Here's our summary of key economic events overnight that affect New Zealand, with news that while all the market chatter is about the spectacular rise of Nvidia and the emergence of AI as a "new industry", the rest of the global economy seems to be generally expanding modestly.
But first up, we should note it is a public holiday in Japan, the world's fourth largest economy, the Emperor's Birthday.
In the US, new jobless claims fell to near their record lows of under 200,000 last week and far below what was anticipated. Continuing claim levels fell too and there are now 2.1 mln people on these benefits out of a 161 mln employed labour force, a tiny fraction. Still no labour market stress to report.
US existing home sales rose marginally back to an annual sales rate of 4 mln which it was last at in August 2023. (It peaked at 7.25 mln in 2005 so it remains modest and currently at the level first reached in 1975.) It's a market essentially in hibernation.
Canadian retail sales probably slipped in January after they reported a strong December expansion and taking overall 2023 sales volumes up +2.3%.
Across the Pacific, the Bank of Korea kept its base rate unchanged at 3.5% during its February meeting. This was as expected. Korea's inflation rate is 2.8%.
In China, vehicle shipments are projected to drop almost -16% in February from the same period last year, according to preliminary data released yesterday. Demand for electric vehicles is also slowing.
China’s overseas investment in metals and mining as part of its Belt and Road Initiative surged by more than +150% in 2023, hitting US$19.4 bln with energy transition metals the main focus. Total Belt and Road investments now top +US$1 tln, this updated report shows.
Some preliminary PMIs for February are starting to come through and the first was from Japan, showing its factory sector contracted more than expected, and its services sector expanded again, but by less than expected. Together they paint a picture of growth stalling in Japan.
In the US, there were rising expansions to report in their factory sector, to a 10 month high, even if still modest, and they had a slight easing in their services expansion.
In Germany things contracted harder, but for the EU overall their services sector is no longer contracting, helping keep things stable.
In India, they are in a quite different space with manufacturing expanding strongly, and their services sector doing even better. India has replaced China as a major source of global growth, bolstering the continuing expansion in the US.
Australia said average weekly ordinary time earnings for full-time adults was AU$1,888.80 in November (NZ$2030/week). The annual increase of +4.5%, or AU$81 a week, was the strongest since May 2013, other than a brief spike in average earnings early in the pandemic.
There was another small decrease in container freight rates last week from the week before, but they remain unusually high on the insecurity same drivers around the canal choke-points. Bulk cargo rates have started to move modestly higher but are not outside 'normal' ranges.
The UST 10yr yield starts today at 4.33% and up +1 bp from this time yesterday. The key 2-10 yield curve inversion is deeper at -39 bps. And their 1-5 curve inversion is less at -68 bps. But their 3 mth-10yr curve inversion has also lessened to -107 bps. The Australian 10 year bond yield is now at 4.19% and down -1 bp. The China 10 year bond rate is under 2.42% and a new all-time low. The NZ Government 10 year bond rate is up +1 bp at 4.91%.
On Wall Street, the The S&P500 hit a fresh record high and is up +1.9% while the Nasdaq added more than +2% after Nvidia's results topped forecasts. Nvidia shares gained more than +15% as the company reported record revenue and issued upbeat guidance on strong demand, suggesting to investors the AI-fueled rally will continue. European markets ended their Thursday sessions strongly, up about +1.5% across the board. Yesterday Tokyo ended up +2.2% and an all-time high, Hong Kong was up +1.5% and Shanghai up +1.3%. The ASX200 missed out on yesterday's rallies, ending unchanged, while the NZX50 booked a +0.9% gain.
The price of gold will start today down -US$8/oz from yesterday at US$2019/oz.
Oil prices are +50 USc/bbl firmer at just over US$78.50/bbl in the US while the international Brent price is up to just under US$83/bbl.
The Kiwi dollar starts today at just on 61.9 USc and up nearly +¼c from yesterday. Against the Aussie we are also +¼c firmer at 94.6 AUc. Against the euro we are little-changed at 57.2 euro cents. That all means our TWI-5 starts today at just over 71.3.
The bitcoin price starts today at US$51,432 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has remained modest at +/- 1.3%.
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70 Comments
Migrants are buying houses, Yeah Right!
Duong is letting the group stay at her home in Papatoetoe where currently 28 people live, and up to six people are sharing a room in her five-bedroom property.
https://www.nzherald.co.nz/nz/vietnamese-migrants-sold-everything-to-pa…
Company director Tu Do rejects the allegation that he had sold fake job offers, and claimed that the migrants failed to turn up for work after arriving in NZ.
A consequence of simply stamping untold numbers of visas is that we do not have the resources to monitor, police, and prosecute these kinds of frauds any more. It's also a low value exercise for the government, compared to something like an IRD investigation where the ROI is positive.
“I have been in business for more than 10 years and my company employs 54 staff,” Do said.
“My turnover is more than one million (dollars) a year, and I don’t do anything illegal.”
With turnover of $1m that's $18k per employee. Less than the minimum wage. Heck, even $2m turnover would only be $36k, still less than the minimum wage. Must be lots of part timers.
