Here's our summary of key economic events overnight that affect New Zealand with news American household spending rose in October and savings fell as prices paid by households surged.
But first, the headline news in the US is that jobless claims there fell to +199,000 last week, the lowest since the start of the pandemic. In fact, they are celebrating that as a 52 year low. But as regular readers here know, we track the actual number which has been running far lower than the reported seasonally adjusted data. Last week, actual claims however actually rose to +259,000 and making 1.814 mln people now on these benefits. At that level, they are in fact back to pre-pandemic levels. They got there a few weeks ago as we reported earlier, but it has taken a while for the seasonally adjusted data to catch up.
US durable goods orders aren't catching up however, falling -4.4% from September but are up +11% from October 2020. They are +3.2% up from October 2019. These are also 'actual' numbers as the seasonally adjusted data seems to sanitise the shifts. New orders for capital goods weren't strong either in October.
The American merchandise trade deficit fell sharply in October from September's all-time record. On a year-on-year basis, American exports were +24% higher while their imports were +14% higher.
New data for personal income and personal spending in October saw both rise, but spending is still rising slightly faster. That means the diminution of their savings rate continues and it is now its lowest since before the pandemic started. Part of that is because inflation is stealing from their wallets, now up to +5.0% year-on-year as measured by their PCE index (the one the Fed supposedly prefers, than CPI which is at 6.2%).
The widely-watched University of Michigan consumer sentiment survey results were released with their full data for October and that confirmed the retreat in their preliminary release, but in the end the retreat wasn't as large as they had originally reported. They also released data of their surveys of American's confidence in their financial system institutions - and all remain quite negative.
US new home sales were little changed in October from September but that was less than was expected.
In a major announcement, chip-maker Samsung has selected a site in Texas near the state capital in Austin to build a US$17 bln chip-making plant. Like several of its rivals, it is racing to expand chip making in the US to tackle supply chain issues. Re-shoring activities like this are gathering steam and will be an economic driver over the next decade.
In Germany, the closely-watched IFO business climate survey was lower in November from October. Companies were less satisfied with their current business situation, and expectations became more pessimistic. Supply bottlenecks and the fourth wave of the pandemic are challenging German companies.
In the latest "Global Power City Index", the top three were unchanged as London (falling), New York (rising) and Tokyo (rising). But Hong Kong fell sharply out of the top ten, and Melbourne #11 rose while Sydney #12 fell.
In Australia, Delta cases in Victoria have risen sharply to 1196 cases reported there yesterday. There are now 9,774 active cases in the state - and there were another 3 deaths yesterday. In NSW there were another 248 new community cases reported yesterday, and a rise, with 2,647 active locally acquired cases, and they had another two deaths yesterday. Queensland is reporting zero new cases again. The ACT has 15 new cases. Overall in Australia, just under 85% of eligible Aussies are fully vaccinated, plus a bit over 6% have now had one shot so far.
The UST 10yr yield opens today at 1.65% and unchanged since this time yesterday. The US 2-10 rate curve starts today flatter at +100 bps as US short rates rise. But their 1-5 curve is little-changed at +114 bps, while their 3m-10 year curve is also flatter at +158 bps. The Australian Govt ten year benchmark rate is -4 bps lower at 1.87%. The China Govt ten year bond is -3 bps lower at 2.91%. The New Zealand Govt ten year is down -6 bps at 2.52%.
In New York, the S&P500 started its Wednesday session lower but is now unchanged in early afternoon trade. European markets all closed generally flat, although London bucked that trend and ended up +0.3% while Frankfurt closed down -0.3%. Yesterday, Tokyo was closed down a sharp -1.6%, Hong Kong and Shanghai finished little-changed. The ASX200 fell -0.2% while the NZX50 rose another +0.6% yesterday.
The price of gold will start today a little firmer at US$1789 and up +US$7 since this time yesterday.
And oil prices are little-changed at just over US$78/bbl in the US, while the international Brent price is now just over US$81/bbl.
The Kiwi dollar opens today -½c lower at just under 68.8 USc which is its lowest since mid October. Against the Australian dollar we are lower at 95.5 AUc. Against the euro we are fractionally lower at 61.4 euro cents. That means our TWI-5 starts today at 73.7 and also its lowest since mid October.
The bitcoin price is lower since this time yesterday, down to US$56,631 and down -1.4%. Volatility over the past 24 hours has been modest at just over +/-1.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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28 Comments
Yes China's belligerence towards the rest of the world could come back to bite them. But that also has other negative implications for the world. Pushing to the precipice sooner rather than later may be a better option.
China is arming up rapidly, giving themselves a very big club. The US militarily is but a shadow of what they have been, but still very capable. The longer this takes to come to a head the more likely it will end in escalating conflict, that most are simply not prepared for, especially NZ.
Way back, General Curtis Le May was more than peeved to see reliance removed from his beloved Strategic Air Command & transferred to the nuke sub brigade. The USA has now 68 of them, still counting. Combined with allies that measures upwards of 80 vs less than 30 of USSR & China, the formers of some antiquity now. The global positioning of those “friendly” western allied subs is enormous, whereabouts unknown, at any one time. Deterrence is still alive and kicking isn’t it.
Ukraine is the way it is because of Russia's meddling, before and after the Wall coming down. And that is no reason for the west to turn their back on them. Sure, it may be the front line, but if Ukraine is surrendered to Russia, then why not Hungary, Poland, Germany, France......?
