Here's our summary of key economic events overnight that affect New Zealand, with news Australia gets "the Budget we need" rather than the one that just papered over their issues.
But first, American retail sales are holding, up +8.2% from a year ago on a same-store basis last week.
But US consumer sentiment is not holding. The widely-watched Conference Board survey has it dipping after two months of gains.
And nor is the next regional Fed factory survey, this one from the Richmond Fed in the mid-Atlantic states region. They are continuing to report weaker conditions as they have done most of the year, with little supply-chain relief.
In China, their slowdown is expected to push the state budget to a -US$1 tln deficit. That would be -5.5% of GDP and similar to the American one.
In Japan, most banks and insurers face currency losses from their giant holding of US Treasuries. They are no longer buyers. In turn, that is putting upward pressure on US yields for these benchmark bonds.
The Ifo Business Climate indicator for Germany edged lower to 84.3 in October, the weakest since May 2020, compared to an upwardly revised 84.4 in September. Still, this new level was not as bad as expected. Winter recession is coming and Europe's biggest economy will contract by -0.6% in the fourth quarter, Ifo forecasted. In the face of all their pressures, that is a pretty creditable result.
The volatile economic situation is changing the landscape of who has bragging rights for the world's largest economies. In 2021 the top five were the US, China, Japan, Germany and the UK (or France on a PPP basis). In 2022 this set is the US, China, Japan, Germany and India. But lurking behind them is an unlikely contender. California is rising fast and is overtaking Germany in late 2022. Just a few years ago, California ranked #7. Much has been written about California's supposed demise and a "flight to Texas". It turns out that was just invented partisanship. The move is the other way, in fact.
Australia released its October mini-Budget and it seems to have been a major change. This is the first Budget from their new Labor Government. Huge amounts of 'pork' from the Morrison/Frydenberg Government have been removed (-AU$22 bln), and they have benefited from rising tax revenues. There seems to be a wholesale change of emphasis underway. Winning sectors include renewable energy, the environment, foreign aid, and a commitment to build an extra 1 million new houses. Losing sectors include the construction industry with some very large projects deferred (-AU28 bln), government consultants (-AU$3.6 bln), and potentially, households, because tax increases loom for some and the claim little can be done for them to fight inflation, especially energy inflation. It is a Budget that is getting grudging support as "the Budget we need" after years of perceived mismanagement. Financial markets will pass their judgement later today.
The UST 10yr yield starts today down -14 bps at 4.09% in a volatile mood. The UST 2-10 rate curve is more inverted at -37 bps. Their 1-5 curve is also more inverted and also at -37 bps. And their 30 day-10yr curve is flatter at +63 bps. The Australian ten year bond is down -35 bps at 3.97%. The China Govt ten year bond is unchanged at 2.74%. And the New Zealand Govt ten year will start today down -7 bps at 4.61%.
Wall Street has started its Tuesday session with another solid gain, with the S&P500 up a further +1.4%. Overnight, European markets were all up another +1.5%, except London which was unchanged. Yesterday, Tokyo rose +1.0%. But the two PRC markets couldn't find the energy to make back any of Monday's very sharp falls, both down -0.1% on the day. The ASX200 rose +0.3% and hindered by their China links. Our NZX50 rose +1.1%.
The price of gold will open today at US$1654/oz. This is up +US$4 from this time yesterday.
And oil prices start today fractionally firmer than this time yesterday at just under US$85/bbl in the US while the international Brent price is just under US$92/bbl.
The Kiwi dollar will open today at 57.4 USc and up +½c from this time yesterday. Against the Australian dollar we are marginally softer at 90 AUc. Against the euro we are little-changed at 57.7 euro cents. That all means our TWI-5 starts today at 67.8, and +30 bps firmer than yesterday.
The bitcoin price is now at US$19,998 and a strong +3.6% higher than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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73 Comments
Another day up. Which reduces the chances of a collapse imo.
What goes up...
