Here's our summary of key economic events overnight that affect New Zealand, with news international inflation is still raging, while the economic slowdown needed to quell it is starting to show in some parts.
There were two regional factory surveys out overnight in the US. The Chicago PMI was little changed and that was an unexpected disappointment because an improvement was expected. It remains quite negative. And the Dallas Fed factory survey for October was also disappointing. Output rose there but the level of new orders didn't and the firms surveyed said the outlook isn't as positive. The Dallas Fed factory survey has been more negative than anywhere else in the rest of the country.
The official Chinese factory PMI unexpectedly fell to 49.2 in October from 50.1, missing market forecasts of 50.0. This was the lowest reading since July, and comes amid the return of strict pandemic restrictions in several big cities with output, new orders, and export sales all falling. Their service sector PMI's turned negative too, largely for the same reason.
And here's an indication of just how tough China's anti-Covid measures are. It locked crowds in the Shanghai Disneyland after a case there was suspected. And it is not the first time they have done something like that.
Meanwhile, the Hong Kong economy is going backwards faster, down a sobering -4.5% from the same period a year ago. This is its steepest contraction since the 2020 pandemic period, and before that the worst since the GFC.
Japanese industrial production was up +9.8% in September from a year ago, but that is artificially enhanced by a weak base. From August, there was slippage, down -1.6% which is rather a sharp negative change.
Japanese retail sales rose by 4.5% in September 2022, compared with an expected +4.1% gain. This was the seventh straight month of increase in retail trade there and the steepest pace since May 2021, and interestingly higher than CPI inflation.
The overall inflation rate in the EU rose to 10.2%. It was the first time it has been in double figures since the EU was formed. Yesterday, we reported Germany's +11.6% rise, today we can note France is up +7.1%, Italy up +12.8%, and Spain was up +7.3%.
Germany retail sales rose in September from August (in 'real' terms), an improvement analysts were not expecting.
Despite those pressures, the EU is still expanding, even it it is slower. It grew +0.2% in Q3 from Q2 and up +2.4% year-on-year. It's a creditable result given all the challenges the region is facing. Portugal and Spain are both doing the best in this bloc.
Australian retail sales rose more than expected, and that is the 9th month in a row of gains. However, almost all of the recent monthly gains are likely due to higher prices rather than volumes. Fashion and dining led the uptick. But year-on-year the gain was more than +17%, mainly because of a very weak base.
The RBA will likely raise rates this afternoon; markets expect a tame +25 bps rise to 2.85%. Anything else will be a surprise. But Australia does face a rising inflation threat, so +25 bps is probably inadequate as an inflation-fighting response.
Iron ore prices hit their lowest level since early 2020 at near US$80/tonne as hopes fade of a rebound in Chinese steel demand, and supply of the raw material picks up.
Also falling is the price of infant formula in China. A major Aussie supplier, Bubs, says a significant number of brands there have oversupplied that market, including local Chinese brands, which has created a major decline in margins across all channels.
But going the other way is the extended rise in the lithium carbonate price. And after Russia's threat to stop Ukrainian wheat shipments, the wheat price has jumped again although it isn't really a big change given the nature of the threat.
In Brazil, the Presidential election result gave ex-President Lula the win by a small but clear margin of some 2.1 mln votes. But that probably won't stop the loser Bolsanaro from "doing a Trump". Lula doesn't officially take over until January 1, so there are probably some extremist events to play out until then. Markets seem to respect these results.
The UST 10yr yield starts today up +4 bps at 4.05%. The UST 2-10 rate curve is more inverted at -44 bps. Their 1-5 curve is inverted and at -40 bps. And their 30 day-10yr curve is a bit steeper at +41 bps. The Australian ten year bond is up +3 bps at 3.81%. The China Govt ten year bond is down -3 bps at 2.66%. And the New Zealand Govt ten year will start today down another -8 bps at 4.22%.
