May 2016 Economic Report - Eve turns socialist

The monthly Economic Report for May is out.

In summary:

The big events in May were the first full month of Citadel building, what looks like the wind down of World War Bee and the rise in Transaction Taxes / Broker Fees (the socialist part).

The overall numbers to keep everything in perspective for March, all in Trillions: Mining rose 15% to 26.3; Destruction fell 7% to 32.9; Trade fell 14% to 734.2; Production rose 39% to 145.4.

The fall in Trade by 14% to a new 2016 record low - i am assuming this is in part because Citadel trade is not being picked up or because of the focus on building citadels?


Some Stats on Deklein (home region of losing side in World War Bee):

• March was all hands to the pumps, April was the battles, May is the ghost town
• Trade peaked at 2.7 trillion in March, now down at 871 billion in May
• Production peaked at 4.0 trillion in March, now down at 704 billion in May
• Mining peaked at 1.0 trillion in March, now down at 163 billion in May
• Destruction peaked at 1.1 trillion in April, now down at 482 billion in May

Some stats on the effect of the rise in Transaction Taxes and Broker Fees:

• On 27 April 2016, Transaction Tax (a tax on items sold) went from 1.5% to 2.0% and Broker Fees (a tax on orders placed on the market for future fulfillment) went from 1% to 3%.
• The aim of this was to make Citadels competitive vs NPC stations
• In May Transaction Tax rose 13% and Brokers Fees rose 147% despite Trade falling 14%.
• Transaction Taxes are back at February Levels when Trade was 33% higher than it was in May.
• Broker Fees are up 214% from February.
• Broker fees are now the biggest ISK sink in the game
• That is called a friction on trade to you and me.
• Or socialism - the redistribution of wealth away from the rich to the government.

Some thoughts on Plex Prices:

• In April and May, 0.5 trillion and 1.5 trillion more was spent than was earned.
• In February and March 22 trillion and 34 trillion more was earned than was spent - i suspect that went into financing World War Bee.
• I would suggest that there has not been the surplus ISK available to buy Plex.  Infact, there was been net selling to finance wars and Citadels.
• The net effect of Transaction Tax and Broker Fees has been to increase spend by 15 trillion since March
• Hence, once Citadel building is over there should be surplus ISK generated each month to buy Plex
• Just not as much as before.
• There have only been 5 months since records began where ISK left the game, April and May were two of those.

Overall

Compared to April where we had the numbers of war, in May we have the numbers of gathering and building.

Mining up 15% to record highs for 2016, Production up a massive 39% to 2016 record highs and Bountry Prizes also rose a strong 31% to 2016 record highs.

The activities of war were down: Destruction fell 7% to 2016 lows; Insurance fell 18%.

The amount of ISK sitting in players and corporation wallets fell for a second month in a row from 968 trillion to 953 trillion - in part due to the spending exceeding income for only the fourth month on record (has to be Citadel related) and also due to 13 trillion leaving the game (players leaving).



Items of note from Regional Activity

Trade - down 14%

I am not sure of the reasons why Trade was down 14% in May, i had expected a rise as the World War Bee came to an end and warriors could return to being miners and traders.

This time  i have put two tables up, the top table is the top 10 Region Trade for May:

	Trade
		Trillions
1	The Forge	517.1
2	Domain	86.2
3	Sinq Laison	30.0
4	Heimatar	15.5
5	Lonetrek	13.0
6	Metropolis	12.9
7	Essence	5.2
8	The Citadel	5.2
9	Providence	4.5
10	Tash-Murkon	4.1

Below is the top 10 Trade Regions for April:

		Trillions
1	The Forge	597.7
2	Domain	99.4
3	Sinq Laison	34.8
4	Heimatar	19.1
5	Lonetrek	18.6
6	Metropolis	14.0
7	The Citadel	7.1
8	Essence	6.5
9	Providence	4.4
10	Tash-Murkon	4.1

Two things to note here:

Firstly, there is clearly been a large fall across the board in High-Sec.  I am guessing one of two things here: either the data can not pick up trade in Citadels; or there genuinely was less trade as the focus was on building Citadels.  I suspect the former.