OK well we have evidence that implicates you in immigration fraud. So we are going to seize everything you have under the proceeds of crime act. Then you can hire a lawyer and an accountant to prove to us to our satisfaction that what you have in assets and income is 100% above board. Otherwise we will sell it all and put the money in the consolidated fund to help offset the costs the government will undoubtedly incur in helping your victims.
Both Germany and Japan are in recession and yet:
"Nvidia is the most important stock on planet earth from an index correlation, factor, and retail momentum perspective". Couldn't agree more w/Goldman's Rubner. Even the Japanese Nikkei made a fresh ATH for the 1st time since 1989, driven by #Nvidia. Link
Good Morning from #Germany where the benchmark index Dax hit fresh ATH driven by blowout #Nvidia numbers. However, the Dax rally is not due to company's good earnings but is based solely on an increase in PE valuations. Link
That's been the common thinking around tech for decades. The downside is technology changes and depreciates fairly rapidly. And technology is one thing, actual ROI is another.
The share values in tech are high due to future growth expectations.
Less rise to the top than sink to the bottom.
The Santa Clara, California-based company controls about 80% of high-end AI chip market, a position that has sent its stock market value up 40% so far this year to $1.73 trillion after it more than tripled in 2023.
Nvidia's customers, which include ChatGPT creator OpenAI, Microsoft, Alphabet, Meta Platforms ,all have raced to snap up the dwindling supply of its chips to compete in the fast-emerging generative AI sector.
Some still thinking analogue should switch to digital
Yes and way to much of it is borrowed... leverage is way to high everywhere, look at that PE ratio fly higher...
It's not true value until the earnings increase. An entire world invested in equities as they provide the best long term gain is an interesting concentration risk, possibly could provide a concentrated decrease in worldwide wealth just as boomers retire? I wonder how many 58-62 year olds are still in agressive funds?
In the US, new jobless claims fell to near their record lows of under 200,000 last week and far below what was anticipated.
Initial Jobless Claims Plunge Near Record Lows... Fed Questions Data's Accuracy
Finally, if you doubt the accuracy of the Biden admin's data, here's what The FOMC Minutes said yesterday:
"While the recent trends prior to the meeting had been remarkably positive, Fed officials judged that some of the recent improvement “reflected idiosyncratic movements in a few series.”
The Indian government has issued executive orders requiring X to act on specific accounts and posts, subject to potential penalties including significant fines and imprisonment. In compliance with the orders, we will withhold these accounts and posts in India alone; however, we disagree with these actions and maintain that freedom of expression should extend to these posts. Consistent with our position, a writ appeal challenging the Indian government's blocking orders remains pending. We have also provided the impacted users with notice of these actions in accordance with our policies. Due to legal restrictions, we are unable to publish the executive orders, but we believe that making them public is essential for transparency. This lack of disclosure can lead to a lack of accountability and arbitrary decision-making. Link
This is interesting
https://www.nzherald.co.nz/nz/realtor-janet-dickson-facing-5-year-ban-f…
The course was foisted on the industry and has raised hundreds of thousands in revenue for Iwi. It is a complete and utter waste of time and money for those involved.
There is certainly a space for learning more about Maori land rights, and how to conduct transactions in a legally and culturally correct with with respect to the same. That's not what agents are spending their time and own money having to complete. There is absolutely no use to them professionally and folks I've spoken to would rather have just made a donation to the local tribe and spent those two days on their actual business.
K.H. Is still choking on their breakfast having read that.
As usual be careful what you read, it’s not unusual to have to do courses that seem irrelevant, we have to do so at our work. This one makes the news because it is Maori, but it does seem to have some relevance to real estate.
Imagine being kicked out of your job for 5 years because you didn't want to do a short course on Māori prayers and spirituality. It's not outside the realms of the imagination. After all, in the public service most meetings start with some sort of Māori prayer, some of which are religious, and not joining in is conspicuous and career limiting.
Māori religion. Calling on Papatuanuku and Ranginui (earth mother and sky father) and our deceased ancestors to give us guidance.
I prefer a secular public service. No prayers from any religion. As for saying a karakia that isn't religious, what's the point besides tokenism, which is more disrespectful than saying no karakia at all.
We might get Utu-ed if we don't. You will come to believe the witch doctors views
Its weird that even in maori communities in BOP on the east coast there is not a strong belief in maori identity. From the census " 36.2% had no religion, 44.7% were Christian, and 6.4% had Māori religious beliefs."
So yes its indeed very funny that maori-ism is being foisted on non-maori people who don't want to learn about it
That's because the stuff being "foisted" on people is cultural values, not religious beliefs. I'm not sure what percentage of Māori subscribe to those cultural values but I'm guessing a large majority subscribe to at least some of them.
And I think reflexively scorning those cultural value is pretty foolish. Does anyone really think Western values are a perfect way forward? Rampant individualism, reduced family and community ties, everyone working 9 to 5 including parents, private ownership of natural resources - are these really making the world a better place? Our mental health statistics, especially amongst youth, would suggest not.