Wall Street has started its Monday session with the S&P500 down -0.7%. Overnight, European markets drifted with little change, except London which was up +0.7%. Yesterday, Tokyo finished with a +1.8% gain. However Hong Kong ended with a -1.2% loss, and Shanghai shed -0.8%. The ASX200 rose +1.2% yesterday and that was bested by the NZX50 which was up +1.9% for a good start to the week.
The price of gold will open today at US$1636/oz. This is down -US$10 from this time yesterday.
And oil prices start today -US$2.50 lower than this time yesterday at just on US$85.50/bbl in the US while the international Brent price is just over US$91/bbl.
The Kiwi dollar will open today at 58.1 USc and little-changed since yesterday. Against the Australian dollar we are firm at 91 AUc. Against the euro we are up +½c at 58.8 euro cents. That all means our TWI-5 starts today at 68.7 and +30 bps higher.
The bitcoin price is now at US$20,390 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
85 Comments
America putting a B52 airbase in Northern Aus is a massive game changer for regional power dynamics. Given Aus is so reliant on China economically, it's hard to see how annoying China is going to make it a win for them. Testing the trade relationship...
Coming soon to an airport near you in Tarras, which is 100% definitely not a front to be able to launch American bombers if needed?
Well they built Te Pirita in WW2 in Canterbury, near Dunsandel. Capable of servicing B17s & B24s. Remnants are still there. The runway outlines still visible from altitude. Never got used. Perhaps now is the time then?
That sure is a dumb thought.
It's a bit of a tongue-in-cheek thought.
I mean why else would you actually need another airport in that specific location (unless your other goal is to see how many jet-lagged tourists you can get crashing their rental cars on the way to Queenstown or Wanaka)?
There's nothing there apart from a passable cafe and a half decent golf course, and it's miles from anywhere.
What’s odder is that we have a government in sheer hypocrisy, declaring a “climate emergency,” parroted by the Christchurch City Council and here they both are proposing the construction, maintenance & operation of a wide bodied jet airport. How much, concrete, steel, metals, plastic, glass, diesel and on and on goes into the carbon footprint of that and how much are ordinary New Zealanders to be taxed to compensate for it. What is even more odd, is the absence of any protest from the champions of the enviroment our Green Party and that this very large tract of land does not contain one sq metre of strategic land reserve.
Four legs (cows) bad, two wings (planes) good.
Can't ride a cow to the UN building, now can we.
Whatever goes upon four legs, or has wings, is a freind.
It's clear that it must be more energy-efficient to run a diesel engine in your car to propel it than run a diesel engine to charge your high carbon footprint electric car. Link
The thing is: 100% of diesel cars are powered by diesel, but less than 100% of electricity is generated from diesel
Running a generator at constant, optimal revs (30% efficient) then turning that into electric car motion (90% efficient) is better than using it to drive a car at varying revs (20% efficient)
Why do you suppose that a hybrid car gets better mileage than a straight ICE car?
Simply because the airport operation will be considered " environmentally sustainable".
Could be because the Greens have very few supporters in this part of the country.
None of the non green supporters in this part of the country want the useless airport either.
US plan A - put a target on every Australian's back.
US Plan B - US Senators call for Biden to shut down a chip center located in China
Without doubt, Beijing is preparing to push back at the US with renewed vigour. The new leadership will not shy away from being confrontational if the US tramples upon China’s core interests. The spiral of hostility will escalate as China senses that the US is preparing for a conflict. In an editorial comment, CCP daily Global Times noted that “the source of such ‘hostility’ comes from the US, and China’s response and countermeasures are, by nature, a legitimate defence. Washington’s various actions against Beijing are like intentionally cutting in front of other’s car on the highway.” Link
and here was me thinking it was the CCP who keeps talking about using force to take over Taiwan -and otherwsie just generally rough up individuals that are a nuisance and have impure or even just incorrect thoughts
Being fed a steady diet of Global Times and RT is doing wonders for your sanity Audaxes.
