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US labour market strong but some sectors not; China to attack wealth accumulation; Yen sinks; container shipping costs fall again; Victoria to renationalise power sector; UST 10yr 4.22%; gold and oil up; NZ$1 = 57 USc; TWI-5 = 67.9

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US labour market strong but some sectors not; China to attack wealth accumulation; Yen sinks; container shipping costs fall again; Victoria to renationalise power sector; UST 10yr 4.22%; gold and oil up; NZ$1 = 57 USc; TWI-5 = 67.9

Here's our summary of key economic events overnight affecting New Zealand, with news that both China and Turkey seem to be wandering off in the belief that economic management doesn't involve behavioural aspects or consequences.

But first, US jobless claims fell to 178,000 last week taking the total number of people on these benefits to just on 1.2 mln and unchanged from the prior week at a record low. So still no evidence yet of any rising American labour market stress. You may recall that that they peaked in 2020 at over 23 mln.

US existing home sales fell again in September, and apart from the pandemic, are now running at a ten year low. High mortgage interest rates are getting all the blame. But at the same time, sellers are withdrawing as well, so supply is tight, leaving a competitive market for those who want to buy.

American may not be buying housing, but they have rediscovered the travel bug. Most large airlines there are reporting record revenues in the September quarter and they are returning to profitability as consumers continue to prioritise spending on travel.

The Philadelphia Fed factory survey in the heartland Rust Belt region was weak again in October but no more so than for September. New orders were weak in this region, but hiring was still difficult. And although firms are not optimistic about the next six months, they are still committing increased investment for capital expenditure.

In China, Section 9 of the Party Congress report on "Improving the People's Wellbeing and Raising Quality of Life", includes new language about regulating wealth accumulation - "keep income distribution and the means of accumulating wealth well-regulated" it said. An article in The Beijing News that quotes a labour researcher discussing this language says that "a few people accumulated wealth too quickly ... This problem remains to be solved" and that appears to have caused some investor anxiety. (H/T BB)

Taiwanese export orders fell in September as expected, down -3.1%, but that was not as sharp a fall as analysts had penciled in. But weak demand from mainland China is hurting this data, where these orders were down -19% year-on-year. Compared with almost all other regions they were up more than +15% on the same basis.

Japanese policymakers made fresh threats of intervention after the yen tumbled past the key psychological level of 150 to the US dollar, keeping investors on high alert in case Tokyo steps into markets again to support the fragile currency. Rumours are swirling that the Bank of Japan is in a new round of emergency bond buying.

The Malaysian election date has been set at November 19. A five year term is being contested there. The era of one party dominating their political landscape may be gone as a coalition of some sort is likely, even after the current one failed short of serving its full term.

German producer prices rose sharply again in September, rising at an annualised rate of +28% from August. But that is very much lower than the year-on-year change of +46%.

The Turkish Central Bank has cut its official interest rate by -150 bps to 10.5%, ignoring inflation at 83% and apparently believing the move won't make it go even higher. Their policy rate was 24% in 2019 when inflation was 20%. The Erdogan Government apparently doesn't think there is any relationship.

In Australia, their jobless rate remained steady at 3.5% in September as the number of employed people increased by just +900, and unemployment increased by +8800. Their participation rate was unchanged at 66.6%. We don't get our September labour force data until Wednesday, November 2, 2022.

In Victoria, the state government will revive the State Electricity Commission, reversing two decades of outsourcing energy generation to the private sector. But that is only if they are re-elected on November 26, which at this time seems highly likely.

Global container shipping costs fell another -3% last week. That takes these costs down to below pre-pandemic levels with the benchmark Shanghai to Los Angeles route now under US$2500/ctnr. This is emblematic of the sudden fall away in the China-US trade. Global bulk cargo rates were little-changed.

