Here's our summary of key economic events over the holiday weekend that affect New Zealand, with news that is generally going south.
Global credit risks are rising as the triple threat of rate rises, Europe’s energy crisis and China’s stuttering property market and political changes all show no sign of easing. Good corporate profits can't mask any of these threats to credit markets.
Also, we should watch out for global commercial property valuations and sales activity. Rising yields and p/e ratios make this sector increasingly vulnerable to a slump.
We are less than ten days away from the next US Fed rate review. Markets are pricing in a full +75 bps (and a bit more) for that meeting, plus another +125 bps and taking their official rate to 5.0% by March 2023 and it is assumed it will level out at that point for the rest of the year. That is a rapid-fire set of increases expected and already priced in. The big question now is, when to slow down? (Markets have priced in a New Zealand OCR at 5.5% by August 2023.)
The early 'flash' PMI result for the US paints a "challenging" picture for business conditions there. New order intakes were weak and their factory sector slipped unexpectedly into a minor contraction. But it is their giant services sector that is their main problem, shifting sharply lower into a real contraction. Still, it is not as low as this survey recorded in August. Getting the blame for this contraction are company moves to rein in their fast rising inventory levels, something analysts have been signaling as likely for six months.
Canadian retail sales didn't slip away as much as expected; in fact they rose in August after a slip in the prior month.
While we were holidaying, Chinese President Xi Jinping sealed his bid for a precedent-breaking third term while his deputy and several other top officials got the boot and 'retired'. 'In' is a hardline group. There are no women again this this core group (again), and for the first time in 25 years no women in the wider Politburo. Also conspicuously missing are leaders with economic experience. Along with Li Keqiang, the central bank chief was another key economic official demoted.
These are changes that have spooked investors. There is a rush by foreign investors to quit exposures to China now; the Hong Kong equity market was in full panic mode yesterday and ended down more than -6%. The Shanghai markets tumbled -2%.
Burnishing Xi's coronation, their official stats reported the Chinese economy rose +3.9% in Q3-2022, exceeding market consensus of +3.4% and picking up from a meagre 0.4% growth in Q2. But it improved even though retail sales rose at just a +2.5% rate, the least in 4 months, and export growth was at a 5-month low. Further, their jobless rate hit its highest since June at an official 5.5%.
One reason the GDP data came in stronger than expected is that industrial production beat estimates, up 6.3% in September alone, in an unexpected spurt. If true, that is surprisingly strong given all the other weak data in this category. Electricity production fell -0.4% in September.
We'll leave you to draw your own conclusions about how credible the reported rising economic growth is among all these falling data points.
Further, real estate investment fell hard (down -8.0%). And house prices also fell at a faster pace with 50 of their 70 largest cities positing declines.
Buyers are shunning residential real estate 'investment' in most Chinese cities now. Local authorities are raising emergency funding to complete stalled projects, but buyers remain suspicious of what they will get. Some cities are trying to entice them back with sub 4% mortgage interest rates. In fact one city is now offering 3.7% mortgages. There is not a lot of evidence it is working yet.
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Prices for iron ore and copper are falling, mostly based on weaker prospects in the Chinese economy. And despite war disruptions from Russian supply, neither are aluminium nor nickel prices going anywhere either. Sanctions should have raised prices for these key commodities, but it isn't happening. The reason is weak demand, especially from China.
Taiwan retail sales rose +7.5% in September from a year ago, good for them but it was less than the strong August rise.
Taiwanese industrial production however retreated in an unusual move lower, down -4.8% from year-ago levels.
As widely expected, Japan's government and central bank intervened in the currency market over the weekend to support a falling yen, The yen soared the most against the US dollar since March 2020 on the intervention, rising +2.7% in just a few hours. It was an intervention timed for the final few hours of trading in the US on Friday, so it should hold things until today, at least. It is estimated to have cost US$37 bln in those few hours.
