Breakfast briefing; 'A gloomy and uncertain outlook'

Business / news

IMF trims global growth forecasts; US retail rises but new home sales fall; South Korea expands; Singapore contracts; EU agrees gas reduction deal; UST 10yr 2.79%; gold down and oil flat; NZ$1 = 62.3 USc; TWI-5 = 71

27th Jul 22, 7:19am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news the global economy is slowing amid 'a gloomy and uncertain outlook'.

The IMF lowered its growth forecasts for the global economy to +3.2% in 2022 from +3.6% in its April review, while the outlook for inflation was revised higher due to a surge in food and energy prices as well as lingering supply-demand imbalances. The American economy is seen growing +2.3% this year (down from -3.7% seen in April) and China's GDP is now expected to expand +3.3%, compared to +4.4% earlier.

Even though they say "the outlook has darkened significantly" they are still forecasting 2022 growth and that might surprise some bears, but the fact remains that global economic activity is still expanding in the major economies, and that is expected to continue even into 2023.

American retail sales rose at as fast a clip last week as we have seen for the past four weeks, and certainly far more than can be accounted for by inflation.

But new home sales in the US tailed off rather sharply in June and slipping below the 600,000 annualised rate for the first time since the March 2020 pandemic pullback.

And American consumer sentiment dipped again in July, according to the Conference Board survey. The decrease was driven primarily by a decline in the Present Situation Index—a sign growth has slowed at the start of Q3. The Expectations Index held relatively steady.

But it is not all gloom. The Richmond Fed's regional July surveys were both indicating improvements in their mid-Atlantic states region. The factory survey rose from its June negative mainly because of some heady rises in new investment in both production equipment and software. And those are expected to rise from here as are shipments of goods. Things weren't quite as positive for their services sector.

Meanwhile there was another US Treasury bond auction, this one for their 5 year maturity. It was well supported, coming in with a median yield of just 2.80%, compared to 3.18% at the prior equivalent event.

Across the Pacific, South Korea reported its Q2 GDP. That showed a pick-up in economic growth to 2.9% from the year-ago period and well above analyst estimates. A rebound in private consumption and government spending offset the decline in exports and private investment.

Economic news out of China has been eerily and unusually absent today. Their usual sources are all focusing on political news, what President Xi is doing or saying. But to be fair, they are winding down for their summer holiday break, even if the weather there is unusually hot at present. But the sudden disappearance of news about their property sector crisis is notable.

In Singapore, even though industrial production was still slightly ahead of year-ago levels in June, that masked a sharpish fall away between May and June that is worth keeping an eye on.

The EU countries, bracing for further cuts in Russian gas supply, approved an emergency plan to curb demand after striking compromise deals to limit the reductions for some small countries.

In Australia, punishing Chinese tariffs have decimated what was Australia’s most lucrative export market for wine. Sales slumped from AU$1.1 bln two years ago to just AU$25 mln now. That has forced them to find other markets, and they are with sales to the rest of the world rising quickly, up +AU$400 mln. But the Chinese punishment means that their yields fell -14% from 2020 to 2022.

The UST 10yr yield starts today at 2.79% and down -2 bps from this time yesterday. Market attention is squarely on Thursday's US Fed announcements where a +75 bps rate hike is universally expected. The UST 2-10 rate curve is more inverted today, now at -26 bps and their 1-5 curve is also more inverted at -18 bps. Their 30 day-10yr curve is now at +63 bps and flatter than this time yesterday. The Australian ten year bond is down -3 bps at 3.34%. The China Govt ten year bond is soft at 2.79%. And the New Zealand Govt ten year will start today lower by -2 bps at 3.61%.

Wall Street has opened its Tuesday session lower, down -1.1% in late afternoon trade and again struggling for any traction. Behemoth retailer Walmart's shares fell almost -10% after a grim trading update ahead of releasing their Q2 earnings results. Some other earnings reports weren't flash either. Overnight, European markets closed mixed with Frankfurt down almost -1.0% but London flat. Yesterday Tokyo ended its Tuesday session down -0.2%, Hong Kong rose a strong +1.7% and Shanghai rose +0.8%. The ASX200 ended up +0.3% while the NZX50 lost -0.3% at the end.

The price of gold will open today at US$1718/oz in New York which is down -US$2 from this time yesterday.

And oil prices are little-changed at just over US$95/bbl in the US, while the international Brent price is now at just over US$100/bbl.

The Kiwi dollar will open today almost -½c weaker than this time yesterday at 62.3 USc. Against the Australian dollar we are also softer at 89.8 AUc. Against the euro we are firmer at 61.6 euro cents. That all means our TWI-5 starts today at 71 and a -20 bps below this time yesterday.