If the patriarch of real estate lobbying - One Roof publishes an article from none other Ashley Church that house market will keep falling in near future can understand how bad the situation is, if they are forced to admit.
https://www.oneroof.co.nz/news/42469
Habits die hard as are still trying to down play the fall by saying that house price has fallen only by 7% ( Though data proves that has fallen anywhere between 15% to 20% for now) and in a subtle way tryingg infuse that this downtrend will not last long and worse is over.
Will they never stop to fib even when it is as clear as day and night.
OneRoof is morally bankrupt, and the NZ Herald by direct association.
* An earlier version of this article incorrectly implied that ASB had misled readers when it provided a house price forecast that was adjusted for inflation. ASB was clear in its language around the inflation-adjusted figure and their report was not misleading or alarmist. OneRoof apologies for the error.
Looks like they're starting to get pulled up on their articles...
Hahahaha how ironic.
I read the original version. He was fuming about ASB going ballistic about "since when do banks start reporting with inflation adjusted figures" and calling ASB a bunch of know-nothings.
I find it rather appalling that it is allowed for the article to be edited without the original remaining fully referenced. This is a credibility/ownership aspect at play, but now you can magically go back and delete any debatable aspects.
There's a reason some say to 'archive everything' you see of questionable merit on the internet.
Appalling from the Herald and Ann Gibson.
The 3 bed 1 bath home in howick on cross lease sold at saturday auction for 1.21m
Did you happen to be there carinaz
Wow. That is quite shocking. If I were a Judge I would certainly feel sympathetic to anyone who might bring a claim against Oneroof/Church in a few years time if they rely on such "certain" advice and purchase now only to suffer losses.
and a commitment to build an extra 1 million new houses
Sounds familiar, wonder if they'll have better luck in Aussie. Spose they could build them near Alice Springs.
"Oh, you wanted the houses built where people want to live?".
Perhaps a better chance than here, given much bigger economies of scale and capability.
If they reckon they need a million homes, sounds like their system can't deliver enough cheap housing either.
I wonder if the UK might try the same strategy. Poor Rishi was at a photo shoot on a construction site, wearing his expensive prada loafers no less 🤣
Back to "Bad news is Good news" stuff, I suppose.
Pound surges against dollar after US house price shock. Sterling surged 1.86pc higher to $1.1487 against the safe haven currency after official data revealed America's housing market has begun to slump under the weight of steep borrowing costs. The euro also benefited, climbing 1pc against the dollar to 0.9969.
"There is nothing either good or bad but thinking makes it so" - to quote some guy from an imperialist canon
Probably said by the same guy.
"There's none so blind as those who will not see"
Low nz /usd @30 sept, now nzd strengthens from low base.
The Pound would also be strengthening due to a little sanity (relatively speaking) returning to UK politics.
As a follower of Christopher Luxon's Twitter account, I notice that he is yet to congratulate Rishi Sunak on becoming Prime Minister. He was very quick to congratulate Liz Truss, he sent congratulations to her as Party leader prior to her official appointment as PM. Does he have an issue with Rishi or does he no longer believe that National and the Conservatives "have many shared values"?
Maybe a clash of religions?
I am trying to give him the benefit of the doubt on race and religion. Perhaps he is confused by Sunak, a man wealthier than the King, who doesn't believe that tax cuts for the rich should be top priority right now.
No doubt about his tax avoiding wife..
Her decision to change her tax arrangements follows accusations of hypocrisy against the chancellor, with opposition parties saying Mr Sunak's family is benefiting at a time when the cost of living is going up.
The BBC estimates Ms Murty would have avoided £2.1m a year in UK tax through her non-dom status.
Remember the Nats rating system on the 'value' of different cultures :
https://www.newshub.co.nz/home/politics/2018/10/simon-bridges-mocks-use…
Mr Bridges says he thinks Mr Goodfellow will accept it once he explains what he wants from the money.
"There's no catch to it," Mr Ross says of the donation, and mentions one of the donors possibly becoming a party candidate and going through "candidate college".
Mr Bridges said it would depend on where the party was polling at the time.
