Breakfast briefing: The US gifts China global opportunities

Economy / news

Dairy prices rise as China demand returns; Canada inflation contained; German sentiment positive but less so; China sets lower growth targets; UST 10yr at 4.58%; gold up and oil mixed; NZ$1 = 56.6 USc; TWI = 67.1

22nd Jan 25, 7:19am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand with news dominated by Trump's shows of 'power' and theatrics. Toxic tech-bro masculinity is on full display. Senior female leaders are getting the chop or sidelined. But so far, also backtracks on trade threats. So we will stand back to await any real impacts.

But first up today, there was another full dairy auction today and it was a modestly positive one, although volumes sold were seasonally lower, the least since July 2024. Overall prices rose +1.4% from the last full auction two weeks ago, and perhaps the detail is more interesting than the overall result. WMP was up +5.0%, SMP was up +2.0%, and both butter and cheddar cheese had better than +2% rises from that last full auction. That takes the WMP price to its highest since June 2022. Stronger demand from China is part of the reason for today's rise, but better demand out of Europe helped too. In NZD terms, overall prices were up only +1.0% as the NZD rose and is higher than two weeks ago.

From the US, the flurry of Presidential executive orders is creating an opening for China to lead some key global initiatives, from health and the WHO, to climate change. While the US is becoming more isolationist, China is finding openings to be less so. The world's power blocs are getting new boundaries.

In Canada, their December CPI data brought few surprises, up 1.8% when a 1.9% rise was expected. But overall December prices actually fell from November and by slightly more than anticipated. Some sales tax relief had a part to play as well. With this result, inflation remained within or below the Bank of Canada’s midpoint target 2% for the fifth consecutive month, adding to current expectations of further rate cuts this year. They next review that official rate on Thursday next week NZT and their current rate is 3.25%. But trade relations with their suddenly unfriendly southern neighbour will dominate how they approach this.

In China, 15 of their 31 regional governments have set growth targets for 2025 less than they had for 2024. Only one raised its target. Basically soft domestic demand and an uncertain global trade outlook is motivating the pullbacks.

In Germany, any green shoots they may have been seeing have been snuffed out by households in defensive mode. The ZEW Indicator of Economic Sentiment fell in January from December, and by more than expected as inflationary pressure perceptions persist. But to be fair, this sentiment index is still positive, and has been since October, just less so.

Later this morning, we will get the December REINZ results, and the Q4-2024 New Zealand inflation result. The RBNZ's February 19 OCR review will be influenced by that.

The UST 10yr yield is now at just on 4.58%, and unchanged from this time yesterday. The key 2-10 yield curve is less positive at +29 bps. Their 1-5 curve is less positive at +18 bps. And their 3 mth-10yr curve has also flattened, now to +26 bps. It is not a ringing endorsement on the US policy changes by the bond markets. The Australian 10 year bond yield starts today under 4.48% and down -5 bps. The China 10 year bond rate is now at 1.66% and down -1 bp. The NZ Government 10 year bond rate is now at 4.67% and down -8 bps.

Wall Street is firmer post-holiday, up +0.8% on the S&P500. Overnight European markets were all up about +0.3%. Yesterday, Tokyo rose +0.3%, Hong Kong rose +0.9%, but Shanghai slipped -0.1%. Singapore dipped -0.3%. The ASX200 rose +0.7% in its Tuesday trade while the NZX50 fell another -0.3%.

The price of gold will start today at US$2740/oz and up +US$33 from yesterday.

Oil prices are unchanged at just over US$76.50/bbl in the US although the international Brent price is down -50 USc to now just on US$79.50.

The Kiwi dollar starts today just under 56.6 USc and unchanged from this time yesterday and holding its recent gain. Against the Aussie we unchanged at 90.4 AUc. Against the euro we are also unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.1 and again unchanged from yesterday.

The bitcoin price starts today at US$105,307 and down -1.3% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.3%.

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68 Comments

by murray86 | 22nd Jan 25, 8:13am 1737486828

An indicator of the chaos to come? In his inauguration speech Trump said "The scales of justice will be rebalanced. The vicious, violent, and unfair weaponization of the Justice Department and our government will end." and then pardons around 1500 people who committed real crimes against the constitution, the government and people during their invasion of the capitol.

Unbalanced would be a fair statement. What will be interesting is what can be done when the real harm he is doing becomes evident or can the Republicans keep him in check sufficiently to survive the full term?