The UST 10yr yield starts today sharply higher again at 4.22%, up another +11 bps from this time yesterday. The UST 2-10 rate curve is slightly less inverted at -40 bps. And their 1-5 curve is also little-changed at -25 bps. But their 30 day-10yr curve is steeper at +101 bps. The Australian ten year bond is up +2 bps at 4.01%. The China Govt ten year bond is up +3 bps at 2.75%. However, the New Zealand Govt ten year will start today at 4.69% and down -2 bps from this time yesterday.

Wall Street is headed lower again today with the S&P500 down -1.0% and unable to hold its morning gains. Overnight, European markets rose with London and Frankfurt up +0.3% and Paris up +0.8%. Yesterday, Tokyo ended down -0.9%, Hong Kong was down -1.4% and Shanghai slipped -0.3%. The ASX200 ended its Thursday session down a full -1.0% and the NZX50 was down -0.8%.

The price of gold will open today at US$1636/oz. This is up +US$6 from this time yesterday.

And oil prices start today up +US$1.50 from this time yesterday at just under US$85/bbl in the US while the international Brent price is just over US$91/bbl. 

The Kiwi dollar will open today at 57 USc and about +½c firmer than this time yesterday. Against the Australian dollar we are little-changed at 90.3 AUc. Against the euro we are +¼c firmer at 58.2 euro cents. That all means our TWI-5 starts today at 67.9, and up +40 bps from yesterday.

The bitcoin price is now at US$19,167 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has however been modest at just +/- 1.1%.

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

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147 Comments

There’s got to be some really bad architecture puns out there today! I’ll start some off:

Truss tried to span the gaps in the conservatives, but didn’t have the structural integrity, the pressure got too much, and the roof caved in on them. They will have to go back to the drawing board. 

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As King Charles would say "Dear oh dear..."

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Monty Python used to run a Twit of the Year piece. Good slot for Conservative Classic Clots.

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Where's John Cleese when you need him?

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. . speaking of which , what're the odds of Boris making a triumphal return  ... haa haaa , yoiks & tally ho , old bean  ... wot  ..

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Check out Sir Kenneth Branagh playing Boris in "This England".  (TVNZ+) Comes over quite sympathetically. 

But lots of Shakepeare quoted so would not do in Godzone. 

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From what I saw of that dramatisation,it looked like Dominic Cummings was running the show...

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Yeah.  I think they are highlighting Dominic early in the show, as he is going to be a turning point later. 

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At least the British know how to get rid of the worst PM in living memory.

Meanwhile in NZ...

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… we have people stupid enough to vote for a guy with the same crazy policies as Truss

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We should all vote for Winston.

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ACT your age  : vote for Davey-boy Seymour ... 

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I can TOP that.

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Vote Dr Sharma. Labour continue to rubbish him despite that they were caught in a lie. I quite like his style and soft manners. Am looking forward to hearing more from him.

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It’s a wonder canny old Winston hasn’t tried to recruit him?

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Both are tainted I suspect 

If sharma gets through the by-election, he will hold in the General and probably increase his share.

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Sharma karma ... the gifts that keeps on giving ... we'll miss him after the Dec 10 bi-election ... ... how come straights & gays can't stand in that ... only bi's ?  

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Or is it the bye-bye election GB

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Yes , dear Gurav needs a sharp lesson in " the universe doesn't revolve around me "  ... I'm confident the voters of West Hamilton will send that message to him : Bye bye .

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9 uptticks to my post above, I did not expect that. He must have a few supporters. I actually find him a lot more easy to listen to than some other pollies, I reckon he could have a huge following. But it will be a big mountain to win the seat esp with ardern causing trouble. She is invested in beating his SOB arse

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2023 NZ national elections could turn out be a milder version of the 2016 US Presidential elections.

In one corner, we have a wealthy 'outsider' to NZ politics stirring rage against government bureaucracy and promising tax cuts for his mates in the name of economic recovery.

In the other corner is a virtue-signaling career politician with a holier-than-thou attitude.

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And in the middle, an old leech who will say anything to get elected and then undemocratically choose who rules the country based on how much he can get out of it. 

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James Shaw is not that old ... is he ...

