Here's our summary of key economic events overnight that affect New Zealand, with news investors are voting with their money today, with some decidedly risk-off shifts.
It is only about 200 days until the November US presidential election an nervousness about that outcome is starting to show up in sentiment surveys. Consumers are apprehensive that the golden run could be crashed by the vote, or that things could destabilise ahead of it. The University of Michigan consumer sentiment poll is now reflecting some of that apprehension. However it is only off a 33 month high so we shouldn't make too much of this April dip and it remains more than +20% higher than year-ago levels. Still, the shift was noticed by financial markets. Wall Street dipped, bond yields slipped back, and the USD surged against all-comers on the risk-off mood.
India's industrial production rose by +5.7% in February from a year ago, the latest data released overnight, but that missed analyst forecasts of +6% growth, but it was a faster expansion than in each of the prior three months. A year ago this expansion was running at 5.8%, so little change on that comparison.
From Friday next week India will start its long national election process which won't be completed until June 1. This one is distinctive because it is already viewed as being rigged in favour of the BJP, so it may in fact be their last chance for a proper exercise of democracy. The prospects of a fair result however seem dim, especially when their Modi-aligned Election Commissioner made an effort to capture his own Wikipedia page to produce a hagiography worthy of Chinese president Xi.
New bank lending in China picked up in March from February but the results still disappointed. March is usually a strong month for borrowing because banks tend to extend more credit at the end of each quarter to meet lending targets. But the ¥3.1 tln in new March lending was less than the ¥3.6 tln expected and the ¥3.9 tln in March 2023.
Meanwhile, China's exports tumbled in March. They dropped -7.5% from a year ago, reversing sharply from a +5.6% growth in the earlier month. This was very much worse than market forecasts, highlighting the Middle Kingdom's uneven recovery and perhaps suggesting global demand won't drive growth there. It may also be a sign that de-risking from China because of its terrible recent signals to investors is biting harder and earlier than anticipated.
It is not all difficult news in China. A survey shows that for the first time since the end of 2021, wage growth rates are picking up again.
The UST 10yr yield is now at 4.52% and down -5 bps from yesterday. A week ago this rate was 4.39%. The key 2-10 yield curve inversion is a bit less at -38 bps. And their 1-5 curve inversion is unchanged at -59 bps. As is their 3 mth-10yr curve inversion is now at -89 bps and a little deeper. The Australian 10 year bond yield is now at 4.24% and down -8 bps. The China 10 year bond rate is down -2 bps at 2.29%. The NZ Government 10 year bond rate is now at 4.95% and +7 bps higher since this time yesterday. A week ago it was at 4.70% so a large +25 bps rise since then.
Locally, this time last week money markets were pricing in three OCR rate cuts in 2024. But sticky inflation in the US, and here, both have traders changing their tune, so that there are now only two cuts priced in for 2024. The October 9 review is where the first is now priced for, the November 27 review for the second. The conviction for these two is easing off too, and kind of quickly. The earlier May or July pricings have now completely vanished and seem a distant memory.
The S&P500 is down -1.5% on Wall Street in its Friday session, and heading for a similar -1.7% weekly retreat, all decided by Friday's shift lower. Overnight, European markets closed very mixed with London up +0.9% and Paris down -0.2%. Yesterday Tokyo ended its Friday session up +0.2% for a minor +0.3% weekly gain. Hong Kong fell -2.2% in its daily trade to end up +0.4% for the week. Shanghai fell -0.5% on the say to end down -1.2% for the week. Singapore closed down -0.3%. The ASX200 ended its Friday session down -0.3% for a net +0.2% weekly gain. The NZX50 ended unchanged on the day but down -0.7% for the week.
The Fear & Greed index has shifted out the "greed" range, to the 'fear' end of the 'neutral' range. This is the largest shift in more than a month.
The price of gold will start today lower by -US$6 from this time yesterday at US$2349/oz. But that is a +US$23 gain in a week. We should note that this price it its all-time high of US$2432 at about 4am this morning. It has been sharply down after that.
Oil prices have been quite volatile over the past 24 hours but have given up almost all earlier gains to be just +50 USc higher at just on US$85/bbl in the US while the international Brent price is just under US$90/bbl. Both levels are about -US$2 less than a week ago.
The Kiwi dollar starts today at just over 59.4 USc and down -½c from yesterday and down a similar level in a week. Against the Aussie we are firmer at 91.9 AUc. Against the euro we are little-changed at 55.8 euro cents. That all means our TWI-5 starts today just on 69.2 and down -20 bps from yesterday, unchanged for the week.
The bitcoin price starts today much softer at US$67,601 and down -3.8% from this time yesterday. However a week ago this price was US$67,794 so virtually no net change since then. Volatility over the past 24 hours has also been moderate at just on +/- 2.6%.
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83 Comments
"I Cannot Afford To Live": Americans Get Emotional As The US Economy Goes Off The Rails
All over America, stores that were once thriving will soon be boarded up.
This is what the future of our economy looks like, and many Americans are preparing for rougher times by purchasing large quantities of gold…
Gold has turned into money for Costco, where yellow metal sales begun last year have turned into a cash cow for the big-box retailer.