Americans with any kind of world view will have to come to terms with the fact that it is very likely that the US will become a laughing stock across the world.

And how far down will the consequence of Trump politics reach? Can ordinary Americans be insulated from the chaos in Washington?

by Pa1nter | 22nd Jan 25, 8:19am 1737487195

Often rock bottom needs to be achieved in order for any substantive change to be adopted.

Hopefully Trumps presidency is that rock bottom.

by Whatwillhappen | 22nd Jan 25, 8:27am 1737487626

That's what we said last time around.

by tim52 | 22nd Jan 25, 8:29am 1737487794

murray he won the popular vote with the expectation he might do this. This is an electoral mandate if ever there was one. You can look at all the pardons Biden made as comparison if you would like. (I have zero interest in discussing these though)

For everyone suffering TDS, can you get it out of your system, quickly? Keep going until even you get board of it.

by Baywatch | 22nd Jan 25, 8:41am 1737488508

There's no cure currently Tim...4 years to go ..

by Gummy Bear Hero | 22nd Jan 25, 10:02am 1737493377

Man up , dude ... if I can endure 5 years of the appalling Ardern , you can suck it up with a mere 4 years of the terrific Trump ... 4 more years ! ... teee heeeee ... haaaaaa ... here , have a Gummibar , you'll feel better ...

by Te Kooti | 22nd Jan 25, 10:21am 1737494498

The left see themselves as "true north" and everyone else as extremists.

by murray86 | 22nd Jan 25, 8:47am 1737488844

True that. But you still have to ask if they truly understand what they have unleashed?

And Biden's pardons? Ordinarily he likely wouldn't have even considered them, but Trump's actions and comments make it increasingly clear they were justified.

by jbman | 22nd Jan 25, 9:17am 1737490668

It's entirely possible that Biden's pardons were illegal - there's no provision in the constitution for pardoning someone who hasn't been found guilty of anything. A pardon is not diplomatic immunity, and I expect these ones will be challenged.

The other issue with them is that a pardon must not only be given but also received, and accepting a pardon is equivalent to an admission of guilt. There is legal precedence for this.

Trying to justify this sort of thing by invoking the spectre of Trump is a cop-out. Criminals need to be held accountable for their crimes.

by murray86 | 22nd Jan 25, 9:24am 1737491050

I tend to agree. But will they be tested?

by Te Kooti | 22nd Jan 25, 10:24am 1737494675

There are issues with pardons apparently, they remove some of the receivers rights around pleading the 5th etc on other charges.

I'm not sure how you pardon someone who has yet to be charged, it's like a get out of jail free card. So bizarre.

by kiwichas | 22nd Jan 25, 3:59pm 1737514781

https://www.bbc.com/news/articles/cz7e0jve875o

Issue with a pardon by Trump, $200,000,000 drug dealer pardoned

by Time Lord | 22nd Jan 25, 3:36pm 1737513389

Can someone tell me why my comment got deleted?

I questioned whether Biden issuing a pardon to Anthony Fauci was justified.

Is that considered grounds for censorship on this website?

by kiwichas | 22nd Jan 25, 8:32am 1737487975

" can the Republicans keep him in check? " they won't, they are all full on for him as they see he is their route to power, esp Vance who will be hoping the orange one carks it or otherwise so he can be President.

by solardb | 22nd Jan 25, 8:44am 1737488671

Mid term elections might change that.

by ChrisOfNoFame | 22nd Jan 25, 10:12am 1737493939

They might. But the USA's billionaire owned MSM and social media will ensure it is not the landslide that would be needed to halt Trumponomics.

by Gummy Bear Hero | 22nd Jan 25, 10:14am 1737494048

... or not ... the Democrats have lost sight of their roots : the working class people ... much alike Labour in NZ ... the wheel of woke is turning , and regular old fashioned values with a dash commonsense thrown in is returning front & centre ...

by AN Other | 22nd Jan 25, 11:00am 1737496850

But when did the Dems last actually attract the working class?

