Here's our summary of key economic events overnight that affect New Zealand, with news yields are climbing as markets recognise the Fed is serious about wanting to see sustained inflation at 2%, and the US economy just keeps on powering ahead. And that is hurting equity valuations.
But first, the overnight dairy auction brought higher prices. In USD terms they were up +2.75% and nearly making back the drop at the prior event. However in NZD terms the gain was +4.2%, so risks to farm gate payout forecasts have faded for now. The rises were pretty much across the board and were led by cheddar cheese, WMP and butter.
In the US, the February JOLTS report delivered a little-changed set of results, far better than the expected labour market retreats. Job openings actually rose slightly.
Meanwhile US factory orders came in higher than expected. New orders rose by +1.4% from the previous month in February. This was above market expectations of a +1% increase to point to further resilience of the US economy. Year-on-year they rose +3.6%.
Adding to the bullish theme, the US Redbook index of retail sales rose +5.2% last week compared to year-ago levels.
There's more. The Logistics Manager’s Index rose to its highest reading in four months in March amid broad-based expansions in all metrics and continued progress in the transportation sector and a buildup of inventories upstream at the manufacturing and wholesale levels.
But it is not all good news; Tesla missed its delivery targets in Q1-2024 by almost -15%, their least since 2022. Their stock dived -4.8% today.. But to be fair it has been on a slide since its peak in July 2023 and has since shed more than -40%.
In China, all the news is about Country Garden's current sales failures. But we have heard that all before.
German inflation has eased to 2.2% in March from 2.5% the previous month. This was their lowest rate since May 2021, moving closer to the ECB's target of 2.0%.
In March, Australian house prices barely moved in both Sydney and Melbourne from the prior month according to CoreLogic analysis. But they zoomed higher in most other major centers. Brisbane, Adelaide and Perth all booked big gains, and year-on-year, Perth is up almost +20%.
The UST 10yr yield is now at 4.36% and up another +3 bps from this time yesterday. The key 2-10 yield curve inversion is less at -34 bps. And their 1-5 curve inversion is also less at -71 bps. Their 3 mth-10yr curve inversion is now at -102 bps and less as well. The Australian 10 year bond yield is now at 4.12% and up a sharp +12 bps. The China 10 year bond rate is down -1 bp at 2.31%. The NZ Government 10 year bond rate is now at 4.71% and up +7 bps.
Wall Street has opened its Tuesday session down -0.9% as the Fed rate cut prospects fade on a thriving economy. European markets were all lower overnight. Tokyo ended its Tuesday session up +0.1%. Hong Kong surged +2.4%, but Shanghai ended down -0.1%. The ASX200 and the NZX50 both ended -0.1% lower yesterday.
The price of gold will start today firmer by +US$19 from yesterday at US$2259/oz, and only -US$7 below its new all-time high reached intra-day yesterday.
Oil prices have risen +50 USc to just on US$84.50/bbl in the US while the international Brent price is now up at US$88.50/bbl. These are five month highs.
The Kiwi dollar starts today at just on 59.6 USc and +20 bps firmer than this time yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are holding at 55.4 euro cents. That all means our TWI-5 starts today just on 69 and actually unchanged from this time yesterday.
The bitcoin price starts today softer at US$65,516 and down another sharpish -4.6% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.1%.
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37 Comments
https://www.oneroof.co.nz/news/tony-alexander-property-developers-are-s…
I have no idea which developers are most at risk. But the fact that five have contacted me recently to enquire about me making presentations for them, accepting their advertising, and writing material for them when none ever have before, I take as my own anecdotal evidence that their problems are deepening.
TA eating a great big bowl of humble pie......
https://ourfiniteworld.com/2024/03/17/advanced-economies-will-be-especi…
So often rises are hyped somewhere, when displacement is ignored. The US is indeed attempting to re-factory; the question is whether that is at the expense of offshore production? So often we get this or that being lauded as an 'engine of growth', but promoted alone.
Globally, we seem to be heading for conflict; the US will - as the article points out - have trouble waging war against those who supply its equipment... It would be interesting to see a correlation of factory-type and military demand...one imagines the new production isn't of cuddly toys....
Tesla Cybertruck: (Note not included in press release..you missed that one also?
Production is currently estimated at approximately 900 units a week and on target to do at least 50,000 this year. Ramp is fast. In addition, they are selling them all at 100-120K a clip. tesla
LOL - you are obviously not a fan..enjoy your ICE
I drive a Tesla. That's how I know they still can't get wipers working properly. They almost got them to 90% ish last year, then out came the Xmas update and back to complete junk. Now they're a bit better but randomly go off on clear dry days.
And just 5 mins ago I was scrolling facebook, and all the feedback from people with the free FSD trial (SoCal tesla owners) was exactly what you'd expect, it's a bit half baked, accelerated too harshly, dithered at intersections and failed to anticipate end of lane merges and made a mess of them. Hardly prime time ready.
"The record streak of negative Permian Basin natural gas prices has come to a close according to data from Natural Gas Intelligence (NGI). Waha recorded negative cash prices every day between March 12 and March 28 – a total of 17 gas days. This surpasses the previous record of 14 days where producers had to pay to have their gas taken away, which was recorded in the spring of 2019."
