Here's our summary of key economic events over the long holiday weekend that affect New Zealand, with news international bond yields are still rising sharply and the momentum is rising. It is trashing our currency - and although most other currencies are struggling to stay with the greenback, we are doing relatively worse.
First today, the global economy has lost momentum in the wake of Russia’s war of aggression in Ukraine, which is dragging down growth and putting additional upward pressure on inflation worldwide, according to the OECD’s latest Interim Economic Outlook. They now say global economic growth will be a modest +3% this year before slowing further to just +2.2% in 2023. This is well below the pace of economic growth projected prior to the war and represents around -US$2.8 tln of lost economic activity in 2023.
Meanwhile in the US, the Chicago Fed's national activity index was unchanged in August, but its July reading was revised higher.
But the Dallas Fed factory survey, which was already struggling, fell further in September. Incoming new orders are slowing now. This survey is more heavily weighted to the US oil patch than most other regional surveys there.
The Chinese central bank made a surprise announcement yesterday, saying it would raise their required foreign exchange risk reserves to 20% from the current zero. The reserve ratio has been zero since 2020. This announcement marks the latest policy measure to stem the faltering yuan which officially fell below 7 to the US dollar yesterday, following the offshore trading pattern late last week.
Japan's factory sector contracted in September according to the latest Markit PMI reading. But their services sector is expanding again in a shift that wasn't expected.
Singapore's industrial production rose in August in an improvement that also wasn't expected. The rise wasn't a lot, but signs of improvement are hard to find these days.
The mood in the German economy has deteriorated significantly. The ifo business climate index fell to 84.3 points in September, and down sharply from 88.6 points in August. This is the lowest reading since May 2020 and the decline runs through all four sectors of the economy.
In Italy, the results of their national elections are still uncertain, but it does look like the far-right Brothers of Italy party will be forming a new government. A real feature of these elections has been a record low 64% voter turnout, allowing an extreme party into power there.
A new Eurozone debt crisis is entirely possible.
And England's economy seems to be going from bad to worse. Investors have panned their recent policy moves as deeply unstable, and now an attempt by the Bank of England to reassure markets are fallen well short, compounding pressures on them. A US Fed official has weighed in about how bad policy in the UK has some wider implications.
In fact, it will probably not only be the UK that starts to raise rates out-of-cycle to contain their problems, this trend might spread. And even if the out-of-cycle trend doesn't spread widely, future benchmark rate hikes could well be super-sized.
The RBA and the RBNZ are two central banks making policy decisions over the next week, the RBA on October 4 and the RBNZ on October 5. They will be facing fierce scrutiny this time.
The UST 10yr yield starts today at 3.89% and +20 bps higher than this time yesterday in a new aggressive push up, almost as much in one day as we had all last week (and that was a lot). It's a 12 year high. The UST 2-10 rate curve is much less inverted at -45 bps. But their 1-5 curve has now turned positive at +1 bp. And their 30 day-10yr curve is much more positive +123 bps. The Australian ten year bond is higher, up +14 bps at 4.08%. The China Govt ten year bond is up +2 bps at 2.73%. The New Zealand Govt ten year will start today at 4.16%, unchanged from Saturday but will surely get a huge jump higher when trading reopens here today.
On Wall Street, the S&P500 is down -1.0% in their Monday afternoon trade. Overnight, European markets were all about -0.3% lower, except London which was unchanged. Yesterday, Tokyo ended down a sharp -2.7%. Hong Kong was down -0.4%. And Shanghai ended its Monday session down -1.2%. The ASX200 finished its Monday trade down -1.6% in a gloomy session there too. The NZX50 was on holiday of course but faces a tough opening today.
The price of gold will open today at US$1628/oz. This is down -US$17 from this time yesterday.
And oil prices start today -US$1.50 lower at just under US$77/bbl in the US while the international Brent price has fallen about -US$3 to be just over US$83/bbl. These are new eight month lows.
The Kiwi dollar will open today at just on 56.4 USc and another full -1c drop since this time yesterday and now close to the pandemic low and the rate that applied in April 2009. Against the Australian dollar we are -½c softer at just on 87.4 AUc and a new nine year low. Against the euro we are -½c lower 58.6 euro cents. Against the yuan we are now under ¥4 and its lowest since 2015 (except the pandemic) .That all means our TWI-5 starts today at just 67.1, and down -80 bps to an eleven year low (also pandemic-excepted).