Japanese inflation came in at 3.0% in September, unchanged from August and holding near an 8 year high. Food prices were up +4.2%. Electricity costs were up 21% and generating a surge in home battery storage demand. Without food and energy costs, 'core' inflation there was only 1.8% however.
Japan's giant economy is still expanding on rising output and new order growth although some of this improvement isn't as fast as it was. Inflation is still an issue for them, but being a high-tech economy is providing extensive resilience.
In Europe, their PMI's are retreating however, although the contraction is minor at this point. The UK contraction is similar.
Tomorrow, Australia releases its September CPI data. It is expected to rise to 6.9% from 6.1% in August. But analysts like at CBA reckon it will be over 7%. At that level, the RBA may not be as sanguine about how they have handled monetary policy so far.
Australia's factory sector is still expanding, just a little slower, but their services sector has slipped into a contraction in October.
The UST 10yr yield starts today little-changed at 4.23% but it is quite volatile. The UST 2-10 rate curve is little-changed at -27 bps. Their 1-5 curve is marginally more inverted at -27 bps. And their 30 day-10yr curve is unchanged at +75 bps. The Australian ten year bond is up +11 bps at 4.32%. The China Govt ten year bond is unchanged at 2.74%. And the New Zealand Govt ten year will start today also little-changed at 4.68%.
Wall Street has started its Monday session with a solid gain, with the S&P500 up +0.9% and driven by positive earnings reports and a suggestion the Fed may ease back in December. Overnight, European markets were all up about +1.5%, except London which rose +0.6%. Yesterday, Tokyo rose +0.3%. But the two PRC markets sank sharply with Hong Kong down a whopping -6.4% and Shanghai giving up -2.0%. The ASX200 rose like the Europeans, up +1.5%. Our NZX50 was closed of course.
The price of gold will open today at US$1650/oz. This is down -US$8 from this time yesterday.
And oil prices start today down -50 USc from this time yesterday at just on US$84.50/bbl in the US while the international Brent price is just on US$91.50/bbl.
The Kiwi dollar will open today at 56.8 USc and down -¾c from this time yesterday. Against the Australian dollar we are little-changed at 90.2 AUc. Against the euro we are also down -¾c at 57.6 euro cents. That all means our TWI-5 starts today at 67.5, and -60 bps lower than yesterday.
The bitcoin price is now at US$19,292 and -0.9% softer than this time yesterday. Volatility over the past 24 hours has also been low at just +/- 0.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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76 Comments
imagine worlds biggest real estate market, buyers not so worried about future value, worried if it will actually get built before builder fails, they are screwed no pipeline, we start to see same here in NZ next year, same reason no pipeline.
Fair enough. A pipeline ain’t any use either, if there is neither supply at one end, nor a market at the other.
Characteristics of a Pyramid Ponzi scheme.
Future value ? I have a friend in Wgtn who purchased a new $800k apartment off the plans 18m ago. Building on track to finish Q1/2023 however Bank has now reassessed & withdrawn mortgage approval. He's put it up for sale on the falling market & is potentially facing walking away from the contract & his 10% deposit. I doubt that he's the only one in that situation.
Plenty more of that to come. Gonna get ugly
Imagine if the banks had to take responsibility for the assessment they made rather than being able to reassess.... the luxury of all care no responsibility.
Non-recourse mortgages would be a good addition to the NZ market.
I’ve been saying this for years. Considering the amount of dividends paid to Australian parent banks. They should assume the risk!
Its also the best legislation possible to support FHB who were sucked into the FOMO.
by Nzdan | 2nd Jul 22, 7:34am
Banks are also expected to know the risks, hence billion dollar profits, because alongside that there is the expectation that they can provide a sound financial service. Yet somehow these billion dollar per year organisations had no clue that their lending rates would increase from 2.5% to 5.5% in one year?
No different to an electrician or plumber, you pay good money and they provide the product/service and carry risk if something goes wrong.
