Here's our summary of key economic events overnight that affect New Zealand, with news the global economy is losing momentum, just as regulators seem to want.
First, there has been a lot of economic data news out overnight, especially in the US. This starts with a raising of their Q3 economic growth rate in the second revision. It was expected to be raised by analysts, but the rise exceeded their estimates. Better consumption levels were the item diving the upside revision.
US mortgage applications resumed their downward slide last week even though mortgage interest rates eased off a bit.
Their housing markets remain in the doldrums, with October pending home sales falling another -4.6% from September to be down -37% from the same month a year ago.
The number of job openings eased by 353,000 to 10.3 million in October of 2022, roughly in line with market expectations, and suggesting demand for workers has started moderating, although the shift is very minor.
The private sector ADP employment report which is a pre-cursor to this weekend's non-farm payrolls report, disappointed analysts. It was expected to report an expansion in payrolls of +200,000 in November but only came up with +127,000. Analysts are expecting the non-farm payrolls to expand by +200,000 which would be much lower than the October +261,000.
There was mixed signals on American inventory levels. Retail inventories rose by almost +$20 bln in October from September (which was less than expected) and wholesale inventories rose +US$17 bln, which was more than expected. Both suggest their excess inventory problems are not easing.
American exports rose +9.9% year-on-year to October, but imports rose +12.4% on the same basis, pushing their merchandise trade deficit out to -$99 bln for the month.
Meanwhile the widely-watched Chicago PMI from their industrial heartland retreated rather sharply in November and by much more than expected. Apart from the 2020 pandemic shock, it is now at its weakest since the GFC.
This, and the expected US Fed Beige Book survey for November which is due out soon, are all expected to confirm that the Fed's rate hikes are having the desired effect of cooling the giant American economy. Chairman Powell acknowledged as much in a speech today, signaling that the heavy lifting is over for a while and that rate hikes from here will be more moderate and less frequent.
Across the Pacific, China's factories are slowing quickly now. The official PMI records a sharpening contraction, and that is compounded by a similar sharper contraction in their services sector. And it is unlikely to improve anytime soon. People in the Chinese city of Guangzhou clashed with riot police as authorities investigated more of those who have taken part in a string of protests against their pandemic restrictions.
In India, there are definite signs of slowdown there too, although to be fair the pace of their expansion is still good, just not as good as it was earlier in the year. India has an inflation problem too, and that risks social pressures.
In the EU overall inflation is easing back, now at 10% in November and down from a record high of 10.6% in October. Market were forecasting 10.4% so this is an undershoot (although few Europeans would feel like that).
In Germany, their November employment data came in better than expected with rising employment levels and a jobless rate of only 3.0%. Germany certainly has its issues but their labour market is not one of them.
The UST 10yr yield starts today at 3.77% and up +4 bps. The UST 2-10 rate curve is little-changed again at -75 bps. And their 1-5 curve has stayed inverted at -83 bps even if a bit less, and their 30 day-10yr curve is still inverted but also less at -22 bps. The Australian ten year bond is down -5 bps at 3.58%. The China Govt ten year bond is up another +1 bp at 2.93% and a new 14 month high. And the New Zealand Govt ten year will start today unchanged at 4.12%.
Wall Street has opened its Wednesday session softish, with the S&P500 down -0.2%. Overnight European markets all closed up about +1.0% except Frankfurt which was up +0.4%. Yesterday, Tokyo ended down -0.2%. Hong Kong zoomed higher again, up another +2.2% while Shanghai closed little-changed. The ASX200 ended its Wednesday session up +0.4%, while the NZX50 ended up +1.4% with a very late surge.
The price of gold will open today little-changed at US$1753/oz.
And oil prices start today up another +US$1.50 from this time yesterday at just over US$80/bbl in the US while the international Brent price is up much less at just over US$86.50/bbl.
The Kiwi dollar will open today at 62.4 USc, and up almost +½c since this time yesterday. Against the Australian dollar we are firm at 92.8 AUc. Against the euro we are also up +½c at 60.4 euro cents. That all means our TWI-5 starts today at 71.5 and up +50 bps from this time yesterday.