Remember that China is surrounded by countries who are scared of them. Lee Kuan Yew said once that having a US naval fleet based in Singapore was a source of comfort, not worry. The only way to stop China invading is to make them think you are too strong, or you have strong friends who will help you. The CCP only thinks of weak or strong, nothing else
I see TV1 is running a documentary on disinformation tonight - should be interesting to watch. There are lots of rabbit holes for people to disappear down these days....
Autobiographical? no one would dare hope.
Fascinating research by the University of Cambridge! Whilst in Western liberal democracies (1.2bn people) 75% hold a negative view of China, in the rest of the world (6.3bn people) 70% feel positively towards China. In those countries, China has even overtaken the US! Link
Fascinating research by the University of Cambridge! Whilst in Western liberal democracies (1.2bn people) 75% hold a negative view of China, in the rest of the world (6.3bn people) 70% feel positively towards China. In those countries, China has even overtaken the US!
Thank you Audaxes. Watched an interesting discussing with Jeffery Sachs last night on Democrcy Now on how the West is responsible for the Ukraine War. This kind of discussion doesn't rub around the water cooler and at the neighborhood BBQs. The NZ sheeple criticize America all they want from the safety of their suburbs. But the reality is that they're unaware of how they fit into the U.S. hegemony and don't really understand much outside the Anglosphere media.
That is very interesting indeed.
A correlation between liberal freedoms, high standards of education, and a less favourable view of China than folk in developing countries have.
Not sure anyone should be necessarily surprised. Probably the same applies for their views of the likes of Marcos, Duterte, Putin, Bolsinaro, Trump etc.
Just remember that not everyone shares your Western freedoms and enlightenment. The reality outside your world is that people understand that the West expects them to behave and think under what you may think is moral and just.
I lived years in developing countries, immersed rather than in an expat bubble.
Definitely very familiar with how different thinking, education and ideology can be there.
It's kind of a bizarre move, the Americans have China completely covered by their airbases in Japan and Guam. By adding Darwin they will only expand their coverage of a huge swathe of sea in the Indian Ocean. The B-52 is also an ancient airframe, they make our creaky old P-3 Orion look youthful.
I'm guessing excellent Russian S500 anti missile and aircraft defence batteries will already be deployed or in the near future.
It’s interesting that the B52 was the front for General Curtis Le May’s Strategic Air Command which was overridden by Eisenhower with that capability being transferred to the nuclear subs. The USA & allies now have over 90 of these, not all nuclear armed of course & the USA continues to produce them at pace, USS Delaware for instance. And then there are too the B2 stealth bombers that are close enough to everything from bases in Nth America anyway. If the B52s were made redundant, as being let’s say a deterrent, and there were obvious reasons concerning their vulnerability to surface to air counter weapons, one can only think this is more about showing the flag, regurgitating Teddy Roosevelt’s gunboat diplomacy perhaps?
Who'd say no to free parking?
Australia has been hosting B-2 Spirit stealth bombers at Amberley in SE Queensland. These are being retired very soon and replaced with the more advanced B-21 Raider. A lot of them.
Russian air defense networks don't have much value against this kind of aircraft. Sorry Audaxes.