Even back in the 1980s, blue collar workers voted for Reagan because he made them feel proud to be Americans (certainly not because his policies helped them (because those policies certainly did not)).

by Foxglove. | 22nd Jan 25, 8:47am 1737488820

For all its flaws the USA has always presented an independent and serious justice system that the people could rely on which was founded on the Supreme Court led by remarkable legal minds such as the great Chief Justice, John Marshall. Even the much maligned Aaron Burr as vice president contributed markedly to the constitutional law of the time. History amply records that when the politicians attack and undermine any nations justice system, then that nation is verging on great danger and so too are its people.

by murray86 | 22nd Jan 25, 8:50am 1737489000

"History amply records that when the politicians attack and undermine any nations justice system, then that nation is verging on great danger and so too are its people."

That's what my question is about. Is the Supreme Court too politically aligned to restrain the President or Congress? With these pardons there could already be an argument that Trump has gone against the constitution.

by solardb | 22nd Jan 25, 8:54am 1737489252

Not to mention lawyers are going to have a field day when all the "woke hires" etc leave their jobs and sue.

by Foxglove. | 22nd Jan 25, 9:09am 1737490164

Murray can only agree. Not only the Supreme Court but the underlying layers of all of the American legal system are appearing as being compromised politically and now under Trump, and Biden too, it has been weaponised. The abuse of Presidential pardons, overturning serious criminal convictions, is but the harbinger,

by yeahnah | 22nd Jan 25, 10:52am 1737496333

Justice system and public service have been compromised in NZ too. We have judges creating rulings on our constitution and the public service has been fully weaponized by the left.

by Silvi | 22nd Jan 25, 9:19am 1737490769

The same question has to arise of and about our own Justice system and the strength of our own democracy. A Judge awarded customary rights to Wairarapa Tribes very recently.

We have all ask ourselves do we wish to be a productive society with sane and sensible laws to grow or whether, as it appears, one South Island tribe will become a rentier to all of the South Island, mining water land and air.

We have Judges deciding the path we will take without any input from us. So lets look closer to home where we have allowed the airey fairy approach that either Tourism will save us or the like, daft discussions on value of housing, and reigning in the Banks instead of making a push for innovation and keeping it here.

An independent Banking system is what we must value and not have a Liz Truss moment because of fiscal irresponsibility. Or Judges taking away our property rights.

by murray86 | 22nd Jan 25, 9:28am 1737491294

And that's the point I was working towards. Much that occurs in the US eventually finds its way across the world and the concern I have is that we have lost sight of what 'Democracy" really means. It helps if we can watch, debate and learn from what is happening elsewhere to prevent the bad stuff happening here.

We cannot undo history, but we can ensure that fairness and justice are the base of moving forward. Something that governments appear to struggle with as the world becomes increasingly divisive.

by Whatwillhappen | 22nd Jan 25, 10:06am 1737493607

Newsroom covered this - the judge issued the grant on a provisional basis subject to the recent Supreme Court decision which tightened eligibility significantly, to the extent that the Government has paused its Bill in case the court judgement achieves its goals

by redcows1 | 22nd Jan 25, 10:19am 1737494387

A quick read on it would appear to me the court system working exactly as you'd expect.

by Colin Maxwell | 22nd Jan 25, 3:26pm 1737512768

I replied to your excellent post at 3:13 pm, Murray.

by profile | 22nd Jan 25, 8:31am 1737487894

The austerity it getting out of hand. Luxinda needs to be reigned in.

@MHReddell

When National was last in govt in 2017 there were 61 ministerial portfolios and as of yesterday’s announcement there are now 79.

by Te Kooti | 22nd Jan 25, 10:30am 1737495038

I saw that, we now have the most bloated cabinet in our history based on a National campaign manifesto of cutting lefty Labour bureacracy.

by kiwikidsnz | 22nd Jan 25, 3:32pm 1737513171

They could start with the low hanging fruit

"The Taxpayers’ Union can reveal through an Official Information Act request that Landcare Research gave $4,027,020 on the Oranga (Wellbeing) Project - including treating Kauri dieback with potions made from Whale-oil and music from whale song (yes, seriously) as part of the MBIE-administered National Science Challenges."

https://www.taxpayers.org.nz/whalesong_trees

Further, from the TPU email

“…we’ve uncovered that the “research” was outsourced to a private “not for profit” company: Te Tira Whakamātaki Limited.

And that’s when we came to a stunning realisation – which now explains why the departments have been so cagey about giving us information on the project…

According to Te Tira Whakamātaki Ltd’s website, its “Co-funder and Trustee” is Melanie Mark-Shadbolt.

And here’s the startling thing: Ms Mark-Shadbolt is also the Co-Director of the very same BioHeritage Science Challenge Science – i.e. the Government initiative funding the project!