The bitcoin price is now at US$19,076 a mere +0.5% higher from this time yesterday. It has been under US$20,000 for nine straight days now. Volatility over the past 24 hours has been modest at just on +/- 1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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130 Comments
House listings 12008. Its exciting... (Each to their own)
I admit I thought there'd be a spring rush by now. Maybe it's still coming, but a bit late.
Please be quick, please...
11960 AON (as of now)
Did 48 sell over the weekend.... be quick
On the positive side, there's no toilet paper shortage anymore. Just up open your wallet and pull out those kiwi dollars.
Brock, this is what happens when your central bank isn't prepared to take the timely action needed to deal with inflation ...
No..it's the problem of one country having the status of reserve currency, always going to end in tears.
Global reserve currencies have historically lasted in cycles of about 100 years as seen on the currency chart. Fiat currencies have historically recorded an average life span of 27 yrs. The USD has been serving as a global reserve currency for over 90 years, 40 of which as a fiat global reserve currency
It's really more to do with any form of farming having bad years.
We made a really complex farm.
No, its the problem of inadequately tight monetary policy leading to NZ dollar debasement (UK seeing something similar as we speak). Tighten monetary policy to a level commensurate with stable prices and the slide will stop.
Our central bank consulted their parricidal tree god superstitions and decided that the last thing New Zealand should have was the housing correction that we really needed to have.
Instead they slashed interest rates, dropped LVRs, postponed DTIs, gave the banks unlimited free money and threatened negative rates.
Then they sat around and played an extended game of grab-ass while everything burned.
The captain of the Costa Concordia got 16 years in prison for a lesser amount of reckless incompetence.
When Grant "Afterpay" Robertson borrows to give the masses lollies, bad things soon come marching along behind.
Obesity and diabetes.
Problem is I did not see anyone complaining about the lollies, as they yelled for more?
It certainly kept many businesses going and hence most people employed...given this is global,I'd rather have near full employment,people earning and paying taxes than the alternative of mass unemployment for the last 2 years.Much easier to ramp up a business than try and start a new one in this environment.
The mass unemployment and business failures will come eventually anyway. However, we will also have crippling debt and hyper-stagflation with them due to the irresponsible monetary and fiscal policies of this regime.
Given this is a global situation,would we really be better off having had mass business failures & unemployment for the past years,would our finances be any better off having to support all those unemployed,what about the social & mental wellbeing of having most people being gainfully employed?
I'd rather be employed,tough as times may be...summers on the way,tourists are coming back...good times and bad times come and go.
Keep smiling and be kind...the opposite is being unkind...not something to aspire to. :-)
LOL -you really think we are in this mess to irresponsible monetary and fiscal policies of this regime..you must live in a cave?
Maybe an echo chamber.
The plasticky nature means you can wash and re-use easily too, thus allowing for green washing as you brown wash.
NZD falling of chart, inflation will stay well above target levels. Rates will continue to climb
Yes, indeed. Those who have been claiming that inflation in New Zealand peaked in the June quarter are wiping the humble pie off their faces as we type!
It certainly looks like the cost of living isn’t going to improve any time soon. What I don’t understand is if I go into town where I live it is heaving, cafes full, restaurants full, car parks full. Where is everyone getting their money from?
We have a very strong labour market and wages are moving up for many (not all). So that keeps things going. And interest rate rises are still yet to bite for many folk. Government is also stoking the fires.
No point saving it. Spend it before it's worthless.
A fiat dollar today is worth zip tomorrow
If your "town" is Wellington its many people paid by your taxes.
I can vouch for that. Frontline workers are struggling with public sector pay freeze, while bureaucrats switch to a different agency or taken up contracting for a huge pay increase.
Recruiters are milking it big time as well.
The $50B from covid printing is still sloshing around the system along with the money saved from super low OCR.
It takes a while for the tightening to bite.
This is starting to put huge pressure on the RBNZ, could we see a .75 or even a 1.00 hike? We probably need to.
I think you are right we need a big hike, but given past performance, I think they on have 50 points in the popgun.
How could they hike 1.00? That would make Ashley Church and Tony Alexander sad. :(
How long can the FED continue to hikes rates without a collapse? When are they going to have to turn the money printer back on...
Cant turn the printers on when Inflation is 8% that would be the road to Zimbabwe
Zimbabwe is an aspiration for some of our politicians.
So they're going to continue to choke money supply whilst their economy collapses? We haven't seen the full impact of the completed rate rises yet, it takes time for this to be seen... US is already in a recession though.
