Here's my summary of the key news overnight in 90 seconds at 9 am, including news inflation is tepid worldwide.
But first, dairy prices on the Fonterra auction platform are up 4.9% from the previous auction two weeks ago. This is the strongest gain since early April. In NZ$ however, the rise was 3.0%, a decline from the previous auction.
Yesterday's inflation reading in New Zealand was pretty tame - held down by the tradeables sector. Our annual inflation rate in the June quarter was 0.7%, its lowest level since 1999.
But inflation reports from some big economies came out overnight and they were very much higher.
In the US, they reported a 1.8% annual rate, up from 1.4% the previous month and its highest rate since February. The US doesn't have the deflation problem some were concerned about earlier in the year.
In the UK, they reported a 2.9% annual rate, up from 2.7% in May. But that was still less than the 3% markets were expecting.
Eurozone inflation was reported at 1.6%, as expected.
Other data out overnight shows mixed fortunes. German sentiment and factory orders were weak. However, US capacity utilisation, housing, and industrial production data all came in above expectations.
Unbelievably good US bank profit results continue to be reported, the latest being from Goldman Sachs who doubled their Q2 result from a year ago.
It has been revealed that while most investors were selling US Treasuries in May trying to avoid losses as yields rose, the Chinese actually increased their holdings - by US$25 billion to US$1.3 trillion. That now represents 11% of the US$11.9 trillion on issue to the public, which itself is a bit more than 79% of US GDP.
And finally, the Aussie election campaign has thrown a spanner in the works of the car and related manufacturing industries with Labor signaling new major fringe benefit taxes. This is an industry that many Kiwi manufacturers have as important customers.
The NZ dollar starts today sharply higher against the US dollar at 78.9 USc, 85.3 AUc, and the TWI is at 74.6.
No chart with that title exists.
22 Comments
Unbelievably good US bank profit results continue to be reported, the latest being from Goldman Sachs who doubled their Q2 result from a year ago.
It's all in the eye of the beholder. Gotta keep those wheels spinning.
NZ has low inflation.
Yeah Right.
Petrol price has jumped.
House prices ballooning.
Power bills up massively in last year - Gisborne $180, Northland and Southland not far behind - the most poverty stricken economic backwaters of NZ.
Food bills up 42% in past decade, just about the fastest increase in the OECD.
Parasitic banks sucking out billions for doing sweet FA except for turning us all into debt slaves and setting nZ up for a debt implosion.
Kiwis are getting a financial arse raping by cartels.
More kiwi kids sliding into poverty, violence, 3rd world diseases.
or maybe whos fiddling the figures to suit their political outlook,
"Why do people continue to give credibility to an operation like Shadowstats? Now that's something that I'd like to hear explained."
http://delong.typepad.com/sdj/2011/12/james-hamilton-on-shadowstats-and…
regards
I think the philosopher John Saul describes the confusion between growth and inflation made by Western elites, very well:
[ And this was written back in the mid 90s ]
"Just as our structures and elites prefer corporate manipulation to real production, so financial manipulation comes more naturally to them than the creation of new capital.
The result has been the gradual conversion of our economies into myriad new forms of inflation, most of which are not measured by our many measuring institutes.
Much of current economic argument turns upon levels of measured inflation which reflect the small potatoes of national economies. So to all appearances we do not inflate.
Financial manipulation creates profits but adds nothing real to the economic wealth of the society. These abstract methods are so widespread and sophisticated that they can create the impression of general prosperity [ eg 2002 -2007 ] when the reality is one of continued decay in both economic and social infrastructures.
Our elites seem often to be the most perplexed by the inability of their systems to create real wealth.
Their isolation from reality is such that they believe their systems can produce growth where in the past only inflation has grown."
Yeah I've visited that shadow stats sites a few times.
It's like everythng is faked or rigged from LIBOR, FOREX, energy markets to unemployment stats.
So much for market price discovery.
Do you follow Max Keiser's reports? I call him Mad Max, he sure doesn't hold back on politicians and banksters.
It feels like groundhog day.
If you only have $100 in your picket and petrol goes up in price, say $5 to $25 what dont you buy instead?
The point in this inflation number is to use it as a guide for setting the OCR so you need to know whats happening overall, not to a specific individual or sector.
If I didnt have a car the increase in petrol wouldnt effect me, if other sectors deflate to cope with that $5 less and I buy in them Im actually better off...Im seeing deflation.
Lets say out of your $100, $30 is mortgage, buy your comment on petrol the RB should put up the OCR and raise what you are paying, say by $3 so your mortgage is $33. So now not only do you have $5 less from petrol you lose another $3 to the mortgage, thats now $8 you have less to spend elsewhere.
Those elsewheres (sectors) have just got to drop their prices by $8 or not make a sale and go out of business.
Power bills up about 4.5% I think....but thats due to the system the Govn milks and not real costs...who did you vote for again?
You turn yourself into a debt slave you dont have to borrow....
Now cartels' yes I will agree on that, some if not many are allowed by the Govn you voted for.
Maybe its time for a radical change?
