Here's our summary of key economic events overnight that affect New Zealand with news that China's economic stumble is the real elephant in the room for the global economy, and not the Russian invasion of Ukraine.
But first in the US, there was a surprisingly negative regional survey of manufacturers in New York. The Empire State Manufacturing Index shrank to -11.6 in May from +24.6 in April, missing market forecasts of +17. This big miss comes after an unusually strong April result, as new orders decreased, and shipments fell at the fastest pace since early in the pandemic. Also, delivery times continued to lengthen, and inventories rose. Averaging out the past three months, this indicator is flat.
Going the other way, Canada posted a better-than-expected result for April housing starts, beating both the March level and analysts forecasts.
But house prices across Canada continue to slip under the weight of rising interest rates, with the nationwide average price of homes falling to C$746,000 in April, down -6.3% from March’s average of C$796,000, a dramatic -C$50,000 retreat in just one month.
Japanese machine tool orders for April came in very strongly again, up +25% year-on-year and a second stellar month in a row, suggesting the world's boardrooms are still investing in capital equipment. It was the second highest order level since 2018, only beaten by the March 2022 result.
Japanese producer prices surged +10% in April from a year ago, rising at a record rate as the Ukraine crisis and a weak yen pushed up the cost of energy and raw materials. "Worse" (but remembering, they are looking for inflation), the March to April rise was at an annualised +14.4% rate, so this shift up is accelerating.
Japan is expecting CPI inflation to hit 2% this year which is very unusual and is having an interesting debate about whether this will be 'transitory' or not. That assessment greatly affects how the Bank of Japan approaches its response to the current inflationary burst.
In China, retail sales in April were very grim. In February 2022 they were up +6.7% year-on-year. In March they fell -3.5% on the same basis, and that was bad. Analysts knew April would be worse thinking they would fall a massive -6.1% which itself would be a shocking retreat. But in the end they dived -11.1%. (And these are the official data.) You can almost hear the gasps in Beijing. This makes the recent warnings from Premier Li look inadequate. It will be no surprise to learn that their official jobless rate has risen from 5.8% to 6.1% with anyone's guess at under-employment.
The fall in China's industrial production in April was massive too. Take a look at this official chart. This is confirmed by looking at their electricity production data. In April, China produced 608.6 bln kWh of electricity, taking it back to 2019 levels, and the lowest since the pandemic-affected early 2020 levels. Given the expansion of their overall economic industrial base since then, a level of just 609 bln kWh is very low given it was almost 760 bln kWh in July 2021, a -20% fall from that peak.
China’s real estate investment also declined in April, as home sales, land purchases and housing prices all set new lows.
Analysts are now downgrading their expectations for calendar 2022 Chinese economic 'growth'.
The UST 10yr yield will start today -5 bps lower at 2.88%. The UST 2-10 rate curve is just a little flatter at +31 bps while their 1-5 curve is flatter at +84 bps. Their 30 day-10yr curve is little-changed however at +225 bps. The Australian ten year bond is now at 3.35% and down -3 bps. The China Govt ten year bond is little-changed at 2.84%. And the New Zealand Govt ten year is down -4 bps at 3.57%.
On Wall Street, the S&P500 is up a minor +0.2% in Monday afternoon trade. Overnight, European markets were mixed between Frankfurt's fall of -0.5% and London's rise of +0.6%. Yesterday, Tokyo ended up +0.5%, Hong Kong ended up +0.3% and Shanghai ended lower by -0.3%. The ASX200 ended its Monday session up +0.3% but the NZX50 ended down -0.1%. Basically, equity markets are betting that the Chinese economic stumble will pass fairly promptly.
The price of gold starts today up +US$4 since this time yesterday at US$1816/oz.
And oil prices are +US$3.50 higher today and now just under US$112.50/bbl in the US, while the international Brent price is now just under US$113.50/bbl.
The Kiwi dollar will open today unchanged against the US dollar, still at 62.9 USc. Against the Australian dollar we are softer at 90.5 AUc. Against the euro we still at 60.4 euro cents. That all means our TWI-5 starts today at 70.6 which is unchanged from this time yesterday.
