Here's our summary of key economic events overnight that affect New Zealand, with news 'good news' on the economic front is being viewed as 'bad' for investors.
First in the US, the widely-watched ISM services PMI rose to record a healthy expansion, and by more than expected. New orders and employment both improved in a clear sign the giant American economy doesn't seem to be heading for a slowdown yet. (But to counter than enthusiasm, their internationally-benchmarked Markit services PMI is recoding a small contraction, something it has done for 4 straight months now.)
But supporting the ISM view, American factory orders rose in October and by more than expected, and rose at a much faster pace than they did in September. It was their biggest rise in four months and they were more than +11% higher than year-ago levels, so more than inflation is at play here.
These improvements are confusing equity and bond markets. After last week's Powell guidance, markets had expected data to support the Fed's idea that the expansion pressures were waning and the central bank could ease back on their rate hikes. But this latest data is very expansionary and keeps the pressure on. The next Fed decision is doe on December 15 (NZT).
In Canada, they did expect a bounce-back in housing consents issued in October - but it didn't arrive. The fall-off was less than for September, but it was still a fall away.
In China, more big tier 1 cities are easing pandemic restrictions. There is clearly a revised approach to pandemic control underway there, and it comes as case numbers rise sharply. China faces only bad options having missed some good options by dismissing Western vaccines.
And those bad options are playing out in their economy; their services sector recorded a terrible November PMI, much worse than the official view. And car dealers report that their inventory levels are sharply higher.
Japan is in a much better state, even if their minor service sector expansion disappeared in November.
And India is in an even better state still, with their services sector expanding at about the same pace as the US.
In the EU, retail sales were slightly weaker than expected in October, their lowest in 10 months and dipping more than expected. Recession worries there are rising, and this data isn't helping.
In Australia, they reported that company profits fell an unexpected -12% in Q3-2022 from Q2, missing market expectations of a small growth, and following an upwardly revised +7.8% rise in Q2. This was the first decline in company profits since the fourth quarter of 2020, amid falling commodity prices. Inventories rose almost +8%.
And Australia's service sector contracted again in November, reinforcing the overall dour business mood there. Their construction sector is still contracting too, but less so in November than in October. Only their factory sector is showing any expansion.
The Reserve Bank of Australia reviews its rates again today, and another +25 bps riser is anticipated. They will next review again in February when a further +25 bps is likely too. To they will have raised rates by +50 bps at least in between the RBNZ reviews. In February, the RBA will then be at 3.35% and closing the gap on the RBNZ's 4.25%
The UST 10yr yield starts today at 3.59% and up +10 bps from this time yesterday. The UST 2-10 rate curve is unchanged an inverted at -79 bps. And their 1-5 curve is less inverted at -98 bps, while their 30 day-10yr curve is a lot less inverted at -23 bps. The Australian ten year bond is up +4 bps at 3.38%. The China Govt ten year bond is up +2 bps at 2.94%. And the New Zealand Govt ten year will start today down -2 bps at 4.01%.
On Wall Street, the S&P500 has started its Monday session down -1.5% on the fears of further large US Fed rate hikes. Overnight, European markets ended about -0.5% lower although the exception was London which was up +0.3%. Tokyo ended yesterday up +0.2%. Hong Kong has continued its giddy run, up a massive +4.5% yesterday. Shanghai was up a strong +1.8% too. The ASX200 ended its Monday session up +0.3% and the NZX50 was also up +0.3%.
The price of gold will open today up at US$1772/oz and down -US$25.
And oil prices start today down -US$1 from this time yesterday at just on US$79/bbl in the US while the international Brent price is down to just over US$84.50/bbl. China is reducing petrol prices.
The Kiwi dollar will open today at 63.1 USc, and down a full -1c from this time yesterday. Against the Australian dollar we are -½c softer at 93.9 AUc. Against the euro we are at 60.1 euro cents and down more than -¾c. That all means our TWI-5 starts today at 71.6 and back to where it was in the middle of last week.
The bitcoin price is now at US$17,036 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has modest at just +/- 1.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
81 Comments
David, if western vaccines are so wonderful then perhaps take a closer look at the all cause death rate in NZ. I've had one Dr of Science state he has seen the data & it is running 17% higher than the long run average.
What is that going to do to housing demand? It is certainly economically news worthy if true. General public don't have access to that data, doesn't seem people are willing to ask a question they don't want the answer to.