I had the team work through the finances and Charities Commission records of Ms Mark-Shadbolt’s company. The company’s costs are almost entirely salaries (surprise, surprise!), and its charitable purpose is merely “Provides advice, information, and advocacy”.

by Baywatch | 22nd Jan 25, 8:37am 1737488269

Even more absurd is some of the people that voted for him wil be rounded up and deported....stupid is as stupid does

by Squishy | 22nd Jan 25, 9:10am 1737490249

Has there been any announcement on deportation? The only ones I saw was preventing people from crossing the southern border and sending criminals back. It's one of the areas I was most disappointed with the announcements because he was so resolute in what he said.

by Brocky | 22nd Jan 25, 9:30am 1737491414

This is a really stupid take.

The U.S. does not allow non-citizens to vote in federal elections. More sensible than New Zealand.

It is good news that illegal migrants are being rounded up and deported. They should have entered the country legally.

by rastus1 | 22nd Jan 25, 10:01am 1737493302

As an aside, we hear little about the Aus boat people problem these days. Is it that it has ceased due to the very hard approach they take or is it just not being reported?

If I recall correctly, if you get caught then you will never be allowed into Aus

Perhaps Mr Trump has seen how its working. Certainly needed sorting.

by middleman1 | 22nd Jan 25, 10:36am 1737495407

rastus. Funny that, isn't it. When the Aussies set up a force to stop the growing tide of illegal migration, mainly via Indonesia, leftie media in Oz & NZ went ballistic, condemning especially strongly the offshore detention facilities. Its strategy prevented the many problems that come from unchecked migration, despite many high profile people and, predictably, the UN, loudly criticising it. Yet there's seldom a mention of this potential crisis averted, in the media.

by Gummy Bear Hero | 22nd Jan 25, 10:05am 1737493527

.... it's time for a lie down , Mr B ... or a walk in the park , something to clear your mind & reduce the TDS ... .... you're starting to spout bigger BS than I normally do ...that's scary ! ...

by jeppy | 22nd Jan 25, 8:41am 1737488494

After a massive landslide victory at the poles Trump has the mandate to carry out everything he campaigned on.The swamp will be completely drained this time.

by Baywatch | 22nd Jan 25, 8:44am 1737488660

To be replaced by sociopaths...

by kiwichas | 22nd Jan 25, 8:57am 1737489477

And neonazis.

by ChrisOfNoFame | 22nd Jan 25, 9:55am 1737492959

With policy set by a plutocracy - for the benefit of the plutocracy.

by solardb | 22nd Jan 25, 8:50am 1737489051

I don't think they paid much attention to his policies. If he said he was going to outlaw silly hats they would have cheered.

I expect there will be a flurry of big pen signing, then very little actually done over the rest of his term.

by kiwichas | 22nd Jan 25, 8:54am 1737489259

Swamp now filling to overflowing

by El Torso | 22nd Jan 25, 8:57am 1737489466

He won at the North and South Pole too? Contagion......

by Gummy Bear Hero | 22nd Jan 25, 10:35am 1737495305

... it seems so ... although he couldn't drain a swamp there ... it'd be frozen over ... perhaps Trumpy is gonna dig out the ice , or the penguin or polar bear crap , or something ...

There's a lot of Trump haters here at interest.co.nz ... I'm sure someone will give us the answers ...

by morphyoss | 22nd Jan 25, 9:48am 1737492503

Trump is the swamp now, he's no longer an outsider. He's just as much of a politician as the rest of them. Bringing in his own bureaucrats and signing a bunch of virtue signalling executive orders means little.

One such order will need an amendment to the constitution to actually take affect, for example. Virtue Signalling.

Plus he's only got 4 years, maybe even only 2 to get laws changed. Given how much internal strife thereis within the congressional republicans - good luck!

by bender | 22nd Jan 25, 10:38am 1737495528

Wrong. Your'e believing his uberhype. He won the popular vote by 1.5%, hardly "massive landslide," and failed to reach 50%. not a "mandate."

by mark_a | 22nd Jan 25, 3:24pm 1737512673

More than the other guys anyway…….

by dollar_bill | 22nd Jan 25, 11:13am 1737497587

The snakes and crocodiles have just shed their skins and scales for new ones. You might want to check how tight Congress is for your so called "mandate". Not all Republicans are bending the knee like sycophants

by solardb | 22nd Jan 25, 8:42am 1737488538

A reminder that the last minister sacked for doing nothing, was replaced by a minister who has done???

https://www.rnz.co.nz/news/business/539575/more-media-cuts-expected-tod…

by MLC | 22nd Jan 25, 9:26am 1737491184

Any guesses on the CPI figures due out today? I think the dec quarter is going to be slightly higher than the RBNZ forecast of 0.4%, probably about 0.6%.

by ChrisOfNoFame | 22nd Jan 25, 10:00am 1737493209

There is nothing shown in any other recent stats to support inflation increasing. In fact, quite the reverse ...

