid an overwhelming supply glut.
In the 'real word', you were not been paid to take it away.
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