The bitcoin price has fallen -0.9% from this time yesterday and is now at US$29,772. Volatility over the past 24 hours has been very high at +/- 4.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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80 Comments
https://edition.cnn.com/2022/05/16/economy/federal-reserve-interest-rat…
Everything is pointing towards central banks - current situation is their creation and not of pandemic. The blame stops with Fed / RBNZ as highlighted in article below :
"But there are some major differences between 1994 and 2022, and timing may be the most important factor.
Greenspan proactively raised rates. He saw that the economy was booming and wanted to get ahead of the inevitable inflation. Powell has been more reactive. He hiked rates by half a percentage point only after inflation soared to levels unseen in decades. There's a possibility that the Fed may be too far behind the curve to be able to ease inflation without inflicting economic hardship on Americans.
Employment today isn't what it was then, either. In 1994, baby boomers were at the heights of their careers, loads of new technology was being introduced in the workplace, and immigration numbers were strong. All of that led to a huge workforce and productivity rates that kept unemployment low even as interest rates rose. In 2022, we're faced with boomers who are ready to exit the workforce, a significant pandemic-reduced labor participation rate and a productivity slowdown.
"In the past, when you've pushed up the unemployment rate, you've almost never been able to avoid a full-fledged recession," Dudley said. "The problem the Fed faces is they're just late.""
Result of RBNZ action for not only believing Fed's lie of TRANSITORY INFLATION but pursuing by inaction as it suited their .........interest/purpose
https://www.macrobusiness.com.au/2022/05/new-zealand-banks-forecast-maj…
very irritating too. I don't mind the adverts - they have as many as they wish despite my subscription but stop my screen jumping, please ensure all adverts are the same size and load at the sides, top or bottom but not in the middle. I've had to re-find this comment box twice just to enter these three sentences. [nb using Chrome browser].
I'm a non-subscriber, I don't mind the ads. But I understand what you're saying about the page refreshes jumping the cursor out of the comment box.
Wait until you try use CTRL + Backspace to delete a block of text just as the refresh happens. It'll take you to an Interest.co 404 Not Found page and you'll lose your entire comment :)
Yep, although my sub might have expired, it's hard to tell. Anyway the amount of ads makes the site close to unusable. This page currently consuming 8GB no wait, 10GB (!) RAM and climbing, and causing big CPU spikes. If I was a new visitor, no way would I feel "encouraged" to subscribe by this, I'd just go elsewhere, stat.
Just logged out. then logged into PressPatron which confirmed my payment and then clicked Interest.co.nz - still being bugged by ads. Even this brief message has been interrupted twice. BTW I have to watch my keyboard so often type whole sentences that don't get entered.
Oil price going up, rate of activity going down.
Who could have predicted that?
https://www.resilience.org/stories/2022-05-16/the-energy-food-crisis-is…
'The Fed’s assumption that raising interest rates will somehow reduce current high energy costs is comparable to medieval physicians’ belief that leech bloodletting would cure diseases like tuberculosis.'
I have no doubt that the EU will continue to buy Russian gas, it suits them to do so and it also suits them to off-load their older armaments to the Ukraine to ensure their re-investments in their militaries can really modernise their armed forces. It really is a terrible display of moral corruption.
However that rabid piece of pro-russian writing is scatty and random, hardly a referenceable bit of work. They are making much of the quality of product and service like that had a bearing on any decision to move away from Russia.
If you have missed it, Russia has invaded it's neighbour without provocation and is committing war-crimes on a regular basis.
If you have missed it, Russia has invaded it's neighbour without provocation and is committing war-crimes on a regular basis.
Dude the article starts:
"with the U.S. and U.K. and NATO surrogate war with Russia, which is taking place in Ukraine"
Russia invaded Crimea, then invaded Ukraine. It's not freaking difficult to understand.
I suppose by your reckoning WW2 started with the US and UK surrogate war with Germany and Japan taking place in Poland?
For an obviously clever guy your "alternative facts" position on Russia lets you down.