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You presumably mean Winston. 

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So how does that work Brock?

You put a PM in place that overnight destroys your economy,sacks the Chancellor,then resigns after 44 days...jeez,forgive me if I don't think the British "know how to do it"

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We all fail sometimes and failing fast is much better than failing slow.

The UK will get through this just fine.

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Your glasses have a very 'rosey tint' today Brock

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The UK parliament has existed since the formation of the United Kingdom in 1707. This is nothing but an insignificant blip.

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You've got a short memory Brock.

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Why?

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Read Agnostium's post below for a start. National were screwing us big time, Winnie knew they had to go (he's smarter than most of the pollies combined, despite his shortcomings), and Ardern did very well in her first term considering what she had to deal with. 

But, and here is where we will agree, the Labour Government (Not just Ardern) has not delivered on it's policies despite now having the most of two terms under its belt. It's current position makes it clear it has no vision, and no way out of our current fix (and in that they are exactly the same as National/Act). The problem is, Ardern remains highly presentable in the media and is a star around the world and shallow thinking voters usually don't look past the media hype. But really what is the alternative choice, but a bad one?

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Yeah cos comparing Truss who had a disapproval rating of 80% and almost collapsed the British economy in a mere 4 weeks to Arden who’s party is neck and neck with national and an approval rating greater than the opposition leader is an intelligent comparison. 

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Truss caves as support fails 

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It appears a 7 day old lettuce has more structure. 

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Does everyone get the truss pun Jimbo

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Also  Liz Truss is going to be replaced by Hugh Grant (sorry, just getting in the Holiday mood with more English comedy).

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Not gloating but i did predict this last week when David thought her going was "unlikely". I don't think he truly understands how the Conservative party works in the UK. They're like rats in a sack fighting for survival/power and what's going on outside the sack is of no interest to them. If they select Alexander de Piffle again the UK really is toast.

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Do rats in a sack fight?

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Er... yes. It's a common idiom in English...

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Any impact on the markets from a likely Boris return to number 10?

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Bring back BoJo! 

 

You have to be an All Blacks fan to understand that one. 

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BoJo didn’t do a bad job really (if you are pro Brexit that is like 50.01% of England or whatever it was). To get rid of your best leader by a mile just because he doesn’t think the rules apply to him is cutting off your nose to spite your face. 

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if you are pro Brexit that is like 38% of England or whatever it was

Corrected that for you...

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53.38% of England voted Leave.

Bojo was an ass-clown.

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53.38% of those who voted you mean. 

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May had some strengths & credentials & a chance to prove those but  made the mistake of calling a snap election which looked sensible, but backfired terribly. She was on the back foot from thereon, a ragged sort of coalition, didn’t then trust anyone but herself and made a hash of it all. Then came Boris, then came covid, god knows what comes next.

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May's mistake was to run a presidential style campaign focused on herself when she had less charisma than Thatcher.

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Those who choose to not vote choose to not matter.

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Are you serious?!?!?!!!

He was the worst PM leading the worse government in living memory until Truss that is. 

The Tories have been in power since 2010, they have followed the policies that the NZ National Party is pitching at the moment, look where it has led the UK. 

People can bang on about Ardern leading the worse government in living memory but just imagine if National/Act  had been in power over the last few years, look at the UK and see how those conservative policies have planned out, not just economically but socially.

There are big structural forces that are embedding inequality in our society and it is causing it to break down. Do we want the parties that want to double down on those policies or those that are least try and address the issue.

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Good post

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Seconded.

7houseluxon is possibly worse. Wanting to repeat the shortterm policies that shaped this mess - with an obvious bias to keep his housing portfolio bouyant - is just not voteable.

Much better to have a multi party coalition where all that can get done/spent is the basic logicql stuff that they can actually agree on.

Seems the biggest issue the world faces is the quality of its leaders. With the  shift of media and online it only seems to attract a certain type of person who dont seem qualified, midstream or stable enough - their egos and ill concieved policies seems more likely to lead to the end of humanity than all the other cŕazy stuff we do.