Agreed, I have been repeating this point over and over again, it takes time for a policy to have its effect on the economy and then be reported. Today's high inflation is a result of last year's policies and today's policies outcomes, won't be felt until 2023
Could be a depression at this rate..... If you read Freidman's monetary history of the United Sates. The great depression was for the most part caused by a significant contraction in the money supply. You can't just raise interest rates the way Western economies are without triggering a financial crisis that will follow with a recession/depression.
Sadly, you could be right.
You can't be in a recession if you change the definition of recession.
And yes, they are. Given the choice of stagflation or recession they will choose recession.
While Rangers are flying off forecourts, cafe's and bars are heaving, and the ski lifts in QT are long we can safely say that in NZ at least the measures to calm our economy aren't having any traction. I live in the Waikato and Te Rapa was rammed over the weekend.
They will, I understand that. The only place I can see a change in behaviour right now is property. While we are spending like this and importing inflation to boot the future looks sure to be an over shoot of biblical proportions based on Orr's track record.
It certainly feels to me like the party on the Titanic…
I have always used driving as a guide. If Fuel prices were over $2.30, there was an immediate reduction of cars on the roads.
Diesel is now more than 91 octane, and 91 is around $2.60 ($2.85 with levy reduction removed) and yet the cars are everywhere. If anything usage has increased.
I am not sure what is going on...
Is it the 6 o'clock swill, with everyone just diving on in before closing time? or, is ignorance bliss? or are people for the most part not actually impacted?
What is going on is proof that the ETS is a bullshit policy based on a bullshit theory implemented by politicians to enable a few to make a lot of money out of nothing.
Did Michael Cohen say that Mr DJ Trump took docs with him, as momentos. And to show them off, and a bargaining chip "get out of jail card".
Special Master "You can't have your cake and eat it too" response to plaintiff lawyers in DJ Trump vs US.
You should seek help for your TDS
He needs to be taken down or kiss USA democracy goodbye.
He doesn't sound like a Trumper...
The global economy needs to lose momentum to deal with the inflationary crisis every country is facing - a negative output gap is required! So for the economic realists out there, this is a sign of progress. Buckle up: asset prices and demand have further to fall.
The steep fall in the NZD appears to go unnoticed by the Finance Minister, RBNZ and the general public. It ranks as the 2nd worst performing currency in the last 1, 3 month and 6 month (just behind the GBP) cycles. The complete silence on the performance of the currency and forward projections is an absolute disgrace for the government and simply does not bode well to investors.
https://www.barchart.com/forex/performance-leaders?viewName=chart&timeFrame=6m
Well, they will certainly be noticing it when the December and March quarter CPI figures are released, which will no doubt show a real bump up in tradables inflation. But I agree: the policy negligence we are seeing from both the government and RB is breathtaking.
They probably already need to make a cost of living adjustment on to the last cost of living payment due out next in a few days time.
Yeah, that's gonna be interesting. The last COL payment is due next week. Inflation has continued to race along so the cost of living gap for those on low incomes will presumably be a lot higher than when the payment was first conceived. What's a poor MoF to do?
Probably not unnoticed. Probably unmentionable.
And no mention about its hugely negative impact on imported inflation.
Good luck with the OCR hike next week. A serious rock and a hard place indeed.
They didn't notice the trade deficit either.
The “Dollar Milkshake” Theory with Brent Johnson (2018)
https://www.youtube.com/watch?v=vDr3lRZ01Zo
The Sovereign Debt Crisis Is Coming | Brent Johnson
https://www.youtube.com/watch?v=XwO5yznfzWI
"Why has the U.S. dollar exploded higher this year against other currencies, and what does its rise mean for the global economy? Brent Johnson, CEO of Santiago Capital and outspoken dollar bull, joins Jack Farley, host of the Forward Guidance podcast, to share his thoughts on what the strength of the greenback indicates about inflation, central banks, and growth rates. Johnson argues that a sovereign debt crisis for China and other emerging markets is within the cards. Filmed on September 14, 2022"
Be interesting to see if the nats change their tax cut promises;
https://www.news.com.au/finance/markets/world-markets/british-pound-hit…
Excerpt;
"..Reason two is the UK is looking less and less like a safe haven. The new government is cutting taxes and spending up big rather than paying back debt, and investors don’t like it.
The UK got a new Prime Minister on September 6 (two days before the Queen died) and her new Treasurer put out a mini-budget shortly afterwards. The budget has been extremely unpopular, giving big tax cuts to the rich in the hope that will stimulate the British economy to perform better.