Secret British ‘black propaganda’ campaign targeted cold war enemies
Britain stirred up tensions, chaos and violence in Africa, the Middle East and Asia, according to declassified papers
If your knowledge only starts with "Russia invaded Crimea, then invaded Ukraine." and doesn't take into account the history before this, then you are in no position to discuss what is happening with any clarity of mind. It is yet another proxy war, with the West having antagonized Russia with NATO pushing towards its borders, looking for an enemy. He goes into what happened around the start of the invasion, with Putin pleading/demanding (hard to know which) with NATO for negotiation and being ignored.
These are from someone with strong military/political/recent history knowledge... just because it doesn't agree with what you have been fed in the media, doesn't make it inaccurate. An open minded person would listen to knowledgable sources and critique it, not dismiss it because it doesn't conform to their world view, which should never be set in stone. Understand the real meaning of "Truth is the first victim of war" and recognise that most Western press regarding the issue is highly censored/biased would be a good start. It runs both ways of course, almost all of the stuff being reported out of Russia is bull dust as well.
Thanks.
I am familiar with the wider context and history. I studied international relations at postgrad level and was fortunate to be lectured by a mixture of academics and serving and ex-military personal, UN staff and visiting politicians. The course had a wide range of students ranging from serving military people, UN staff, business people, NGOs and the usual mix of student academics. I am familiar with how to obtain different sources of information and make assessments based on more than just media clickbait.
I think I have a good handle on what I know and what I don't know. Taking all this into account I still stand by my previous statement that the issue can be distilled to "Russia invaded Crimea, then invaded Ukraine". We can go over the historical reasons why and whether it benefits or harms the US but the bottom line is that Russia invaded a sovereign nation for it's own national interest. Anything that tries to apologise for, explain or minimise the threat that this poses to a peaceful world order is appeasement, plain and simple. Tactical appeasement can be useful but as a long-term strategy against an expansionist nuclear power willing to use military force, it doesn't work. At some point you need to pick a side. For me that is not Russia.
"Russia invaded Crimea, then invaded Ukraine"
Would, the US invaded Afghanistan and then Iraq and bombed some other countries along the way, be the equivalent characterisation for the War on Terror?
Are you sure you are "familiar with how to obtain different sources of information and make assessments based on more than just media clickbait"? I don't think its that hard to find some indication of the circumstances and provocations that produce a more coherent story than the above. You might think Russia's pretence for it's "Special Operation" is dubious or just complete rubbish but they do have one. As as postgrad student you might have short opinion on this and also if Maidan and the Minsk agreements are relevant.
so because somebody else invaded somebody else at some other time, that mean Russia didn't, yet again, invade a soverign neighbour?
Is it OK if Turkey invades Crimea, after all historically it's always been part of Turkey and the Tartars have suffered persecution after the Russia takeover.
The events in kick of when the democratically elected government of Ukraine is unconstitutionally replaced under armed coercion. This is well beyond my international legal knowledge from here on out. Does the new government still have sovereignty over it's entire territory or can the population declare independence? I thought our postgrad might have some more informed opinion.
Who invaded who at some other time?
you bought up the topic of america in afganistan and iraq. I didn't see the relevance to the discussion about who started this war. And declaration or not, this is very much a war, not a limited 'operation'
When John Key chose to stand down, does that mean the king country can declare independance?
The Ukraine that Putin has invaded, had democratically elected its current and previous governments.
Zelensky won just about every region except a small area on the western border, and crimea and the sepratist controlled areas that did not participate.
His support in the east was much stronger than support in the west.
https://en.wikipedia.org/wiki/2019_Ukrainian_presidential_election#/med…
I suggest you reread the above thread all the way through more carefully and an make effort to understand what is being referred to. The invasion of Crimea, the first event in question, occurs in 2014. You might want to read about what happened during the Maidan uprising, coup or revolution and why there is separatist region (called Donbas) and form some opinions on this.
I don't think you have the reading comprehension (even if you have to a guess every so often) or the background knowledge to have an interesting discussion with.
Hypothetically if this was all you knew on the WOT topic, it would not enough to form any opinions on the morality or legality of it or much of anything. Its not a useful or worthy summary to me.