Imagine a bank wanting to make sure they could get their money back safely, so they could repay old peoples term depositis.
If you dont want to lose more then you have, dont play leveraged markets...
FFS anyone old enough will remember abondoned building sites from 1988-9, hell the BNZ almost fell over twice. (Ron Brierley tried to buy BNZ with a loan from themselves (would have been pretty cool if succesful), since fallen from grace.
Great post.
And abandoned building sites in the mid to late 70s too. We lived next to one in Wellington, as kids my brother and I pretended it was a bombed out WW2 site, certainly looked like one!
He can lose far more than his 10% deposit, of course.
The vendors can come after him for the eventual resale difference if it's more than the 10% deposit he forfeits.
If is sells for 23% less than he's contracted for, he immediately forfeits his 10% deposit and the vendors will come after him for the other 13%.
I wondered about that too, it might depend on when confirmation formally happens &/or any sunset clauses. I had asked him & he said the contract allows him to walk with just losing his deposit. I did suggest he should see a solicitor asap.
Always possible, I guess.
But developers don't have contracts that allow buyers to wander off at their discretion.
Imagine if a block of 50 had one buyer walk away; thinking that by doing so he'd only lose 10% and that triggers everyone else to do the same - hoping that by doing so they'd force the price down by 23%.
They'd all 'lose' 10% and pick up the 13% on the new price levels.
As I say. Not generally allowed.
Yeah i'm skeptical. I think this buyer may be getting hoodwinked by the developer. A smart developer will let the buyer believe that they are only on the hook for the 10% when they know otherwise. This will lead the buyer into a false sense of security and the buyer will not take measures to protect themselve's beyond the loss of the 10% deposit. Realistically this buyer should be slowly draining their bank account $200 a week, in expectation that they are going to have to declare bankruptcy. They buyer is not doing this as they think that all they have at stake is the 10% deposit. The developer will wait till the buyer formally defaults then move aggressively against the buyer's other assets. The joys of buying into the bottom of a pyramid scheme.
Out of interest, intended as investment property or owner occupied?
Originally envisaged as long term investment for his family; I did ask him about the option of moving into it himself, said it he considered it but wouldn't work for him because he needs parking and at least a double garage of adjacent storage for his business.
Bleeding is about to start....
Came across a house in Pakuranga bought last year for 1.810 Million z(RV 1.475Million). Today, it could sell between 1.1 million to 1.3 million
https://www.oneroof.co.nz/7-pooley-street-pakuranga-heights-manukau-cit…
Such was the craziness, who would pay 1.810 million.....maybe a developer that too not smart investor as would know that the risk is high assuming that house value goes up by 30% to 40% every year.
It seems to be a renovated property so savvy investor not only bought for 1.810 million but also spent $$$$$$ on renovation, wonder what loss target he has set for himself. In new built getting away with a loss of 10% seems to be blessing compare to what may unfold or should say unfolding.
IF you believe the blurb it's an owner/occupier walking away to relocate (to Kaitaia perhaps as the haircut will be a close one?).
Haha many of those blurbs are BS.
There’s a townhouse on the market where we live, marketed on similar grounds - owners moving out to a new life overseas. It is rented…
One would have thought that blatant lying would be against the REA code of conduct.
4 A licensee must not mislead a customer or client, nor provide false information, nor withhold information that should by law or in fairness be provided to a customer or client
Oh, it is! Mind you, given that real estate agents were the 5th least trusted profession in 2010, if people don't trust you do they also expect you to lie in your adverts? If so, is a misleading ad really false information? /s
Surely you are not insinuating that real estate agents lie?
Jesus. His mortgage wasn't guaranteed but he went unconditional?
I guess on the "bright side" - the value of the house might be 720k or less now, so he would have lost that 80k anyway
His mortgage wasn't guaranteed but he went unconditional?