Tax cuts are not likely to achieve that, while they are likely to accelerate inflation, so the British central bank is expected to react by lifting official interest rates. It’s like having one foot on the accelerator and one on the brake at the same time: you don’t go anywhere and wreck the engine."
"Australia’s new Treasurer, Jim Chalmers, is bringing down his first budget in October, and he should be looking at the UK situation with serious concern. Because he proposes – like the UK – to deliver big tax cuts that mostly benefit high income earners. These tax cuts have become known as the “stage three tax cuts.” They are an old idea, brought in by the Turnbull government in its 2018-19 budget under then-Treasurer Scott Morrison.
The tax cuts were supposed to be rolled out over the following seven years, but we don’t have to stick to that plan – the world has changed quite a bit since 2018. For one thing, inflation is now the enemy. When the government cuts taxes it encourages spending, and spending makes businesses put up prices, creating inflation. We don’t need more of that right now!"
"Another relevant change is we have enormous debt. Much of it is caused by the handouts during the pandemic. The Commonwealth government is forecast to soon go over a trillion dollars. If the government leaves the taxes in place it can help return the budget to balance sooner and prevent the debt growing larger.
If Mr Chalmers emulates the UK and unleashes a budget that delivers big tax cuts, he must acknowledge that he does so having seen the warning signs. Financial markets could deliver an instant verdict that they consider such a move irresponsible."
Yes at the very least a tax cut package would need to be matched by some aggressive spending restraint if markets are not to become unsetlled. The time for tax cuts was about 5 years ago, when fiscal headroom could have accommodated them.
If a tax cut isn't matched by a decrease in government spending then it isn't a tax cut. It is just a decrease in income tax compensated for by an increase in the inflation tax.
GBP. The only currency the NZD has appreciated against. Buying some Loake 1880 tomorrow, partly with the last COL payment. Thanks JA
You only made $70k last year Rexy ..the accountants doing a good job ah?
Partner’s income. A flaw in the Cost of Living spray.
There are many 'flaws' out there...the main one being universal super...Australia is means tested and transitioning to 67 years of age.
It's certainly something I'm open to facing.
If we're living longer, then post retirement age (read eligible for super), it's a double whammy as we're consuming more of tax payer funded health systems etc. It simply can't keep going on like this.
But 'I paid taxes all my life'.....
New Zealand's will be means tested and 70 by the time it comes for millennials to be put out to pasture.
Guaranteed.
Imagine if Millennials took the same approach as Boomers did when "Kiwisaver" was first introduced in the 70's. Maybe Millennials don't share the same selfish views around contributing to the pot.
Better check with her first ah..she might want to buy you some new undies.
Or a new pack of "Depends"
Throw caution to the wind and get a last made for John Lobb bespoke shoes.
Not enough time for that.
Comparing NZ tax changes (and thats what they are) and the UK and Aussie tax cuts are like comparing apples and carrots.
NZ has not changed its tax brackets (which is whats been proposed ) for 12 years an extraordinarily long time as a result a Median worker is now been taxed at 33c in the dollar whenever they get a pay rise. In the last 12 years a median salaried worker has moved from paying 16% of their salary in tax to now paying 22% of their salary in tax - creating quite the tax burden on the lowest income earners.
As for the top tax bracket of 39% that is a relatively new tax change only implemented in 2021. So removing it is hardly going to overstimulate the economy.
Secondly if NZ does nothing to its tax brackets and Australia continues with its proposed changes NZ will for the first time in 50 years be a higher PAYE taxing country than Australia - this will only exacerbate the brain drain and deter migration to NZ as it will become decidedly cheaper to live and work in Australia.
Australia over the last 20 years has adjusted its tax brackets every 4-5 years to ensure that it remains as fair as possible and to ensure - currently somebody on 75K pays just 19% of their income in tax - as compared to the equivalent in NZ of 22%.