You wrote a lengthy comment saying you know what your talking about, I would have though one or two insightful sentences on the topic would have proved it and been shorter or you might want to educate us. I am guessing that you could from this Russia invaded twice opinion from watching 15 min of CNN or the like.
"You might think Russia's pretence for it's "Special Operation" is dubious or just complete rubbish but they do have one. As as postgrad student you might have short opinion on this"
I'm not a post-grad student anymore.
A pretense is an attempt to make something that is not the case appear true.
I agree Russia has a pretense for it's "Special Operation". I also think it's a dubious and rubbish pretense.
All good?
Blobbles Russia is the aggressor here. There is no justification. Nato countries have bordered Russia for years, and NATO is a strict security arrangement against Soviet, and now Russian aggression. Countries have to apply to join NATO and there are standards that must be met, to become a member, that is why Ukraine's application 10 years, or so, ago made no progress. But Ukraine always knew Putin's Russia was the threat to them. It is a legacy of the Soviets. The Soviets want to put the world under their jackboot, Putin seems to be of the same mind. I suppose you would argue that Russia didn't invade Georgia either? None of the west European countries were capable of standing off Russia (USSR) in the 1950s or since so NATO was formed to ensure they didn't stand alone. A few countries chose not to join, and France pulled out. Sweden and Finland's recent turn around is not because of US or European aggression, it is because of Russia's aggression.
In this day and age there is not one jot of justification that can be applied to Putin's actions that will stand up to any scrutiny. You parroting Putin's BS does not do you credit.
At least you didn't start off with insults this time, well done Murray, learning how to argue.
Did you read the piece? Continuous repetition of the same points does not an argument make, particularly when a staunch US patriot Republican Senator who has been indirectly involved with the players dismantles much of your argument. Much like the previously linked article penned by Kissenger as to why Ukraine should never be able to join NATO. These are the people that understand the situation far better than us because they helped to shape them.
I aren't "parroting Putin's BS", I am outlining the historical record. Now as you have said many times, NATO was setup to counter the Soviets? Well the piece we are looking at says exactly that, then goes on to say how NATO should have been disbanded once the Soviet threat was removed (I have argued that instead, Russia should have been allowed to join NATO). Instead it became a force that needed to find and antagonize an enemy, which they have successfully done. And now there's a new proxy war being fought, one where the US doesn't really care about Ukraine and it's people, but only cares about supplying more and more arms to a people to fight their new enemy number one. Unfortunately these truths are not found in the censored Western media, but are told be the occasional person in the know. What's your response to this?
"We don’t care! The United States and NATO, we do not care how many Ukrainians die. Not civilians, not women, not children, not soldiers. We do not care. It’s become a great football game. You know, we’ve got our team. They’ve got their team, rah rah. We want to get the biggest score and run it up. And, you know, we don’t care how many how many of our players get crippled on the playing field, as long as we win. "
I completely agree that Russia was the aggressor and it's actions are over the top. But to claim "there is not one jot of justification" is simply you parroting exactly what you are supposed to, gobbling up a narrative sold to you to gain support for yet another proxy war. Had you been around when Vietnam justifications were flying around you probably would have eaten them up to. Did you also eat up the "WMD" bulld#%t sold to you by a war mongering Bush/Rumsfeld?
NATO could have negotiated in December last year. It refused to even consider it. And now it's obvious why.
Outlining Putin's version of history isn't the real record of history. For the piece to go on and say that NATO should have been disbanded, or that Russia should have been allowed to join it are both so shallow and ignorant of what Russia was after the fall of the iron curtain as to be rank stupidity. Russia's history after the fall of the Soviet Union is one of corruption and instability (how do you think the oligarchs got so rich?). There was never a period when Europe or the US could consider that a country with such a large nuclear arsenal was not potentially a threat to the world. There was always the chance of a Putin or someone like him forcing his way to the top and ultimately being in charge of that arsenal. Besides Russia did not need to be a member of NATO, it was a permanent member of the UN Security Council, which theoretically should have prevented the invasion of Ukraine in the first place! And considering that little snippet, if it had been do you really think that would have stopped Putin if he had been a member of NATO?