The bitcoin price is now at US$16,851 and up +2.7% from this time yesterday. Volatility over the past 24 hours has moderate at just +/- 2.2%. Meanwhile, the ECB said bitcoin is being artificially propped up and should not be legitimised by regulators or financial companies as it is more akin to gambling.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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96 Comments
The ECB is the pot calling the kettle black.
... ahhh , sorry Brock , but we can't say " black " anymore , that's deemed to be inappropriate ... hate speech laws , you see ... we'll edit in " dusky " instead ... ... and , a second thing , the tone of the quote is bullying , " pot calls kettle " ... definitely bullying , so we'll swap that out with a less aggressive narrative .... how's this work for you :
" The ECB is the pot saying kia ora to the dusky kettle . "
Have you considered the diversity of cooking vessels in OW-TEH-ROWA before making your bigoted euro-centric colonialist statements?
We can only have an inclusive and equitable society when the wok kia ora's the yellow hangi stone.
No GBH is just spouting and for that there is both precedent & common approval from parliament, from the Prime Minister down.
Boomer circle jerk. Gotta love the calibre of the posts here.
Agree & apologise. The attempted humour is definitely too laboured.
I'll establish a working group to formulate the framework for a team of consultants who will thence study the diverse parameters at play here ... it's complex , you see ... and get back to you with an apology if they deem it appropriate to do so and if it doesn't impinge upon the spirit of the Treaty of Waitangi ...
@Greg Ninness, @David Chaston - isn't this exactly the kind of thing you were talking about the other day when you mentioned improving the tone of this comment section? Can we please see you put your money where your mouth is & kick these low-effort commenters to the curb?
... being a bit hard on my buddies Foxy & Brocky , fella ... have a Gummy Bear ... relax , destress ... they're good guys , really ...
You're on form today GBH - nice laugh to start the day (sad but true).
I quite like some of the humour exhibited by most on the site. Don't like when it degenerates into personal slagging because someone has been too precious, but as most who contribute seem to be at the high end of the intelligence spectrum they are capable of some very good levels of cynical humour. Just don't make it personal! Oh and most of us just need to vent on occasion, plus GBH's comments are just that, an attempt at cynical humour.
New Zealand has an aging population and many of them are choosing to work longer and later. I'd have liked to hear what Orr and his team had to say on the trends he is seeing in the labour market of New Zealand and what dat he is using.
Instead we received a report on Super, pointing out Woman and Maori have less in savings.
Posted in error sorry
Tane Mahuta swayed ever so slightly , a small branch shook ... apology accepted !
Good Morning from #Germany, where supermarket prices keep rising. German Food CPI jumped 21% YoY in Nov, the highest food price #inflation since the start of the statistic & way higher than in other Eurozone countries. In #Italy, food inflation is just 14% & in #Spain 16%. Link
Just had a service provider (small business, am not naming or giving any other information) up their fees again, taking their total price increases for the last 6 months to +50%. I hope for their sake it's due to excess demand, and not profiteering or [gulp] increased mortgage payments - we will miss their service, but it was an optional luxury that was both convenient and inconvenient to use. Being treated like a money pinata swayed the balance to more inconvenient than convenient, so we'll no longer be using it.
Ye gods, I hope it's not because they are backed by a mortgage...
Chaos A lot of small business put loans on the house during covid.
Had a haircut last week in Hastings. The owner of the barbers store put prices up another $3 for a haircut - after he had increased prices $3 a few months back. When I asked him why, he said, "All businesses are putting prices up so I don't see why I shouldn't." I told him he was taking the piss at $38 for a basic haircut and he looked at me like I had said something totally profound. Before Covid it was $26 and I always felt that was a bit pricey. $38 for a basic haircut in Hastings (not a wealthy place by any means)....things are getting a bit crazy.
$50 in Auckland. I used to get a haircut every month, now every 6-8 weeks.
... mine charges $ 20 ... but it's all over in 5 minutes ...
Cheap for me , and a rate of $ 240 per hour for her : hair hair ! ...
$10 in Rotorua and Tokoroa. People need to think about where they are living.
I used to pay $25-30 in central Auckland, but in recent times my wife has gotten rather good at it with the clippers so I haven't had to go back.
Shaving one's own head remains inflation-proof as long as the clippers still work.