W
The argument that the top rate reduction is stimulatory falls over once you take into account the government spends far more than it receives in taxation revenue. The only real questions then becomes "WHO do you want to be spending that money?". Spending is spending, and if the government is going to piss it away on non-measurable outcomes and inflating the public service for no gain then it is arguably worse than someone using it for an extra week on the slopes or a service on their W12 Bentley.
https://www.odt.co.nz/news/national/nats-drop-tax-policy-after-widespre…
National has copped friendly fire from its likely coalition partner, Act, which is arguing National's tax plan would stoke inflation by cutting taxes and increasing spending at the same time - sending a wave of cash through the economy.Act isn't alone - nearly every party in Parliament has lashed out at National's tax policy, which would reduce income tax by adjusting tax thresholds, for being inflationary.National disputes the idea the tax cuts would be inflationary, but its finance spokeswoman Nicola Willis has confirmed the policy was on the bench for now, with the party working up a new tax policy for the next election.National had pitched it as a suggestion for Budget 2022, but left the door open to taking the policy, or something similar, to the 2023 election.Willis confirmed on Tuesday the policy was for Budget 2022 and National would put forward a tax policy for the next election later - this may or may not include something like the current indexation policy."What we said was in this Budget, the Government had room to add inflation adjusted tax thresholds. We think that would have been the right thing to do," Willis said."As we shape our tax policy for the future, New Zealanders can expect to see a package that really focuses on the squeezed middle of New Zealanders who we know are struggling to get ahead and the shape of that package will be determined next year," she said.National has also scrubbed a "tax calculator" from its website, the calculator had been online until at least June, giving people an indication of how much tax they would save under National's policy.
I'd prefer to see the tax free threshold increased at the bottom, everyone gets a decent share of the adjustment,rather than the $2.15 a week for the 'bottom feeders' on $45k a year in the Nats original plan.
Australia for comparison;
Resident tax rates 2022–23
Taxable income
Tax on this income
0 – $18,200 Nil
$18,201 – $45,000 19 cents for each $1 over $18,200
$45,001 – $120,000 $5,092 plus 32.5 cents for each $1 over $45,000
$120,001 – $180,000 $29,467 plus 37 cents for each $1 over $120,000
$180,001 and over $51,667 plus 45 cents for each $1 over $180,000
The above rates do not include the Medicare levy of 2%.
32.5 is going to 30.
37 rate being dropped altogether.
45 rate moving up to 200k.
I am all for tax reform,but something more meaningful that gets more than $2.15 p/w week in low paid workers pockets. Just tinkering with thresholds is just kicking the can down the road. You also have to accept,that when times are tough,sometimes you just can't afford what you want and still fund the health service,education etc...$20 p/w is going to be meaningless if strict austerity measures are brought in to pay for it. Of course the well off don't mind,they go private for health/education & have health insurance.
Just requires a bit of a change in mindset. The first $50k of income is basic cost of living, therefore should be where the adjustments are made the most.
Unfortunately people think paying tax is some kind of "loyalty scheme", where the more you pay the more you should get back in rebates. Oh what a burden being in the top 10% of tax payers.
I agree a tax free threshold is well overdue for NZ - for the simple reason it seems silly we are running a system where beneficiaries and Super recipients are taxed on what effectively is a government payment - so you have a system where MSD has to remove tax - send it to IRD, who then send money to Treasury and NZ super Fund to pay benefits - like some never ending cycle of paper shuffling.
Talk about adding another unnecessary layer of bureaucracy.
The increase to 39% for those earning over $180k is estimated to raise $550m a year (https://www.rnz.co.nz/news/election-2020/425595/labour-pledges-to-raise…).
Assuming you want National to offset this amount with a new tax free threshold rather than removing the 39% tax rate as they propose that would be a around $20 dollars each year for each taxpayer (say a tax free threshold of $200). This is because a tax free threshold will affect 100% of taxpayers where as the 39% only affects 2%. Anyone proposing a tax free threshold needs to price it up.
The number of individual income tax payers is based on this https://www.treasury.govt.nz/information-and-services/financial-managem….
Without coming out an supporting National, i would suggest Act and the other critics of the policy are just spouting "conventional economics wisdom" rather than expressing a real understanding of the mechanics. National's proposed tax cuts would not put a large amount of money into the economy, but would go a little way towards compensating for some of the rampant inflation that has already occurred. Or are those critics part of a greater plan to further drive down living standards in NZ?
I was thinking about the war last night and I can’t for the life of me see how it ends well. Obviously negotiation and settlement is the only option for peace, but I struggle to see the path to that.
Ukraine won’t give up territory, and Russia will not end the war without territorial wins.
Maybe an agreement for Ukraine to not join NATO? But I think that’s unlikely, especially so long as Ukraine are holding their own (or even winning) on the battlefields.
So what are we left with? A long stalemate?
But if so, I see massive unrest growing in Russia.
So then is it a toppling of Putin or…. He gets a few of his nukes out?