How did NATO antagonise and enemy? Just by existing? By recognising the potential threat that lay with the instability? Or just being a security alliance that Russia was not a part of? That would mean we are a threat to China simply because we are a member of ANZUS although to all intent defunct, and ASEAN, and RIMPAC.
Who wrote that statement? Is it the official position of the US, NATO and the EU? I don't believe it.
I suggest to you many nations tried to talk to Russia. Russia was dictating terms and would not negotiate. Besides what would they negotiate on? Sacrificing Ukraine? What is right about that? There is not one jot of justification for Russia's actions now or ever. The US's rational for invading Iraq - no I did not swallow it, but I had no information to counter it either, and I was around for the start of Viet Nam and the only information we had was the media and you know what it was like then. But you come across as being gullible, parroting Putin's BS, and telling us he is justified in invading a neighbouring, weaker country and committing war crimes, rather than using diplomacy.
agnostium: You need to read wider. It's not as black/white as you imagine.
So consider this then; if Britain hadn't stepped in to stop Hitler and allowed Europe to become Hitler's Festung Europa, would Hitler and the Nazis ever be stopped? Would they have eventually been in a position to wipe out the communists in Russia, reach out and bomb the US into submission and left us with a world of facist dictatorships? There were plenty of Nazis in all the countries to pick up his flag and run with it.
Basically mirrors exactly what I have been saying about the whole situation, this from someone who has very in-depth knowledge about the situation. It's a very, very good read for anyone wanting to educate themselves about it (as a number of posters on this site are in desperate need of).
Rate of activity going down? Ease off the crackpot DGM websites chap.
"U.S. crude oil production in the forecast averages 11.9 million b/d in 2022, up 0.7 million b/d from 2021. We forecast that production will increase to more than 12.8 million b/d in 2023, surpassing the previous annual average record of 12.3 million b/d set in 2019.
...an average of 3.85 MMb/d was exported during the last three weeks of April, in contrast to earlier this year (the six weeks prior to the mid-February invasion of Ukraine), when exports averaged just 2.5 MMb/d.
...In April, U.S. LNG exports averaged 11.6 billion cubic feet per day (Bcf/d), slightly below an all-time peak of almost 12.0 Bcf/d set in March. We expect U.S. LNG exports to average 12.0 Bcf/d this year, a 23% increase from 2021.
... We expect rising coal production will replenish electric power sector inventories in 2023 that were depleted during 2021. We also expect coal exports will remain at high levels during the forecast period as a result of high global coal prices
I always wondered why Russia didn't come down hard on Turkey for shooting their fighter jet down over Syria. Did Turkey owe Russia a favour after that? Vetoing Finland and Sweden's bid to join NATO?
Or is Turkey doing the rest of NATO a favour? Or is Turkey doing both of them a favour?
i'd suggest that Finland and Sweden's stance on the PKK only proves they are not US puppets as so many are apt to suggest NATO is. For turkey to take the stand it has is duplicitous. PKK attacks in Turkey never activated NATO's security accords, and joining NATO is about Russia's aggression, not the political stand with respect to the Kurds.
How should the US handle this Turkish troublemaker?
Perhaps leave Nato in it's current fairly useless state and form a northern + eastern arc alliance of nations who see the current situation clearly. The US, UK, Netherlands, Norway, Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Czech Rep, Slovakia, Ukraine, Romania, Bulgaria and Greece.
Leave out Germany and France who are acting like a fifth column.