The S-500 is designed for intercepting and destroying intercontinental ballistic missiles, as well as hypersonic cruise missiles and aircraft, for air defense against Airborne Early Warning and Control and for jamming aircraft.[citation needed] With a planned range of 600 km (370 mi) for anti-ballistic missile (ABM) and 500 km (310 mi) for air defense,[20] the S-500 would be able to detect and simultaneously engage up to 10 ballistic hypersonic targets flying at a speed of 5 kilometres per second (3.1 mi/s)[21][22] to a limit of 7 km/s (4.3 mi/s).[23][24] It also aims at destroying hypersonic cruise missiles and other aerial targets at speeds of higher than Mach 5, as well as spacecraft. The altitude of a target engaged can be as high as 180–200 km (110–120 mi).[25] It is effective against ballistic missiles with a launch range of 3,500 km (2,200 mi), the radar reaches a radius of 3,000 km (1,300 km for the EPR 0,1 square meter).[26][27] Other targets it has been announced to defend against include unmanned aerial vehicles, low Earth orbit satellites, space weapons launched from hypersonic aircraft, and hypersonic orbital platforms.[28]
The system is mobile and has rapid deployability. Experts believe that the system's capabilities can affect enemy intercontinental ballistic missiles at the middle and end portions of flight,[20] but reports by Almaz-Antey say that the external target-designation system (RLS Voronezh-DM and missile defence system A-135 radar Don-2N) will be capable of mid-early flight portion interceptions of enemy ballistic missiles, which is one of the final stages of the S-500 project. It is to have a response time of less than 4 seconds (Compared to the S-400's less than 10).[29] Link
dp
Do you notice how such a lengthy article avoided mentioning that it's of any use against stealth aircraft.
It's very very very difficult to shoot down things that your VLF radar can barely detect and that your fire control radar cannot see at all until it's right on top of it.
As old mate DGM would say "it's the physics!".
Your Russian mates also have a deeply questionable ability to source the chips to build anything useful these days and the CCP don't really know how to make them either. Perhaps that's why they are so greedy for Taiwan.
I don't think the current Russian strategy of stripping down old washing machines for microelectronics is going to cut it for an s500 production line.
Russian defense officials and commentators have framed the S-500 as a “silver bullet” against U.S. stealth aircraft, with the manufacturer, Almaz-Antey, calling the system a “blow against American prestige.” Military expert Alexei Leonkov projected confidence that the S-500 will fare particularly well against the upcoming U.S. B-21 Raider stealth bomber. “The U.S. military relies on the stealth of the B-21,” Leonkov said. “But they do not take into account that work is constantly underway to improve and update Russia’s radars… Russian military radars will be able to detect the B-21, which can then be engaged not only by the S-400 and S-500 but also by [other] air defense systems.” Link
Well to paraphrase the immortal words of Mandy Rice-Davies, he would say that wouldn’t he.
Audaxes is too far gone down the rabbit hole to save. It's just laughable.
Well paraphrasing again, this time Orwell, it’s not so much that he loves the communist powers, it’s his hatred of America that drives him.
China does know how to make rockets. And the hypersonics it developed/tested and are now in the field, way before the West. Which has scared the hell out of Washington.
And they don't appear to need any outside know how to make them work. And they are likely carrier killers as CIWS of carriers are unlikely to be able to spot and shoot them down before they hit, they are simply moving too fast. Interceptor missiles might have a chance, but a barrage of them is likely overwhelming. Suddenly carrier groups don't look as protected as they used to be.
With you there. The thing is though it’s not just the striking power it’s the retaliatory ability as well. No strike regardless of sophistication employed is going to remove that threat significantly let alone entirely. The nuclear powered submarine has done to aircraft carriers what they did to battleships. The USA have these deep & deployed, location known only to them. The fleet is modern and new boats are arriving continuously. Alongside western allies those submarines number close to 100 as opposed to Russia & China 33 or so, of which a good percentage are outmoded. These subs are the most potent weapon on offer, striking or retaliatory, in terms of range, mobility, surprise, concealment and self defence.
A huge swath of sea that China is entirely reliant on for oil.
China has discovered a deepwater oil field with reserves of 50 billion metres. This massive find in the ocean just off China's coast in Hainan Province signals a shift in the balance of global oil power. The find is bigger than the entire US oil reserves. Link
Jesus. Stop drinking the Kool Aid mate. It's embarrassing for you.
That's not even oil, it's natural gas. And the location is in Vietnamese waters.
You are now just posting straight up bullshit in your slavish worship of genocidal regimes.