That said, inflation is about prices, not volumes. So it's possible some prices have gone up, while volumes have tanked.

by MLC | 22nd Jan 25, 10:22am 1737494565

There certainly are some recent stats/facts that support inflation over the last quarter. To list a few: NZD weaker against USD affecting tradeable prices, petrol/diesel prices up about 3% according to SPI, international airfares dec increase 30% according to SPI (very small weight though), overall SPI change over the last quarter (after applying CPI weights) is more than prior quarters. Some of these are weak and probably/hopefully short-term.

Sep quarter CPI was 0.6. I'm picking about the same rate rather than a decrease.

We will know very shortly.

by ChrisOfNoFame | 22nd Jan 25, 11:28am 1737498503

The fall in the NZD will be a story for next quarter.

And what a story it is likely to be .... [how will suppliers react? surely not by bumping up profits? they'd never do that? would they? /sarc)

by Brocky | 22nd Jan 25, 9:27am 1737491257

Toxic tech-bro masculinity is on full display. Senior female leaders are getting the chop or sidelined.

At least we're getting on-board with the executive order about there only being two genders.

by M0ralHazard | 22nd Jan 25, 10:33am 1737495182

I find it funny that by the President decreeing that there are only two genders, that they are tacitly admitting that gender is a social construct.

by middleman1 | 22nd Jan 25, 10:41am 1737495712

Or maybe it's just simply that the guy doesn't understand the difference between sex and gender

by solardb | 22nd Jan 25, 10:51am 1737496300

Maybe he got more of a handful when he grabbed a female by the P.

by middleman1 | 22nd Jan 25, 11:33am 1737498781

'when you are a star you can do anything'.

by ChrisOfNoFame | 22nd Jan 25, 10:00am 1737493243

The NACTF have come up with a brand new way to 'grow' NZ Inc. /sarc

Nicola Willis hints at visa changes to grow economy

by J.C. | 22nd Jan 25, 10:00am 1737493243

According to Yellen, the US Treasury reached its debt limit y'day and is now using 'extraordinary measures' to continue operating.

In one of her last acts as Treasury Secretary, Janet Yellen said her agency will start taking “extraordinary measures,” or special accounting maneuvers intended to prevent the nation from hitting the debt ceiling, on January 21 in a letter sent to congressional leaders Friday afternoon.

She sent a letter in late December to lawmakers stating that Treasury expected to hit the statutory debt ceiling between January 14 and January 23. And now, the agency will stop paying into certain accounts, including the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, to make up for the shortfall in money beginning Tuesday.

https://apnews.com/article/treasury-debt-limit-janet-yellen-7e598f2811d…

by ChrisOfNoFame | 22nd Jan 25, 10:08am 1737493680

The new administration will blame the previous one. But a way will be found to ensure all Americans pay for the tax cuts that are due to expire this year.

Remember those tax cuts?

Back in Trump's first term he slashed taxes that heavily favored the wealthy. And economists all agreed that debt would rise to pay for them as the 'growth predictions' that justified them were pure bunkum. Well, they were due to expire ... In case you were wondering why the billionaires lined up behind the Great Orange One.

by Zachary Smith | 22nd Jan 25, 10:07am 1737493657

Fantastic news that 1500 of the January 6th protestors have been pardoned.

Really, really pleased with how things are going so far. To see the "tech bros" in control is refreshing indeed.

by Middleaged | 22nd Jan 25, 12:02pm 1737500562

"Fantastic news that 1500 of the January 6th protestors have been pardoned."

Yeah, tell that to the families of the various law enforcement and security guards who were injured on the day while just doing their job; or the several people whose deaths were most likely precipitated by events on that day. Or the bureaucrats who were scared for their lives and probably still having PTSD flashbacks.