"Two Chinese would be nice, but then would it be one Chinese and one Filipino?"
"Two Chinese would be more valuable than two Indians, I have to say," Mr Ross replied.
Yes. The tories were forced to give up on the type of policies Luxon is hanging his hat on. There is not much support in NZ or overseas for tax breaks and pumping property values given current market issues..... he needs to have a rethink or might go down as the leader who managed to lose an unloseable election. Or ends up running a scragbag of assorted coalotion partners for 4 years and getting zilch done before losing to a new labour leader.
I have noticed that Erica Stanford is in the media a lot more. Her brand of compassionate conservatism would resonate with a much wider audience than Luxon's outdated world view.
Impresses me too. Has herself well prepared, homework done and articulates well. Good composure & humour too, nice to see. Would get my vote.
I don't understand Luxon's strategy. ACT have the small government, low tax, economic liberal (Trussanomics) vote. National should distance themselves from this and pitch their tent firmly in the centre. Pro-business, pro farming, pro biodiversity and strong support for health and education.
The centre wants a real party not Luxon or Winston
ACT party anyone?
https://thedailyblog.co.nz/2022/10/25/guest-blog-finn-flynn-the-road-to…
But none of those positions (apart from pro-farming) are aligned with the National Party values, so would be pretty hypocritical.
Undoubtedly. Just relaying what reports write.
The pound has benefited from a slump in the dollar this afternoon following the sharpest slowdown in US house price growth on record.
https://www.telegraph.co.uk/business/2022/10/25/markets-ftse-100-live-n…
Perhaps Mr Luxon is feeling slightly sheepish when comparing the size of his....portfolio to Rishi's
NZ builders will goto Aussie to help build the houses, NZ ers will go to live in them....
Hope they're taking life jackets
It's been happening for 40 years...boom,bust in NZ,then off to Oz go all the tradies...
'especially energy inflation'
It's ALL energy-based, David.
https://surplusenergyeconomics.wordpress.com/2022/10/19/242-the-dynamic…
(It's worth careful perusal).
And: Murray 86 - we've been fighting over oil since we started using it. Why do you think Bell, Lawrence and Allenby were there? Why Faisal? Why the Shah? Why both Iraq's? Why Libya? Why Venezuela?
Linklater - the book you decried, actually has 50 - five zero - pages of referencing. Yet you cry: 'unreferenced'?
What are you replying to?
No arguments here PDK. The article is interesting in that the author presents some perspectives that I would challenge. This paragraph for example;
"Historically, we can observe that, whilst global real GDP almost quadrupled (+292%) between 1980 and 2021, World consumption of energy slightly more than doubled (Fig. 1A). The implication is that the efficiency with which energy is converted into economic output improved by 85% between those years (Fig. 1B). This makes it easy to understand the popularity of the mistaken notion that we can somehow “de-couple” the economy from the use of energy."
While I don't doubt that some shallow thinkers disagree that the economy and energy are linked, what the author misses is what i would suggest is a much more dangerous linkage. The numbers he cites (taking them at face value) doesn't suggest to me that the economy and energy are de-coupled, but that there is the possibility of an argument that we have become more efficient in the consumption of energy. I would suggest that this is dangerous because it then introduces the possibility of complacency, that we can continue to improve the efficiency to the point that our total energy needs reduce to the level that is required for sustainability. This is rubbish, but I would also suggest that it is in part, what is actually occurring. The root problem is not the availability of energy, or what the reserves are, but the number of people on the planet. Every living thing consumes energy. Human beings consume more energy than any other living thing, but through all this we have never accepted the need to live in balance with the environment, and so our consumption of energy has outstripped the environment's ability to adjust for our presence. There is but one final solution that can save the species, and possibly the planet, and that is reducing the population. This can happen by accident (disease, famine), by greed and corruption (war) or by planned cooperation across the planet. Or alternatively we destroy the planet's ability to support life as we know it.