Israel apparently has some safety data that makes the vax questionable.
Europe has timely updates on excess mortality with much better statistics than NZs small population could produce - if the vaccine is an issue I'd expect the same kind of problems over there. Looks pretty consistent with heaps of people dying from Covid over the last few years, at first glance. Big spikes corresponding with disease waves, particularly pronounced in older age groups. Now all settling back to normal range. 0-14 year old excess deaths barely changed the whole time as Covid didn't really affect them, for the most part.
https://www.euromomo.eu/graphs-and-maps/
NZ cumulative excess mortality since the beginning of the pandemic is still negative.
The reason there have been more deaths recently, I suspect, is that we're catching up on the flu deaths deferred by lockdowns.
https://ourworldindata.org/grapher/cumulative-excess-mortality-p-scores…
All the information is in the spreadsheet here Births and deaths: Year ended March 2022 | Stats NZ
You will see a generally increasing death rate up to 2019 due to ageing population then a drop in 2020 due to lockdowns followed by 2021 getting back to 2019 rates. There is also an expected catch-up effect which can be seen if you look at the 70+ rates.
Any comparisons to 2020 will show rises due to the low rates that year. Overseas comparisons are not valid with strong lockdowns in NZ isolating us from COVID deaths in 2020 unlike other countries like the UK or US.
StatsNZ have it running at 10% above normal. Typical increase in death over the past decade was 1.4%. Scarfie is correct more people are dying. For whatever reason the MSM and politicians, who were rabid about death last year, now won't go near it - even though there is more of it. Ayesha Verrall was giving them a 9-10/10 for covid response on red radio last evening so I guess they have a very low level of interest.
"In the year ended September 2022 compared with the year ended September 2021 there were 38,052 deaths registered, up from 34,578.
...The increase in deaths in the June 2022 year (9.7 percent) was higher than the average annual increase over the previous decade (1.4 percent)."
https://www.stats.govt.nz/information-releases/births-and-deaths-year-e…
Changes in mortality can have many causes. Covid-19 being an obvious one and reducing access to medical assistance / early diagnosis because of lockdowns being another. There are two others that are being obscured by Covid: increased consumption of over-processed food; this is mainly by younger people so the effect is delayed - expect increased diabetes and heart problems. The other is reduction in sleep caused by mobile social media, Netflix, etc. Speaking from experience this affects the elderly. Certainly reduced and disturbed sleep correlate with increased mortality; it does so roughly to the same effect as regular smoking. It is difficult to say whether all the diseases that cause death also disturb your sleep patterns or vice versa. Regular patterns of sleep are common to all mammals - disturbing those patterns is taking a risk.
You are comparing the % increase from an artificially low base (due to lockdowns) so of course the % increase is going to be higher when we go back to normal conditions. If you were saying that death rates had gone up 10% from 2019 figures you might have something, but otherwise you are actually just saying how effective the lockdowns were...
Changes in sleep have occurred recently - I take my laptop to bed and my wife her mobile phone and we didn't three years ago and I doubt we are that unusual. Ten years ago the low quality of NZ TV drove sane people to bed mid-evening but now there are half a dozen suppliers of quality binge-worthy TV keeping us awake all night. Add improved addictive gaming. The figures from the US pre-date Covid and indicate a slight drop in average lifespan. Medicine has been adding 2 years to lifespan every decade (or two months every year) and has been doing so most of my life. Supported by personal experience - I'm alive because of improved blood pressure treatment and my wife because of improved chemotherapy. So death by pizza and self-imposed sleep deprivation may be masked by improved medicine.
I'm alive because of improved diet, more exercise and more sunlight (personal experience). Life expectancy has dropped in the USA since 2014. Western world medicine? You prevent disease, western world medicine cannot cure disease and never will, as displayed by their hideous mRNA vaccine, that produced more adverse reactions, than deaths.
Causation or Correlation, that answer will be in the data, which we cannot see......
I find it hard to believe that a 17% jump (if correct) is health care related, how many standard deviations is that from the expected death rates? I assume the data is banded into age brackets. If its all in the elderly , this shows how good lockdowns where..... at preventing death in this group, covid deaths starting to mount up in NZ, included in that number is my own father-in-law.
As in most things, yes even Barfoot auction results from last Saturday, the data will show us whats happening. The rest is fluff.
Thanks re Father-in-law.