Yep those are admirable but I didn't see anything that relates specifically to the job of an REA
They are self employed workers so that means if te kooti thinks he can create a niche and make extra money using te reo then it will probably catch on..
You can't make it compulsory
"Reflexively scorning", nice burn
"...40 largest miners together invested $75bn, equivalent to a mere quarter of EBITDA. BHP, which on February 20th reported its results for the second half of 2023, invested $8.8bn last year—less than half as much as it spent in 2013.
That is a problem. Decarbonising the global economy will require 6.5bn tonnes of metal between now and 2050, according to the Energy Transitions Commission. Although much attention has been paid to the lithium and nickel needed for batteries, that is only one part of the picture. Fully 170m tonnes a year of steel, comprising mostly iron ore, will be needed for everything from wind turbines to electric vehicles (EVs)—more than ten times current global production."
https://www.economist.com/business/2024/02/18/why-the-worlds-mining-com…
"Just in case readers thought the 70 per cent figure was a typo, the paper goes on to devote a page to maps and statistics to back up the claim, stating: “Given Victoria’s low agricultural land area relative to other states, achieving full energy decarbonisation with only onshore renewables is an implausible prospect.”
“For example, 60GW using only onshore wind and large-scale solar could require up to 70 per cent of agricultural land, or four times the area of Greater Melbourne,” the paper says, estimating Victoria’s total agricultural land at 127,000 square kilometres."
https://www.theaustralian.com.au/nation/politics/victorian-government-r…
I like to caution:
First Nvidia. The hurray is focussed on revenue growth. Net operating Cash Flow paints a far less rosy picture see: https://www.marketwatch.com/investing/stock/nvda/financials/cash-flow
Secondly the American worker/consumer. Their hourly wage is up but their average weekly income is flatlining and even going back very slowly. This is driven by the stronger reduction in hours worked. Results are rapid increasing delinquency rates for Credit Card and Auto loans.
With the S&P as well as other indices at all time highs we are looking at a classic example of a K shaped recovery with a certain amount of people doing well and the majority who is less off.
https://fred.stlouisfed.org/series/CES0500000011
https://fred.stlouisfed.org/series/CES0500000003
https://fred.stlouisfed.org/series/DRCCLACBS
I understand why the focus is only on the positive leg of the K because Biden (The Democratics) needs to be re-elected.
I want to know whose family can issue bonds and can essentially print its own money and issue its own currency? Apparently Nicola Willis'!
https://www.thepost.co.nz/business/350186330/nicola-willis-likens-nz-pu…
I would argue there is no shortage of funding: just a lack of will to focus our resources on the much-needed infrastructure instead of pouring billions into vanity projects for vote buying.
Take the Ngauranga to Petone cycleway in the Wellington region for example, it was first proposed by NZTA in 2012 with a <16m price tag. In June 2020 the cost was revealed at an upper estimate of 94m. Then in 2021, the project went into procurement with a $130m budget!
And finally in Sep 2023, after the usual budget blowout, the final capital cost is estimated at $238m. That's $33 million per km.
A stark opponent of this project once presented their argument that the cycleway business case likely overestimates the number of cars it would get off the road and underestimates the number of train commuters who would switch to bikes, thus also overestimating the overall emission reduction from this capital investment.
Just to be clear, though it may be funded from the cycleway budget, that project is NOT a cycleway project. It's rebuilding a seawall to protect the motorway and train tracks. That fact that at the end of the project they are painting a cycleway on the top is mere icing on the cake.
Yeah you obviously realise its coming out of the cycle budget... but maybe you don't realise its a seawall designed to protect infrastructure from storms for the next 80 years. That's protection of water/telecoms/power/rail/road. Will secure that critical infrastructure along the sea front for a good long while yet, while creating a whole new area for recreation (fishing etc), enhancing little blue penguin hatching areas (although they did just kill a few, have to break eggs to make an omelette). Also is an extra lane for emergency vehicles if there is a car accident along there and everyone is rubber necking causing huge jams.
But yeah, its "just a cycleway".
Nvidia make great graphics cards and continue to support their older products for over 5 years with driver updates, I switched to them a few years back after Sapphire was pretty useless in terms of problems and ongoing support. Still using a 7 year old Nvidia card with no issues at all.
Except for when they limited DLSS to their 40 series cards. Meanwhile AMD's equivalent (FSR) is open source, and works on Nvidia cards.
For example, myself with an RTX 3080 running Cyberpunk would normally get around 90 - 100 fps on 1440p max (ray tracing off). A quick registry tweak and a couple of FSR files copied, and I'm now running at 140 - 150fps on the same settings using AMD's upscaling tech.
I kinda have a bit of a laugh at gamers to be honest and people that chuck huge money on a rig. No idea what actual frame rate my GTX750Ti is running on 1080p but it looks great on an old 32" Sony TV at 60Hz and it's 1 meter away from me. Doesn't really matter how fast your local setup is there is still massive latency in the internet.
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