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I’m meant he was the best option for the Tories; totally crazy but not right wing crazy like some of the others. Do they still have that extreme left wing nut job on the other side? Boris could still be the best of the bad options. 

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... not a fan of luscious buxom Luxon , then ? ...

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GBH,are you mistaking him for his deputy?

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I wish ! ... I'd be a happy camper if she was the head Gnat ... & larry Luxon was finance shadow minister or summit ... 

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She’s fairly average if you ask me, at best minor Minister material

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... if she's " fairly average " , then she's a lettuce ahead of cuddles Luxon ...

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Agreed. She has the vision of a welding mask.

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Hmmm,interesting CV...if you go on what most folk say in here about qualifications,she could be a good fit for Labour (sarc) with her degree in English Lit,although her 'privileged' upbringing in Wellington may count against her.

At least she has had experience outside of politics with the Nat party  'real world training ground' that is Fonterra,wonder if she was there with Toddy?

Willis was born and raised in Port HowardWellington. She is the eldest of three children.[4] Willis's mother was a journalist in the Parliamentary Press Gallery,[4] her father a partner in corporate law firm .[5] After a "privileged childhood", she first attended Samuel Marsden Collegiate, a private school for girls, before asking to spend her last two years of high school boarding at King's College in Auckland – a decision she regretted.[5]

She graduated with a first-class honours degree in English literature from Victoria University of Wellington in 2003,[6] and earned a post-graduate diploma in journalism from the University of Canterbury in 2017.[7] She was a member of the Victoria University Debating Society, and competed in international tournaments.

After graduation, she took up a position as a research and policy advisor for Bill English and went on to serve as a senior advisor to John Key in 2008[8] In 2012, Willis joined dairy co-operative Fonterra, taking on senior management roles, as well as serving on the board of Export NZ, a division of lobbyist group Business New Zealand.[9][10]

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She seems like a good person, but when I have seen her in parliament her questioning and response to questioning has been pretty average, in my view.

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A policy wonk for English then Key, and then parachuted straight into senior management at Fonterra? Sounds like she was being groomed for politics and needed some "business experience" from the agricultural arm of the party.

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I have met her and talked to her about policies a few times.  She is quite a bright spark, smart as a whip, but is very shaped by her upbringing. Appears to have zero understanding of what it's like to be poor/disadvantaged, but has a tonne of sympathy/empathy for those that are and actively looks for solutions.  Not that the solutions are necessarily good policy, though many have some merit (like the current Social Investment thing).  Would rate her quite highly in the National Party lineup though, good to see her as deputy, probably leadership material, would have to compare to having a few conversations with Luxon.  We need an opposite term for a caring capitalist, like "Chardonnay socialist"... maybe a Milo Capitalist?

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"Social Investment" unfortunately looks to me like more sales sizzle than substance. It's sold as a well-formed policy when really it's an aspirational idea to use more data points and data analytics to improve targeting of social services. Which is not a bad thing but really rests on an assumption that analytics and research are not currently being done.

And we have masses of research in universities into socioeconomic problems and interventions. Perhaps it's the willingness to consider difficult solutions that is more critical than more BI.

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An un-costed aspirational idea

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Great comment. My concern is that the National party pollies don't seem to think "real jobs every where for every one" is a viable vision to build policies on. If they were really for more economic activity to increase wealth, then surely this is a fundamental requirement? Where do they think the wealth of their core voters come from? Or don't they think it is worthwhile to build the wealth of the 'rabble' so that they as a political party are more attractive to them? The most effective 'social investment' would be supporting business's to employ more people on decent wages everywhere. This would save in benefit payouts at all levels, eventually help to reduce crime, improving opportunities and so on. Why have our pollies apparently given up on these goals? surely they don't think they're too hard?

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Indeed, a real party of business would look to reduce company income tax rather than taxes on property speculators. We've already had the party of incentivising property speculation not productive business.

