Here's our summary of key economic events overnight that affect New Zealand, with news Moody's has downgraded the Chinese economy's outlook.
First up today however there was a dairy auction overnight and that came in with a minor +1.6% gain in USD terms, although only a +0.5% rise in NZD terms. Rather oddly, most of the major components managed better rises. Cheddar cheese recovered +9.7%, SMP was up +1.2% and WMP rose +2.1% from the prior event two weeks ago. This auction won't be changing minds about farm gate payouts, but at least it wasn't negative.
In the US the news is quite mixed. Starting with the positives, the ISM services PMI expanded faster and by more than expected. A feature is that it led by faster expanding new order levels. The internationally-benchmarked S&PGlobal (ex Markit) one also reported a pick up in expansion and better new order levels, but at a lower level that the ISM one.
However the LMI logistics survey revealed a contracting sector in November quite a sharp turn down from October. But at least inventory levels and freight costs are reducing, which is probably a good thing for them.
Also falling however are job openings. This data is for October and the retreat reported is quite sharp, down -617,000 from the previous month to 8.733 mln and the lowest since 2021. Perhaps this is the early indication of a slowing American jobs market, something analysts have been expecting for almost two years now. But the current forecasts for non-farm payrolls are a +185,000 expansion in November when the data is released Saturday NZT (and the ADP report at +130,000) and analysts have been increasing their bets recently.
US retail sales as reported by their Redbook index for bricks & mortar stores on a same-store basis has slipped back to +3.0% year-on-year. Just enough to account for inflation perhaps, but nothing more and certainly not the real gains we have had in the past eight of twelve months.
In China, Moody's affirmed their credit rating at A1 but revised the outlook from "stable" to "negative", citing growing risks stemming from lower medium-term economic growth, rising debt, and the ongoing restructuring of their property sector.
The OECD released their PISA review results of education and they make grim reading for New Zealanders. Schools are failing our kids, according to these reviews. The education community is brushing these results off as "pandemic-related" and that may be a part answer. But the OECD itself says there is more at play here. Australia also scored worse although got gains in science. The US held its own, but Japan for instance improved.
Yesterday, the Reserve Bank of Australia held its policy rate unchanged at 4.35% and delivered the expected hawkish commentary.
Internationally, the Bank for International Settlements has warned that rapid global growth in buy now, pay later services could create risks in the financial system. The warnings are focused on both Australia and Sweden who have the heaviest adoption.
Air cargo volumes continue to rise and in October were +3.8% higher than the same month a year ago. For the Asia/Pacific region they are up +7.6%. But to be fair they still trail pre-pandemic (2019) levels although the shortfall is now a minor -2.4% on that basis.
On the same basis, international passenger travel is still -20% lower in the Asia/Pacific region than pre-pandemic equivalents, down -5.8% globally. But the gains from last year are very sharp as the return to globe-trotting returns to normal. But the biggest gains aren't international, they are domestic air travel which is now greater than pre-pandemic.
The UST 10yr yield is down -11 bps from yesterday at 4.18% with the slide resuming. The key 2-10 yield curve is now inverted by -42 bps. Their 1-5 curve inversion is a bit less inverted at -81 bps. And their 3 mth-10yr curve inversion is now -122 bps and much more inverted. The Australian 10 year bond yield is now at 4.29% and down a very sharp -26 bps from yesterday. The China 10 year bond rate is little-changed at 2.70%. And the NZ Government 10 year bond rate is down -3 bps at 5.02%.
In New York, Wall Street has started its Tuesday session with the S&P500 little-changed. Overnight European markets rose +0.8, except London which fell -0.3%. Yesterday Tokyo ended its Tuesday session down -1.4%. Hong Kong fell a sharper -1.9%, and Shanghai fell an unusually large -1.7% again with sharp falloffs at the end of their sessions. The ASX200 ended down -0.9% while the NZX50 ended down a minor -0.1%.
The price of gold will start today just on US$2,017/oz and down another -US$9 after yesterday and now way off its all-time high.
Oil prices are -50 USc lower at just under US$73/bbl in the US. The international Brent price is now at US$77.50/bbl and -US$1 lower. These are new 5 month lows.
The Kiwi dollar starts today at 61.3 USc and down another -40 bps from yesterday. Against the Aussie we are up +40 bps at 93.6 AUc. Against the euro we are down -20 bps to 56.8 euro cents. That all means our TWI-5 starts today just on 70.5 and down a mere -10 bps from this time yesterday.
The bitcoin price starts today at US$42,725 and up another +2.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.6%.
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58 Comments
With the year winding down, have been catching up with some clients, prospective clients and peers before I try to shift into "getting the garden sorted before the wife shoots me" mode in the next week.
Most everyone I've spoken to whose business model is more B2B (particularly in manufacturing, software, services) is doing ok all things considered, at least for now. Pipelines not looking too bad, deals still being signed off etc.