My hand me down Wahl clippers finally gave up after approx 20 years of service (for me). Ended up getting some cheapies from the supermarket of all places for $20. A year down the track and they're still hanging in there.
I have a cheap pair, does the job okay. Considering upgrading to a set of Wahl clippers.
Can anyone confirm if a better quality set of clippers actually cuts better, particularly with thick hair. Don't want to waste my money if there's no discernable difference in the cutting experience.
I've always cut my own hair and recently bought a cordless Remington hair clipper. Best one ever.
LOL. I miss my barber in Hamilton - $13 every time. Only allowed me to pay extra after the lockdown ended, but then refused afterwards.
Every other barber I've been to in the last couple of years has charged me whatever they felt like for the same haircut - they seem to make it up as they go along. One charged me 5 different prices over 5 visits, varying from $16 up to $55 - the hair cut never changed. Same story in Auckland.
I bought my own clippers for $29.
My wife & I had the same hairdresser for over 25 years; price is now increased to $15 for me. She works from home or with some notice she makes house calls ;)
Covid has really hurt the industry speaking from experience. Being shutdown during lockdowns and still paying rent, bills etc etc wasn't fun. Then ever since reopening its a double whammy when staff are maxing out on sick leave and clients cancel last minute from illness.. still gotta pay those staff! I'd say every SME in the country has faced increased costs of doing business. Id like to tell my insurance company the latest premium increase is taking the piss but hey look around they are just another business trying to keep on keeping on in the current environment.
sick leave pay has been substantial as lots of staff have been paid for period greater than their contract
I see that being paid for sick leave is one of the demands of the Rail employees in USA who are going to strike - I was surprised it wasnt already included
Any business that increases their fees by 50% must be incredibly confident as to their unique selling point and lack of competitors. Otherwise customers will walk. Let them live or die on their decision. Unfortunately I cannot do this in many industry sectors here in NZ. For example Supermarkets or Builders that have priced gouged heavily in the last 18-24 months. Commerce Commission......Yeah, right.
I just had a plumber charge a $75 vehicle callout fee as part of his invoice when he lives 4 houses down the road and dropped in on the way home.
Thought that was interesting. Didn't quibble (maybe times are tough) but I can imagine use of fees like that in barely justifiable circumstances will come under pressure soon.
I have just come back from Italy, I found food and drink prices very cheap compared to here and the quality so much better.
Yield curve inversion reaches new extremes: US 10y yields have fallen further below those on short-term bonds than at any time in decades https://wsj.com/articles/yield Link
Forward Treasury rates nailed the Fed's early '19 pause and eventual rate cuts before even the Fed figured it all out. https://youtube.com/watch?v=huu1NX Link
Even back in '06, the Fed's final rate hike that cycle was predated by inversion in the forward 2-year rate. Track record here is far more enviable than any of the FOMC's, especially in the context of everything else going on at the same time(s). Link
"This ECB Blog post appeared as an opinion piece in Handelsblatt. The views expressed in each blog entry are those of the author(s) and do not necessarily represent the views of the European Central Bank and the Eurosystem."
Now going future.... Inflation should start easing, unemployment rising and economy softening, If not, due to surplus cash in economy despite OCR going up than we are looking at worse than disaster scenario in 2023.
There's surplus cash around but it's not evenly distributed.
It'll be used to pick through the bones of what remains.