In fact, sales are so brisk that analysts at Wells Fargo expect revenue “may now be running at” $100 million to $200 million a month, a rapid acceleration since bullion hit the warehouse club late in the summer of 2023.
Just like me, so many of you can feel what is coming.
A tipping point has arrived, and the outlook for the months ahead is very bleak.
The U.S. economy is going off the rails, and the worse things get the more frustrated the American people are going to become
Thyssenkrupp, one of Germany's most iconic industrial conglomerates, plans to reduce steel output by ~20%. The plan responds to an "upward trajectory of energy costs owing to climate policy objectives" and pressure from "unchecked" Asian steel imports. https://thyssenkrupp-steel.com/en/newsroom/pr Link
Nervousness about the outcome of the USA election is starting to show up. Rather understandable that. An incumbent well past his best before date with a deputy unelectable in her own right. A challenger verging on criminal and other convictions with the most important priority of purging himself of the lot of them. The whole world waits, and wonders. And no more so than Putin.
There's money to be made if you're that confident. Biden and Trump now pretty much neck-and-neck and the Democrats are now favourite to provide the next President. Trump's odds have been sliding for weeks. Biden to become favourite this week?
https://www.betfair.com.au/hub/sports/politics/us-election-betting-odds/
Trump is in serious cognitive decline, and has been for a few years. If you're really interested you can easily look it up
"The oranges of the investigation" the origins ...
"The 1864 militia closed the airports" planes hadn't been invented in 1864. Etc etc
The simple fact I need to say this leads me to believe there's double standards in judging the two candidates
Mr Trump will win a holiday in the big house, for sure. Of all the cases and appeals he's been lodging he has only partly succeeded in a couple
Trump handled the eclipse the same way he handles his porn stars, without any protection. The man is entertaining, I'll give him that
We've seen the real Don. When you're a conspiracy theorist / ideologically wedded to a certain world view it doesn't matter what the reality is, you come up with a justification. Every despot in history has hoodwinked his supporters in the same way. Trump is no different.
We'll always have Paris.
"The world’s net coal-power capacity grew at the fastest pace since 2016 last year, led by a surge in new plants in China and a slowdown in retirements elsewhere, according to a new report from Global Energy Monitor. The world’s coal fleet grew by 2% to 2,130 gigawatts, with China accounting for about two-thirds of the increase, according to the climate research firm."
Meanwhile down at the south east end of the line NZ’s earnest and proud emission efforts etc, in the face of that, amount to little more than bubble and squeak. Given the remorseless and unabated industrial thermal activity by the giant nations NZ must now accept the reality that its only recourse is prioritising defence against the incoming effect of said thermal activity.
If NZ Inc. gets stuck into electrifying NZ energy infrastructure, NZ Inc. would build up a huge amount of intellectual property in this space.
Consequently, I don't think our efforts should be trivialized as having no effect.
One area we could derive significant foreign revenue from is getting a robust, working and cost sustainable tidal generation package together. (Note that the package may not be built in NZ but royalties will flow back.) There is a real opportunity in this space as efforts overseas have been piecemeal and largely ineffective due to stop/start investment and/or poor execution. And with water being so much heavier than air, tidal power potential is absolutely enormous. If a tiny nation like ours can compete and win the America's cup, where innovation and high tech results in the fastest boat ... I'm pretty sure we can do this.
Your 2nd paragraph pretty much nails it.
NZ doesn't have a worker problem. We have a management and leadership problem.
Chippy & Luxon et al please take note - and change the status quo. (Yeah, I know. Wasting my breath while so many people think the status quo is just dandy.)
Chris - do some homework, don't just do 'pretty sure'.
That's Flying High territory - ideology is to be avoided.
I have acquaintances who have done theses into tidal power - all agree it is not the go. Same with electrifying everything - ain't gonna happen. Storage, the 2ND Law (and entropy) are agin you.
And nobody - NOBODY - has proven that a renewable infrastructure can perpetually beget renewable infrastructure; the EROEI has NEVER been attained. (And I've pushed this corner of physics, harder and longer than most...).
Profile entering stage 4 of the climate crisis denial tactics. Deny we can solve the problem.
At least we're making progress. Do you get decreasing pay as you ascend the stages.
https://www.google.com/amp/s/amp.theguardian.com/environment/climate-co…
Only a wide eyed conspiracy theorist would think record anthro CO2 emissions are "making progress" on their non-problem gravy train.
https://www.reuters.com/business/energy/global-energy-related-co2-emiss…
Meanwhile water care proposing a 25.8% water price rise in Auckland, if they get more debt only 9% on top of 7.5% rates rise, none of these remotely close to the 1-3% band... The trouble with the "Basket" of goods in our CPI is that the $$$ we spend in each bucket just does not match .. ie our rent/interest bucket of spend is often 40%, rates , water on top, power, food .... not sure many have eyes on international travel costs..
for most people Inflation is still read hot, water and rates just going to rub salt in
Our business insurance has rocketed up, just had the notice our building needs a structural engineers report for earthquake rating...there goes another 15k plus, rates already 3 x what our more expensive residential home pays up 20 percent, wage bill up, power up, only thing down is pedestrian count.