If it is the latter, i.e. a genuine fall in Trade then that would surprise me given Trade was only up 1% in April following a 14% fall in March (that was due to Skill Point Trading in February).  In other words, from the high in February, trading has fallen 25%.

No big ranking changes from February or March or April.  Business almost as normal really, Trade Hubs dominating.

Secondly, that said, the battle for Lonetrek to replace Metropolis (Hek) as a Trade Hub took a knock.  I suspect Lonetrek could fall further as World War Bee is scaled down given Lonetrek's position as a staging Region.

As a reminder to new players, the main 5 Trade Hubs in the order we know: The Forge (i.e. Jita); Domain (i.e. Amarr); Sinq Laison (i.e. Dodixie); Heimatar (i.e. Rens); Metropolis (i.e. Hek).

In the next 5: the expected Essence and Tash-Murkon are there, known secondary trade hubs.  But also Lonetrek and Citadel (both Regions that are one jump out of Jita) and Providence (null sec space that borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik).

The dominance of The Forge (Jita) reigns supreme though - Jita shows no sign of losing its dominance.  It is no surprise that citadels in High-Sec are parking themselves close to Jita as they fight for its business.

Of other news, Deklein (home region of the losing side in World War Bee) has seen Trade fall 68% from 2.8 trillion in March to 0.9 trillion in May.

Trade was up 76% in Fade to 2.2 trillion, and up strongly since the February level of 475 billion.

Vale of the Silent is seeing good trade, up 571% to  2.1 trillion though it was typically 1.4 trillion in February / March.



Production - up 39%

The 39% rise in Production, i greatly suspect, is the building of Citadels and rebuilding of items lost in World War Bee.

Again,  i have put two tables up, the top table is the top 10 Region Production for May:

	Production
		Trillions
1	The Forge	32.7
2	Lonetrek	19.6
3	The Citadel	15.1
4	Domain	8.9
5	Providence	5.4
6	Sinq Laison	5.3
7	Geminate	3.7
8	Catch	2.8
9	Tash-Murkon	2.6
10	Malpais	2.4

Below is the top 10 Production Regions for April:

		Trillions
1	The Forge	19.6
2	Lonetrek	14.0
3	The Citadel	11.8
4	Domain	7.3
5	Sinq Laison	5.3
6	Providence	3.6
7	Metropolis	2.8
8	Geminate	2.5
9	Malpais	2.1
10	Tash-Murkon	2.0

The Regions of The Forge and its neighbours Lonetrek and Citadel dominated - they were always big production centers but now take on the role as being where Citadels are being focused in High Sec to take business away from Jita

For new players - The Forge remains the top slot - makes sense, many people will produce near where they buy the raw materials and/or intend to sell.

Domain and Sinq Laison are the other two major Trade Hubs - hence would expect Production to be there.

Providence, is a Low Sec Region but borders several highsec Regions: Domain / Tash-Murkon / Devoid / Derelik and has a more inviting stance for players - hence we would expect to see it be up there in the Production rankings.

Deklein (home region of the losing side in World War Bee) has fallen from the top 10 in Feb / Mar all the way to position 42 with a Production value fall of 83% from 4.0 trillion in March to 0.7 trillion in May.



Mining - up 15%

Mining rose 15% back up to pre World War Bee levels - reflecting less war disruption and the focus on mining to build Citadels.

	mining
		Trillions
1	The Forge	1.7
2	Providence	1.5
3	Lonetrek	1.4
4	Domain	1.4
5	Metropolis	1.1
6	Malpais	1.0
7	Cobalt Edge	0.9
8	Tash-Murkon	0.9
9	Everyshore	0.9
10	Sinq Laison	0.8

Nothing special of note in mining this month.

Deklein, which historically had been a Top 10 mining Region remains down at position number 46.  In its great days we would see 1.0 trillion mined in a month, now it is barely 0.2 trillion.  How the mightly have fallen.

The Forge and Domain at the top given being major Trade Hubs - so people mining near where they intend to sell and Lonetrek being next to The Forge and itself a major production Region.