https://www.barfoot.co.nz/property/residential/rodney-district/orewa/house/840596
136 West Hoe Heights, Orewa
SOLD for $1,235,000 CV was $1,425,000
a 13.3% discount to CV last sold 2002 for $332,000
One roof est Low $1,320,000 est $1,490,000
https://www.barfoot.co.nz/property/residential/north-shore-city/devonpo…
26B Seabreeze road narrowneck
SOLD for $2,350,000 CV was $2.325,000
a 1% premium over CV last sold 2009 for $960
One roof est Low $1,925,000 est $2,135,000 high $2,350,000
https://www.barfoot.co.nz/property/residential/rodney-district/orewa/ho…
70 Riverside Road,Orewa
SOLD for $1,035,000 CV was $945,000
a 9.5% premium to CV last sold 2000 $215,000
One roof est Low $805,000 est $930,000 high $1,090,000
https://www.barfoot.co.nz/property/residential/auckland-city/greenlane/…
3/193 Great South Road,Greenlane
SOLD for $1,325,000 CV was $1,650,000
a 19% discount to CV last sold 2012 $740,000
One roof est Low $1,355,000 est $1,535,000 high $1,710,000
https://www.barfoot.co.nz/property/residential/auckland-city/mt-welling…
51A hamlin rd mt wellington
SOLD for $950,000 CV was $1150,000
a 17% discount to CV last sold 2013 $523,599
One roof est Low $895,000 est $990,000 high $1,090,000
Those are some very large profits for the vendors there
Yes, but some have taken a long time to get it. Be interesting to see if things move back towards 2010 prices as discussed yesterday. They start to look quite affordable. Certainly looks like 2017 prices are on the way.
I've been checking in on some places around Wellington which now have a BEO lower than what they bought for in 2017/2018. Have been on the market for months. One in particular is BEO of 10k below what was paid in 2017. Was up for rent for a number of weeks before being listed for sale in August. Not moving...
Depends on your definition of "profit".
It's still the same house, it has the same utility value, it's the same relative worth compared to its neighbours or other suburbs, cities.
Money $ is just the medium of exchange in this example, it could have been exchanged for eg shares, gold, a car or boat. Asset prices go up (& recently down) for a range of wider economic circumstances mostly out of the homeowners control.
Monetary price inflation really reflects the devaluation (*) of money as a medium of exchange, not profit.
(*) edit: driven by the increased $ amount in circulation since the GFC + Covid / # assets
Thanks IT GUY, that list took a bit of time to produce. Really good to see real time examples.
shame it was deleted from the other stream as promotional material, I cannot see why, I do not work for barfoots
Nearly all my comments get deleted from Greg's articles. Seriously pondering cancelling my Press Patron contribution now as even innocuous comments are deleted.
Your comments are too meaty perhaps?
Zach - Every comment I post to gregs articles theat mentions any analysis of BF auction process results etc gets deleted today. Barfoots must be advertising enough with Interest that they have a bit of say. I suspect BF are very scared that nothing is selling its going to have a massive bottom line impact.
This is such a bad look as greg is often well late to delete the comments, meaning everyone knows how biased he is being.
maybe its time to post this stuff on twitter - elon values free speach.
David is either relaxed of down at the pub.
There is still equity there to be banked. Prices will continue falling while it can still be banked by those with reason to sell (reduced exposure perhaps). A lot different to Nov-21 now that buyers are in retreat.
How much equity will remain in Nov-23?
I see snake oil Tony is out with his latest schlock.
https://www.nzherald.co.nz/business/continuous-disclosure-think-mortgag…
He has decided that reading The Scrolls might be more accurate than his usual spruiker talking points.
9.5% is only a day late and a dollar short.
Worst Property Commentator Ever
The curly comb-over isn't the worst property commentator ever ... St Ashley of the Property Church has that title , surely ....
Church tries to blind us with religion and drama.
Combover Tony tries to blind us with pseudo-science and waffle.
https://www.newshub.co.nz/home/money/2022/12/property-prices-continue-d…
It says Auckland is sitting at 1.36 Million.......wow.....still a lot to fall before it becomes affordable.
Plug 1.36 million into SE Queensland and weep at what you get for your money in comparison.
Keep in mind that QLD realestate adverts use a 'listing price' to entice buyers, the actual selling price is usually 20% - 30% higher. But yes, a QLD listing price of 1M that would probably sell at 1.3M is a very nice house.
Edit: and don't forget exchange rate 1.1 NZD ~ 1 AUD
That's not true. Houses generally sell reasonably close to asking price. Perhaps even under in the current market.
Any ambiguity can be avoided by examining recently sold prices.
My comments are based on the actual experience my kids had in Brisbane this year. If you read my second sentence, I am actually agreeing with you:
that would probably sell at 1.3M is a very nice house.
There was a short period of sillyness where I expect some of that kind of thing was happening on occasion.
But as a general rule not really. As a vendor you'd be lucky to even get the asking price at the moment.