The bitcoin price is again lower than this time yesterday, down by another -4.3% to US$20,925. Volatility over the past 24 hours has been high at just over +/-3.7%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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119 Comments

by Tee | 27th Jul 22, 7:27am 1658863627

Fed announcement tomorrow.

by Baywatch | 27th Jul 22, 7:59am 1658865545

Yes these unelected masters of the Universe will make some sort of announcement. Then Hawks will devour many doves.

by theglc | 27th Jul 22, 8:44am 1658868256

And US GDP announcement also Thursday is certain to show they are in a recession.

How certain? When the Whitehouse proactively tries to redefine a recession just a week before, you know the figures are going to be negative! LOL

https://www.whitehouse.gov/cea/written-materials/2022/07/21/how-do-econ…

by IT GUY | 27th Jul 22, 9:40am 1658871601

Only the left is dumb enough to try and redefine recession

by Baywatch | 27th Jul 22, 10:14am 1658873681

What's worse..trying to steal an election?

by sit23 | 27th Jul 22, 2:15pm 1658888117

Successfully stealing an election!

by HouseMouse | 27th Jul 22, 7:47am 1658864829

Global growth surprising the bears? Yeah, nah.

for ‘global’ growth to go negative you need really, really , really bad economic times. I think it will get quite bad but not *that* bad.

by powerdownkiwi | 27th Jul 22, 8:16am 1658866588

Then you're not accounting properly.

Every day, the planet burns through 100 million barrels of oil, and a coal/gas equivalent. There is no replacement - by several orders of magnitude (I've run off-grid on solar and self-generated solar (firewood) - so have a knowledge of scalability) and we're around half-way through that finite set of stocks.

For global growth to reduce below last year's level of activity, all you need is less energy going into the system, and for your efficiency-gains (if any remain available) to no longer outpace entropic decay. Al those parameters exist.

Trying to account by tracking forward bets made with fiat-issued debt, is trying to pin the tail on the donkey - while it runs away across the paddock. This is where all the discussion re RBNZ, is so pointless.

by JustAnOpinion | 27th Jul 22, 8:50am 1658868624

I think there will be a transition in the west that will be mirrored in emerging markets.

I think this will start in earnest in 2026 at the latest with the commercial availability of solid state batteries for home storage on the back of their use in EVs in late 2025 and the transition of existing lithium based battery factories. The cost advantage of using less of more available resources to compose the battery and their increased energy density will change the game.

A 4kw micro turbine and 5kw of solar plus 40kwh solid state battery will be a $30k investment but essentially take your house and EV off the grid.

Grid scale solid state storage will allow solar to meaningfully replace existing generation over time.

The need for oil will not be removed, it is embedded in too many of our existing food and chemical supply chains but its primary draw, transport and electricity generation will be.

by Final Account | 27th Jul 22, 9:00am 1658869212

The renewable solution works for but a few geographic and political situations. Not as many countries as desired will be able to make the switch.

Even rich and smart Germany spent what, $2T on solar and wind expecting it to provide 200% of their peak energy demand and its wound up providing more like 15%?

Point is time is ticking and the expected energy generation from renewables is not what it is going to be. This faster transition also needs now to be completed with less inputs, resource, people and cooperation than it did previously. The time to start in earnest was 20 years ago when you could get stuff delivered reliably.

by Plutocracy | 27th Jul 22, 11:51am 1658879467

At the point we generally accept there's an energy shortage, we likely won't have the surplus energy to build the necessary infrastructure to transition to alternative energy. Completely agree that the time to start was a few decades ago, unfortunately most people take a techno-optimist view that 'someone will figure it out in time', and this is used as an excuse not to plan or act in advance.

by JustAnOpinion | 27th Jul 22, 12:22pm 1658881369

What is the basis of your belief we won't have enough energy to complete the transition? I have seen no evidence of this.

by kiwimm | 27th Jul 22, 1:04pm 1658883871

If you wait until the energy supply is falling (= lower standard of living, more frequent and longer recessions), will you be willing to accept an even lower standard of living due to using the available energy to build more infrastructure?

by Final Account | 27th Jul 22, 1:10pm 1658884225

And we don't have 2 years to wait while the incumbent greenies come to the realization we need more rational policy around fossil fuels for that transition period.

by Plutocracy | 27th Jul 22, 1:39pm 1658885943

Pretty much this.

In brief, the idea is that once we enter a decline phase in fossil fuel availability—first in petroleum—our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but…energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term—effectively steepening the decline—for a long-term energy plan? It’s a trap!

by sit23 | 27th Jul 22, 2:19pm 1658888365

The world seemed to get by in a manner before coal and oil were ever extracted from the ground. If we go back to that we shall probably survive as a species. I have watched game of thrones and various ancient Roman tv programmes. Everybody seemed to get by in some manner. Especially in Spartacus. I have had a lot of worries in my life, and most of them didn't happen!

by powerdownkiwi | 27th Jul 22, 3:14pm 1658891679

There were south of 1 billion present, until 1800.

And much, much more intact planet.

