Here's our summary of key economic events overnight that affect New Zealand, with news China is duplicating Russia's bully-play of a smaller neighbour, albeit with different means so far.
But first, northern hemisphere holidays are in full swing now and financial markets are quiet as a consequence, even if war and geopolitical fights seem to be escalating.
In the US, the New York Fed has released its national consumer inflation expectations survey. These fell to 6.2% in July, down from a record high 6.8% in June. Driving this retreat were expectations that the price of petrol would fall sharply. Food prices are also expected to fall back. The same survey reported the recent household spending surge will ease back to more normal levels - and that the jobless rate is unlikely to rise. The point of these surveys isn't as a predictor of the future, rather they inform how household budgets are being set.
This better inflation outlook comes just as the US Congress has passed a huge social and climate program, the centre-piece of the Biden Administration's re-orienting of the giant US economy after the battering it has taken over the past six years.
Across the Pacific, China is making a concerted play to snuff out the democratic government in Taiwan with a semi-permanent "live fire" military exercise surrounding the island nation. At the same time Taiwan reported healthy export orders in July, up +14%, its second-best level ever. Its monthly trade surplus remained over +US$5 bln. But the question remains, how can that continue with the military squeeze tightening. Democratic talking can't compete with military bullying. Regional concerns are rising.
The number of ships navigating around the island on Friday was far lower than usual, down to a handful of vessels from an average of 240 a day over the prior week. Ship owners can no longer get political risk insurance in these waters.
And in an escalation of its pique, China has stopped cooperating with the US in a number of areas including controlling is fentanyl export trade. China may be weaponising the drug trade. It is also signaling that it needs to 're-educate' the Taiwan population away from democracy.
At home, China has a number of issues it is grappling with, including the recent pandemic spread. More than 80,000 tourists are now stranded in China's holiday island of Hainan (China's "Hawaii") as its main city is locked down to prevent spread. And in Xinjiang, tourists have been told to go home early due to a widening outbreak there as well.
In Europe, Norway has said it will cut back electricity supplies to the EU because its hydro lakes are low. It is raising its subsidy on electricity to households to 90% and prioritising local customers.
The UST 10yr yield starts today at 2.77% and -6 lower than this time yesterday. The UST 2-10 rate curve is more inverted today, now at -45 bps and their 1-5 curve is also more inverted at -37 bps. Their 30 day-10yr curve is now at +62 bps and flatter than this time yesterday. The Australian ten year bond is -5 bps lower at 3.21%. The China Govt ten year bond is marginally firmer at 2.76%. And the New Zealand Govt ten year will start today down at 3.37% and up +4 bps from this time yesterday.
Wall Street has opened its Monday trade in a very lack-luster fashion, unchanged from where it ended last week. The S&P500 is up a mere +0.1% so far. Overnight, European markets were more positive, all up about +0.8%, London a bit less. Yesterday, Tokyo finished up its Monday trade up +0.3%, Hong Kong was down -0.8%, and Shanghai was also up +0.3%. The ASX200 ended its trade yesterday up +0.1% and the NZX50- ended down -0.2%.
The price of gold will open today at US$1788/oz which is up +US$12/oz from this time yesterday.
And oil prices start up +US$1.50/bbl from this time yesterday at just on US$89.50/bbl in the US, while the international Brent price is now just on US$95.50/bbl.
The Kiwi dollar will open today at 62.9 USc which is +½c higher than this time yesterday. Against the Australian dollar we are -½c weaker at 89.9 AUc. Against the euro we are firmer at 61.6 euro cents. That all means our TWI-5 starts today at just on 71.3 and still in our usual range.
The bitcoin price has moved higher from this time yesterday, up +3.0% to US$23,954. Volatility over the past 24 hours has been moderate at just over +/-2.5%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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54 Comments
“In the past, the growth rate of GDP has exceeded that of energy consumption. As the economy changes from growth to shrinkage, we should expect this situation to reverse: The rate of shrinkage of GDP will be greater than the rate of shrinkage of energy consumption.”
Or more likely GDP and energy aren’t as linked as the author wants to assume.