To do nothing will bring on the first two points above while returning the species to the stone age (this has happened before). The last option will only work if we as a species demand of our leadership to be as smart as we and they claim to be, to rise above petty political differences (although politics will be necessary to enact what is required) and agree to work towards a managed population decline while working to ensure all our energy requirements are met the most efficient way possible.
That might just be the best post I've read in 15 years on Interest.co.
:)
At least in NZ we have an opportunity to solve the population/energy conundrum by limiting our population to 5 million with a combination of natural increase, targeted immigration, local food production and carbon neutral energy production. The next challenge is living within our means and adjusting our lifestyles (less importing) to stay within those means. Our survival as a functioning nation are damned by the lack of political consensus domestically and internationally to address these same concerns. We as a species seem too addicted to comfort and entertainment to voluntarily reduce our consumption and maintain or reduce our populations in the face of threats from many directions.
For the complexities, this problem can be broken down in to simple issues; energy efficiencies must still be sought. This will only be achieved through technology where we look at all possible sources. Greens tend to be fundamentalists but they lie to everyone, and likely even themselves. They don't like roads, but unless travel is stopped, very high quality roads are necessary to achieve efficient travel. But ultimately there needs to be a national population target. I would suggest that 5 million is too high. I think the balance would be more likely around 3 - 4 million. I suggest we should focus on the people already here. Our basic economy needs to change to become largely self supporting in as much as possible with good jobs for every one. People should expect, and be expected to have a job, to contribute towards supporting themselves. But lifestyles need not necessarily be significantly impacted in the near term, but a long term draw downs will be necessary as technological limits are realised. As to immigration - I strongly disagree. i believe we need to work on building the skills and capabilities for our own people. Pay them what they are worth to our economy to keep them here. Any immigration should only be to bring skills in to teach our own what they need. Foreign companies operating here must be required to pay decent wages and working conditions (in fact I strongly believe in the 40 hour working week, 8,8,8). There is much much more, but what needs to happen can start quickly without destroying what we have now, but building to sustainable outcomes. But some very fundamental and significant changes must occur at government level first.
Excellent Murray and Whakahokia Mai.
I would be very happy to see a target population target of 3 - 4 million.
It would solve our share of planets emission programme as well. Weird devices like carbon trading are doomed, those are just fiddling. We have to consider population as the base concept.
Any one who supports Carbon trading/Emission Trading schemes doesn't understand the problem or human psychology and is offering a present with a nasty trap in it. Bluntly I'd call them just plain stupid. What is needed is Government action, leadership. It can't happen any other way. But a lot of interference will be run. The banks especially will not like it. Multi-national corporates can be expected to toss their toys too, but they all worship at the altar of the $, and no amount of those will help when the planet can no longer provide an environment for us to live in. But Governments have to act for all the people, not just the rich and powerful. If it is just them, the economy would not be sustainable.
No what is needed is less government, less government action. Fossil fuels have increased world population, increased quality of life, increased life expectancy, made the world a safer place and they are plentiful. So use them. Supply and demand will dictate energy use, not governments with their war on fossil fuels or your crazy notion to depopulate the world.
You may get your wish if the gene therapy experiment performed by Pfizer works as planned.
Agreed on focusing on our own people and paying them for what they are worth. The general consensus among business leaders seems to be an underlying restraint in upskilling their staff proactively, instead opting for the motto of 'you have to seek this yourself' then 'sorry we cant spare your time to learn that'. Leaders need to proactively work to employee strengths and nurture them. Topo many people leave a job due lack of recognition and lack of opportunity for the reason above. Take care of your staff and they will take care of your business in loyalty and productivity. Somewhere in the last 30years we seem to have lost this ethos.
Agreed. lazy and greedy is the underlying reason.
Latest Data from QV shows that the House Price Index to end of September 2022 has fallen 2.1% for the previous 12 months.
(DP)
Ethereum jumps 11%.
Post merge, it has become deflationary - further, based on current (bear market) volume, stakers receive a yield of 6%, that gives it x17 earnings.
I think a flippening vs bitcoin is baked in - maybe 1-2 years away.
(and no I don't have enough - grumble).