It's the morph from 8 to 2 or 1, which worries me...

by agnostium | 27th Jul 22, 4:53pm 1658897609

100% correct. We're using up our limited supply on shit and will not have enough left to adapt.

by IT GUY | 27th Jul 22, 9:42am 1658871749

Works in countries where people have 30km

by sit23 | 27th Jul 22, 2:31pm 1658889068

I have 32 kilometers. That should be enough.

by kiwimm | 27th Jul 22, 10:46am 1658875573

Current global energy demand is about 175,000TWh and increasing at around 4,000TWh/year. Renewable energy generation is 8,300TWh and increasing at 700TWh/year. We have a long way to go just to move the yearly increase in demand to renewables, let alone make a dent in current demand.

If you think you can build and charge a global-sized battery, you are dreaming.

by Grattaway | 27th Jul 22, 10:47am 1658875639

It appears that we will try everything else before we switch the nuclear power stations back on. At least we have 80 -100 years to get in right despite PDK's doomsday view that we will all be done for soon

by murray86 | 27th Jul 22, 10:56am 1658876195

these figures really push home the point that it is population size and growth that are the root problem. Our current world is based on consumerism and that demands energy. Add in the fact that everyone with any kind of political power wants 'growth', and especially economists, then we are all in deep trouble. The conversation MUST be about population size. But even if populations start drawing back the demand for energy will take a while to roll back too. In the interim I believe that nuclear power must be used, but it is not a fix, but rather a delaying tactic.

by Brock Landers | 27th Jul 22, 11:12am 1658877128

Any conversation about population size is going to be framed as racialist by the usual suspects.

by Believer1980 | 27th Jul 22, 11:16am 1658877386

All wealthier economies have negative population growth. What are you going to do about countries that have positive growth? India and the South Asian countries, Nigeria and rest of Africa are now the human population growth engines. What do you propose Murray to control their population?

by murray86 | 27th Jul 22, 11:31am 1658878266

"All wealthier economies have negative population growth." A quick look at https://www.worldometers.info/world-population/population-by-country/ shows this statement to be patently false.

But this needs to be a global conversation, not country by country. Politically for this to work there needs to be many cultural changes across the world, but up front people must be able to realise the economic benefits that countries seek. Places like India have significant social and cultural divisions and economic benefits are clearly parcelled out much along those lines. This is no less true in the US, EU and even NZ and Aussie. Partisan politics, tribalism, must change to ensure that all benefit from an economy not just a few elites, because populations will need to cooperate with any population reduction plan.

I realise that this is beyond a huge ask, but the conversation must begin in political circles. To begin talking about reducing populations will also require discussing economies and the benefits. Much must change, but it will never change if the discussion never starts.

by Believer1980 | 27th Jul 22, 12:06pm 1658880374

Murray, my statement is factually correct, the popultation growth of wealthier countries is from immigration. even US has a fertility rate of 1.8 (less than 2 to replace the two who created them). This is very clear evidence that population growth (from giving birth to children, not where and how they move around 1 globe) is now exclusively coming from certain locations on the globe (Just sort by fertility rate in the table you have kindly referred me to). Why do you deny such obvious fact? where fertility rate is less than 2, the population will be on the decline (unless you will have net immigration which is not what we are talking about). Logically, your effort should be on where the fert.rate is higher than 2, in many African countries that is more than 4 or 5. So the global population growth today is coming primarily from Africa, South of Asia and to a lesser extent certain parts of the Middle East. Is this an inconvenience truth? Developed economies (including Eastern Asian countries, which actually have lower fert.rates) do not have population increase from births at present, so they are not contributing to global population increase.

by Palmtree08 | 27th Jul 22, 12:45pm 1658882740

Patent nonsense. Any birth rate greater than death rate increases population. While you will say any birth rate below 2 is below replacement, it's not below replacement until parents die, in 50-60 years time. Global human population has been in overshoot for a long time now. Hard to say how far overshot, because humans are drawing down their own carrying capacity every day! Meanwhile global population increases by a Germany, every year!

by kiwimm | 27th Jul 22, 1:06pm 1658884007

Even with a birthrate of 2, the population will continue growing as life expectancy increases

by refactornz | 27th Jul 22, 1:42pm 1658886166

Only temporarily

by Believer1980 | 27th Jul 22, 6:41pm 1658904105

If the whole world has fert.rate less than 2, the global population will be on a declining projection. China population is projected to be less than today by 2050. Assuming its current population growth, Nigerea will be the 3rd populous country by 2050. See here: https://en.wikipedia.org/wiki/Projections_of_population_growth 

This quote from bbc: " The fertility rate - the average number of children a woman gives birth to - is falling. If the number falls below approximately 2.1, then the size of the population starts to fall." https://www.bbc.com/news/health-53409521

So I am not uttering patent nonsense. These are simple facts.

by murray86 | 27th Jul 22, 1:28pm 1658885300

No you were wrong. You made no mention of fertility rate. Too late to recover yourself. But none the less the wealthier countries, and these will be the ones with the highest level of energy use are all growing in population size. And the reason for this is the very thing that drives the energy use - life style.