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Domestic company income tax is irrelevant as it is really just a witholding tax, destined to be credited to shareholders when dividends are eventually paid. It is shareholders (like all individuals) who actually pay the final tax. The only benefit to the govt of company tax is that it is paid "now" whereas shareholders (who get a credit for the tax paid by the company through the imputation system) won't pay their tax until the dividends are eventually paid. 

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I think this is what Labour are trying to achieve with rises in the minimum wage...and if a business can't afford a dollar or two extra an hour,their business is probably not that viable.According to the right it seems there is never a 'right time' for those at the bottom to have their wages lifted.

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 "not a fan of luscious buxom Luxon , then ?"

It's not Luxon himself, I'm sure he is a very capable person, it's the National Party policies. 

I think this is the big trap that democracies are falling into and making it about the personalities rather than the policies. So you will get people who don't like Ardern on a personal level because she is a liberal, successful young woman who will vote against her based on that fact and on the other hand people who are fed up with old white rich men getting into power who will vote against Luxon for that reason. We need to get back to focusing on the party policies. 

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Yep. And in policy terms  I like TOP the most.

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... from my viewpoint  , neither Labour nor the Gnats offer policies to increase competition within NZ ... in our education & healthcare ... neither have a focus on encouraging & stimulating small business , where jobs/innovation/growth really occur  ... both are fixated with protecting big companies & big government agencies ... and that hampers increasing our productivity ... tax cuts for the rich ? Geeez  , Chris , stop this BS ... please !

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Bald & buxom is not a good vision over morning coffee. Thanks for that GBH.

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For the record I wouldn't piss on National even if they were on fire.

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 ... for the record , I would piss on Labour , even if they weren't on fire   ... 

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Time for those incontinent pants GBH..

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... I'm incentivised to hold it in until someone from Labour knocks on the door  ...

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Be careful of where you let it out...you may be liable for raising the nitrate levels...

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Similar to Wayne Brown and that far left commentator Simon Wilson.

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See the Herald features Mr Brown meeting with Chloe. Ir appeared to be amiable.  Anything but a fan of the Greens but I have come to respect her for her get up and go and sheer  tenacity in getting answers. But I don’t live in Auckland. Does her electorate value her or is she just another identity from Wellington?

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Hope the professional grumpers don't start getting stuck in to Wayne Brown for being "woke" for talking to Chloe

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How many billions of debt will Ardern and Co lump on our descendants while they ‘try’? Absolute worst PM and Government in living memory. If only we could novate that debt to the voters that put them in power. 

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Similar to National's running up debt post-earthquake?

The real debt problem has been driven by entitlement mentality and market fixing, that entitlement to feel rich by driving up house prices and foisting ever larger debts on following generations. Unfortunately, that entitlement mentality has infected successive governments infested with speculators.

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Why are politicians allowed anywhere near debt? Robbo's $9.5 billion LSAP fustercluck should be the last straw.

"The taxpayer is poorer as a result of the LSAP and how market rates turned out (as Tucker rightly notes, it needn’t have turned out that way, although by 2020 the odds were against them – and as I’ve pointed out often there is no sign in NZ at least that a proper ex ante risk analysis was done). Those costs have to be paid for and will mean, all else equal, that taxes are higher over time."

https://croakingcassandra.com/2022/10/20/a-bad-idea/

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Yeah, so much comes down to successive governments having subsidised, privileged and protected property speculation for the last couple of decades. They've enriched themselves at a massive cost to following generations. 

If any of our recent PMs had done what they campaigned on and dealt with the housing crisis they might not have felt the need to throw so much money at it in the last few years.

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What does the LSAP have to do with the government, that's the RBNZ innit?

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Robertson agreed to indemnify the scheme - and he approves the monetary policy committee. The $9.5 billions bucks stop with the Finance Minister - who couldn't even be bothered to ask for a risk analysis.

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Well I guess RP we could go with the Truss policies that Luxon says they were aligned with...then we could power that debt to the power of 10...