Providence is up there given it is nullsec space that is very connected to several High Sec Regions and has a more neutral policy to neutral players.  In fact, mining in Providence has been rising nicely each month.  Back in February it was 974 billion.  In May it is now 1.459 trillion.  And i bet there is not one 

New Halaima Code of Conduct contract between them, not being High Sec and all that.

Destruction - down 7%, pre World War Bee levels


Looks like World War Bee is winding down.

The top table is the top 10 Destruction in May:

	Destroyed
		Trillions
1	Lonetrek	2.7
2	The Citadel	2.2
3	The Forge	1.9
4	Domain	1.4
5	Black Rise	1.4
6	Providence	1.2
7	Sinq Laison	1.1
8	Metropolis	1.1
9	Catch	1.0
10	Querious	1.0

The table below is the top 10 Destruction in April:

		Trillions
1	Lonetrek	3.0
2	Pure Blind	2.3
3	The Forge	2.3
4	The Citadel	1.9
5	Black Rise	1.6
6	Domain	1.4
7	Tribute	1.1
8	Deklein	1.1
9	Metropolis	1.1
10	Sinq Laison	1.1

Life seems to be returning to normal where Destruction is focused on High Sec.

Catch and Querious, though they are now in the top 10, have always seen Destruction around the 1 trillion level.

In March we saw Vale of the Silent enter the top 10 given a large battle, in April Deklein and Pure Blind entered the top 10 as the war moved on.

In May life has merely returned to normal.  Lonetrek remains higher than normal, also Fade, but that is about it.  Fade saw a net Import position rather than its normal net exports - i.e. a net 4.6 trillion of items were moved into Fade during May vs the more normal net 10 trillion leaving.

Life as normal of course means that Destruction follows Trade - for that, read ganking.

For The Forge, during May there was 734 trillion ISK of goods imported into the Region and 736 trillion ISK of goods exported.  Out of all that, a mere 1.9 trillion was destroyed.  A drop in the ocean really, only 0.1% of all traffic value.  Though annoying if you happen to be amongst that drop.

In fact, all the major Trade Hubs don't see more than 0.2% of their import+export traffic destroyed in May.  Ganking is clearly there but just not the threat it is made out to be.



Imports and Exports

I normally watch the Imports and Exports as an indicator on the travel of goods or, more recently, the movement of war.

In all, Imports were down 2% and Exports were down 1% following rises of 14% in each of March and April.  To me, the March and April rises were due to war mobilisation.  The May flat level i suspect is due to a wind down in war countered by an increase in movement of goods to build Citadels.

And that is largely what i think we are seeing . . . . . . 

Firstly, for the first time i can recall we have seen net exports out of The Forge (Jita).  The net imports in Feb / Mar / Apr was 21.8 / 117.0 / 23.5 trillion,  In May, the net export was 1.9 trillion.  For now, i am putting that down to building Citadels in Lonetrek (Region next door).  For what it is worth, when i look at import data, i add the value of anything mined in that Region to Imports given i suspect much of it is then Exported.

Secondly, though Trade was down 14% in The Forge (Jita) the Imports and Exports were up 7% and 11% respectively.  Presumably, therefore, much of that did not go through the markets but was transported into the Forge to be used in building Citadels in The Forge or Lonetrek.

The only other Regions i could see that saw a reversal in normal direction of trade was Tribute which normally sees net exports, in May saw 13 trillion of net imports.  I am guessing that is war related.  And Fade which normally sees net exports, this time saw net imports.

Of the normal review where i look for Regions seeing a higher than normal net import or export the following i could only really see that Catch has now been consistently seeing higher imports than exports, and the amounts rose strongly in May.



Items of note in the Sinks and Faucets

This is a story of tax rises, Citadel building, wars winding down and ratting back to normal levels.

As a reminder on 27 April 2016, Transaction Tax (a tax on items sold) went from 1.5% to 2.0% and Broker Fees (a tax on orders placed on the market for future fulfillment) went from 1% to 3%.

The aim of this was to make Citadels competitive and therefore encourage traders to move from NPC stations to Citadels.