Diesenl fails to understand that Moscow created Minsk Agreement for it not to be implemented. It was created to precisely freeze the conflict and allow Russia to complete relatively calmly the process which is the title of my first book: Losing Military Supremacy. The Myopia of American Strategic Planning. From the get go Russia knew that there was nothing to talk about with both West, let alone 404. Russia needed to rearm and to mobilize, which she did to a large degree due to: Link
The big question is - can the west stop them, and put them back in their cages?
Hmmmm....
US Secretary of State Madeleine Albright, needing a way to punish Saddam Hussein for not wanting to become a US colony, personally arranged the targeted destruction of Iraq’s drinking water purification facilities and enacted worldwide sanctions to prevent Iraq from obtaining replacement supplies or repairs. According to the United Nations, Albright’s actions directly resulted in the deaths of more than 500,000 Iraqi infants from contaminated drinking water, with the full knowledge of the US government. Then in a TV interview on the program 60 Minutes where she was confronted with evidence of these acts by Leslie Stahl, Albright famously proclaimed, “Yes, it was worth it.” (26) (27) And after personally arranging the 80-day non-stop bombing of Yugoslavia, the greatest continuous bombing campaign ever instituted by anybody anywhere, she said, “The United States is good. We try to do our best everywhere”. (28) Link
Forty five years ago I read some investment advice, probably in a book, cant remember, but the message was about the importance of saving early in your life.
One investor saved $10 a week for the first 10 years of his/her working life, investing in TDs and then stopped saving for the next 30 years. The second investor saved nothing until year ten and then started saving $10 a week for the next 30 years, also investing in TDs. At the end of 40 years who had more dosh? Answer was the first one.
There were obviously some assumptions in the above story, probably interest rates of about 10 percent, and minimal tax. The idea was good, but the practicality based on interest rates which were about 6% at the time, and taxes at 33%. . At year 3, I switched to property, and we all know what happened in the early 80s. At year 13, I stopped saving, and 40 years later, I am very happy with the early advice
Just a few years ago the advice I heard was to save 10% of what ever you take in. The earlier you start the better. The adviser indicated that consistency generally resulted in a fund that if started at 20 could enable retirement at around 55. He also stressed that it did not matter how much you earned. It has never been easy for most to live within 90% of their means, but if they can the rewards are well worth it!
I disagree somewhat. Your mortgage looses purchasing power each year due to inflation. The appreciation of the assets value will well outstrip the mortgage interest rate. Also, it gives you access to capital through leverage which can be redeployed into the market at opportune times.
Obviously having less debt is ideal, but there is always an opportunity cost.
It should be noted that the TRY is up 8 percent against the NZ lira over the past day, such is a day in the life for the worlds tenth most traded currency. The antipodean cross will need to tumble back down over the coming week , otherwise one Nomura analyst will see his bonus chopped. Also, hopefully the NZD starts to help out the RBNZ a little, otherwise fuel prices at pump will continue to reach new all time highs.
During the RBNZ , I watched a Bayley live auction,( my first) sixty percent sold, all bid. A couple more should have sold Standout was a Waiheke property, that sold , having been brought forward, 2.6 million over RV ,( almost treble), double Homes and QV estimates. Interest rates don't matter much if you don't need a mortgage or when a lot of money is trying to find a" home"
Today’s Shortages Could Soon Become Tomorrow's Gluts
History suggests that acute shortages can lead to overproduction, eventually bringing down prices
Nobody is 'in control'.
Firstly, OPEC can try and turn their remaining resource into wealth tokens - but ex the resource, there is no home for the tokens.
Secondly, there ain't the spare capacity anywhere, despite hype and avoidance, parroted by the media. Conventional wells, fields, nations, deplete at about 5% pa. The stave-off was unconventional; tar, fracking etc; those take more energy, in the case of fracking deplete faster, make more mess, and require specialist refining (sours, bitumen, kerogen).
This has been coming for a long, long time. Obscured by the climate change we need to get off them argument, by the Saudi America nonsense, and by the societal ability to cranially revert to short-termism.
https://ourfiniteworld.com/2021/11/10/our-fossil-fuel-energy-predicamen…
Increasingly, we are telling ourselves satisfying stories - truckie-shortages, supply-chain issues, the Dow fluctuations always now preceded by some 'explanation' as to why the lemmings went up or down. But OPEC, like everyone else, are part of a global system predicated on growth, and growth requires more energy - exponentially more, minus efficiencies, plus increased maintenance demand. All a bit confuscated by payments being increasingly made in unrepayable debt, of course........
If this was just Japan, maybe it could be left as just a problem of/for Japan. It's not. The macro money illusion has masked substantial weakness in Germany and China, too. Japan. Germany. China. Where'd we see problems in those three? Also in early '18. https://alhambrapartners.com/2021/11/23/the-growth-scare-keeps-growing-out-of-the-macro-money-illusion/
Meanwhile, on the Nothing to see here newsfront...
https://summit.news/2021/11/24/former-pro-calls-for-investigation-after…
Strange isn't it...??
You don't think?
https://www.ahajournals.org/doi/10.1161/circ.144.suppl_1.10712
https://stevekirsch.substack.com/p/latest-devastating-news-on-the-vacci…
Nah, nothing was rushed, all checks are in place
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