Here's our summary of key economic events overnight that affect New Zealand, with news that is surprisingly positive today.
But perhaps unsurprisingly, the US non-farm payrolls rose more than the conservative forecasts, up +261,000 s.a. in the headline result and well above the expected +200,000.
But as regular readers will recall, we prefer to watch the 'actual' numbers and those rose +1,172,000 in October from September and taking their paid workforce to a massive 154.3 mln, and easily its largest ever. That is +1 mln more than the 'seasonally adjusted' numbers report. The pay for +1 mln extra people is likely to be highly stimulating and power American consumption for some time to come. That will also be adding to inflationary pressures, bolstering demand. They have a paid workforce +3.4% larger than this time last year. (New Zealand's paid workforce rose +1.2% in the year, for comparison.)
By any measure these are strong numbers. Their participation rate rose to a modest 62.2% (NZ = 71.7%). As might be expected, less than 20% of their jobless are 'long term unemployed' which is consistent with a very strong labour market. (In NZ almost all jobless are long-term unemployed, as we have previously noted.)
It is now a chicken-or-egg issue going forward. Will the new expanded employment drive an economic expansion? Or will a stuttering economic expansion make the higher employment unsustainable? Seemingly endless 'warnings' that the US economy is running out of steam have so far proven unfounded. But there is one cloud in today's US jobs numbers - the vast increase in paid workers were at lower hourly rates.
North of the border, Canada also reported a strong and strengthening jobs market. They expected a +10,000 rise in paid jobs but actually reported +108,300 new jobs - and even more for full-time positions, and a reduction in part-time jobs. Their participation rate is 64.9%.
Adding to the positive vibe, Japan's services sector is well on the mend, with it expanding at a faster rate in October. They reported faster growth in activity levels and employment and optimism in that sector is now at all-time highs.
Singaporean retail sales rose more than expected in September and extending a new positive trend. They are now up +3.2% from August and up more than +11% from year-ago levels.
South Korea's top three battery producers posted sharp increases in sales for the third quarter, according to results released by Friday, thanks to skyrocketing demand for electric vehicle batteries. Much of their good fortune comes as international buyers try to stay clear of Chinese suppliers and the geopolitical risks that entails.
China's seemingly endless promises of "reform and opening up' are just pointing out how closed and controlled their economy is, even if they know they do need those economic reforms. Their Party Congress focus on control and security indicates a deep distrust of their own people and market forces. It is hard to see how international companies can have much confidence in supply chains that rely on China after these recent shifts.
German factory orders fell in September and by more than expected. This extends a recent weakening trend. Export orders are holding these from being even worse.
In Australia, their residential rental market is in crisis with vacancy rates at 1% or below in most urban areas. There are reports that some renters were making up to 100 applications for a home unsuccessfully, sometimes after receiving a no-grounds eviction with a set end date. The conditions for widespread social unrest are brewing in these circumstances.
Also under stress are casinos. Australia has a widespread gambling addition and giant companies have grown over the years to take advantage. High profile slap-downs of Crown and Star casino operations have exposed they have become huge money laundering operations. The next to be hit is likely to be our own SkyCity Entertainment (SKC, #16). Austrac is expected to hit them with their own huge penalties on money laundering charges in the next week. SKC shares have been under-performers so far this year with an -11% year-to-date retreat. This imminent Austrac decision probably won't help.
And the Australian central bank expects a couple of tough years for Australians, with real wages continuing to fall as inflation persists and unemployment starts to rise. These forecasts are part of its latest Monetary Policy Statement. They echo their new Government's warnings. "Given the importance of avoiding a price–wage spiral, the board will continue to pay close attention to both the price-setting behaviour of firms and the evolution of labour costs in the period ahead," it warned. They are also concerned that recent jumps in rent, especially in Australia's two biggest cities, might further entrench inflation.
The UST 10yr yield started today at 4.16% and +3 bps higher than yesterday. It is up +16 bps for the week. The UST 2-10 rate curve is a little less inverted at -50 bps. Their 1-5 curve is slightly more inverted at -42 bps. And their 30 day-10yr curve is flatter at +49 bps. The Australian ten year bond is down -6 bps at 3.87%. The China Govt ten year bond is up +3 bps at 2.72%. And the New Zealand Govt ten year will start today unchanged at 4.60%. A week ago it was at 4.34%.