"The announcement of Kwarteng and Truss’s new plan triggered a sell-off in government bonds — typically considered quite safe investments — which was so extreme that the Bank of England, the UK’s central bank, stepped in and purchased 65 billion pounds worth of bonds “to restore orderly market conditions” and float the country’s pension scheme."

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Simon Wilson is as centrist as you can possibly be. 

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But central bankers want governments to be in debt, to enslave the people.    Covid was a great 'excuse', next it will be 'Global Warming' and more debt on the horizon.

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... I do wonder if Kiwis have forgotten that Jacinda has been through 4 elections so far , and only won 1 of them  ? ... beaten twice by Nikki Kaye for Akld Central , 2011 & 2014 ... beaten by Bill English in the 2017 general election  ... but gifted the baubles of office by a vengeful Winston Peter's  ..

She won 2020 ... thanks to a virus ! ... 

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Geez,that's a desperate spin GBH...fact is she has been leading the country through 2 terms...2017 when Nats forgot we had MMP and they couldn't add up...then the most crushing victory in the MMP era...and yes there was a virus and the people chose who they wanted to lead them through that crisis...and it certainly wasn't Soimon, Toddy or Crusher...

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And let's not forget Bill's record isn't exactly stellar...I like the man,a great deputy,but...

"...After leading National to its worst-ever election result in 2002, English was sacked the following year in favour of Don Brash."

And then he loses an election where his party garnered more votes than the oppostion,but couldn't work out the math as what 50% equalled...

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Second time round English was much improved. He probably achieved a better result in 2017 than Key would have. But MMP via Winston was the downfall. History was not on National’s side there for a start following the Bolger/Shipley shambles. In contrast, and people tend to forget this, WP worked fairly well with Helen Clark as her foreign minister and other NZF mps such as Marks & Martin were respected within the Labour camp as well. So that was a precedent to some degree & when National somehow got themselves tarred in the release of his confidential pension details, well that was to WP a vendetta which he repaid with one of his own. Here was only one direction for him after that.

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"but MMP via Winston was the downfall" 

What is this supposed to mean?  English didn't win the election because he didn't win an outright majority and could not find enough coalition partners to get a coalition majority. Those are the rules of the game and they are far better than the shitty first past the post option that you get in the UK and US that just leads to increasingly polarised extremes. 

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Really, I thought she won 2020 because an overwhelming majority of the population thought she was doing an excellent job. 

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A turnip would have won in 2020 if painted red and named Jacinda.

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Well I guess National made a strategic error by putting forward Judith and her team rather than a turnip painted red? 

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My comment was re 2017. You might care to recall Collins led National in 2020.

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Forgot to switch accounts back GBH?

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Wayne Brown does not think the rules apply to him.  So would probably get more votes now than when elected. 

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It is Bojo et al who created the current toxic culture within the Tory party. Without his leadership and fermenting of this culture, there would never have been a Truss shitshow. 

Boris’ appalling conduct goes back decades. His every venture and idea failed the nation, but occasionally, profited and benefited him. He has always been corrupt and self serving. He is a narcissist who has had very good PR. Boggles my mind how surface some peoples appraisal of him is. 

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Correct.

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It's the same sort of person who likes Trump because he "doesn't follow the rules" and doesn't give a shit about anyone but himself.  They like him because it validates their own behaviour and attitudes.

Oversimplifies complex issues into black and white and means they do not have to question their own attitudes, world views and behaviours over the last years/decades. 

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Wayne Brown reminds me of Trump - same sort of slogans - Drain The Swamp, Make America Great Again - but not actual realistic policies.

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In fairness to Brown, he comes across as legitimately more intelligent than Trump. Trump was a serial conman who inherited money and came out behind index fund performance across the period. Brown is a skilled engineer.

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If only for pure entertainment value (and watching people melt down on Twitter) I'd like to see him do a George Foreman and make a comeback too. 