Banks make loans mainly against assets and property that’s already in place. Then 80% of the loans are real estate mortgage loans, the rest are corporate takeover loans speculation loans, loans that are collateralized by stocks and bonds, and of course that’s what the American central bank had been spending $9 trillion just collateralized by stocks and bonds and junk mortgages and junk bonds. So we’re having a perversion of everything that capitalism promised to be, and it turns out that the road to serfdom, the literal road to serfdom, is not a strong state like Hayek said, but a state that’s too weak to control the financial sector and steer it to serve the economy as a whole. Link
That's 'shooting the messenger 101'.
Who said 'wants'?
She has graphed a linkage - and I've got the same graph in the 1976 McGraw-Hill Encylopedia of Energy (had it since new). Sorry, all else if virtual parcel-passing, until cash-in. If it weren't so, we wouldn't need dairy, tourism, transport.... We could all be wealthy virtually. Which of course we can, infinitely. Until we go in to buy something real. Which took energy to extract, process and proffer.
It had to be done. Standing idly by whilst china bullies its way to domination of the pacific and ignores international laws will result in a gradual erosion of democracy and changing of the guard until we wake up in a world where all freedom is gone. Or its too late to try to stop it.
Tit for tat is proven the best way to win/stop a confrontation. USA and allies needs to make it clear they will retaliate every time China tries to bully the world into accepting its illegal actions or takes an illegal action.
China has no legal right to take over Taiwan and we should all defendand stand up for Taiwan qs we would expect others to do for us.
And in an escalation of its pique, China has stopped cooperating with the US in a number of areas including controlling is fentanyl export trade. China may be weaponising the drug trade. It is also signaling that it needs to 're-educate' the Taiwan population away from democracy.
This kind of democracy? - America’s Deep State is its s‘elected’ government.
Or this? - Auditor-General raises concerns about accountability in Three Waters plan
There is no doubt that 'democracy' is being watered down a lot these days. You pointed to an article referring to America's 'Deep State' and to be fair it it looks to be a fair representation of what we see. But I would also point out that if those oligarchs suddenly decided to harshly impinge on personal freedoms, and the abortion debate begins to come close, the reaction to them will not be nice, especially with their gun laws. Trump exposed the under belly, and also their gullibility, but in the end it is still the theme song from Les Miserables ..."Do you hear the people sing? Singing the Song of angry men. It's the music of a people who will not be slaves again!...." China on the other hand has put a lot of resources into controlling its population. I cannot speak to Taiwan's style of 'freedom', but would suggest their election was an indicator as to the type of reception the CCP will have.
None the less, if China tries to pull its noose tight, the US, Australia, Japan, South Korea, Indonesia, Philippines and Viet Nam will all have to make a choice, and just as for Russia (Putin) in Ukraine, if they are not contained and pushed back there will be no stopping them. And they are much more capable than Russia is. There will be no avoiding it. It may even be cheaper to provoke to an earlier escalation than to allow a meat grinder outcome like Ukraine has become?
And they are much more capable than Russia is. Are you sure?
What is horrible here is the fact that many still do not grasp a fundamental difference between Russian and US ABM systems--Russian ABM system at this stage already is capable to mitigate a nuclear attack on Russia by fielding (no, not planning but actually deploying) systems with a full blown intercontinental anti-ballistic capability such as S-500, S-550, A-235 Nudol. These are capabilities the US simply doesn't have. Importantly, one needs a system of BMEWS radar with accuracy characteristics such as Voronezh to not just detect but provide accurate targeting for ABM systems. Look at the comparative characteristics of Russian and US BMEWS radar. Especially their accuracy in targeting. Guess from three times who gets better probabilities for a hard-kill (kinetic, meaning physically slamming into nuclear warhead) of the incoming MIRVs. Right. Link
Don’t make much difference as to who does what and/or how they do it. Obliteration is obliteration full stop. All the nations who are nuclear armed, one way or another, are able to deal out massive destruction & millions of deaths with just one nuke detonation. Sure some might achieve this with greater technological skill but so what, there will be certain retaliation. That’s why the Curtis Le May had his Strategic Air Command loaded up and aloft 24/7 which capacity only reduced when the subs took over. And where and how close those very large numbers of subs may be located is always a good question to consider one would imagine.
I wasn't considering their respective nuke capability because I'm hopeful that none of them are insane enough to escalate to that. Possibly a forlorn hope, but one none the less.