However, the universal, consistent piece of feedback from anybody with exposure to retail is just how tough they are doing it.
Will be interesting to see how the Christmas retail season pans out.
https://www.thegreatsimplification.com/episode/99-jeremy-grantham
An astute intellect, interviewed by another. Worth every minute.
Makes those advocating population-growth, look somewhat cranially curtailed.
MSD incentives. I don't ever read what a huge draw/pull is offered to young -poorly educated-teenage girls throughout the country who are offered an opportunity for independent living which they never, never, could afford in Auckland or any big NZ city on their own income, and curiously you never here of this cohart of school leavers going out flatting. Instead they secure themselves a state sponsored flat and start their lives down a road of no return with a young baby along for the ride. In the past 60 years Western Nations throughout the world have fundamentally altered society with these policies. Contrast that to the "disincentive" of former generations who simply had to stay home with their families and get on with it. Not nearly as appealing an outcome for an undisciplined act on the part of the male and female. Go back 70 years and surely the outcome what have been a frugal but disciplined family live encouraged by their extended family to "get on with it". I would maintain far less damage has come to families and children from our Grandfather's social policies than the Helen Clark world view. That view assigns too many poorly educated solo mothers for a live of public dependency and children feeling left out as they raise through childhood to teenagers--and then the cycle repeats.
Beanie I challenged them when Covid was making it's way through the world that maybe the world should let it run it's course and they would get what they wanted in regards to depopulation of the world, (a short sharp painful hit) but they were they ones who said we needed to protect the population. Can't have it both ways.
1. Education as to the dangers of overpopulation, in schools (you need to get to the pre-conceptual cohort).
2. Put the brakes on immigration; it's the right answer to a very, very dumb question (Labour as guilty as the Nacts in that).
3. Counselling post 2nd birth - and removal of support for subsequent ones.
Although the young are taking this into their own hands; all the rainbow echelon are about something other than species reproduction. They know they cannot achieve/afford a nest, cannot support a nurturing mate - so have concocted different narratives.
What is unique, is that we have to - and were always going to have to - adjust to less people, and a permanent elder bias as that unfolds. Requires a much smarter society than currently demonstrated; free markets don't work, for starters, which will have a fair number rattled. .
Nothing we can do changes what happens in the rest of the world, but we can do well in New Zealand.
A. Our natural increase may in fact be a decrease already.
B. We need people coming in for skill transfer. eg health. One in one out gives plenty of traffic. So incomes strictly prioritised.
Let the population drift down for a few hundred years.
Our grandchildren will be rich. Plenty of deserted beaches to build that marvellous batch. You could even get around easily in Auckland.
I'm somewhat time poor at the moment, but a quick scan through the transcript raises some interesting points.
They talk about some otherwise very smart people not getting the link to the natural world. It is an interesting point of human psychology, but I believe it is rooted in FOMO. People invest because they want to get rich. For many it is needed to stay ahead of the ravages of Government. Thus their goals have short horizons. We see that in NZ. Remember our discussion a few days ago about Piggy Muldoon's think big projects? Good ideas but needed a payback well before they could reasonably be expected. thus he got castigated for them. To accept the link to the natural world means acceptance of the fact that there is simply not enough to go around at current and future population levels, no matter how you look at it. Technology can soften the impact, but there is still too many people. So people, who have a tendency to be extremists, focus on the fine detail of investing and avoid the bigger picture of consequences where they already know they won't like the answer.
PDK, Do you know what is one of the biggest drivers of population growth is?
Have a guess.
No. Not having too many kids. That's a symptom.
Government policy? No. Doesn't work. Look at Russia. And Japan.
Still no idea?
It's Religion.
Take a look at all major religions. Which countries have the highest population growth?
All major religions have two things in common.
1. Subjugate women. Basically, depower them. Discourage their education. Ensure they become breeding stock and do what they're told.
2. Make it a mark of success to breed more soldiers. Islam? Yup. Catholicism? Yup. I could keep going. (Remember I said major religions.)
Yes, all these religious policies are rooted in the distance past where having the biggest army usually won the ruler what he wanted. Further, the more soldiers that a woman creates, the poorer the family becomes and the heavier become the reliance on the ruler - and the greater the likelihood that a male child became a soldier (and few soldiers become rich).
Do you know the best way to break this breeding cycle?
Educate and empower women to take back control over their own minds and bodies. The places where women are best educated have low birth rates. Often below the replenishment rate (2.1). E.g. Japan and much of Europe. And those examples are being added to every year as policies put into effect a generation ago (and more) come into effect. You'll also notice a correlation between falling reproductive rates and growing numbers of non-practicing follower, agnostics and atheists.
Simple, huh? Who knew educating and empowering women would have such dramatic effect? (Actually, many knew. But coming out and bashing religions, unless you're the CCP, doesn't usually work well.)