That is the way it is for all people who buy off the plan. The agreement will be unconditional from the buyer's side, and even if your bank at the time says you qualify for a loan, the bank won't confirm it, or not, approx. 3 to 6 months out from settlement.
From the developers' perspective, their funders don't see a sales agreement as a 'sale' unless it's unconditional, even though they know the buyer won't get confirmation of funding until closer to settlement from a bank (maybe even from themselves). While this might seem like smoke and mirrors, it still is less risky for the bank to have the project sold like this so the debt is spread across many small owners, rather than one big developer. Then in a crash like this, it is more likely they can recover their investment through these small owners, as they will as a whole have more equity to grab, and easier to sue as private individuals, than one big developer that would just go into bankruptcy if it all collapses.
Many people who have bought off the plan should be more worried than just losing their deposit if they can't settle.
'He's put it up for sale on the falling market & is potentially facing walking away from the contract & his 10% deposit.'
If they are lucky. Given that he will have to settle on it regardless, or get sued for specific performance.
https://www.afr.com/wealth/personal-finance/bidders-losing-home-deposit…
Property buyers are derailing deals, losing deposits and being threatened with damages because they think they have a pre-approved loan despite rising interest rates disqualifying them from borrowing.
Higher rates and tougher lending conditions mean many prospective buyers no longer qualify for a loan approved by the lender over the last six months, analysis of rates shows.
After such a great long weekend now back to more bad news in the market..but nothing surprising. China becoming more isolated by the day.
... is it bad news really , that markets are sobering up after the party ... and accepting that we got a price to pay ... reality might be harsh , but it's still better than the artificial world of near endless credit creation
Cheaper houses for families & friends : that is an awesome thing 🙂
Well, yes & no. Certainly if house prices retreat in favour of fhbs that is positive for them but on the other hand mortgage costs & inflation counteract negatively on cash supply to service the prospect. Rather like poor old Tantalus isn’t it.
Indeed. One wonders if Hu spoke up, said something to the effect of "We should NOT abolish term limits" before being escorted away. He might be like "I am old and want to protect my country, so f it".
I suspect the weekend was a major turning point for China. Xi will use COVID as an excuse to isolate China even more, intentionally so. That has never gone down well as a policy for China in the past and the future won't be any different. But Chinese emperors always seem to get this backwards and Xi is just the latest in a long line of getting it wrong. Which is hard to believe given he has come up during a time when China opened up an prospered as a result. With an increasingly hard line leadership who will be getting more and more corrupted by power every day, it's not looking rosy. Many foreigners I know have left China now and it would not surprise me if a blanket foreigner ban under the guise of COVID restrictions gets implemented soon.
I think people are underplaying this in their minds, IMO it's a disaster of international proportions that will slowly unfold as China gets more aggressive, more nationalistic, less willing to cooperate and sees less economic growth. And any type of economic collapse will be blamed on foreigners and be "responded to" with increased belligerence.
Watched the press conference live.
No minced words - never seen anything like it before.
“China gets more aggressive, more nationalistic.” Indeed, I used to be of the mind that the CCP would resort to pulling across the old bamboo curtain and take care of business as such, internally. But it is obvious that imperialistic attractions still exist and muttering about “reclaiming” the old empire, well beyond only Taiwan, are still afoot. And for that there is opportunity and certainly to the north & west. Regionally Russia has now immensely weakened itself economically & militarily. A good starting point would be Mongolia, not much over 100 years ago a set part of China. Hard for any other country to intervene, let alone assist. If the President can thus demonstrate that China can be expansionist, that sets in motion a whole new ball game to present to the people.
Hard for any other country to intervene
Don't underestimate the impact of 'careful' condemnation such moves attract from the likes of Biden, Trudeau and Ardern.
US companies has never had profitable relations with Russia, so sanctions were easy to apply. The same does not apply in the case of corporate America, which is deeply invested in China. So those rich pr*cks will flex their political muscle to limit US's backlash against Chinese aggression in Asia to speeches and diplomacy.