Wall Street's Friday session is up +0.9% from Thursday in volatile trading, and they are heading for a weekly loss of -3.3% which is unusually large and driven by the Fed's clear focus on inflation which brings with it a P/E revaluation. Overnight, European markets all rose strongly, mostly up +2.5% although London lagged. Yesterday Tokyo ended down -1.7% to limit its weekly gain to +0.4%. Hong Kong had a strong comeback party yesterday, up a massive +5.4% to cap a weekly almost +9% gain. Similarly, Shanghai rose +2.4% yesterday for a +6.1% weekly rise. Yesterday the ASX200 ended up a minor +0.5% for a weekly +1.6% rise. And the NZX50 rose +0.4% for a +0.9% weekly rise. The NZX's big move was the prior week's +3% gain.
The price of gold will open today at US$1675/oz. This is up +US$47 from this time yesterday and up +US$33 for the week.
And oil prices start today up +US$3.50 from this time yesterday at just on US$91.50/bbl in the US while the international Brent price is just on US$98/bbl. A week ago these two prices were US$87/bbl and US$93/bbl respectively.
The Kiwi dollar will open today at 59 and almost +1¼c higher than this time yesterday. For the week it is up +1c and driving a strongish revaluation. Against the Australian dollar we have stayed firm at 91.6 AUc and near our highest since April. Against the euro we are up slightly at 59.5 euro cents. That all means our TWI-5 starts today at 69.6 and our highest since mid September.
We should also note that we are at a four month high against the Chinese yuan, which itself is at a 13 year low against the US dollar which is quite the loss of face by the official Chinese currency.
The bitcoin price is now at US$20,763 and up +2.3% from this time yesterday. It is virtually unchanged from this time last week when it was US$20,693. Volatility over the past 24 hours has been moderate however at just on +/- 2.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
77 Comments
US payrolls rise much more than expected
Something Has Snapped: Unexplained 2.3 Million Jobs Gap Emerges In Broken Payrolls Report
Something else is broken:
An example just yesterday, no different from most of this year: the Federal Reserve raised its RRP “floor” to 3.80% yet the 4-week T-bill yield was somewhere in the 3.50% range (depending upon pricing source). As a reminder, there is no reason apart from scarce collateral anyone would prefer to purchase and hold government paper for four weeks returning 30 bps (or more) less than they would receive “lending” the same cash to the Federal Reserve collateralized by USTs every day for the same four weeks. Link
I do wonder if Zerohedge will be right about anything any time soon. Maybe one day. But then that is the life of a Russian troll service, I suppose.
Trolling the trolls, love it
The unemployment rate isn't going to surge in tomorrow's data nor next month maybe not anytime soon. The FOMC can continue to pretend that it means something even though it's becoming clear it means nothing (again). RBA and BoE were at least honest about recession risks. Link
David, until you factor-in the real world - the energy/resource physics of it - to your appraisals, I'm sorry, but the same criticism can be thrown back at you.
Nobody can claim 'right' from a less-than-fully-informed POV.
And propaganda is not owned by one side.
It's not, but the "science" many of the sites you like to frequent is often word for word copy pastes of Russian Propeganda, masquerading as objectivity.
If physics were the missing link to rock solid economic modelling then it'd already be used. And if it's not, hey look you could clean up with all your physics education.
I do wonder if Zerohedge will be right about anything any time soon. Maybe one day. But then that is the life of a Russian troll service, I suppose.
Matt Taibbi cited Zerohedge as being one publisher to accurately assess the level of corruption in the banking industry running up the the GFC. Of course, you'd have been none the wiser about such things if you were reading mainstream fare such as NYT, WaPo, WSJ, or even Granny Herald.
Zerohedge used to be good, long ago. Not anymore sadly.
Zerohedge used to be good, long ago. Not anymore sadly.
