Here's our summary of key economic events overnight that affect New Zealand with news it may be hard to maintain the 2021 economic momentum in 2022.
But first, the US reported +256,000 more initial jobless claims last week, a seasonal rise. On a seasonally adjusted basis, the report is +192,000 new claims. The total number of people on these claims is now only 1.636 mln (actual) which is actually lower than before the pandemic started, in fact the lowest since July 1973, a 48 year record.
That is reinforced by the December Chicago PMI from the American industrial heartland. It rose on the back of stocking up to get ahead of supply chain issues. Firms also said that finding new hires to fill empty positions is challenging. Among the main five indicators, Production and New Orders and were higher. Order Backlogs, Employment and Supplier Deliveries fell across the month. They also reported a small easing of cost pressure.
A combination of the Omicron pandemic spread and winter snowstorms is having a major impact on US travel arrangements, with airlines cancelling thousands of flights daily. A 'blizzard' of Omicron infections is expected there over the next two weeks. Perhaps the US will find it hard to maintain its economic momentum to start 2022.
In China they have momentum issues of their own and the corrosive nature of their slowdown is starting to be revealed. It has been especially hard on SMEs, and for the first time in 20 years, more SMEs were 'deregistered' than formed.
And shares of Evergrande fell -9% yesterday to just NZ$0.28 after the embattled real estate developer did not pay offshore coupons due earlier this week. The decline wiped out gains from earlier this week, when the market cheered the initial progress made by the firm in resuming construction work.
In India they have imposed stricter rules to prevent the pandemic spreading during their festive season. Night curfews have been imposed in all major cities, restaurants are ordered to limit customers, among other new rules.
In Turkey, their currency fell another -6% yesterday, taking the four-day tally to a -20% fall. And it turns out that last week's 'recovery' wasn't from market demand at all - it was all from Turkish authorities using their scarce resources in frantic buying of their own currency. The locals just watched as Ankara wasted its funds.
Russian GDP grew +4.3% in Q3-2021, taking the annual rate to US$1.75 tln in overall economic activity. It grew +5.2% in the year to November. That puts it just a bit smaller than Canada but a bit larger than Brazil or Australia. Russian economic activity is just 12% the size of China, less than 8% the size of the US.
Russia is ending a deadly month with more than 85,000 fatalities from the pandemic there, taking the total toll to 810,000. Life expectancy has fallen to levels last seen in 2012 and is now under 70 years. Lack of trust in their government and its Sputnik vaccine has kept vaccination rates very low.
In Australia, there were 12,226 new community cases reported yesterday in NSW, a doubling in less than a week, now with 70,928 active locally-acquired cases, but only 1 more death. And 5,135 pandemic cases in Victoria were reported yesterday, also a massive jump. There are now 23,833 active cases in the state - and there were another 13 deaths there. Queensland is reporting 2222 new cases but no more deaths. In South Australia, new cases slipped slightly to 1374 yesterday. The ACT has 253 new cases and Tasmania 92 new cases, both big increases. Overall in Australia, 21,254 new cases were reported yesterday and their hospitalisation rates are now back nearly to the peak Delta levels. They will surely pass than in the next 14 days.
Meanwhile, their national government is reducing isolation standards and discouraging people from testing.
The UST 10yr yield opens today at 1.52% and a -2 bps slip. For the record, we started 2021 at 0.93%. The UST 2-10 rate curve starts today little-changed at +79 bps. Their 1-5 curve is marginally flatter +90 bps, while their 3m-10 year curve is also flatter at +150 bps. The Australian Govt ten year benchmark rate is unchanged at 1.62%. The China Govt ten year bond is down -3 bps at 2.79%. The New Zealand Govt ten year is firmer by +3 bps at 2.28%, remembering we started the year at only 0.99%.
On Wall Street, the S&P500 is trading up +0.2% in Thursday afternoon trade and near its record high it set two days ago. Of course they have a day's trading to go to close out the year, but are on track for a +29% annual gain. Overnight, European markets all gained about +0.2% and holding their earlier-in-the-week big rise. The exception is London which lost -0.2%. Tokyo finished its Thursday trade down -0.4%. Hong Kong gained +0.1% and Shanghai recovered +0.6% yesterday. The ASX200 traded flat yesterday but is heading for an annual +12% rise. And the NZX50 Capital Index gained +0.8% yesterday, but is heading for an overall annual retreat of -4.8%.
The price of gold will start today at US$1814/oz and up +US$10 from this time yesterday. The year started with the gold price at US$1891, so the yellow metal has slipped -4.1% since then.
And oil prices start today a US$1 firmer at just under US$77/bbl in the US, while the international Brent price is now just over US$79.50/bbl. We started the year with crude oil at US$52/bbl, so the net rise has been more than +50%.
The Kiwi dollar opens today almost unchanged and is still at just under 68.3 USc. If we end here, that will mean the NZD has devalued by -5.2% since the start of 2021. Against the Australian dollar we are softer at 94.1 AUc. Against the euro we are little-changed at 60.3 euro cents. That means our TWI-5 starts the today still at 72.8. We end the year down just -0.6% on a TWI-5 basis. Essentially it has been the USD that has moved higher over the year rather than the NZD moving lower.
The bitcoin price is virtually unchanged at US$47,551 and just -0.3% below this time yesterday and holding its new lower level. Volatility over the past 24 hours has been modest at +/- 1.9%. However since the start of 2021 the bitcoin price has risen from US$28,769, a gain of +65%.