On a serious note, surely the better strategy for the Tories would be to call an early election, lose badly, and then let Labour deal with the impending economic carnage so that you can be positioned for a comeback thereafter. Basically just pass the problem to the opposition and let them fail miserably at handling it. I guess the problem is that so many of their MPs would lose their seats, and the rats would rather cling to the sinking ship than go down honourably. 

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Could you summarise for those of us not subscribed to FT right now? Cheers 

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Does this work? - https://archive.ph/WMVuc

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Cough Bypass Cough Paywalls Cough Plugin

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Indeed.

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The lettuce won! All hail the lettuce.

🥬🥬🥬

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And it only cost a quid! Time to replace all pollys?

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At last, an honest green candidate. 

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From DunnyOnTheWell?

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and how is Colin the Daxon, well?

If only some of our politicians combed their hair more often....

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looks like some of us cant become immigrants and will always be expats,yearning for dear old england.

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.....or Europe, China, India, South East Asia etc.  Acknowledging your roots has become a crime in Jacintaland.

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What a weird comment

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The Turkish Central Bank has cut its official interest rate by -150 bps to 10.5%

The average mortgage rate in Turkey is 20%.    Which ought to give pause for thought to those people that still believe that the RBNZ can somehow magically make mortgage rates low again by pulling the OCR lever.

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Remind me what inflation rate% Turkey has? 

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That was my point.

Mortgage rates are (mostly) related to inflation rates and the cost of credit, and not to whatever some autocrat decides to set the OCR at.

 

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Right that’s how it’s supposed to work! Unless the government intervened to protect overseas banking profits by lending billions directly to the banks at the OCR rate. Lucky that will never happen!

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Fortunately, financial markets don't give a squat about keeping the property ponzi alive in NZ.

My neighbour, a comms stooge in the public sector with multiple investment properties, dropped some golden words last weekend. He believes RBNZ will be "forced to bring mortgage rates down to under 2.5%" in 2023.

Feels like 2008 all over again!

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People honestly believe that the RBNZ controls mortgage rates.

It is another type of mass delusion.   The media is misleading people.

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‘A comms stooge in the public sector with multiple investment properties’

Could you go much lower as a human being?

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He believes RBNZ will be "forced to bring mortgage rates down to under 2.5%" in 2023.

"No, you don't understand, mate. We are too big and important to be allowed to fail."

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So with inflation at 83%, turkish banks are paying you 60% to borrow money, seems like a steal!

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And oil prices start today up +US$1.50 from this time yesterday at just under US$85/bbl in the US while the international Brent price is just over US$91/bbl. 

Even though gasoline demand is ridiculously low, gasoline production is, too. The result continues to be even more ridiculously tight supplies. Going to need much more recession to keep prices down, which is according to some plans. Link

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And one other "inconvenient" headwind to watch, the growing possibility of a housing bust where home prices actually fall in widespread fashion in what would be the worst possible time just when consumers are saddled w/gas prices and now job worries. Link

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Yep, where oil goes we go.  The thought that the RBNZ has any control on inflation is yesterday's story.

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In 1975 Sir John Kerr dismissed the sitting Whiltlam Government, as it was in turmoil; unmanageable.

He did that because he was the Queens' Representative - the Governor General of Australia - and, rightly or wrongly, he saw that as his job.

If King Charles 111 has a purpose at all in today's world, isn't it the same thing? To oversee a stable democratic Government, and when all else fails; when a deadlock cannot be otherwise resolved, step up and do his job? (Mandate a General Election for his subjects to decide the fate of his Government)

The Truss Affair threatens more the survival of the Conservative Government/Party, it threatens the validity and existence of the Monarchy itself.

(Which of course leads on to  - Why does NZ need a Governor General if back home they can't even sort themselves out?)

 

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Now bw that would be the ultimate irony. Considering the fate of his predecessor, the first King Charles, that is. In the words of his nemesis Cromwell, who did dismiss parliament, viz.  “Go, get out! Make haste! Ye venal slaves be gone! So! Take away that shining bauble there and lock up the doors. In the name of god go.” Not sure that our present day Charlie is quite up to that?