It's an agrregator. Nothing more, nothing less. There's still some great content on ZH. I would agree that ZH is not suitable for people who cannot think for themselves. But that's not why it exists.
Russian troll service
Welcome to the new age of McCarthyism, I guess...
So the USA is employing more but paying them less? Huge numbers involved obviously so that is something of a generalisation but that in turn, you would think, must contribute to the ever growing divide in society between the haves and the have nots, the rich and poor, or is it simply that using plenty of low skill manual labour is still a great winner, over there at least?
MH: Marx said that the role of industrial capitalism was to cut costs of production in order to compete with industrial capitalists in other countries. There are two ways of reducing the costs if you are a capitalist. One is to simply lower wages, but if you lower wages, you don’t get high productivity labor. The Americans, by the 19th century, realized that the higher the wage was, the higher the labor productivity, because productive labor was well-educated. well-fed, healthy labor. The idea of capitalism was, number one, to reduce the costs of production that were unnecessary. Namely, what did labor have to pay just to live that wasn’t really necessary. The biggest cost of labor was land rent... Link
Look like Rabobank have upped their T/D rates, but maybe I just missed a past announcement.
yep matched TSB and hit 5% TD. CCB topped them yesterday, 5.05%. Rates still rising, US and NZ 10yrs turned up again this week, NZ 10 yr 4.6%. The inevitable 5% 1 yr from the big 4 must be very close now, my pick dec. The talk of slowdown again not coming out in the US data last night, very strong jobs market and high wage inflation. My 'truckometer' around Auckland is still seeing very busy commercial traffic, and still strong consumer spending.
TD's 5% in Dec, that's 2 months earlier than my prediction. Could be much closer to 6% than 5% come Feb now so I guess I was wrong, but in a good way for me. If things keep going like this the pocket money in interest payments will turn into a "Living Wage" for many people.
Carlos you might be right with feb, will be interesting to see what the TDs move to after the 0.75 (1.00?) OCR rise Nov 22. That 10 yr swap of 4.65 says alot.
The next OCR in November is the most important one of the year, it really is a signal as to whether we get aggressive with hikes or keep plodding along with our fingers crossed.
yes last chance for RBNZ for nearly 3 months. 0.75 a certainty, but they must be tempted to go 1.0%. Next quarter fuel subsidy ends, fuel will inflate 10% when this happens, straight into next years april CPI.
They will backtrack on the fuel subsidy, Wood has already intimated at that.
An intimate subsidy? Now theres a subsidy I can agree with!
New round of EU embargoes hit the Russian crude oil export business for sea shipments in Dec 2022 - this will ensure the a new round of energy price hikes will hit......+ world oil consumption set to surpass new record levels at over 100 million bbl day, in the coming months, with the China reopening set to boost energy demand. inflation rates of 10-15% in 2023, looks strong.
Yes I know the oil business very well.
We are in for double or tripple whammys to hit us!
Biden has nearly drained the US strategic fuel reserve to suppress petrol prices ahead of the mid terms. This will have a bigger impact on fuel prices than labours handout, fuel is about to get even more expensive.
More Scre@#d than expected.
One more nail in the coffin for the residential construction sector. Watch it commence an epic slump around the middle of 2023.
Which if it happened HM would put an instant floor under house price falls.
Except prices are determined by what people are ready, willing, and able to pay, not the cost of production.
If they can't sell at a profit, they simply stop being produced.
Thanks for taking that one :)
Which was my point. They stop being produced, no new houses, eventual shortage and house prices strop falling and start rising again. Election next year and Covid is over, what do you think will happen with no houses being built and immigration picks up again ?
Eventually, yes. That’s a story for 2024. But plenty of carnage to come before then.
Don’t ask me how many foreign passports I’ve handled in the past 2 months, France, Germany, Philippine, India, China, Mexico, Ireland, UK, Canada…..work visa, critical work visa, visitors, students you name it. Covid delayed their travel to NZ and now they are all jumping on the next available flight here. The number will only increase with more airlines returning to NZ. They are not reporting this on the news yet.
And no I don’t work at the airport or immigration thank goodness.
Yeah I am also noticing foreign workers seeping in.