PS you is generic not necessarily you specific
regards
SP - nah, forget realities. Stick to GDP. It's a universal, god-given measure. There was a slight glitch in delivering the universal equation, the 'E' in E=MC2, was actually 'Economics'. Someone made a tragic assumption that it was 'Energy'.
http://www.odt.co.nz/opinion/opinion/152297/false-gospel-according-gdp
FB - ta for that. I guess I see them as different clientele. Folk in my/your circles, have had these discussions forever. No point in having them there, unless its because you need reinforcement etc. I'm past that. So that leaves the across-the-board ODT-type readership, who I treat with respect until experience suggests otherwise.
I started out here with similar initial respect. This clientele has a different echelon - or two. It has those who are genuinely scared enough to lie to themselves (something rare-to-non-existent in my crowd). Has to be ego, insecurity, whatever. Eventually, you have to ignore them. Then there's the outright spinners; I have fun working out who they are, or at least what outfit they're from. They won't change, because they're paid not to. I make no apologies for challenging that kind, head on and hard. It's a failure of our current media - and I've hassled senior ones like John Armstrong - that they don't do so.
cheers, go well, go...... oops. :)
I've had a look at your blog which makes interesting reading but you aren't keeping it updated, the links are great too.
There are always big mouth Haters, like the gloating Trolls around this site.
But getting their attention is a good sign you are on the right track.
Factboy
Thank you for backing up Murray in such a nice way. His ODT piece is a classic.
The way that your friends react to your thoughts and planning is very disappointing. They will of course be standing on your doorstep wanting to borrow (never return) this-and-that after things get sticky.
And as for their unstated "Stopped Clock correct twice a day" talk - check out Mish last night. He has the perfect answer for such nonsense.
And now I sign off - thinking about Magellan's crew - celebrating the day-of-prayer - on the wrong day of the week. How could they have ever considered the need for a date line!
goNZ
Dont count me as one of those Frog Bloggers. Reality alone ends up making me more 'green' than any Green Party members that I know.
I had never heard of the Frog Blog before! For that I thank you.
Energy substitution is actually a very pleasant and rewarding hobby.
As you imply with your contrail question - most Frog Bloggers are quite happy to do as they do. And they will.
Rudderless - chuckle. Yeah, I'm loud in my condemnation of the Greens too. They have a long way to go.
That Mish thing was interesting
"Power consumption, for example, simply doesn’t suggest that growth rates have been able to hold up.
Last year’s GDP growth clocked in at 7.9%, although a lot of analysts believe it may have been closer to 5.5%, and if power consumption year to date is already much lower than it was last year, unless there has been a major – and hard to detect – improvement in energy efficiency it is hard for me to imagine why growth this year and next year should even match last year".
Well I'll be buggered. Whod'a thought - energy underwriting economics. Now there's something novel.... :)
I liked this too:
"An analysis that points to an unsustainable trend is always right if the trend turned out indeed to be unsustainable. The fact that it may have taken many years before the limits were reached is not an indication that the model was wrong. It is simply how the economy works"
Good stuff.
missionaries and fanatics
In the deep south a revivalist meeting is in progress. A charismatic evangelist fires up the congregation with fire and brimstone. Many see the "light" and become immediate devotees. In a state of heightened fervour, the congregation contribute generously as the collection plate is passed around.
chartists and fanatics
In the far north, a wealth seminar is in progress. A charismatic presenter fires up the congregation with promises of untold wealth and riches. Novices learn charting (property) is the light and the way. Convinced they have found salvation and the holy grail. In a state of heightened expectation the congregation contribute generously. Signing on for the never-ending journey to "el-dorado" and "valhalla".
Dairy Prices now bookended
http://www.nzherald.co.nz/agriculture/news/article.cfm?c_id=16&objectid…
Fonterra will trim 9 per cent from its Anmum maternal health products in mainland China from next month "to better meet consumer needs in light of recent industry-wide price revisions," Fonterra president for Greater China and India, Kelvin Wickham, said in an emailed statement.
The New Zealand firm joins Abbott Laboratories, Nestle, Danone, Royal FrieslandCampina and Mead Johnson Nutrition in cutting prices since the China National Development and Reform Commission launched its investigation.
We would suggest that this 9% of revenue would be a good and higher percentage of earnings.......
China is preventing the British finance director of GlaxoSmithKline China from leaving the country as the police investigate claims the British drug giant bribed doctors with cash and sexual favours.
Steve Nechelput, who has served as GSK's finance chief in China for a year, tried to fly out of the country three weeks ago but was told he had been banned from leaving.
http://www.guardian.co.uk/business/2013/jul/17/glaxosmithkline-executiv…
News of the travel ban comes after Chinese police raised concerns that Mark Reilly, the head of GSK's Chinese operations, left the country shortly after the bribery investigation was announced on 27 June and has not returned.
Asked about Reilly's decision to leave the country, Gao Feng, the head of China's fraud unit, said: "You had better ask him yourself why he has left China and is not willing to return so far." A GSK spokesman said Reilly returned to the UK for long-scheduled meetings. He declined to state if or when Reilly would return to China.
Chinese police have detained four senior GSK executives, all Chinese nationals, as part of the investigation that stretches back to 2007 and involves deals worth 3bn yuan (£320m). GSK is alleged to have played a "godfather" role at the centre of a network of more than 700 intermediaries and travel agencies used to bribe doctors and lawyers with cash and sexual favours.
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