But capability can just come down to numbers. I don't recall who said it but there is a quote out of the cold war; "Quantity has a quality all of it's own" and was in reference i believe to the sheer numbers of tanks and aircraft the USSR was capable of fielding at the time. The US in it's hubris firmly believed that the qualitative edge it had was sufficient. Fortunately that premise never got tested then, but we may be getting closer to it now.
You are quoting Stalin. As it happened came across some old Life magazines including Dec13 1948, in depth interview Eisenhower. This has his opinion on many contemporaries including Stalin & Zhukov and from that, one section is pertinent. The means of clearing a German minefield was best achieved by clearing out nearby prisons, asylums, hospitals or just villages and shoving the gathered individuals through. QED. Certainly confirms the quote doesn’t it.
Seriously - The Duran as a news source....
- Overall, we rate The Duran as a Questionable source based on far-right-wing bias, promotion of Russian propaganda, right-wing conspiracies, a lack of transparency, use of poor sources, plagiarism, and failed fact checks.
https://mediabiasfactcheck.com/the-duran/
Der Groenen having to swallow a few dead rats in bringing nuclear, coal or lignite burning power stations back on line. No going to happen for at least six months on the fossil fuel side. Not actually aware that Germany had any nuclear plants and if they did they were shutdown years ago and so highly unlikely to be brought back on line inside 2-5 years.
Not actually aware that Germany had any nuclear plants and if they did they were shutdown years ago
germany has 3 nuclear plants still operating right now and 3 that were shutdown less than 6 months ago
https://en.wikipedia.org/wiki/Nuclear_power_in_Germany#Reactors
These despot states only have ten years at best so they might have a go now.
The reason I say this is because I think Elon Musks Starlink is going to allow people anywhere free internet access…and once people have free access of information the game is up for the dictators.
In China, Murdoch's Satellite TV Is Thriving, Legalities Notwithstanding
By Leslie Chang Staff Reporter of The Wall Street Journal
May 26, 1999 11:42 am ET
I am watching 'Occupied' on Netflix at the moment - it starts with Norway deciding to stop supplying energy to Europe. They get occupied by Russia who force them to turn the taps back on!
More seriously, the rest of the century is going to favour countries with energy and food security and a balance of trade in real things. The sooner we realise this and work out what it means for NZ, the better.
Some big investments in hydro or pumped hydro are needed now, we could be largely energy independent (a net exporter even) once we have more electric vehicles. Of course National will cancel the pumped hydro and leave it all up to the private sector who have absolutely no incentive to increase supply. The people voting for National won’t care as they will be dead before the problems occur (and dead earlier than expected if national stop investing in health again). But got to have that $20 a week tax cut!
NZ battery project aka pumped hydro for the lean other hydro years is highly likely to be a waste of money. I don't object to spending money to see if we need to spend money but since this is a Labour implemented project the report will be favourable for implementing it. Most likely by drastically under estimating the costs.
I had a look at the website about three months ago but could not located any meaningful report on progress.
we don't have a surplus of renewable because no one wants to build it. Most of the last week the wholesale power price has been $0.01/MWh. You add more and more non-dispatchable solar/wind and get a lot of rain that fills the lakes, you will have more and more $0.01 days.
But if you have a pumped hydro lake that is happy to buy up that surplus renewable, at above break even price, to sell back during peak periods and off seasons, then generators will be incentivised to build all the consented renewable projects that they are choosing not to build right now.
NZ has treaded in the exact opposite direction in the last decade or so. Banning O&G exploration, underinvestment in energy infrastructure, low-skilled migration into non-export sectors, huge capital misallocation, etc.
So we will need strong business and political leadership (both MIA) to help steer the economy around with proper reforms.
These rankings are too simplistic but such a slide must be concerning - New Zealand Biggest Loser In World Competitiveness Rankings | Scoop News
The plan was to fill the Government coffers. If I remember correctly those companies have a mandated dividend payout to the Government. I found out about when I read an article some years back that said Genesis had borrowed $300 mil to pay the government its dividend
And better policies that involves better skilling the local workforce and only bringing migrant workers to fill genuine skill shortages in hi-value sectors.