True, but in fairness the cost should sit in local rates on land, as the infrastructure and betterment flow to the land. I say this as a landowner in Auckland, too.
Can't always be looking to make others pay - there's far too much of that entitlement already in property.
It may also be a sign that de-risking from China because of its terrible recent signals to investors is biting harder and earlier than anticipated.
This is just geopolitical incompetence of the highest order by Italy. The BRI isn't an alliance, there's no treaty, no obligation. It's just infrastructure projects which you can agree to on a case by case basis. As such she had zero need to "pull out" from it, it was pure political posturing to presumably annoy China and please Washington, with no other consequences. And there wouldn't have been a need for a "charm offensive" now just 4 months afterwards. It's just completely senseless. Link
Quote Bloomberg @business16h
Italian Prime Minister Giorgia Meloni is embarking on a charm offensive with China as she looks to shield trade and economic ties after pulling out of the Belt and Road Initiative last year https://trib.al/xquIPwz
I don't recall this one being in the Coalition agreement?
"Prime Minister Christopher Luxon says he'll look at changing the tax-exempt status of churches this term, adding he's open to suggestions they should pay up."
Brian Tamaki fires up after Christopher Luxon eyes tax reform for churches | Newshub
How about the rest of "charity" tax / low tax exemptions, Sanitarium, Iwi business organisations etc ?
The price of gold will start today lower by -US$6 from this time yesterday at US$2349/oz. But that is a +US$23 gain in a week
Got pretty wild last night. And silver was even wilder - up 4% at one point and threatening USD30. Then bam. Jamie Dimon bought out the big guns and prices slammed for both gold and silver.
But screw Jamie and the banks. We will see if Asia has control on Mon - Shanghai Gold Futures up 1.27%. Gold is now up 30% in 6 months - one of its best 6 month gains in history. And they're oblivious to it all at the water coolers and neighborhood BBQs across Nu Zillun.
After reading the above and factoring in some other comments made in other channels I predict:
Next week Wall Street will be buying the dip and before the end of the current quarter there will be a concerted worldwide rates cut by all central banks at the same time.
More CRE apocalypse porn. 345k sq ft office building in Baltimore with a starting bid of USD1.5 million. Only 32% occupancy. Designed by Ludwig Mies van der Rohe and modeled after the Seagram's Building in New York.
https://www.ten-x.com/listing/100-n-charles-st-baltimore-md-21201/30841…
Hmm should I buy a small section in riverhead or a resort in Iowa?
https://www.ten-x.com/listing/350-bell-st-dubuque-ia-52001/31016502/?li…
Just teasing… but both have their unique water features!
Central banks are buying the gold top, particularly the People's Bank of China. Chinese people are smart. It would make complete sense for people to follow their lead. The Anglosphere central banks' actions are executed to influence the behavior of the sheeple. Not suggesting that People's Bank wants Chinese people to buy gold but I could imagine that they understand why people might be doing so.
https://www.zerohedge.com/markets/central-banks-are-buying-gold-top
The Sino property ponzi is in full swing now, mostly downwards. The ugly reality is being shielded by their key media players, as always, but there's blood on the tracks pretty much everywhere you look. The Chinese people, as distinct from the Chinese Communist Party, have now lost most of the faith the CCP told them they had to have in their august organisation.
The peoples choices are so limited, as we know, so no real surprise we see the gold prices going higher. Especially with their huge [by our standards] savings rates.
I'm not sure the bracketed comment is fair.
"Since the UNHRC's creation in 2006, it has resolved almost as many resolutions condemning Israel alone than on issues for the rest of the world combined. The 45 resolutions comprised almost half (45.9%) of all country-specific resolutions passed by the UNHRC"
https://en.wikipedia.org/wiki/List_of_United_Nations_resolutions_concer…
Probably limited. The point is, there's an incredible focus on Israel's wrongdoing, completely out of proportion when you compare their actions to those of dozens of other countries. There are shitty things happening all over the world, but we hold Israel to a different standard.
Are you similarly concerned about the dead in Ukraine, Myanmar, and Sudan? Israel at least has a clear reason for their war - they were attacked, thousands killed, and hundreds of their citizens are still held hostage behind Gazan human shields. Their enemy hides among civilians because dead Gazans are great PR for Hamas.
Well played. sir.
There is too much 'by association' and emotive stuff in our conversations - some of the political assumptions are quite tiresome.
The question is always 'why'? Not: Who?
Trump is no being voted for because he's flawed, he's being voted for because he's not the Establishment. That is so, irrespective of court-cases - which (and I'm no Trump supporter) are being brought by the Elite there, the way the Elite here bought our recent election.
A showdown between the rest of the ME and Israel has been inevitable, in my view, since 1946. It's Buckminster Fuller-s In-pirates/Out-pirates, in spades. This time the US is a decaying hegemon; Israel without her, is toast.
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