There was fairly consistent demand for people to come to NZ before covid, not many reasons to think that wouldn't continue now that quarantine is well over.
Or actually increase, if you were young and in many parts of Europe (or most places) you'd be wanting outskie.
You realise the ‘stop falling’ can go on for a long time though and may not jump up for a very long time. Put it this way, if banks were banned from lending tomorrow would your little fantasy of floors based on prod cost hold up true? Just accept it doesn’t work like that and stop listening to the absolute moron you get these ideas from, I’ve seen you proven wrong so many times on this.
If the average Jack and Jane can borrow a max of 350k or 400k at 8.5% to 9% rates'(+150k deposit) .......thats where house prices must go.
Not really, FHB are a small percentage of the market so if existing owners can still borrow money to upsize then things pretty much carry on as normal for a few years at least and over that time anything can change. The housing market is very slow to change.
No it doesn't.
Land prices can still fall, a lot.
Makes up maybe 20-30% of the cost of an average new completed subdivision cost.
So you might see slight drops in overall new house prices. But certainly not huge savings like many expect, outside of extenuating fire sales and liquidations.
Greenfield of brownfield?
On average it balances out, sought after existing land invariably gets a more expensive build than a new greenfields townhouse.
I suppose it's possible huge drops in land pricing would lead to 150m2 GJ Gardiner builds in Herne Bay, but it seems unlikely.
Depends where you are. Land price is around 40 - 45% of new build in many areas - certainly where I am (Manawatu)
The mickey mouse qty imported stuff will only raise their price by 15%!
To be fair to fletchers, they haven’t gauged the price much at all considering they really could have (and should have considering short supply). Overseas imports of plaster board can’t seem to compete on price
German factory orders fell in September and by more than expected. This extends a recent weakening trend. Export orders are holding these from being even worse.
Germany’s solo trip to Beijing exposes Europe’s dilemma on #China. Chancellor Scholz brings a high-profile delegation on his first state visit to Beijing and faces a delicate balancing act. #Germany is running a massive trade deficit w/China. https://bloomberg.com/news/articles/ Link
US economy clearly loving the fiscal stimulus flowing from govt interest payments - already $600 billion per year and heading north with every fed rate hike.
Mind you, RBNZ will be giving the banks $6m a day by Christmas - the cost of maintaining their inflation-fighting reputation.
After a decade of making money for the US government, the Fed is now losing money on an ongoing basis As the QE portfolio is taking a beating and interest on excess reserves to be paid to banks is quickly heading above 4%, the Fed will be delivering a negative P&L going forward Link
The Herald and Stuff are consistently leading on poverty and cost of living stories these days.
It’s starting to get a bit ugly.
Print media travelling better the TV1 OR TV3 at holding the Govt to account.
Jessica Much McKay and Melissa Chan Green both weak interviewers.
Well they are Jacinda’s buddies aren’t they.
Print media are better at anecdotal crap. Half their stories are about what somebody posted on Twitter. There is always someone who has a bad story to tell, but is there any real evidence that people are struggling more now than previously?
McDonald's current 30 Deals for 30 Days promotion is the bellweather for this, and I say that without a hint of irony.
There's a Maccas near my place, and as I have to drive/walk/bike past it every time I want to get onto the main road, I could tell you down to the minute when it's quiet or busy and how many cars will typically be in the drivethrough queue at any time of the day.
The only other time I've ever seen so many cars backed up, spilling into the carpark and road, was when takeaways first opened after the 2020 lockdown.
People are desperate for cheap eats (and some of these deals - and I say this as someone who isn't a big McDs fan - are genuinely good value) and they are showing up in floods of Biblical proportions to save a few bucks on dinner.
Some of it is clever marketing, but I think the bigger driver is a desperation to save a few $$.
eek!
It's been ugly for a while. We just stopped hearing about it so much on Checkpoint for some reason, despite the situation in emergency housing getting worse and worse under Labour by the day. Can't imagine why that might be.
Does anyone know whether most of the people in Rotorua in emergency housing are local people, or have many of them been moved there from other parts of the Upper North Island?