INZ should limit issuing visas to occupations on their level of participation in the hi-value export economy (skilled farm managers, SaaS/game developers) and/or improving our living standards (doctors, nurses, builders, electrical engineers, etc.).
I actually believe INZ's Green List is a step in the right direction but keeping the old pathways running alongside does not help.
Well said Cameron Bagrie -
"Why has one political party not managed to grab this thing by the scruff of the neck and not be the chart holder or hold that banner in terms of, 'We are going to invest in New Zealand's future and the investment has to come from education'. No one seems to have that mantel."
Dump fees free, pay teachers the balance - attract quality teachers by making it possible to live and achieve home ownership on a teacher's salary.
That said, my kids are home schooled and thriving. Lucky that we can do it on a single income - but any family should be able to afford to do it.
Today is a day of sorrow. I need to ponder the wrongs I have done since childhood and put these deeds out to the public so I can be re-judged.
No matter what did at whatever youthful age, regardless of the penalty I received at the time, I deserve to re-sentenced on todays standards and judged as if I have always been a rational mature middle aged adult.
I will be busy. My public life aspirations might be over.
All I can say............is sorry.
The more I think about this, the more I'm in two minds.
On one hand, National claims to be the party of responsibility, of being tough on crime and law and order etc, and so it's hypocritical of them to let Uffindell stay. If it's true that the leadership only just learned of what he's done, they've got the perfect excuse to kick him to the curb and say "we won't tolerate this sort of behaviour" (notwithstanding the fact that the media will just pile on and not let this die, and every time a National MP tries to raise any point regarding law & order I'm sure their lack of enforcement here will be brought up)
On the other hand - or should I say the other side of parliament - you've now got a bunch of MPs who seem to believe in giving even our most violent and recidivist criminals an unending number of second chances now arguing that someone who was legally a youth when he offended shouldn't be given a second chance, because it's politically expedient to do so. Trevor Mallard also proved you can hit a man and go on to even higher office, so I guess there's precedent there (and we even had a police commissioner who had a conviction for drink driving, so it's not like the wider upper echelons of public service or private business are immune to such behaviour)
A 13 year old was caught yesterday by members of public after partaking in a ram raid. Would those calling for Uffindell's head argue said 13 year old should - in 20-30 years time - be re-punished for a crime they had committed many years ago, provided they reformed and don't go on and commit any more offences?
As a teenager at high school, I was bullied badly both with physical violence and words, because I was an artsy/musical kid who was no good at sport and wasn't in the best of shape, had a funny accent, and didn't fit the mould of what a teenage boy should have been. Some of the kids who picked on me badly have gone on to have careers in law and public service - although what they did to me (and others) wasn't pleasant, they all seem to have gone on to become decent members of society and contribute in various ways. I wouldn't want to see them lose their jobs or be vilified for what they did before they were old enough to drive past 10pm without adult supervision.
If I were Luxon I'd probably let him go, if only because otherwise this will be the 'gift that keeps on giving' to the government. At the same time, if you believe in second chances does he not deserve a second chance too?
It is pretty clear that the knowledge of the incident did not reach either the electorate or National’s leaders when it should have. That lapse is now looking to overtake, sadly enough, in importance the lapse of the sixteen year old as it is now being promoted in the unforgiving, punitive and strident world of politics and attendant media. Long ago one of my better CEOs warned me never conceal a mistake because it will simply fester & percolate, and when it does reach the surface, its consequences will be far worse than those at the start. This is such an example and while like in any offence, criminal charge or not, in which justice is considered to allow for redemption, the emphasis has now shifted to just what went on in the selection process which in turn cannot help refocus attention on just how National selects its candidates. Images of Gilmour, Barclay, Walker& Boag, Ross, Falloon are already in the shadows.
Don't disagree with you there.
Politics is politics, and so everyone with skin in the game either way will look to score points here with no care or consideration for the underlying issue (whether or not a mistake - albeit a bad one - before adulthood should preclude you from public office). Both sides will be hypocritical as is their unyielding way.
The lack of disclosure to the public and leadership is a separate issue, as you rightfully point out.
For example, do we yet know exactly what Uffindel disclosed? It's one thing to say "I was a bit of a naughty boy at high school and left because I got physical with another kid" versus "I participated in a gang bashing on a younger student with a piece of furniture used as a weapon".
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