But this digress's from the point, populations MUST shrink, as it is people who consume energy and their demands never go backwards in general.

by sit23 | 27th Jul 22, 2:29pm 1658888983

If and when we run out of our energy sources our population will shrink to fit the environment it is in. The Maori and Moriori survived with their energy sources and other resources with a certain population which seemed to fit the circumstances. They seemed to breed enough to keep the whole thing going. Maybe we should just not worry so much, and maybe we shouldn't be giving so many people whole careers out of handwringing and forcing things on people that we obviously don't want. Just get on with our lives, and let the future take care of itself. Our species is totally incapable of wrecking our planet, in spite of all the obvious lies to the contrary. Our planet will adjust things itself if we do too much dumb stuff. It has possibly already started doing so in some places.

by rastus1 | 27th Jul 22, 11:34am 1658878447

Covid version 6.3 might do it. Give it time.

by sit23 | 27th Jul 22, 2:35pm 1658889331

Just wait for the sequels. If 6.3 doesn't bring us in to line, 6.4, then 6.5, and 6.6, ad nauseam until we all do what the Ministry of Truth tells us to. My only issue is the incompatibility of compulsary mask wearing and compulsary facial recognition technology. I am working on my range of lead lined masks.

by Millennial_Woman | 27th Jul 22, 2:09pm 1658887766

Educate women and give them free access to contraception. Then also watch their contribution to society blossom, into things other than child raising, there are so many benefits to this, so much potential.

by powerdownkiwi | 27th Jul 22, 3:21pm 1658892101

MW - you misunderstand the problem.

The overshoot is now, already. I agree that education - of everyone, irrespective of gender or age - is one of the best targets.

But it cant solve already-here overshoot.

https://www.amazon.com/Overshoot-Ecological-Basis-Revolutionary-Change/…

(he gave a lecture at Otago, think about '05).

Contraception is a given. I'd add sterilisation after replacement progeny....

by Fossil Lover | 27th Jul 22, 3:05pm 1658891104

Bill Gates also thinks we need to decrease the world's population. Sick. Population will automatically decrease when fossil fuel consumption decreases. And that is not going to happen any time soon. Known reserves seem to increase over the years and peak oil estimates have all been blatantly false. The whole concept behind 'climate change' (not global warming any more), is fear and control. As in the Corona Virus.

by agnostium | 27th Jul 22, 4:56pm 1658897815

Nuclear power cannot replace current energy use. Same reason as Plutocracy mentions above, plus the materials required to build will get progressively more energy intensive to get.

by mfd | 27th Jul 22, 10:57am 1658876232

Lake Onslow is a nice option for a NZ-sized battery. About 5,500 GWh potential storage or nearly half a billion Tesla Powerwalls. Equivalent to installing a couple of hundred Powerwalls in every house in the country

by GV 27 | 27th Jul 22, 11:03am 1658876597

In terms of output? Yes. In terms of the kind of grid resilience that decentralised solar would get you? Nowhere close.

by mfd | 27th Jul 22, 11:27am 1658878073

Not output, storage. In terms of output it should be roughly equivalent to Huntly.

Pretty centralised for sure, my point is that it's on a whole different scale to house scale batteries.

by JustAnOpinion | 27th Jul 22, 12:01pm 1658880083

Perhaps you missed the point I made about Grid Scale batteries. These will be much cheaper and more effective at managing solar voltage variation due to their proximity.

The replacement will not be easy (and with hydro not even necessary, that is already the right source) but it will soon be possible if the will exists.

by mfd | 27th Jul 22, 12:52pm 1658883161

I eagerly await cheaper and more effective batteries and I hope you're right.

I'm not an expert on this but can imagine you're right that proximity helps with the hour-to-hour kind of management. Onslow would be just fine for the daily variation (ramp up as the solar load diminishes in the afternoon/evening, ramp down again the morning, similar for wind). Batteries are currently not feasible for dry year storage which Onslow can achieve.

Onslow will be extremely expensive, for sure, approx $4 billion but no doubt will overrun that. Call it $10 bill to round it off.

Achieving the same storage with Powerwalls assuming we got them at $10k each would cost the country $4 trillion dollars. Onslow would be a rounding error compared to that. These grid scale batteries would have to be cheaper by a factor of a hundred to even start to compete in that game, even ignoring the fact that their life time would be significantly shorter than the Onslow dam.

by Nzdan | 27th Jul 22, 1:09pm 1658884177

$10b. In other words, 1/5th of our annual Social Welfare spend. 1/10th of our "Funding for Lending" bank subsidy programme.

by kiwimm | 27th Jul 22, 1:08pm 1658884138

Lake Onslow is 1000 times cheaper than Li-Ion batteries. Even assuming massive breakthroughs that causes battery costs to drop 90%, you are still looking at spending 100x more to get the same storage capacity.

by The Person | 27th Jul 22, 1:32pm 1658885534

"will be much cheaper", "will soon be possible"

Lithium batteries were first researched in the 1960s and commercialised in 1991. 30 years later nothing better has come along. New battery tech is always "just around the corner".