How Many Died as a Result of Capitol Riot? - FactCheck.org

by Zachary Smith | 22nd Jan 25, 1:26pm 1737505585

You can't blame all 1500 people for that. The punishments were unnecessarily harsh and vindictive for most of those charged. The people responsible for that should be scrutinized.

by General Comment | 22nd Jan 25, 10:45am 1737495953

In crypto news, the minister who said the prayer at Trump's inauguration has released his own coin: $LORENZO. Get in quick!

What, you think I'm joking?

by rastus1 | 22nd Jan 25, 10:51am 1737496301

5,300 new one's each day. Lottery scheme relying on complex computer math to look credible.

by Colin Maxwell | 22nd Jan 25, 4:25pm 1737516330

Very well said earlier this morning at 8:13, Murray86 - BRAVO

The core problem here as I see it in the impending chaos, is that Trump received his mandate, as opposed to an even more appalling candidate/party doing so, but tragically this 'win' was based on a pack of lies, and the layers of smoke and mirrors that he and his band deployed with such a gleeful swagger during his entire election runup.

#1 The US Stock market is currently in the biggest bubble in history.

- In 1899 the total US stock market amounted to 14.5% of the total world market.

- In 2024 that figure was 60.5%. = growth of 417%

- In 1899 the US portion of global GDP was around that 14.5% figure.

- Fast forward to 2024 and it is estimated at 26.5% = growth of 182%

This is an enormous anomaly in itself - PROBLEM - the majority of the growth in GDP in that time frame has been in the parasitic financial economy, not in the real economy - which makes this discrepancy even more monumentally stark.

#2 Within the MSCI (Morgan Stanley Capital International) which is an index measured across 23 developed markets, the top 10 companies are all US-based. And a mind-numbing 74% of the entire global index is made up of US companies. 20 out of the top 25 are US companies.

#3 The prime reason for this glaring anomaly (in #2) is the extraordinary privilege that the US has enjoyed as the principal global reserve currency.

THEY GET TO EXPORT THEIR DEBT - this partly explains the massive rise in the indexes.

- The S&P 500 Index (the index of the largest 500 companies) has risen by almost 700% in 30 years.

- Meanwhile, the NASDAQ (the index more heavily weighted to technology stocks) rose by almost 8000% in that same period.

#4 25 companies represent 53% of the entire index. The top 10 represent 37.5%.

#5 There are glaring anomalies in the share prices of companies like Tesla. Its market cap (MC) is equal to the other top 10 car makers combined...how so?

- In 2021 Tesla produced around 930,000 cars globally.

- Toyota in that year produced 10 million.

- And yet Tesla's MC was 400% higher than Toyota's.

The stalwarts defend Tesla's MC by saying that it is not really a car company, but a technology company. It could just as well be argued that it is neither - IOWs, it's become very much a speculative financial asset where global investors hold their wealth in the expectation that the share price will continue to rise.

#6 How so (#5) when Tesla's stock market performance since 2020 is +677% when the S&P's is only +14%?

Simple - stocks like Tesla are not remotely based on market fundamentals. They are the apex of financial capitalism. The Apples/Microsoft/NVIDIA/Amazon/Meta/Teslas are a huge component of the most obscene asset bubble since 1929.

#7 Looking at this bubble within the context of the WILTSHIRE 5000* to GDP ratio. This gives us another specific context as to what is happening, compared to other bubbles -

- In 2000 when the DotCom bubble burst, the index was 138% of GDP.

- December 2024 it was 206% of GDP - the highest ever recorded.

- Back in Ronny Raygun's era, in November 1978, the ratio was just 36% of US GDP.

*(Est. in 1974, it is a MC weighted index of the market value of all actively traded American stocks HQ'd in the US)

#8 PRIVATE EQUITY (PE) NUMBERS ARE JUST AS HORRENDOUS - (PE means private companies that are not traded on the public stock markets).

- The total value of both public and private equities is now 300% of US GDP - by far the historical record.

- At the peak of the Dotcom bubble it was just over 200%.

- In the collapse of 2009 it went as low as 100%

This debacle was fed by the US govt intentionally inflating these bubbles because it made for rich donor lobbies that could fund the 'best politicians that money can buy'.

ZIRP wasn't enough either, they implemented massive QE as well to further supercharge the financial economy. The Fed's balance sheet exploded from ~$1 trillion to close to $9 trillion (the peak in 2022) when they lapped up govt debt by buying treasury securities.