Twocents , Edit#2 , and don't forget Selling costs,moving costs,stamp duty costs,and accomodation rental costs while you settle in ,find something to buy and wait for settlement.Better get a 1.6mill sale to aim for a 1.3 mill purchase in oz.
Laughable. 😂
In how many different ways do you want to be laughed at ,Brockie? You give good cause for genuine derision,everyday.
I'm not the one holding a straight face and claiming it costs 200-300k to move from NZ to Australia, champ.
Laughable 😂
If you feel that way, please don't hesitate to call the fun police.
Yahoo Finance news "Stocks jump as Fed chair Powell signals slowing interest rates". Up 1.6 percent and over 2 percent intra day
Precisely what I have been saying. Dont be fooled by the doomsters
Nice, more green shoots. Are you implying doomsters are viewing this all wrong and a downturn will now be avoided?
Good moaning...👍
by HW2 | 1st Dec 22, 10:16am 1669843019
Good moaning...👍
I will credit you for being more respectful this time. I had anticipated another deflection of a perfectly good question, and that's precisely what I got. Maybe next time will be different and verifiable facts will accompany such posts???
by HW2 | 1st Dec 22, 10:16am 1669843019
Good moaning...👍
Might be time for another warning from the moderators about the required level of comments on these forums.
Good to see you're expanding your horizons beyond the NZ housing market only there HW2.
Check out this chart - it is the 2/10 yield showing a deep inversion.
It hasn't been this inverted in the last 30 years (drag the chart out to see the whole history)
It has predicted nearly every recession and drop in the share market over the past 50 years.
Bet against this at your risk.
You dont know much about me IO...
US 10 year treasury is off 15 percent from its peak.
Btw I do not like to bet
"You dont know much about me IO...
US 10 year treasury is off 15 percent from its peak.
Btw I do not like to bet"
You mean "I don't think that I like to bet".
And yet that you hold a large position against the housing market (with multiple rentals) at present, that tells me that you do like to bet.
As Taleb put it - don't tell me what you think, show me what is in your portfolio.
Haha you are funny. Perhaps stick to the topic
I will just add, more people die in bed than anywhere else, it is better to be active
... who's bed ? ... what're they up to , prior to dying ? ... ... sounds like a great time ...
The old guy who owned the Swashbucklers bar in AKL went that way, smile on his face until the end... or shortly before the actual end.
"Haha you are funny. Perhaps stick to the topic"
It is the topic, but perhaps you can't connect the dots (yet).
It depends which dots IO ..... its funny how my dots always win 👍so let's get back to the topics do jour other than landlord bashing
"US 10 year treasury is off 15 percent from its peak"
I don't think you understand - the 10 year is inverted below other yields, including the Fed fund rate.
This means the market believes the future is going to be worse than the present.
Being long on assets when the market thinks the future is going to be worse than the present is very risky.
Being long on assets when the market thinks the future is going to be worse than the present is very risky.
I guess you think that I am a trader. Time the entry, or get an eye for a bargain, and the rest falls into place. Or it should do except there will be some really stupid owners who manage to muck it up. Amokk aka IO was telling me to read the FB posts of the johnny come latelys. I have seen it before dont worry
IO, do you think the US sharemarket has priced in a recession? It seems to me it is knee jerking up at any positive signal. Genuine question as I rate your contributions on here.
Yield curve is still telling us that it thinks the future is going to be worse than the present - so no I don't think the share market has bottomed if that is what you mean by pricing in a recession.
Thanks and yes that's exactly what I meant.
Increases are still increases - its a bit early to break out the champagne yet. Powell also said he expects it to go somewhat higher than forecast in September.
And that point of inflection may not be any time soon.
Meanwhile, the ECB said bitcoin is being artificially propped up and should not be legitimised by regulators or financial companies as it is more akin to gambling
On the contrary. With the fall of FTX and other deregulated exchanges / rehypothecation 'solutions', the BTC price is not being "propped up" at all. The tourists and degenerates have largely been washed away. Furthermore, not a week goes by without another tradfi annoucement related to ol' ratty and / or digital assets.
Institution presiding over repeated debt crisis for the same members over and over again tries to convince everyone system they can't manipulate is bad.