ETH has not become deflationary, but it's getting very close! Crazy difference compared with the POW days. 6% staking returns is an exaggeration too, assuming you're talking solo staking. Much less if you mean "staking" with Lido or Rocket Pool and receiving a liquid staking derivative (stETH or rETH).
Seven sharp last night. Car buyer complaining they getting screwed by the hp. Car cost 10k and repayments of 15k. These people need someone holding their hands at every step.
Set up classes at the winz office... without being snakey, there are lots of useful topics to talk about and probably lots of willing mentors with the time to run little groups.
At the winz office or through the winz office. An enterprising entrepreneur would be there setting a programme up, get govt funding, would not cost the winz client a cent. Is anything like this already in place, I believe there is parenting help through Ian Grant and parenting place
Why just the winz office. Most people seem to have no idea of the cost of a loan. Most appear to judge the buying of a house purely on the weekly payments and wether they're "affordable". Vast majority would be flabbergasted to discover that at today's interest rates they may be close to paying double the price over a given period.
Try working out the cost of the other option... renting for ~25years (600 a week now), but 15 years of inflation at say 4% while trying to save the full price of the house..
Have to agree. Instead of focusing on why people are so financially illiterate, the answer proposed (in NZ) is to create more and more regulations to protect such people from themselves.
That's a very privileged world view - talk about victim blaming.
Those people getting ripped off are used to getting nothing, they think if they question or decline anything in the contract then they won't get the loan for the car. Often they have poor English language - first generation PI migrants are targeted all the time. The more protection the legal system can give them, the better.
It is impossible to stop scams and scammers. But you can educate people on how to spot them
Hell, we already send leaflets out with mugshots of all these scammers, err, i mean candidates..
The volatile economic situation is changing the landscape of who has bragging rights for the world's largest economies. In 2021 the top five were the US, China, Japan, Germany and the UK (or France on a PPP basis). In 2022 this set is the US, China, Japan, Germany and India. But lurking behind them is an unlikely contender. California is rising fast and is overtaking Germany in late 2022.
If one excludes California from the US where does that leave the later in the ranking table?
California is home to just under 12% of the US population and contributes 14.7% to its national GDP.
Back home, excluding the Auckland region would put NZ's GDP next to Serbia in the ranking table.
Auckland might contribute to GDP. aka spending. But it's the rest of the country that makes the money.
New Zealanders have been abandoning Auckland for decades. It's only the uninformed immigrants who keep it's population from collapsing.
In Japan, most banks and insurers face currency losses from their giant holding of US Treasuries. They are no longer buyers. In turn, that is putting upward pressure on US yields for these benchmark bonds.
Domestic housing bust accelerates, yet it is foreign Treasury buyers who are inverting the curve.
What do foreign UST buyers know that maybe American bond sellers don't? The latter seem to care all about he Fed. The former are facing more obvious problems beginning with a massive global dollar shortage. More than the domestic housing bust, these underappreciated monetary
"Just 2 per cent of decile 1 students passed the writing component of new standards that from 2024 will be required for NCEA assessments." 10% for numeracy and 24% for reading.
https://www.nzherald.co.nz/nz/ncea-changes-just-2-per-cent-of-decile-1-…
"No COVID-19 related learning loss in reading in Swedish primary school students.
The proportion of students with weak reading skills did not increase during the pandemic.
Students from disadvantaged socio-economic backgrounds were not especially affected."
https://www.sciencedirect.com/science/article/pii/S0883035522000891
Which is why I get frustrated when the sole measure of our covid response is deaths. Never mind all the other indicators that have turned red - many of which will take decades to manifest.
Much like everything else done in this country, the Covid response was designed to protect the older generations by sacrificing the socioeconomic wellbeing of the younger ones.
rastus - 2022 has seen our highest ever excess mortality. Especially death rates in older people are higher than normal. Death is last years news, no one cares about it this year,
What's the COVID response got to do with it?
Our education system and it's implementers suck big time COVID or no COVID response.
nothing...i think you confused responses.
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