My understanding is that quite a few of them have come from other parts of the country and as a result have significant cultural dislocation and many of them are now a long way from immediate family.
May seem like not much, but probably pretty important if getting a better understanding of their history and ties to the land are an important part of their journey to a better life. Also, stuff as simple as being able to take part time work because you don't need to pay for childcare and so on.
They've really, really buggered that place up. The sad thing is there's probably plenty who could do better for themselves and probably want to, but they're literally trapped.
An absolute debacle.
I took my grandson to McDs the other week. What a soulless place. No wonder people don't get out of their cars when they buy it.
Agree 100%.
I take my kids to Starbucks,no burgers but a nice vibrant,quiet place to enjoy a toasted sandwich for the kids and coffee for me,
I take my kids and grandies to locally owned cafes. The ones where the owner is there wearing an apron. Plenty of awesome ones to choose from.
...the Australian central bank expects a couple of tough years for Australians, with real wages continuing to fall as inflation persists and unemployment starts to rise.
No sign of it yet, unemployment remains at a super-low 3.5% while inflation heads for the moon.
Gold...above says USD1675 latest look today USD1681.30..had a look at NZ;s favorite buy sell auction site and the cheapest I find is a 1 oz Kruger for NZD2850.00, which is about $15 NZ over the USD1681 exchange so that is not too bad ...but looking at the rest, it looks like folk are out to fleece folk ...theres another Kruger there for NZD4175. Yep I know folk will say thats because they are collectibles or whatever but really its just an ounce of gold to most...a 1 OZ ozzie nugget coin for NZD3550.00 ...1/4oz kiwi for NZD1350.00 wow... Looking at some of it makes me wonder ... Whats the point in having a gold trade index if folk are gonna just ignore it and go their own way...lol Its true that folk can ask what they want but when you have inconsistency it does tend to ring a few bells in some. Havent looked at the silver ... but Id imagine the outcome would be a similar result.
Spot gold price does not include cost of producing coins or dealers margins. Very rare to be able to buy an oz gold or silver coin at spot. Always been that way and I have been buying since oz coins were $200 each. Usually a few percent margin over spot price. For some reason the 1/4 and half oz gold coins command an even higher premium. I bought a 1/10th oz krug once and it made the oz price real high.
Gold...above says USD1675 latest look today USD1681.30..had a look at NZ;s favorite buy sell auction site and the cheapest I find is a 1 oz Kruger for NZD2850.00, which is about $15 NZ over the USD1681 exchange so that is not too ba
I know it's seen as a cop out but I own PMGOLD on the ASX. I also own PMGT (digital gold tokens fully redeemable for physical through the Perth Mint) and GDX Miners and OceanaGold (which recently was removed from the ASX and listed on the Toronto Exchange). GDX up 10% on Fri.
I also have exposure to silver, which was up 7% on Fri.
Both these simultaneous movements in gold and silver are rarely seen, so interesting times.
Gold priced in NZD appears to he holding its own.
Little update on ol' ratty. Dollar cost averaging monthly.
Past 12 months (which includes all-time high territory) : -5.5%
Past 2 years : +6.7%
P3Y : +125%
P4Y : +254%
P5Y : +284%
P6Y : +713%
So the reverse of what you'd want in an investment.
So the reverse of what you'd want in an investment.
That depends. If you'r referring to its price being negative in P1Y, it's all relative. What the pattern suggests is how to accumulate ol' ratty: slowly and consistently.
It's operating like a massively overpriced IPO that fails to make a viable business case for itself.
I see a major problem that might deter most from investing in gold...that problem is you have fluctuating mint numbers across some historically very standard coins ,you have various weights/blends and you have NO uniformity. I understand the need to cater to collectors (the words 'collector's edition' in itself probably deters many) but I see way too much variation. Its all the rage marketing wise but is it actually why Gold struggles to reach its full potential? The Maple and Kruger and Eagle and Panda and Nugget and Lord of the Rings and Sovereign , some various blends etc etc.. on and on it goes. I think Gold has been exploited so much by the marketeers that its actually seriously dented its attractiveness to the average consumer. If we had 1 global Coin that was tied to the spot price where would Gold go?, If this coin had no mint limit ,no date, but was micro etched or chipped with origin details ? Fact is if someone came to me with an OZ coin from wherever wanting cash Id be looking at the spot price and a small profit margin before making an offer and I think the average person walking the street would do the same.