Institution presiding over repeated debt crisis for the same members over and over again tries to convince everyone system they can't manipulate is bad.
I don't understand the Europeans at times. Christine Lagarde preaches to them about why it's necessary for them to continue to live under the bureaucratic yolk. She's single handedly an important contributor to the revenues of Louis Vuitton, And a convicted crook. Why would anyone listen to her? What value does she bring?
Has Orr overtightened? And is he in danger of tightening for too long.
Watching the New Zealand Labour market the conclusion appears we continue to have labour shortages, there are clear signal in the Ag industry a response of labour replacement technology accelerating, and finally we are seeing New Zealand at the point of people saying they need higher wages. The new Health boards are again refusing to give the Nurses the years long catch up they are owed and the last negoitiation is now historical and they are due to begin the next round. Just in this sector expect to see many Nurses leave New Zealand. Their beef on wages is a valid one and as I was told what we are seeing with Little and this government no recogntion of experience qualification of senior staff and the the Govt creating a situation where young staff are paid at the same level as their seniors. It is now the same in the Supermarket sector.
We are normalising interest rates.
My view is that we had rates that were too loose for too long.
Not that we are overtightening now.
I beg to differ on whether Orr is or is not overtightening. When the two year inverted to the levels we are seeing I am off the opinion it was the trigger to slow down. What does Adrian want? MZM.
Without doubt Little is The Worst Health Minister Ever in NZ, I cannot believe that nurses are having to show ED patients flash cards with his email address and mobile number on to complain to. The fact that he still maintains there is No Health Crisis is distracting from the actual HEALTH CRISIS. The entire health industry - normally strongly left leaning and Labour voting has lost faith in the Minister. I acknowledge that Health was not all roses five years ago, but to waste money settling up a seperate Maori Health board while there is actually a CRISIS in delivery of core health services is political madness.
That is the salient point alright. True the ills in the health sector commenced long before this government. True a carefully designed restructure might well be meritorious provided the overall outcome(s) had been strategised and were cost and efficiency effective. But not true and wise administration to embark on that in the midst of a pandemic as a priority over bolstering the front line facilities, the clinical and associated staff already working under tremendous pressure. It is difficult to imagine how a government could commit to such a counterproductive and unbalanced initiative.
It seems like such a missed opportunity from Little too. He should've said straight out "Damn right, health is at a crisis point. It has been underfunded and had to face cuts for so long that it's a very hard road back." His big mistake was trying to pretend there's no long-term crisis to dig it out from.
It was only 2016, just six years back, when National's Jonathan Coleman (nicknamed "Dr Death" by some in the sector) was cutting the health budget even as the population aged. https://www.newstalkzb.co.nz/news/health/jobs-first-to-go-as-govt-deman… Now we're seeing people struggling to deal with the limits of access to care that long-term underinvestment in health has wrought.
Perhaps some assumed when they voted that they'd always be able to afford private health insurance, and now they're finding they can't...
Notwithstanding whatever less than helpful problems or failures have occurred within the current (albeit, likely necessary) restructuring. That's on those doing it.
Antagonising all of that is the fact that it is far from an attractive work environment, largely because it simply isn’t safe. Those at the front line of emergency services, health, clinicians & associated, fire fighting, ambulance and of course police can have their personal safety threatened on any given moment. Have recently been in the Christchurch Emergency unfortunately, it is not a good environment for staff and vulnerable patients.
"The entire health industry - normally strongly left leaning and Labour voting has lost faith in the Minister."
Bold claim, the entire health industry! Based on comments on this site Labour will be lucky to get more than a couple of hundred votes next year and National will be strolling home with a supermajority.
"The entire health industry"
You've spoken to all involved?
Recast Investor ( Australia ) have published an article on My Food Bag ... and wondered how could the NZ media give the company a " free pass " when it listed at $ 1.85 last year , and all the insiders bailed out ... just 15 % of IPO funds went into MGB ... 85 % went into My Money Bag as Nadia & co scarpered ...
... since then , $ 330 million of investor's capital has been lost ... and the share languishes at 41 cents ...
Any comment , Ms Lim ?
On the history of that suggest the company name should have been - My Fool Bag.
Anyone who bought into that IPO might be excused for feeling a little ripped off...
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