I wonder what Luxon and Simeon Brown, both religious wackadoodles, think about that? I can't see them rewriting their thousand year old religious texts - can you?
Great post - but how about timelines? I'd suggest religions had hold over the dispensing of surplus energy - grain - and pretended to have inside running on knowledge. That lever being whether you got another go-around in the 'next' life, if you submitted your tithe them in this one.
As their 'inside knowledge' got disproven - via Darwin/Lyell/Wallace - they got displaced by another Elite; industrialists. Those manipulated democracy to their own ends. That Elite has changed; they're CEOs and financial traders and rentiers now - but the lobbying still continues. They - like the religious Elite of old, feel more powerful if they lord it over more people (and as Victoria Nuland personifies, they don't mind others being cannon-fodder).
So it's really the Elite du jour - those who grasp and displace; whether by tobacco/fishing/farming lobbying, or religions hell-threats - who are the problem. This lot are peddling cost-of-living fixes, while shafting the bottom 60%. Same as promising a heaven while siphoning-off the Communion wine...
Thank you.
The subject of population growth was part of an Economics paper I did at Uni some time ago. Popped up in a recent Philosophy paper too.
(The Uni isn't allowed to provide the answers - that's what religions do - just get you to consider what the answer may be. Like my dad used to say: The biggest value of a good education is the ability to spot b.s. ... and this subject is awash with it.)
https://www.stuff.co.nz/business/133397329/landlord-evicts-single-mum-w…
A landlord who used renovations as a reason to evict a single mother with a brain tumour has been ordered to pay $5500 after relisting the property four days after the family moved out.
“Please note that if the property is not being renovated as you have advised, and you have given the notice for the tenant to vacate due to these reasons, it is illegal (just so you are aware),” she said.
After she had moved, the tenant discovered the property had been advertised for rent on Trade Me two working days later, at $130 per week more than she had been paying, and no renovations appeared to have been done.
Bishop said: "Labour’s removal of no-cause termination has hit vulnerable people particularly hard. Many landlords are now reluctant to ‘take a chance’ on tenants with poor rental histories, due to the difficulty of ending the tenancy if it doesn’t work out."
EDIT: Kick them out I say..now were are my fags?
"Many landlords ..."? How many?
Odd. I never seen any empirical or statistical analysis that confirms this. Have you?
No, you haven't.
Its urban myth spread by the property rentier class so they can lord over their tenants.
Funny how easily some people are sucked in, ay Baywatch?
I'm a LL and I will give preference to people who present life challenges openly and honestly.
Agree. I highly doubt any landlord is going to "take a chance" on a tenant with a poor history. Impossible. They only say that to appear altruistic, or to save face from their poor vetting processes when they do take on a tenant that trashes their place. So they can look much more savvy than they truly are.
"I knew they had a bad history, I was giving them a chance"
Quite a lot actually do. Many LLs I know, including myself.
We charge market rates for new tenants. But we don't increase rents each year by anything like what we could.
Such behavior doesn't appear in any stats unless a change of bond amount is filed with Tenancy Services. I can't be bothered with that so it goes unrecorded. (I have an aversion to paperwork. The IRD hates me. As does my accountant.)
My mum was a shocker. She became such good friends with her tenants it could be years before she increased the rent. One place she owned, a four-bed in a CBD location with good parking, was occupied by young adults and the tenancy agreement constantly had new names coming and old names going. The number of weddings and christenings and baby showers she went too, and continues to go to, thanks to that place! (All her places now sold at the peak.)
Unfortunately NZ is not immune to opportunists, scavengers and plain old scalpers. For instance the percentage of them that emerged during the Canterbury EQ sequences was rather disconcerting.Some , but not as many as should have been, ended up in court. Both sides of the claim process were persistently involved. Hopefully as in this case here, there are channels to successfully seek recourse but as in the EQs not all victims are equipped to carry the fight.
Its always been that way. But in the last few years they invented the internet and fully control what we see hear and do (sit and scroll)
No more protests or let them eat cake moments.. they just take what they want from us peasants.. now with no fear of comeback.
In some ways we cant blame them as we have let it happen...
Hey property ponzi is fine as long as no extreme global events threaten more inflation (we have been running on one or two black swan events per year) and thus more rate hikes.
Usa has more issues than us.. they have just hit thw point where their govt has to borrow to pay interest on its debt, they might not sign off on ukraine budget support (where does that leave allies) and trump will be reelected soon (who will throw ukraine under a bus.
Good surf mind.
Hey property ponzi is fine as long as no extreme global events threaten more inflation (we have been running on one or two black swan events per year) and thus more rate hikes.
But here lies the problem. The general consensus in NZ and Australia is that our ponzis are antifragile. Even if you hypothesize that they are, it's amateur risk management on every level.
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