This is the final daily review for 2021. As it is a long holiday weekend here in New Zealand, we will next return on Wednesday, January 5, 2022. Happy New Year.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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22 Comments
So, we are left with the same general questions as before: what if early 2021’s “boom” along with its “inflation” were similarly a mirage like 2017? It may have looked red hot to some like Warren Buffett, yet in reality the money illusion of the supply shock and especially Uncle Sam’s singular interference may have only produced the appearance of a robust advance.
Whatever the case of the first part, like 2018 we’ve found ourselves looking into the second part – the slowdown – regardless.
IHS Markit’s flash PMI readings for Europe and Germany, in particular, were hardly awful in most respects. The headline was 58.0 for Europe as a whole in December 2021, down a touch from 58.4 in November, and while that was the lowest since February it isn’t especially low.
But that number masked a growing unease, buoyed to the upside by others of its components than maybe the most important of them:
Overall inflows of new business decreased in December, thereby ending a sequence of growth stretching back to July last year. Weakness in demand was centred [sic] on the service sector, where the decline in intakes of new work gathered pace to the fastest since April. New orders received by manufacturers continued to rise, although the rate of growth was the weakest in the current 18-month sequence of expansion. [emphasis added]
Prices paid, prices received, supplier times, etc., these are all at or near record highs. New orders, on the other hand, have sunk to alarming lows.
Yeah it gets a bit tiring people going on about booming economies in the middle of a Pandemic. So far its all been fake due to governments spending billions if not trillions of dollars keeping the "Show" on the road. Next year is not going to be great and its almost inevitable another Covid mutation will pop up. The world is in crisis and the sheeple need to start adapting.
Don't worry our leaders have got this - 'DJ Dimension – New Zealand’s first Omicron community case – is on his third border exemption to New Zealand since the start of the Covid pandemic, the government has confirmed.'
'Dalton understands that 100 of the 250 requests made by DHBs in recent months have been rejected – including an application from one overseas ICU nurse who has been rejected six times.'
https://www.stuff.co.nz/national/health/coronavirus/126608859/miqueue-h…
https://www.stuff.co.nz/national/300488326/covid19-dj-dimension-on-thir…
Russian GDP grew +4.3% in Q3-2021, taking the annual rate to US$1.75 tln in overall economic activity. It grew +5.2% in the year to November. That puts it just a bit smaller than Canada but a bit larger than Brazil or Australia. Russian economic activity is just 12% the size of China, less than 8% the size of the US.
RE Germany GDP US$3.843 tln:
Yet German energy policy has drifted out of control, far from any semblance of solid moorings. The country has closed down its nukes, with coal-fired energy next in the crosshairs. All this while the natural gas from Russia is now problematic. And renewables clearly do not work to meet the overall load.
In other words, Germany is powering down. Which takes us back to the beginning of this note, with the metaphor of an Energy Stalingrad. In this context Germany is openly moving towards an energy disaster while its political class brag about it and pat themselves on the back.
The proverbial writing is on the wall. Germany’s future is a roadmap to energy scarcity, with routine brownouts and blackouts, not enough gas in the lines, social and industrial disruptions, and an unwind of the country’s economy if not social order.
As an outsider looking in, this all seems crazy. Germans are supposed to be smart. Why would they do this?
Then again, as an outsider in the U.S. looking around, much of this crazy, Germanic-style energy agenda has also taken root here in this country. It means that the U.S. is just a few years behind Germany in marching to our own Energy Stalingrad.
And as for Stalingrad? Well, we know how that ended. Link: scroll down to Germany Marches Toward Energy Stalingrad - By Byron King
China becomes stakeholder in outcome of EU-US-Germany-Russia gas tango. Putin-Xi talks in Beijing (Feb) will prioritise Mongolian route of Power of Siberia pipeline potentially delivering up to 50 bcm/year to China (same as Nord Stream 2.) http://en.people.cn/n3/2021/1230/c
I have no knowledge of your claims and believe I am not qualified without more information to comment.
But perceived global outrages against democracy and justice are never ending - NDAA Blocking Biden From Closing Gitmo
Agreed Guantanamo Bay is unforgiveable. ""Habeas corpus is a recourse in law through which a person can report an unlawful detention or imprisonment to a court and request that the court order the custodian of the person, usually a prison official, to bring the prisoner to court, to determine whether the detention is lawful."" Attempts to circumvent it both bad and counter-productive. I've never forgiven Obama - proof that the US president is not all powerful.
It is sad that the CCP are unwilling to simply accept history. It will do them no good in the long run. Maybe a very long run.
It is sad that the CCP are unwilling to simply accept history. It will do them no good in the long run. Maybe a very long run.
Indeed -The Rewriting of History Begins After Bombshell Steele Dossier Revelations
Sure, our lives here are temporary- but private ownership is one of the pillars of successful capitalism.
https://www.imf.org/external/pubs/ft/fandd/2015/06/basics.htm
Amazing how much you interest.co.nz subscribers are indoctrinated into the system by media manipulation. After all we live in a hermit kingdom, don't talk to your neighbors, government knows best. America is not short of energy. Period. And Boston will consume. Coal reserves are incredible, the infrastructure for coal consumption is in place - supply and demand. No more common sense anymore.
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