Good posts from Blobbles et al.
I've also read recent commentary that indicates some expectations that China will move against Taiwan within a year. Not sure I believe it but you capture of Blobbles line suggests there is definitely a chance of it. Hope not.
Great post. And this has been brewing over the last 5-6 years for anyone who cared to look and think, and challenge both the Chinese and dominant western rhetoric of China’s inexorable rise (even in the West skepticism on China has been a minority position). Anyone who has been on this website for a few years will know of my deep and persistent skepticism of China.
I wonder what David Mahon has to say.
Indeed. The Chinese people's love of property gambling has run its race which is quite an achievement. As people bail out on their stock and real estate markets/bubble I'm sure several ponzi structures will be exposed making the sentiment worse.
Will this cause an exit to holdings in NZ to support debt in the motherland, or a flight to hide funds in our market...
The desire for capital flight from China's probably never been higher.
Luckily, so too are Chinese restrictions on its populace and their assets.
I'd be getting the heck out, money or no money.
And so, China’s position as a middle income (at best) nation is confirmed, as predicted. It will weaken from here.
Income isn't the metric. Access to energy and resources is.
Thus: 'Also conspicuously missing are leaders with economic experience' makes entire sense; they were taught a myth which is increasingly looking like an unclothed Emperor.
https://ourfiniteworld.com/2022/10/18/why-financial-approaches-wont-fix…
Read it carefully, sans prior assumptions, HM. And others.
The EU's leadership is in turkeys hands , too ...
Always the need to deflect - from physics to social. It didn't matter, post iceberg, who captained the Titanic.
One asks why?
Only answer seems to be: vested interest. Or lackey thereof.
High praise indeed , from the Grand Master of Deflection : cheers 😂
Why should we believe this Gail Tverberg? Her only listed credential (unverified) anywhere is the vague title of "actuary", yet she's trying to speak with authority on fields like physics, agriculture, climate, and resource availability. Has anything she's ever posted been peer reviewed?
That's a mixed effort. :)
Firstly, people either have a handle on the truth - as in first-principle fact - or they haven't. Qualifications - particularly as they progress into the pointy end of siloes - count for less and less.
That said, Gail was one of the contributing intellects - Hagens, Carlin, Orlov, Mearns, Brown, Heinberg and Martenson come to mind as respected others - in the old Oil Drum days. That site was the clearing-house for much of the energy/money/growth/depletion discussion, globally (indeed, it led same). It led to:
https://www.thegreatsimplification.com/
https://toolatefor2.blogspot.com/2018/10/george-monbiot.html
https://consciousnessofsheep.co.uk/
https://surplusenergyeconomics.wordpress.com/
https://www.theautomaticearth.com/
And I've probably left as many out. Quite the clearing-house, was The Oil Drum. Gail was one who though on, first. Hagens - an ex investment banker - was too.
Yeah so all of those sites and all of your sources seems to occupy a special interest/hobbyist level of science of dubious efficacy.
I read a book circa 2001/2002 that make a very compelling case for an imminent drop in availability/rise in cost of fossil fuels. I took it semi-seriously. Yet here I am 20 years later and the availability and price of fuel hasn't really moved a lot, outside of extenuating circumstances (pandemic, war, natural disasters, etc).
How can anyone determine which final warning is really the final warning? Impossible to say, and therefore hard to maintain enthusiasm.
Personally, I've found accepting the basic premise that the Earth is round and therefore finite, a good starting point for interpreting which commentators are in touch with reality, or not. So that immediately disqualifies the vast bulk of noise parroting the mantra of exponential growth. Of course there's always the techno utopian faith carrot to dangle in front of exponentialists, but really, if bothering to study the historical path of civilisation, depletion, pollution and overshoot are glaringly obvious to even the least observant.
There's a different between accepting things are finite, and making out you can determine when and how things finish.
All we can be certain of, is change.