Of course there is a looming winter to deal with. The war of course started in late winter, so neither side has had a whole winter to contend with.
What I'm hoping for is it turning into Vietnam. Like the US, if Russia loses support at home they may just end up pulling out. Given the gov owns the press I'm sure they could spin it as some sort of win. But we could be in for a long stalemate if it goes that way
I doubt Putin has as much control of the press as he thought.
The protesting, draft issues, and general mood of the Russian People is suggesting the global narrative is being heard loud and clear by the wider public.
The press won't be able to hide the fact that family members are dying. To date most of the dying has been by mercenaries and contracted soldiers. Now the draft has started more of the dead will be men from families who were happy to support the war as long as their men were not dying. That support will change quickly as more Russians are sent home dead. The more Russians Ukraine kills the quicker the war will end.
I struggle to see how this can go on much longer than another year. As others mention there be be limited tolerance to ongoing battleground deaths.
I really do struggle to see any way to peace sadly, other than Putin getting toppled.
I also harbour grave fears of escalation…
At the start of the war, the media claimed Putin was ill, pointing to his puffy, unattractive appearance. Now it seems it was just that he's an ugly old fart!
Realistically. Both sides will keep fighting until the military and/or economic situation of one side becomes untenable. That side will then have to make a bad deal, effectively surrendering. If this side is Ukraine expect serious territorial concessions to Russia. If this side is Russia expect a complete retreat from all of Ukraine by Russia including Crimea. Unfortunately this one is going to be decided on the battlefield.
If any one is interested. This youtube channel provides an excellent objective & unbiased daily analysis of the conflict.
https://www.youtube.com/channel/UCP2QApi8G2TKc8NZmeDWSUg
I don't think there was a good outcome possible after the first week Kate. We are now getting closer to those thresholds where Putin would be more likely to escalate to nukes, and I somewhat suggested that this could happen a while back. Putin is causing his people to revolt and he is desperately trying to hold on to his strongman image, which will make it very hard to walk away now.
My view, and many will castigate me for this, is that to stop a rampant and planet destroying nuclear escalation, is that NATO must tell Russia that if they escalate then NATO will specifically target the national and military leadership of Russia with everything at their disposal. Make the cost to much to bear. So far NATO has not engaged, but a nuclear escalation will involve all of Europe.
Ukraine's survival may get them into NATO sooner, but I suspect NATO will not be keen, and will want to see that it will become and remain a stable democracy before that, but other places like Moldova will be keen. I don't think the other countries are currently stable enough to qualify for membership though.
Putin knows he's beaten militarily. We have to offer him a way out where he doesn't lose too much credibility in Russia. The more he is corned the more he is likely to become increasingly erratic. We also have to ensure Ukraine can maintain it's territorial integrity.
There will need to be some sort of agreement that Russia will withdraw militarily from the occupied territories on the condition that the occupied areas get some sort of regional autonomy overseen by the UN. Security from further Russian invasions will need to be be provided by a reasonably neutral (Turkey? India?) Peacekeeping force endorsed by UN, accepted by Russia and backed up by NATO.
This would allow Putin to claim internally that he had ensured the "Russian" population in Donbas had been liberated and save some face.
You might be right that he knows he is beaten militarily, but i don't think he will accept having to withdraw from anywhere. Russia is scraping the barrel to find fighters now, and a few of those they are putting guns into the hands of, when they realise the reality of the war, will turn those guns on their own leadership. Unwilling soldiers can easily become a threat to their own army. Ukraine will not accept a negotiated settlement that would include one Russian soldier inside the old Ukrainian borders. I don't blame them, and agree with them.
What will happen now as well, as anyone in the invaded areas of Ukraine who identifies with Russia, and who survives any possible revenge when the territory is retaken, will likely be given the option to return to Russia voluntarily or they will be packed off there against their will. Racism, Ukrainians against Russian will rule for a long time to come.
I doubt many of the Russian speakers will move to Russia voluntarily. Something like 80% of them voted for independence from Russia at the end of the Soviet Union.
Zelensky is one of those people whos first language is Russian that Putin has gone in to 'liberate'.
If he's thinking about more than himself (questionable) Putin would use nukes on Kiev between April and August. Why? Because the prevailing wind in Kiev between August and April is westerly, sending fallout towards Russia and Eastern Ukraine. There are issues there though, as From late April until August the prevailing winds are from the north, sending fallout to Crimea. From early April to late April the wind prevails from the south, sending fallout to Belarus.