In May Transaction Tax rose 13% and Brokers Fees rose 147% despite Trade falling 14%.  That is called a tax rise to you and me.  Looks like Eve is going socialist.

In fact, Transaction Taxes are back at February Levels when Trade was 33% higher than it was in May.  Broker Fees are up 214% from February!  Broker fees are now the biggest ISK sink in the game.

We can see the effect of Citadel Blueprints: the spend on Blueprints shot up 566% to 24.8 trillion in April vs 3.7 trillion in March, and remain high at 15.3 trillion in May.

Manufacturing costs are up 26%, Industry Job Taxes are up 27% and Planetary Interaction Taxes are up 32 - 38% - all points to gathering materials to manufacture Citadels.  Infact, Planetary Construction is up 38% - that is a serious amount of tedious clicking going on!

Bounty prizes are up 31% to 38.2 trillion - so back to pre-war levels.  Warriors going back to ratting. 

Net insurance payments (payments to players less premiums paid to NPCs) fell 18% to 3.7 trillion having risen by a massive 31% to 4.5 trillion ISK in April (on top of a massive 21% to 3.4 trillion ISK in March).  That is war winding down.

Project Discovery rewards keep on falling, now down to 177 billion vs 340 billion in March.



Items of note in the Money Supply

Looks like the money supply data got a bit borked in the last part of May (no data for character ISK) but was sorted out for the last day in May.  For now, i am going to ignore the movements in daily ISK during May - i suspect the data needs cleaned.

The greatest inflow of ISK into the game as a % of the prior day's ISK was on 17 October 2014 when 4.9 trillion ISK came into the game (=0.66% of the prior day's ISK in the game).  And indeed 18 October 2014 was the third largest day with 4.1 trillion ISK coming into the game.  Not sure why this would be: Plex went over 800m though that itself would not cause ISK to flow into the game; may also relate to SOMER Blink reimbursing prior deposits (see paragraph below).

The greatest outflow of ISK from the game occured on 20 August 2014 when a massive 32.7 trillion ISK left the game (=4.3% of the prior day's ISK in the game).  Most likely to do with the banning of SOMER Blink from the game on that day.  To put this in perspective, the next largest outflow of ISK was on 8 January 2016 when 4.8 trillion left the game (=0.52% of the prior day's ISK in the game) - again, most likely due to a banning event: The Latest IWANTISK Ban Wave.  Seems at least to be a pattern to the major outflow days = banning days.



Mapping all that onto Plex Prices

I greatly suspect players, like myself, use surplus ISK generated each month to buy Plex.  When i say "surplus" i of course mean surplus to all other requirements - where i have a choice of letting my ISK balance grow with no chance of generating further returns or i can invest it somewhere.

Normally, there is 20 - 30 trillion of surplus ISK generated which, through the mechanisms of trading, makes its way nicely up to the business owners and bankers in Eve.

They then park some of that in Plex.  That is what makes Plex an inflation hedge - where inflation is defined as money supply.  That is, the rising amount of ISK in Eve.

However, we have had three recent events which have disrupted that flow.

Firstly, World War Bee, i suspect, will have seen a higher than normal selling pressure to finance the war.  For a few months that extra ISK generated went into financing the war and i suspect hoarded reserves of Plex were sold to help out.  That i suspect is now largely over.

Secondly, Citadel building will also have seen a higher than normal selling pressure to finance the cost of building Citadels.  That i suspect has further to go.

Thirdly, the rise in Transaction Taxes and Broker Fees has added a further 15 trillion of additional ISK sink to Eve.  That is here to stay.

The net effect of all that has meant that in April and May we have seen, for the first time since August 2014, ISK actually leave Eve.

ISK has only left Eve on three prior occasions - August 2014, April 2014 and March 2014.

Hence,for the last two months there has not been surplus ISK generated to invest in Plex and for the prior three months before that we had World War Bee financing by selling Plex.

Going forwards, we still have Citadel build pressure and the higher Transaction Taxes and Broker Fees.  The latter part is called socialism - the redistribution fo wealth from the wealthy to the poor via the government.  Except, at present, it is not getting much further than the Eve government.