Pa1nter,
i have become very reluctant to insert myself into any discussion in which PDK is involved. Why? Because for all his knowledge, he only deals in absolutes; no shades of gray in his world. He believes in the prophecy of Clugston's Blip and that gives 2050 as the end date for the world as we know it-we will transition to sustainability through global societal collapse as we seek to sustain our current way of life.
Well, such a scenario is possible, as is others; nuclear war, a Black death type pandemic or some tipping-point leading to runaway global warming. But it is NOT predetermined that any of these will actually happen. Yes, we are bound at some point to exhaust our usable FF supplies, I certainly believe that our consumer societies will have to be greatly scaled back and the effects of climate change will become more severe, but i also believe that as the cliff edge come closer, we will react more positively.
And 2050 is in my view, a ridiculous date, unsupported by evidence.
Straw man and avoidance - you can do better.
:)
That's exactly how they attempted to rubbish World3 slash the Limits to Growth.
Except they didn't.
There 50 pages of reference, in the book he mentions.
Five Zero.
Fifty.
A lotta words in that.
Unsupported, Linklater?
Maybe you should judge a site by the intellect of the commenters.
Both ourfiniteworld and the automaticearth are full of antivax wakos.
I gave up with both those sites.
I enjoy The Great Simplification and Hagens, although I admit I'm just coming to terms with the implications despite working in sustainability sphere for over a decade.
In this case Putin should be more worried then Taiwan. It would make way more sense for China to push north towards Artic and oil/gas then try to claim a rock, unless they know of major oil/gas reserves around Taiwan, then all bets are off.
Scarfie has sold me on this relationship over many a beer. It takes time for markets to learn that they are wrong, They are not going to be able to ignore China this time, already we are seeing Hong Kong markets well down. Gut feel is that the Hong Kong Dollar peg will go in the next few weeks, there is going to be blood on the floor. Once the peg is gone, its really part of China. Two Countries, One System, one Authorian leader.
The fall of the peg will trigger carnage across asian FX markets imho knock Kiwi and Aussie lower. Indeed it may actually take pressure off the need for Higher OCR, as a lower export induced slowdown may see us cutting OCR big time.
Access to energy explains Ukraine.
Oil was on the up before Putin did his thing (in spite of the narrative that he is to blame). The battle for energy is well under way - and some are about to learn that energy cannot be printed.
Next imagine what will happen to oil demand when China lifts covid restrictions?
A stagnant Russia led by an increasingly self isolated autocrat is a better explanation.
Energy may not be printable but it certainly seems like there's multiple players able to increase and decrease their production volume. More of a tap than a printer.
I wouldn't bet against Russia - the hold energy.
..and these multiple players who have the tap....are not the West.
Russia is poked. They have energy, but are going backwards in almost every other area. What they do with that energy is of significantly less value than what other places can do with it.
Energy resources have varied distribution throughout the world. Some in the West, some in the East. Also in the North, and in the south. Some in desert, some in the sea, some in mountains, some in caves.
i don't think we're battling over energy quite yet, but it is looming. What I think is happening at the moment is the energy exporters are trying to build their chests up before it really becomes a scarce commodity and people are ready to go to war over it.
But here's a question - irrespective of the amount of fossil fuel energy left, can the planet sustain the consumption of it at current levels? I believe not. To that end there must be alternatives. Following through - if every motor vehicle and truck on roads in the world was electric and the only consumption of fossil fuels was aviation and shipping, would that be sufficient to save the planet?
Current data for the decline in oil fields’ production indicates that around 3 million barrels per day of new production must be achieved year on year, simply to sustain supply levels. This is equivalent to finding another Saudi Arabia every 3–4 years.
The battle started decades ago and is well underway.
Murray - Why must there be alternatives? Some god? Arrogance of one species?
We will end up on real-time solar acreage, once we burned our way through the buries solar acreage. It's that simple.
But you're right re the second half.
So the answer is: No.