These are the ground winds, I haven't checked what the stratospheric winds are.
An ideal end to the war could come from the toppling of Putin from within Russia, I concede it's not likely though.
Its happening as we speak ..
USD = TULIP MANIA
Giorgia Meloni may be the new leader of Italy. A country much bigger than Greece. Liz Truss might have an easier job.
"The Chinese central bank made a surprise announcement yesterday, saying it would raise their required foreign exchange risk reserves to 20% from the current zero."
Don't know what this means, another -ve.
We are very much in risk aversion mode at the moment. Very little that can be done to save the NZD. 0.3 vs 0.4% ocr will do very little to the currency in this climate, sort of like Japan’s intervention last week.
SPN500 is still in the green if you value it in NZD :)
A US Fed official has weighed in about how bad policy in the UK has some wider implications.
The “cap” on bankers bonuses that the Tories have just removed had been set at double their annual salary. Yes, double their annual salary. So a banker on £320,000 a year could only get an annual bonus of £640,000. That has now been lifted so they will be able to get annual bonuses of millions again.
On each million of which they will also benefit from a new £55,000 tax cut.
The greatest irony of this is that the first multimillion pound bankers’ bonuses will be going this Christmas to bankers who shorted the pound before Kwasi Kwarteng’s “mini-budget”.
The Chinese central bank made a surprise announcement yesterday, saying it would raise their required foreign exchange risk reserves to 20% from the current zero.
Hmmmm....
The People’s Bank of China said Monday it’ll impose a risk reserve requirement of 20% on currency forward sales by banks. Since August, the central bank has sought to limit the yuan’s losses through its daily reference rate as well as demanding that lenders set aside more foreign exchange as reserves.
In Italy, the results of their national elections are still uncertain, but it does look like the far-right Brothers of Italy party will be forming a new government. A real feature of these elections has been a record low 64% voter turnout, allowing an extreme party into power there.
Indeed, checkout: Voter turnout in United States elections
Brothers of Italy's main ideological trends are conservatism, nationalism, nativism, euroscepticism, and opposition to immigration
This is what it takes to be labelled far-right in the media these days - going against the grain on neoliberalism and wokeness.
The British media also said the new PM's speech was chilling for wanting her people to stop worshipping the "Gods of consumerism" and returning to their roots.
Boo her, yay Cindy and Trudeau for virtue signaling and handing over the keys to their kingdoms to the high priests aka economists.
America’s real adversaries are its European and other allies - Michael Hudson
The U.S. aim is to keep them from trading with China and Russia
The Iron Curtain of the 1940s and ‘50s was ostensibly designed to isolate Russia from Western Europe – to keep out Communist ideology and military penetration. Today’s sanctions regime is aimed inward, to prevent America’s NATO and other Western allies from opening up more trade and investment with Russia and China. The aim is not so much to isolate Russia and China as to hold these allies firmly within America’s own economic orbit. Allies are to forego the benefits of importing Russian gas and Chinese products, buying much higher-priced U.S. LNG and other exports, capped by more U.S. arms.
The sanctions that U.S. diplomats are insisting that their allies impose against trade with Russia and China are aimed ostensibly at deterring a military buildup. But that cannot really be the main Russian and Chinese concern. They have much more to gain by offering mutual economic benefits to the West. So the underlying question is whether Europe will find its advantage in replacing U.S. exports with Russian and Chinese supplies and the associated mutual economic linkages.
How come you left out Fascism..??? But well done in getting in woke
The trend continues.
Gold down US$20, but up NZ$15.
Unless there's a surprise coming from the RBNZ on the 4th (or earlier?) then this continuing trend has imported disaster written all over it for us.
Real returns on government debt are rising fast, easing money debasement fears.
2009 remember it well NZD-USD 52c, mortgage rate over 8% history repeats!
52 cents is on the horizon. It's testing 38 that concerns me.
Under .51 in early '09 I think. According to the interest chart, under .50 even though I'd forgotten or didn't notice that.
38 cents in 2001.
I just tested our mortgage (fixed until July '23 and Feb '24) against 7.3% rates and my existing repayments will cover it. So far, so good.
But the continued fall against the US is what's going to cause the real grief for everyone, not just mortgage payers.
"First today, the global economy has lost momentum in the wake of Russia’s war of aggression in Ukraine"
Honestly, that makes me laugh!
It is the West's response to Russia's SMO that has contributed to the issues we are seeing in the Global economy. And remember this that inflation was already going through the roof before Feb.