Lithium batteries from what i understand cost US 30 cents / kWh, that's for storage, you have the generation cost on top. Onslow is extrememly cheap in comparison

by kiwimm | 27th Jul 22, 1:10pm 1658884254

Resilience is another way of saying inefficient. Yes, an individual can generate and store their own power but this comes at a much greater cost due to loss of demand aggregation and economies of scale.

by Advisor | 27th Jul 22, 11:06am 1658876794

China alone made up 24% of global energy consumption, almost as much as the US, India and Russia combined.

It may look like small countries do not stand a chance in making a dent here but clean energy innovation is driven by smaller players - 6 out of 10 countries leading in clean energy innovation have populations under 20m.

Clean Green NZ sits at 33 out of 34 in the most recent study, one place below India - The 2021 Global Energy Innovation Index: National Contributions to the Global Clean Energy Innovation System | ITIF

by JustAnOpinion | 27th Jul 22, 12:26pm 1658881610

I wouldn't bank too much on that index, Aussie at 15...enough said.

by JustAnOpinion | 27th Jul 22, 11:29am 1658878145

Global sized battery? Not sure what you are on about. I am talking about a transition over years driven by the disruption of solid state batteries.

Demand will look after itself, the cost of energy will only be heading in one direction over time.

by powerdownkiwi | 27th Jul 22, 12:10pm 1658880611

You're asking a less energy-dense medium, to daily discharge 100million barrels of oil equivalent, plus coal/gas BOE of similar magnitude. And presumably to be charged that much on average. Maybe we can allow slightly better efficiency, round trip, but it still doesn't anywhere near scale. But I think Onslow is valid if we agree the grid is worth keeping; I just think we might be too late to build it.

I have 3 separate low-wattage PV/battery systems, but it's days since we saw sun. Without the microhydro, we'd need to generate (we haven't started the 'genny in months, perhaps a year). I see Onslow as a bigger-scale answer to my present micro-situation.

As to energy prices, they can only go up. Energy underwrites money, and the best energy is in the rearview mirror. I suggest the increasing global debt - increasingly unrepayable - indicates the widening gap between affordability and what we 'pay'.

by sit23 | 27th Jul 22, 2:40pm 1658889615

Deferred maintenance on all aspects of the power grid over the last 20 years means grossly increased power bills over the next few years. You are far better off out of it, PDK. And your cost differentials will only get better.

by kiwimm | 27th Jul 22, 1:14pm 1658884467

To cover 20% of demand would require 700 billion tonnes of batteries (using the best solid state forecast of 2kWh/kg) - about 100kg per person if evenly spread

by Homer | 27th Jul 22, 11:58am 1658879884

From a telegram group this morning ...

copied:

"If you think electric cars are doing your bit please read this.

So much for electric cars from an NZ mechanic!

Had to work on a Nissan leaf last week. A $30,000 car with a crook battery.

No one in town would work on it and as he had done a course it was given to him. He got the tutor up from Dunedin polytech to help.

One crook module in the battery was shorting to the case. A secondhand module is able to be fitted, but they need to be in exactly the same condition as the remaining ones (85.2%) or the entire battery fails.

So the owner was left with the option of a secondhand battery out of a wreck that has no guarantee at $14,000 or a new battery at $20,000.

Then there is the problem of disposing of the old battery or part battery. Nothing is available and No-one willing to transport a damaged battery.

Specialist transport is available, and the cost to have one module (out of 24) transported to Australia and disposed of is around $5,000.

On top of all that, the tutor went through some of the legislation around EVs with him.

So if one is involved in a crash, and people are trapped inside, the fire brigade has to isolate the battery before they cut into the car.

In a leaf, the isolation plug is under a bolted cover on the floor between the front and back seats. Once the cover is removed, the 3 pairs of gloves required by law are to be fitted, cotton, rubber, and leather. Then with hands resembling lamb roasts they can try and disconnect the 3 stage electrical plug. Then they can cut into the car.

So the problem with crashing any EV is that if you are trapped, you're dead, as it is impossible to remove victims. Also can't put a battery fire out. Water makes lithium burn. They forgot to tell you this part!"

by Baywatch | 27th Jul 22, 12:02pm 1658880176

Fact check

New Zealand owners of Nissan Leafs have no options to upgrade their car with a new battery pack to extend the useful life of their car. At Blue Cars we recognised this looming environmental problem years ago and started working on a solution. In 2017 we launched our pilot project with co-funding from EECA. This allowed us to design, build and test our own replacement battery module for a Nissan Leaf. Our new module achieved 45% greater capacity than new original Leaf modules and gave us the confidence to set our sights on a full upgrade solution.

https://bluecars.nz/nissan-leaf-battery-replacement-project/

by Carlos67 | 27th Jul 22, 12:14pm 1658880845

So basically that car is a write off and will be sent to the tip and people will be burying the battery in their backyard because nobody is going to pay $5k to dispose of it. I'm going to call BS on the cell replacement as long as it has the same or slightly higher capacity it will be fine.

by powerdownkiwi | 27th Jul 22, 12:29pm 1658881793

Carlos - BS back.