First up PDK, we're not at war over energy yet. No one is actually shooting at someone else to gain control of oil wells. But unless something significant changes, that will come.
What i'm trying to do is stimulate the discussion towards some interesting areas. Currently there are huge amounts of research being carried out in to options for alternatives. Yes, ultimately it may all be futile. But what are we seeing around the world today? Little short of denial while autocrats try to seize power and democratic politicians attempt to make themselves less accountable. The real problem is the number of people on the planet. It's not energy consumption. Energy consumption is a by product of the presence of biological life forms. Every species that has ever existed in humans time has proven this. Too many and they begin to destroy their environment. It doesn't matter the mechanism that this happens by, it always happens. But human arrogance believes that the universal rules do not apply to us.
Although i am not religious, and I argue that the bible and other religious texts are nothing more than political documents, the story of the garden of Eden is the one that is pertinent. Eden is the beginning and end of the journey. No matter how we live, if we cannot do it in balance with the environment, we become the authors of our own demise.
What the ---- do you think both Iraq's were about? Venezuela? The Shah?
But the rest?
Dead right!
No, converting the whole motor vehicle fleet to electric would not be sufficient (it isn't feasible either). A huge amount of fossil fuels are required to extract materials to build cars, to actually build the cars, to build the roading infrastructure and associated parking. It needs to be less travel by private motorcar.
Well, less travel by private car implies a lower standard of living, which is not acceptable, so will trigger a lowering of the OCR to stimulate the economy, and problem solved. Clearly you haven't thought this through with your physics/energy/commodity mumbo jumbo.
PBK not sure the article adds much - but you are right in that energy is the important metric
Plenty of economists understand the place energy, food and population growth play in economies. Leaving this view point out of a nations leadership team is short sighted - and stacking your team with yes men is also very shortsighted and history shows that it can end badly
So do we have the smarts to improve efficiency and reduce consumption or will it just end badly for the poor of the world - played out over the next 100 years or so
Two weeks ago after a strong intra day surge I told you guys that investors have picked the bottom of the DJI. Have you noticed that almost every trading day since there has been bullish moves. Something could be happening, based on fundamentals and earnings.
MVO misplaced vague optimism?
Too big for that
No that bottom was when the index fell 50% of the distance from the top to past lows, its a technical level that triggered short closes..... Many models trade Fibonacci levels.
Shorts closing allows these guys to build a fund for shorting higher again.... they dont often reverse short to long, merely close, with the aim of putting shorts back on a bit higher.
The Fibonacci retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%. While not officially a Fibonacci ratio, 50% is also used.
So expect a bounce that moves up about 23.6-38.2 of the total fall so far.
Its still sell the rally, not buy the dip.
Short closes happened earlier, at the end of the previous month. Since then index trading higher highs and higher lows.
Some people say that higher risk free rate and higher cost to borrow translates to lower asset prices. That theory is WAY too simplistic and probably underlies poor choices
Landing is looking less soft every day on the Global Markets.....
Only halftime. Enjoy your oranges. Next year will be long & hard which ever way you look at it. In keeping with my 'half' theme, we're only half way down as well. It could be more, but I'm hoping not. We might see some huge global migrations over the next 12-24 months as people relocate to the safer zones. Pure survival will kick in, in some areas. We may benefit(?) from this. The more I think of BE's comment in yesterday's article, that we will be less effected than some others, the more I hope he's right.
Remember, life has to go on. People need to eat. In that sense we will be okay. It would be nice to see the price of cheese come down by 50% but I doubt it. The next chapter is all about the basics. Most of the fluffy stuff will vanish, including our current govt with any luck. What could unravel may not be for the faint of heart.
NZ will not necessarily be OK. Food may be a must have but people switch to cheaper substitutes when times are tough, not just cutting down on meals out. And to be able to export from here at the end of the world we need those shipping lanes open and affordable fuel for the ships. We have no control over such matters.
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