It seems like Russia will approve the referendum results and the Russian border will move west. The Russians will probably then focus on taking Odessa and that signals the end for Ukraine.
Ukraine should have negotiated peace while they had the chance but the US has really led them down the garden path
The sooner it is over the better for everyone involved.
Hard to disagree with any of that. Roger Waters just said something similar, and look what happened to him. He was lauded as a hero for his anti-Trump comments, now he's persona non grata.
What a crock of shit. And it's not a Special Military Operation anymore, Putin just partially mobilised, that makes it officially war (even though it always was)
And what will it be called when Xi has likewise been poked in his Taiwan eye often enough?
That's right. War, as well. Like Afghanistan was. And Iraq. But they were Just Wars, weren't they? Because it was The Good Guys fighting them.
Do you not recall how many were against the decision to go into Iraq and Afghanistan? Many lament what might have been had George W Bush not been in power.
So you expect the west to just sit back and allow Russia to invade a sovereign nation? Something tells me you would be quick to change your tune had you been in the unfortunate position to have been born in Kyiv.
You are just full of it. Russia invaded Ukraine. No special language used by Putin can change that fact.
The piddling details that a lot of people don't talk about, but is the basis of Russia's position, is that during the Soviet era, it was the USSR's policy to re-settle ethnic Russians into the satellite states, to entrench their hold on them. This is paying off now for Putin. In the end though as Zelensky has said, there will be no peace until Russia is gone from Ukraine, all of Ukraine, and that now includes Crimea.
If Putin succeeds with Ukraine then the Baltic states will be worried.
Well what other outcome is there?
The Ukrainian Armed forces have been decimated & Nato cant put troops on the ground.
The Eastern regions are home to about 5million, that are going to choose to join Russia. That means Russia will see attacks as an attack on Russia. That means escalation.
Russia has all the military might and all the weapons.
I'm confused as to why all the dummies in Europe and the US keep peddling this idea that Ukraine can win. Its just not possible in any scenario that is plausible.
They're not dummies. Ever heard the term asymmetric war before? Ukraine doesn't need a large standing army to win. That's why Russia lost in Afghanistan and the US in Viet Nam. Ukraine has already adopted a small unit, high mobility form of warfare which really screws with conventional armies. In the Donbas, Ukrainians will merge with the population, and even be sheltered by many. They will carry out an insurgency type of warfare, but they will also start identifying Russians and collaborators and they will start killing them too. The Ukrainian hatred for Russian has become very deep and implacable. Inside Ukraine's borders will not be a safe place for a Russian for a long time to come.
What evidence do you have that the population of Eastern Ukraine is going to choose to join Russia? This is the same population that voted 83% in favour for Ukrainian independence in 1991. The younger post 1991 population is even less in favour of Russia.
If Russia has all of the military might and all the weapons, why did they loose the war for Kyiv? Why did they fail to take Kharkiv city, and then later get pushed out of the whole region? Why aren't they at Odessa yet?
Markets doubt Bailey can avoid emergency rate rise after plunge in pound. Bank of England Governor fails to convince traders that action can wait until November
The UST 2-10 rate curve is much less inverted at -45 bps. But their 1-5 curve has now turned positive at +1 bp. And their 30 day-10yr curve is much more positive +123 bps
I don't get this. I get the general idea of curve inversion (thanks IO), but this is taking it up a notch.
So in the 2-10 year future, investors see things not being that great, in 1-5 years things are ok, and the 30 day-10 year bracket investors think things are going to be very good. What gives?
The Kiwi dollar will open today at just on 56.4 USc and another full -1c drop since this time yesterday...
I thought inflation would fall back but if we destroy our currency we'll be seeing a lot more inflation.
Not to worry! The RBNZ will ramp up interest rates to save the Kiwi. Oh. Hang on. That's Inflationary as well.
Whichever way we now turn, it's the same scenario. Inflation, followed by 'success' and a deflationary wipe-out of present asset prices born of 'free money', to a level that the economy can function efficiently.
Higher interest rates cause inflation? A fan of the Turkish School of Economics I see.
If you allow the currency to be destroyed, you will be dealing with more problems than just inflation.
Unfortunately, given the absolute silence from RBNZ about the ongoing debasement of the NZD, they do not have the backbone to raise the OCR to a level whereby they halt the destruction of the currency and prolonged pain.
The end justifies the means right?
https://www.nzherald.co.nz/nz/crime/police-used-false-information-to-ac…
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