Leaf batteries can be used for years - near indefinitely - in off-grid and such-like applications. I have never used new batteries for our house system; there are enough 2nd hand lead/acid back-up batteries around (hardly ever been used, discarded by date). I did contemplate cannibilising a Leaf battery, but I'm 12 volt, and it would have been a palaver. Equally, the argument against L/A is merely weight, and in a static situation that doesn't count (vehicles have to carry their batteries).

But all the cells bar the faulty one, will be resurrectable. No need to discard.

by JustAnOpinion | 27th Jul 22, 12:14pm 1658880880

https://www.stuff.co.nz/motoring/evs/124607176/big-plans-for-old-ev-bat…
The car was out of warranty, this might shock you but ICE vehicles also blow up engines.
The fire brigade will use the jaws of life to extract you from the vehicle the battery will not make the car live.

by powerdownkiwi | 27th Jul 22, 12:21pm 1658881298

Homer - firstly, cars of any sort are not a sustainable option. Carting 1-2 tonnes of material with us, to shift mostly just us, was a temporary arrangement courtesy of a one-off hit of surplus energy.

That said, you sound like a 1920's blacksmith; "them motor-cars will never be as good as horses; their tyres can't be re-shod".

by JustAnOpinion | 27th Jul 22, 12:29pm 1658881776

I agree, the sooner I can buy my Jetson the better https://www.jetsonaero.com/

by Markus | 27th Jul 22, 8:30am 1658867418

I think we are headed for recession. My experience, when growth forecasts are adjusted down to a lower level of 'growth', it almost always turns out to be a recession.

In this case, we could even be in for 1929-style depression, at least in New Zealand. Depends a lot on the central banks, the 'unelected masters of the universe', as someone on this forum aptly put it.

by bw | 27th Jul 22, 8:46am 1658868377

1929 might just be a fond memory.

In 1929 there were 2 billion of us crawling about the planet; pretty much confined to where we were at the time.

Today, there are a mobile 8 billion of us, all looking to take whatever anyone else has from them, to survive.

by Final Account | 27th Jul 22, 9:03am 1658869437

Mobile to a point. Border incursions like Ukraine are still going to be rare. Only the US is capable of projecting any major sort of military power. Maybe France or Japan.

People will just kick back and grow onions scratching around in the dirt hoping their teeth don't get too bad.

by Noncents | 27th Jul 22, 9:09am 1658869792

Mobility doesn't require an army. Just look at our immigration stats.

by Final Account | 27th Jul 22, 1:04pm 1658883873

Great point, I had my blinkers on thinking open warfare, not manipulating local politics & culture via mass immigration.

by Pa1nter | 27th Jul 22, 11:10am 1658877018

So there could be a World War, you say? We should give it a name.

by Audaxes | 27th Jul 22, 9:02am 1658869360

The market can't be discounting something like dot-com recession, because that scenario would mean we've already had the recession (Q1/Q2 '22). Can't be something like H1 '08, either. Inversion *has* to be something like 81-82 or 2d part of 08-09. Link

by Audaxes | 27th Jul 22, 9:06am 1658869569

NOW we know why China's economy has been only downhill into the crapper for the last decade. They've been stealing info and ideas from...the Fed. https://hsgac.senate.gov/imo/media/doc/

by HouseMouse | 27th Jul 22, 7:50am 1658865008

Happy to see the Aus dollar so strong against the NZD as I am near the end of a torturous process of transferring my Aussie super to NZ.

by 8014 | 27th Jul 22, 8:37am 1658867865

Hope your experience is better than mine. My AU super provider transferred the money in the form of a cheque during peak-covid - it took a total of 8 weeks to clear funds and while in transit, the NZD continued to fall against the AUD

by HouseMouse | 27th Jul 22, 9:18am 1658870323

It’s a shambles ey???

by redcows1 | 27th Jul 22, 10:36am 1658874994

What's a cheque?

by powerdownkiwi | 27th Jul 22, 10:43am 1658875436

https://genius.com/Michael-franks-in-the-eye-of-the-storm-lyrics

last two lines, 1st verse

by Rob Reid | 27th Jul 22, 2:43pm 1658889816

Whoa! Michael Franks. You just took me right back to '81.

by murray86 | 27th Jul 22, 10:51am 1658875903

You know you have a problem when you take your cheque to the bank and they ask you what it is!

by bender | 27th Jul 22, 11:01am 1658876471

What's a cheque? A former means of currency transfer still used in advanced economies but deemed too difficult and confusing to process by NZ banks and the Banking Ombudsman's office and therefore eliminated by collusion of those parties.

by Pa1nter | 27th Jul 22, 11:13am 1658877236

Too niche to be viable any longer. Slow, tedious waste of time.