The wisdom of Joe Tzu:
https://www.lemonde.fr/en/international/article/2024/01/26/biden-halts-…
Who has the most energy, wins.
So they are trying to keep it at home.
And Russia is the ultimate prize; the biggest remaining piece on the board. Collapse Russia, and you can mop up. Fight Russia - and you might well lose (Nuland was replaced by the fellow who organised the exit from Afghanistan, if I remember correctly - a Biden shuffle with implications), During the energy-descent, you have to sacrifice even hitherto friends - like the EU.
Indeed. Russia was sitting pretty, selling its natural resources into an energy hungry, global neoliberal industralist system. Russian elites being masters of the universe, were rolling in cash for their ever larger super yachts, exclusive London properties and finest western education for their pampered spawn.
It wasn't enough. The cold war goons that fondly remembered the power of the Moscow centred emipires of the USSR and times before, after consolidating their power by killing opposition, controlling media, and rewriting the constitution to remain in power for life, decided to embark on an expedition to re establish the territorial might of the old USSR/Russian empires.
They could have got away with it. Western Europe being in the grip of an energy crisis and beholding to Vlads energy largesse. The Ukraine leadership however showed some spine and the population of Ukraine obviously didn't want to go back to the system run by Moscow approved grifters inherited from the break up. Thirty years of poverty can focus a population on the causes of their problems.
The images of grandfathers preparing petrol cocktails should Russian troops break through to Kyiv left a lasting impression on me, as did the little boy shuffling down the border road, alone in tears carrying his soft toy, as families tried to escape to safety.
This is a great listen, lighthearted but serious undertones:
https://timharford.com/2024/03/cautionary-tales-inside-the-bizarre-worl…
Thanks, that was good. Historically the road to power for psychopaths has been all too easy. Once they have been installed by a second tier of enablers and an army of legally untouchable drones able to meter out state sanctioned violence the decay of quality of life in society is assured. Democracy is the only system that can blunt the rise of psychopathy, but democracy without egalitarianism, individual responsibility and education can't survive. Like in your referenced podcast, we living in democracies are lying to ourselves in a similar vein to totalitarians. Democracy can't survive the mythology of exponential growthism, techno utopianism, ignored resource depletion and the view that anthropcentrism is a galactic law of physics. These delusions have to end, before they end us!
Russia has a mythological attachment to Crimea. Here's an equally lighthearted exposee of their obsession.
Don't get overcome by the emotional images Palmtree. An alternative explanation is that this is no geopolitical conflict, just one of those nasty unsolvable ethnic conflicts. Look at the map and figure out who speaks russian and where they are. And who doesn't. Quite revealing.
But essentially in those sort of ethnic conflicts it's brothers and cousins killing each other. Mad murderers both sides.
One side was living peacefully, trying to lift living standards, the other side invaded wanting to prevent the "brothers and grandmothers and children" now being butchered, from leaving the stable of the Kremlin orbit. You will be our "brothers" or die.
Can't have a Russian speaking neighbour living more prosporously and a glaring example to your own population how they are being robbed blind.
Virtually everyone in Ukraine speaks Russian. Speaking the native Ukrainan language was banned under Kremlin rule for much of its history.
https://en.wikipedia.org/wiki/Chronology_of_Ukrainian_language_suppress….
"Mad murderers both sides." Only one side let the dogs out!
The price of gold will start today firmer by +US$19 from yesterday at US$2259/oz, and only -US$7 below its new all-time high reached intra-day yesterday.
Why do they care? I've never understood the gold price conspiracy theory but open to being convinced.
Because they perceive a strong gold price as movement away from and distrust in the monetary paradigm that they represent, particularly in the West.
And let's face it, when the gold price appreciates at a value greater than cash, equities, and even the glorious residential property, the hoi polloi have the potential to get restless and start asking 'why'. We're not really at that point. And it's no guarantee it will happen. Remember gold, silver, miners all crashed with the stock market in March 2020 (rat poison as well). It could very well happen again.
Glad Tesla stock is down, this is good work, taking care of a small amount of the unnecessary excesses due to Demoronacrats
Musk will sleep (the small amount he does sleep) soundly, mega-packs, Cyber Trucks and Optimus.
Wolfie must be happy he sold his BTC, well played sir!
NZ House prices seem to be finally giving way, this is good of course (except for the young FHB they can be fed to the sharks) and I like that inflation is doing a good half of the heavy lifting.
If you want to buy a car now might be the time, when our currency falls that will likely raise prices $10k or so.
Ratepayers will also feel the pain big-time since many councils are accredited Living Wage Employers in New Zealand.
I am sure many will side-step these pain points by outsourcing unskilled work to contractors and labour-hire companies.
NZ Post is already going down that route by deciding to layoff unionised posties and stream mail delivery through its parcel network, i.e., underpaid subbies. Not judging the move, just saying it is going to become more commonplace with 100k+ unskilled migrants already in the country desperate for a payday.
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