The vast majority of this went into asset price inflation, particularly in the stock market and real estate realms. This was like pouring petrol on a FIRE (Finance/Insurance/Real-Estate) economy that was already ablaze, especially post-2000.

#9 QE/QT sleight of hand.

Ostensibly in 2022, the Fed tried to decrease the MS but the net effect was that the supply increased. Remember that most 'money' (more than 90%) is created when private banks write up loans out of thin air. But of course, the US Treasury played a hand here too, by emptying the Treasury General Account to the tune of $900 billion (from $946 billion down to $45 billion in June 2023).

#10 Remember that this easy money policy in #9 is 100% bipartisan and began in earnest under the 'Obomber' #44 regime and post-2008 - why? - well, because the billionaire oligarchs, the financial sector, and private monopolies, fund the political campaigns of 'both' parties.

Add in rabid and systemic insider trading and this is another level of idiocy ensconced within this giant house of cards - NB, ~20% of Congress (more than 100) have been caught red-handed insider trading.

#11 None of this ill health in the economy and stock market is organic - IT'S A PRODUCT OF GOVT POLICY. In many ways the share market and the real economy are antagonistic.

- 93% of US stocks are owned by the wealthiest 10% of Americans.

- The wealthiest 1% own 50% of the stocks.

- The wealthiest 0.1% own almost 25%.

- The bottom 50% in wealth of the US own a mere 1% - IOW 170 million own a minuscule 1%!

#12 Another context - the BUFFETT INDICATOR - advises that investors should be wary of an index that goes over 100%.

- In 1929 on the eve of the Great Depression (GD) it stood at 81%

- In 1933 it had crashed to 25% - it then took around 20 years for the stock market to regain its pre-GD MC

- In 2000 it hit 183%.

- 2007 to 135%

- 2009 to 73%

- Today it is over 200% = a staggering 250% higher than in 1929.

AND SO WHAT ARE THE OLIGARCHS UP TO? - simple, as quietly as possible they are cashing $billions out of the stock market. These people see the writing on the wall - the US stock market is on the cusp of an enormous meltdown. This is much bigger than just a tech-stock Mag-7 bubble. Be very careful when the billionaires begin cashing out unless you happen to enjoy the thrill of picking up pennies in front of 15-ton steam-rollers.

BUFFETT (Berkshire Hathaway)

- Sold out $166 billion of stocks in 2023/24.

- In the 2nd quarter of 2024 he sold $75.5 billion.

- In the 3rd quarter another #34.6 billion.

- They now sit on a pile of $325 billion in highly liquid assets - mostly in govt T-bills

BEZOS

- As of November 2024 he had cashed out $12.5 billion in Amazon stocks - in just 11 months.

MARK ZUCKERBERG

- Sold $2 billion in Meta stock. ( Meta = 'Farsebook'/Instagram/WhatsApp)

ELON MUSK

- Sold out $7.5 billion in Tesla stocks in 2022

#14 THE TRUMP EUPHORIA

With all of his promises, it is quite possible that this could extend the time frame of this bubble - however, what happens when Mainstreet finds out that they have been lied to just as they were back in his #45 first term?

- In 2018 the wealthiest 400 US billionaires paid a lower effective tax rate than the lowest 50% cohort.

- The estimates are that the #47 policies will result in a reduction of 5% in taxes for the wealthiest 5%.

- Meanwhile, real taxes will quietly rise for the other 95%.

Why is this? - because tariffs will result in a rise in the cost of consumer goods that Mainstreet needs just to survive. This is known as the Marginal Prosperity To Consume Formula (MPC). The low-income deciles have a much higher MPC, this is a basic fact of life.

Trump's policies will result in a reduction in taxes for the financial economy and an increase in those on labour. This is just another transfer of wealth from the working class to the already wealthy sector. This wealth will feed directly into the stock market and private equity bubbles plus, at the same time, the billionaire plutocrats will continue to cannibalise the real economy.

MY CONCLUSION

Trump is as utterly clueless when it comes to macroeconomics, as he is on geopolitics. He measures the health of the US economy by the strength of the stock market indexes. The billionaire oligarchs that he surrounds himself with as advisers and cabinet members, won't be enlightening him - they are all in on this latest grand swindle too - it's what they do!

Regards to all

Colin Maxwell