I cant see the average consumer on the street being interested in paper gold . Nz has already had a debacle whereby the safe did not cover enough physical. It is little wonder that folk are indulging in crypto but they do so based on a non physical basis and this leads me to believe that if Gold traders could get their act together and come up with a universal 'spot coin' (physical only)..Crypto might find itself in the doldrums particularily if such was physical only and tied to the spot value. Because it is physical that drives scarcity and as we know there wouldnt be enough minted to keep up with demand and it is this which gives Gold its value... If Gold is to fight its way out of alleged 'price fixing' it needs to go back to keep it simple . Can they mint the one universal coin to rule them all ? , 'The Spot' ? .... I suggest manipulating a physical market place would be mighty difficult against a physical global universal thats value includes its production cost yet is tied to a fluctuating 'spot' value.....because to me it seems absurd 'for some reason' smaller measures fetch disjointed values and Id like too see folk off the street be able to buy/sell/trade Gold in a market that is somewhat more regular than the circus we currently have...Wait...probably too rational for the real world.....excuse the rationale/critique..... Can the global dealers/traders make Gold universally 'indestructible'? (Spandau Ballet 'Gold') My 10 cents....lol https://www.youtube.com/watch?v=r-Z82UYV7oA
I see the issue being that any alternate stores of value are usually fairly passive, and contingent on there being enough willing participants in that space to maintain or increase demand.
For the average person they seem pretty pointless. Say you hold 50k of gold, the economy crumbles and the local fiat currency drops in value 99%. You still only have about 50k of pre inflation wealth, it's not like that's going to last you very long.
Different story if you're able to store millions in gold I guess.
If you cannot reach the global consumer with a universal standard , you will struggle with uptake. Crypto could head the same way...too much diversity. Digital/paper should not have reign over physical...Bitcoin mining /trading is a questionable activity at best.... Physical makes it harder to trade/engage in illegal activities...Gold has historically been veiwed/used as a refuge from the larger financial system if that is to be displaced by digital/crypto/paper there will be essentially no refuge for anyone...because all that can be lost at the push of a button. Its not too late for Gold but as time passes and folk become more conditioned to digital ? I think its imperative that Gold survive ,the free world needs it more than many might suppose universally independent of any state or realm .
If we see widespread crypto adoption it'll come in a state sponsored form. Any private individual thinking they can get in on the ground floor of money 2.0 is in for a rude awakening.
Certainly hilarious when people claim they're the early adopters and it'll take off once central banks hitch a ride.
So, basically, all the central banks around the world will just go and adopt Bitcoin. How is it done? Does RBNZ just print trillions of NZD and buy up Bitcoins? Defeats the purpose. Would the Government make it legal tender? What for? It's not illegal for people to make/accept payments in Bitcoin, but the Government won't let you pay your taxes with it and why should they?
So, basically, all the central banks around the world will just go and adopt Bitcoin. How is it done? Does RBNZ just print trillions of NZD and buy up Bitcoins? Defeats the purpose.
I don't think you understand. Central banks that print money indefinitely destroy their currencies more quickly. If the RBNZ did what you prescribe, why would a BTC owner sell Sats for a currency that is worthless? Doesn't make sense.
The banks just create a new digital currency and you swap the paper money for that. They will probably give you more back in a digital than paper to speed it up then just have a cut off date that the paper is then worthless and job done. At the same time Bitcoin will have to stand on its own because the banks will kill it. Really don't see why its so hard for people to grasp it. Bitcoin will never become a currency, its just to easy to create a new one from scratch.
The banks just create a new digital currency and you swap the paper money for that.
Sure. But BTC owners will not exchange their BTC for a central bank digital currency. It's an entirely different asset with different properties.
Dynamic duo, Jac and Grant have hit the canvas, a bit like the boxer, SBW
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