Why just the US? As Erdogan states; NATO is a security alliance formed essentially to counter the Soviets. I suspect that if Turkey were to apply to join NATO today they would get the same response Ukraine did - 'no thanks'. The Kurds are a tricky issue politically. they are a displaced people whose homeland straddles the borders of three countries, none of whom have recognised their call for independence. Just like many other peoples, a break away group has resorted to violence to make their point, and this has targeted civilians. That is terrorism, and would only undermine their case. But what was the world's reaction to Sadam Hussein using chemical weapons on Kurdish villages when he was in power? I saw photos of the women and children who were the casualties of that genocide. Sweden and Finland have chosen to recognise the Kurdish people's right to call for an independent state, as is their right. The world still does not hold Turkey to account for the Armenian genocide, and Turkey was admitted to NATO despite it. That demonstrates that NATO is a security not a political alliance, even if politics impacts it. I think the US should continue. In fact I think they should not have vetoed Poland's offer of MIG 29's to Ukraine. They could have sold used F16's to Poland at a good price to replace them as was asked, as Poland already operates F16s. Despite some saying this is a proxy war, i feel that the US, NATO and the EU have all but thrown Ukraine under the bus, and what military aid they are getting now is little more than a sop to appease the critics after they realised they screwed up big time by not being ready when Putin jumped because they didn't believe he'd be stupid enough to, and because of that they missed the best opportunity to stop him cold, without a huge risk of escalation. That time has past. Putin's unspoken belief that NATO and the EU is paralysed by politics, risk aversion and indecision has been proven true, and he will no longer be easily stopped, without serious escalation. Their politics, risk aversion and indecision has only made the risk worse, not prevented or avoided anything.
"they screwed up big time by not being ready when Putin jumped because they didn't believe he'd be stupid enough to, and because of that they missed the best opportunity to stop him cold, without a huge risk of escalation. That time has past. Putin's unspoken belief that NATO and the EU is paralysed by politics, risk aversion and indecision has been proven true, and he will no longer be easily stopped"
Correct.
Wage-price spiral in making? Microsoft to double salary budget, boost employee stock ranges as comp battles to attract workers, BBG reports. W/unemployment near 50y low & 2 job openings available for every one unemployed, US workers enjoying more power than they’ve had in decades Link
And therein Te Kooti (I'd love to know why you choose that handle?) I think you've nailed it.
In the late 1800s and early 1900s many economic policies by the Government were racist in effect. An example being the right to vote. this was essentially based on being a land owner (in the European sense). The Government soon realised that the majority of recognised legal land owners were actually Maori, and that the traction needed to implement British policy in NZ might be undermined. So many measures were taken, essentially illegal as they breached the Treaty, to dispossess Maori of much of their land. Unfortunately the politicians of the time did not understand consequences. Taking land off Maori deprived them of not just the land, but of their ability to live independently, provide and care for their families and sustain their tikanga, and much more. Worse the Government made no provision for alternatives for Maori to generate a living, and so on. Economic and political decisions that had a racist effect, but Maori were not the only ones adversely impacted by the poor policies. Many of the settlers could not get land for a variety of reasons and they faced the same travails as Maori did.
Today not much has changed. Politicians continue to make economic policies or policies with economic impacts which adversely impact on people in the lower levels of society, but are apparently indifferent to the impacts. All they seem to care about is the appearance of doing the right thing, or worse, not annoying the rich and powerful lobbies. If the Government looked at strategies to raise wages, they would make ensure living standards were better for people with higher levels of disposable income. For people to survive on benefits they need to be of a level that is too close to the minimum wage, but the Government seems to be happy about this. It seems they would prefer full or near full prisons and busy probation staff to ensuring people can actually get ahead through having a job.
In 1900 there were a million Kiwis and 5% were Māori and experts thought they were heading to extinction but there were Māori MPs and one was acting Prime minister for periods in 1909 and 1911. Compare to Britain - no women MPs and Keir Hardie the only working-class MP. Racist in effect? Quite probably but other prejudices were far more significant. Our current identity obsession based on language, culture, ethnicity and ancestors land-ownership are not an improvement from the days when identity meant religion and aristocratic land-ownership.
Agreed. I believe NZ in the past was not that equal but it probably felt more equal. The owner of the large farm, the business owner, the chartered accountant may have had larger incomes and better houses than the labourers but their kids went to the same schools, played the same sports, went to the same beaches and of course the same church. There was little need to desperately move home to get your children into a decent school. Social mobility was high - so many deservedly famous Kiwis had poor origins. That may still happen in some towns but Auckland is now haves and have-nots with too many children born into poverty - not just the poverty of food on the table but poverty of aspiration.
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