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British politicians are just alike lettuces : off with their heads ... and make haste about it , or you'll be next ...

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You make good points BW, but I would suggest that it as yet, has not reached the point to require that intervention. True the Tories are in turmoil, but as yet there hasn't been multiple forced general elections for the whole Government, so there remains an argument that the government remains 'stable' in that it is not changing, despite the party of that government being in turmoil. 

Your question about the GG is pointless, as our Government demonstrates much more consistent stability. Oh and Sir John Kerr acted without a mandate of the people, and there remains the taint of political bias on his actions, no matter the state of the Government.

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Fraser was a bully. He bullied Gorton & McMahon and did ditto to Kerr. Met his match in Hawke though. Reduced him to tears. Fond saying of my grandmother. That always happens to a bully when they meet a bigger bully.

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Heading to Japan next year. 

 

Any thoughts on buying Yen now?

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a prudent strategy may be to buy 1/2 your requirement now.

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... no need  ... they have them there ... went to Tokyo once ... plenty of yen locally ...

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I bought a tonne earlier this year when it was about 87.

about 85 now?

hard to see it getting much better for buying, and potential that a Bank of Japan intervention will strengthen the yen

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The UST 10yr yield starts today sharply higher again at 4.22%, up another +11 bps from this time yesterday.

This chart highlights that the recent bond market rout is not the result of an inflation scare, but is about a Dollar liquidity squeeze. 10y US real rates have jumped to 1.69%, the highest level since GFC 2009. The bond market is thus signaling stress. Link

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Here's a comment from a viewer on a  Eurodollar University video

"Philip Byrne

Based quite a bit on your work, my theory is that the US is draining the Eurodollar market every time we export oil, food, and natural gas while the US consumer takes a breather from buying imported items. The supply shock is definitely one part of the equation but declining real US consumer demand is another part. The sharp rise in food and energy prices effectively forces US consumers to substitute low elasticity demand items for high elasticity of demand items such as imported goods. This keeps dollars from leaving the US. Domestic inflation tells me that Jay Powell and the US government have created a surplus of dollars at home that are trapped in the US. This has created a paradox where the dollar is both over-supplied (US) and scarce (Eurodollar). From the standpoint of investments, higher US interest rates are more attractive to investors than lower/riskier investments outside the US. ..."

The video

"The yen isn't Japan's problem, it is everyone's problem. Because this crash isn't the Fed"

https://youtu.be/y2xK0oqWJSw

 

Show less

 

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This is an astute comment. The third leg of the arrangement is that perhaps a conduit is missing to supply $US to those worldwide parties who have loans in $US and can no longer pay the interest in $US on those loans because of the decrease in purchasing power of their own currencies. Banks or nations wishing to rescue those creditors from their debt obligations will have the same problem, finding it more difficult and expensive to purchase the $US required to service those loans. 

This conduit only generally comes into play when a crisis forces the US authorities hands and they then make $US available through select channels to  other nations financial institutions.

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Starting to subscribe to the fourth turning way of thinking. Each PM/President is worse/less effective than the previous one and this won't change until there is a large upheaval.

Whoever the Tories put in next will also be a disaster. Whoever NZ elects from either red or blue will be worse than we have now. Neither will have the backbone to make significant change. Both will push for more of the status quo. Both will offer bribes to the electorate to keep the status quo.

The cycle goes:

  • Hard times create strong people
  • Strong people create good times
  • Good times create weak people
  • Weak people create hard times (we are here)
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Longest serving Monarch shaking hands with shortest serving UK Prime Minister.

https://www.1news.co.nz/2022/09/12/photographer-who-took-final-images-o…

A handshake deadlier than any virus.

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Worst PM in living memory. Killed the queen, then the British economy, all in 45 days.

Did manage to significantly enrich friends' hedge funds by virtue of pounding the pound down though.

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