Good riddance.

Unless you're the sort of person who likes forward dating a cheque.

by Richardfromauckland | 27th Jul 22, 8:18am 1658866695

The literal and figurative stormy weather is getting tiring.

by GV 27 | 27th Jul 22, 8:35am 1658867750

A proper winter storm or two never hurt anyone, it's the back to back ones that get you.

But very few cold-snaps so far this winter. In fact, I'd not be surprised if this winter was as warm as the previous ones for the last few years.

by Palmtree08 | 27th Jul 22, 12:55pm 1658883351

Certainly the overnight lows are degrees higher than a "normal" winter, of a couple of decades ago.

by Timmyboy | 27th Jul 22, 8:39am 1658867948

A continued "growth" rate of 3.2% would mean a doubling of the human economy over about the next 22 years. Only a madman or an economist would believe that's possible. Perhaps Profile too.

by nigelh | 27th Jul 22, 8:40am 1658868023

"The EU countries, bracing for further cuts in Russian gas supply, approved an emergency plan ......"

Putin's grip on the EUs tender body parts tightens. I wonder how long its going to be before the reverse happens. Either Putin will be dead or for at least another five years, which ever comes first.

NZ is also doing its part to support the EU/USA and paying for the Russo-Ukranian war in terms of higher fuel and fertiliser costs.

by theglc | 27th Jul 22, 8:54am 1658868896

Its called biting the hand that feeds

Why European leaders joined the US proxy war against Russia instead of pursuing a peaceful outcome is anyone's guess.

Self inflicted wounds! Cold winter ahead!

by JustAnOpinion | 27th Jul 22, 9:06am 1658869566

They do seem to have made the worst possible choices. Rapid decisions by committee trend towards the least disruptive, least risk choice regardless of the options.

The real victims here are the Ukrainians, they made a clear deal with the west in regards to their nuclear weapons and have been betrayed. For shame.

by HeavyG | 27th Jul 22, 9:20am 1658870401

Russia also offered security assurances to Ukraine under the deal. Russia's invasion is a clear violation of the agreement. USA providing billions in aid and military equipment to Ukraine is consistent with its obligation.

https://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurance….

by JustAnOpinion | 27th Jul 22, 11:26am 1658877971

Yes I think that is fair, $7b is a good amount to commit to their "assurance of security" clause. Not quite what the Ukrainians had in mind I'd wager but certainly better than nothing.

by HeavyG | 27th Jul 22, 1:13pm 1658884396

Read the clause here:

http://www.cfr.org/nonproliferation-arms-control-and-disarmament/budape…

USA only obligated to to seek immediate United Nations Security Council action to provide assistance to Ukraine if a victim of, or threatened with nukes. USA has gone well beyond the requirements of its "assurance".

by HeavyG | 27th Jul 22, 9:35am 1658871336

If you give bullies an inch they'll take a mile. Appeasement didn't work with Hitler and it won't with Putin (https://www.iwm.org.uk/history/how-britain-hoped-to-avoid-war-with-germ….).

Better the west take a hit to the wallet and let the Ukrainians and Russians do all the dying.

by Audaxes | 27th Jul 22, 11:44am 1658879093

Indeed: Exclusions And Sanctions Help 'Enemies' To Build Their Own Capabilities

by Advisor | 27th Jul 22, 12:00pm 1658880056

Interesting article. Western sanctions have allowed its common enemies to forge a closer alliance than ever.

Gazprom signed a $40b deal with Iran to develop upstream and midstream assets for Iran's huge natural gas reserves.

by Independent_Observer | 27th Jul 22, 8:40am 1658868056

ARPA boss leaves position 2 years early.

APRA boss Wayne Byres to leave bank regulator before term expires - ABC News

by Independent_Observer | 27th Jul 22, 8:44am 1658868255

Homebuyer mortgage payments up 43.5% in US over year.

https://pbs.twimg.com/media/FXywnAEUcAEVN0V?format=png&name=small

by realterms | 27th Jul 22, 9:14am 1658870049

New buyers, presumably. With long term fixes in the US the needle will hardly have budged on the total payments.

by Carinaz | 27th Jul 22, 8:46am 1658868381

Gloomy and uncertain outlook - did we all not knew what was comming.

What percentage is due to action or inaction of RBNZ. In corporate world such massive blunder will lead to immediate sacking.

by vman | 27th Jul 22, 10:44am 1658875499

To be fair,plenty of massive blunders in the corporate world go unpunished,in many cases they get to carry on,then in a couple of years they get to 'pivot' out of their role to seek new challenges and take a hefty exit package with them.There are many instances of corporate leaders plundering shareholders cash.

by WestieAJ | 27th Jul 22, 8:52am 1658868757

Q4 2021 Walmart and other US retailers spent up big to charter their own vessels from China to get inventory into stores. How much of that stuff is still sitting on shelves and needing further markdowns to encourage cash strapped customers to buy? At least it is deflationary

by waymad | 27th Jul 22, 9:04am 1658869470

The infamous Whiplash Effect.