Hey look, European inflation nearing 11% and they did it without massive interest rate drops.
Things that make you go hmmmm.
Pumping credit and liquidity in the system in 2020 led to an incredibly strong nominal growth momentum until late 2021 Why would such an abrupt withdrawal of credit and liquidity in 2022 not lead to sharp disinflationary trends ahead? By 2024, I expect Fed Funds to be below 1%. Link
Confidence is returning. Slowly but surely
Proof?
"Green chutes" aka green shoots depending on which side of the fence you reside
DJI up 14 percent in October. You told me it would be going down. You were wrong
"Find out where people are headed and buy the land before they get there." My gut read is you want to get your kids into home oownership. You'd be wise to act before others do.
Hilarious how you are comparing the stock market to property.
The stock market is forward looking and liquid. Property is not.
If you look at my original post I am sure you will see that I referred to confidence.
HW2, you are 100% correct that confidence is cementing that it will get worse before getting normal (Not better) and till now has been slow and steady but fromhereon it seems it will be fast and steep.
You are bang on !
Can I interest you in a new listing? Seaviews in East Auckland urgent sale. I will contact you
The young chap serving me in the coffee shop today said that the carnage hasn't started yet. Downhill spiral, totally out of the control of Cindy and Robbo, right up to and past the next election, then bottoming out and slowly picking up for the benefit of Chris and Davie's coalition. He is probably right. I won't do another project until the changeover.
He said that while serving coffee? He needs a new job... as a shoe shine boy.
Being an unemployed property whiz with no capital is worse than being a barista property whiz building capital.
That said, maybe baristas really are the new shoeshine boys?
China really is screwed. Hong Kong’s rapid decline is going to be very problematic for it.
The way in which they rooted the HK economy under CCP control makes you wonder what the heck they think they would gain by taking Taiwan?
Nothing. The wealth would vanish.
Money laundering and property speculation were hardly long term growth strategies.
I'm talking Taiwan...what's NZ have to do with it?
But CCP doesn't give a hoot about HK's economy. A few more soldiers, a few more arrests and disappearances, all sorted. Power and control, nothing else.
They cannot afford the peg it will go... once the HK dollar falls HK is dead.,
A great financial hub once. Now Tokyo, Taiwan, Seoul, Singapore take up the slack. International tourism not what it once was either undoubtedly and how much traffic will the great port continue to attract. What it was was never going to endure it’s a part of the mainland going about that in more or less, the same fashion as, when in Rome do the same as the Romans.
Sorry, but no. You have to remember HK once held the privileged position of being the Wests only gateway into the great Chinese market at the same going the other way. But China opened up to the West, which meant HK was almost certainly in trouble from that point forward. Rather than be replaced by other countries, it has mostly been replaced by Guangzhou/Shenzhen/Shanghai/Tianjin etc, cities internal to China.
Hong Kong represented over 25% of China's GDP in 1992. Today, it's around 2%. Yes China has grown, but much of what used to be exclusive to Hong Kong has been moved into mainland cities, to be closer to customers and cutting out the Hong Kong middle market. China's opening up was much more responsible for this than other countries.
I was talking about the diminishing financial hub activity of HK being replaced by other centres, not anything else, and which is self evident in that regard. Believe we agree on the rest of it.
The UST 10yr yield starts today up +4 bps at 4.05%
Well, moments ago the Treasury just added fuel to that particularly fiery question when in its latest Marketable Borrowing Estimate it uneviled that in the current October – December 2022 quarter, the US Treasury now expects to borrow $550 billion in marketable debt, assuming an end-of-December cash balance of $700 billion. The borrowing estimate is $150 billion higher than announced in August 2022, and is due primarily due to changes to projections of fiscal activity, greater than projected discount on marketable securities, and lower non-marketable financing.