Foresee logistics snarls so order bigly.
Order delayed beyond expectations so order some more just in case.
Both orders ship together, finally.
Just in time to have consumers padlock their wallets.
Gotta shift the goods so discount heavily, to heck with the per unit profit, because inventory holding costs are rising and warehouses are outta space.
Blame the earnings massacre on Putin.

by Pa1nter | 27th Jul 22, 11:16am 1658877388

You blame it on high interest rates, no?

by Final Account | 27th Jul 22, 9:05am 1658869554

Apple earnings tomorrow (Wednesday US time) should be interesting. I wonder how long they can extend and pretend for, before they take the whole market with them...

by ngakonui gold | 27th Jul 22, 10:08am 1658873291

I;m hoping the share price drops as i would like to get a slice of the pie.

Plenty to look forward to with this company imo.

by Dale Smith | 27th Jul 22, 10:22am 1658874176

You didn't just follow a comment about Apple, by using the word 'pie', did you?

by J.C. | 27th Jul 22, 11:05am 1658876701

Yes. E-commerce businesses like overstock dot com will be the place to buy discounted big ticket items like lounge suites at 50% discount.

I'm in the camp that deflation is already baked in anyway. The signals are all there.

by colinchch | 27th Jul 22, 9:08am 1658869714

The IMF lowered its growth forecasts for the global economy to +3.2% in 2022 ?

Its hardly growth in the true sense of the word with inflation raging at 7-9% , in real terms we are already in a recession if you deduct rising costs.

by powerdownkiwi | 27th Jul 22, 10:40am 1658875237

For once, we are in total agreement.

Now, as to causes....

by Nzdano | 27th Jul 22, 11:13am 1658877237

I believe the metric is "real" GDP growth. So it will be inflation adjusted.

by powerdownkiwi | 27th Jul 22, 11:23am 1658877827

That's an oxymoron.

GDP growth - indeed GDP anything - is not 'real', because it does not include reality in its accounting.

by Smudge02 | 27th Jul 22, 9:56am 1658872617

Very easy for people to throw out predictions nowadays which is all good, to be honest I would believe several on here more than a so called “economist” with an agenda. One thing I see though is that the world has changed hugely, where we used to see the world as relatively stable, we now see curve balls coming at us at an alarming rate. Foot and Mouth is now on our doorstep, if that gets into NZ…….yikes!

by False economies | 27th Jul 22, 9:57am 1658872630

Natural gas price spiking again...

https://www.bbc.com/news/topics/cxwdwz5d8gxt/natural-gas

by Grattaway | 27th Jul 22, 10:59am 1658876388

Yep - time we drilled some more wells. Absolutely no point in leaving natural gas in the ground and burning coal instead - so unless someone has a magic bullet to reduce energy consumption we should be exploring for gas

by False economies | 27th Jul 22, 11:02am 1658876526

Or we save it till we (or that should be future NZers) really need it...?

by Baywatch | 27th Jul 22, 11:33am 1658878414

a magic bullet to reduce energy consumption

Have we even given tried?

by Smudge02 | 27th Jul 22, 12:34pm 1658882095

Yep - time we drilled some more wells

Only problem is we have an anti gas Govt who would rather import foreign coal in through the back door than admit they got something wrong.

by Advisor | 27th Jul 22, 2:10pm 1658887824

Anti-smarts as well - setting up a $20m transformation fund for Taranaki to recover from the O&G exploration ban. 90% of the funding went to a walking track across the Egmont National Park and towards rebuilding the Taranaki cathedral church.

by The Person | 27th Jul 22, 1:56pm 1658886960

magic bullet to reduce energy consumption

ride a bicycle around town instead of driving a Ute?

by Carinaz | 27th Jul 22, 11:42am 1658878941

https://www.abc.net.au/news/2022-07-26/sydney-news-house-prices-slip-ra…

Happening world over but bigger the ponzi bigger the Burst

by HouseMouse | 27th Jul 22, 11:50am 1658879429

I see 91 is nearly down to $2.70 per litre in Auckland. It will rise again for sure, but I reckon inflation has definitely peaked.

by Rob Reid | 27th Jul 22, 3:33pm 1658892804

Yes, probably. We can now settle into another step down in standard of living, while the govt congratulates itself that inflation was indeed transitory and we need to crush rates back to zero to stimulate the "economy".

by Markus | 27th Jul 22, 9:24pm 1658913851

I sure hope inflation has peaked and OCR rises stop or are reversed. I am very worried these days about a potentially massive collapse of our housing-driven economy, as you know.

South of Auckland, I saw petrol prices of around 2.60 recently, same impression as you.