It doesn't end there of course, and in its first estimate for borrowing during the January – March 2023 quarter, the Treasury expects to borrow $578 billion in new debt, assuming an end-of-March cash balance of $500 billion. Said otherwise, another $1.1 trillion in debt issuance in the next six months. Link
Having bombers in Darwin is good, it makes things safer for all..... MAD
War is peace.
Freedom is slavery.
Ignorance is strength.
Walk quietly, and carry a big stick. The only way to beat a bully with a gun, is to have a gun. No other way. MAD has worked perfectly since 1947-48 or thereabouts. Longest period in the history of the world where a really good weapon has not been used.
" Taxes are love " ... James Shaw , occasional Greens co-leader ...
"Taxes are for working folk, not property speculators" - interim National leader.
Right next door to the Port of Darwin, currently under 99-year lease to .... China. That would be akin to leasing the Port of Tauranga to China.
Next century — on November 15, 2114 — the Darwin Port is due to return to Australian hands.
https://www.abc.net.au/news/2022-05-07/darwin-port-lease-china/101040810
What about those sea drones?;see Black Sea video, would take Foxy back to the old U-boat days
https://maritime-executive.com/article/video-suicide-drone-boats-attack…
Let’s then call them Cockleshell Heroes, without any heroes actually on board?
Absolutely, certainly has that WW11 vibe, pity it's really happening all over again; Putin thinks it's 1942 not 2022.
World seems to be getting inured to this destructive heartless murderer.
Well he’s certainly got a problem. If plan A was the capture of Kiev & the collapse and replacement of the government that is kaput. If plan B was to occupy the Donetsk region & surrounds & use the Dnieper as a natural border, well then that cannot be secured without control of Kharkov in the north and they have failed there too. All that history of the planning and operation of the great general Zhukov & comrades was at their disposal. The Wehrmacht knew the strategic value of Kharkov, they took it twice each time in a matter of weeks and from a hugely extended and fraught supply line. The great Russian army of today, from right next door, failed miserably in their attempt.
Just as well Putin has no Rokossovsky
And here's an indication of just how tough China's anti-Covid measures are. It locked crowds in the Shanghai Disneyland after a case there was suspected. And it is not the first time they have done something like that.
I don't get it. All I can think is they must know something about this virus that the ROW doesn't know.
Remember the ETA ad ... they're all nuts in there. Still I can't think of a better place to be stuck
Maybe they are practicing for the next pandemic.
Strengthening their systems and responses, and training the populace.
Maybe the next virus will be a real bad one, and China will be ready for it. Meanwhile, the West has an ever-growing "Freedom!" crowd and a whole lot of public health and supply chain complacency.
As far as I can see, we have done nothing to strengthen our supply chains, put no new plans in place to distribute food, etc, in a really bad pandemic, have not really strengthened our hospital systems, and probably couldn't even pull off another lockdown if we needed to.
If the next virus to be released is a really bad one, we wouldn't even have the capacity to do snap lockdowns of malls, etc, if neccessary. But China will be ready.
She'll be right, mate 🦠🦠🦠
I used to do similar on Rollercoaster Tycoon - barricade the exit once enough guests were in the park so they were forced to buy their food and drink and my profits went through the roof. Life imitates art, doesn't it?
I don't see what they could know exclusively about a virus that the rest of the world has studied pretty thoroughly.
Seems more likely that backing down would mean the CCP losing face so they're digging in.
We could have been in similar stuk here is nz if the govt was slightly more authoritarian and the populace slightly more compliant. JA was hellbent on covid zero, she resolutely refusing to allow freedom of movement both within the country and from those trying to get back home.
The Wellington protests and the slide in the polls helped.
China has a huge rural population and many of these people eat wild foods including bats which can carry corona viruses lethal to humans. The now super transmissible strains of Covid 19 could combine with wild types to produce a deadly recombinant variant. See https://www.statnews.com/2022/02/16/coronaviruses-are-clever-evolutiona… So the severe China lockdown policy may be protecting us... for a while?
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