Crime, Poverty and now covid data, all our problems are Complex under Labour..... I agree but there are some smart people out here. Perhaps its mental health, whatever it is I cannot see any good reasons for not releasing this type of data, lets drop the last 15 years into the public domain....
Nothing shuts down conspiracies like real data does.... or not.
I would like to see some real data on the difference in mortality of Delta vs Omnicron as well. We had a lot of people with Delta in the MIQ facilities, how many died? from memory only 1?
Could be anything or a combination of things IT Guy
1) Stretched healthcare system
2) Vaccine doesn't work very well beyond the short term and people are not getting enough boosters to maintain good immunity
3) Closing the border for 2 years created a "immunological naivety" issue in NZ where people went to long without catching common colds, flu etc. This meant that when they did catch colds, flu's in 2022, these new variants were too far evolved from their ancestors and immune systems among the old and weak struggled.
4) Lots of delayed diagnoses of cancer etc. Cancers that would have been caught early with in person doctors checks were missed by the zoom call doctor check. When these cancers were finally found they were advanced too far to be treatable. Also delays in cancer/other treatments due to level 3/4 lockdowns.
5) Lower levels of flu/colds in 2020/2021 due to lockdown's meant that people who should have passed in 2020/2021 from the flu. Basically got their stay extended till 2022. This creates a higher death rate in 2022 relative to 2020/2021. What I am saying is the issue is more that 2020/2021 numbers are artificially low due to lockdown's & 2022 is the catch up year.
I'd say it's 5)
It can clearly be seen on the graphs
https://ourworldindata.org/grapher/excess-mortality-p-scores-projected-…
In my service at least, and I believe it's the same in others, we did not pause cancer treatments in lockdowns for any cases where time is a factor. We treated right through all lockdowns.
I suspect you're right about slow/missed diagnosis, but I don't have any particular insight into that.
You can't change a conspiracy theorist's mind with data and logic. Their identity is normally tied up with the conspiracy community so they will go to extremes to justify their position even in the face of 9verwhelming evidence.
Fantastic podcast here explaining how conspiracy theorists mind works
https://www.pushkin.fm/podcasts/cautionary-tales/cautionary-conversatio…
You cannot change a conspiracy theorist's mind when he travelled around the USA and seen hospitals empty (apart from obese diabetics on respirators, CNN), no unusual deaths, lots of FEMA sponsored funerals where everyone apparently died of Covid and hospitals paid for anyone with the sniffles, respirators encouraged (more $$$). The experts went to extremes to justify their position's even in the face of overwhelming evidence, that the mRNA vaccines did not work (didn't stop transmission or infection), and people only die with co-morbidities. Sometimes the data and logic doesn't reflect the reality.
Yea agree, I was implying that we don’t know the cause of the increase so could choose to pin it on any number of factors: healthcare, vaccines, trust in healthcare (or lack of). Apologies if it didn’t read that way.
We had lower all causes rate during lockdowns didn’t we? So could also be a lagging factor.
Sorry to hear about your FIL
Yes agree on the lag, but only if its in the higher age bracket or we can trace a direct impact of delayed cancer treatment etc.
I am no anti vaxer, I was vaxed, but I was pro choice... We where told it would protect weak in the community, but it turns out being vaxed does not stop you spreading covid.... So it doesn't help the weak in the community ....
We where sold a crock. The enquiry needs to examine the messaging. The head on Newstalk said they would look at this and the 1pm gospel services.
My favourites where the ones we had to wait 15 mins for the numbers, First we had to all sing "How great our lord Labour ", followed by a brief tour through our holiness JA diary. On Monday I will be in Taranaki, On Tueday in Dannevirke etc (Note she never went to Auckland.......)
Least we forget the POINTLESS Auckland Lockdowns.
IMO the covid vaccine never really stacked up. Interestingly, now that we have had time to go through more stages of clinical testing, it appears that the actual science (and real world results) are backing this. It neither reduces transmission, nor improves long term outcomes. The ultimate determination for outcome appears to be (and always was) age and co-morbidities.
As for the rest of the response. I was ok for the original lockdown (and believe the borders should have been shut tighter (i.e. no ins/outs). However once it was clear (may/june 2020) that the virus was really not that bad for 90% of the population we should have just gone back to normal.
The mandates, trackers, sermons ("knocking on the door of the unvaccinated") were disgusting and wrong.
Given the scope of the commission, I can't see it having any meaningful impact, let alone actual accountability/punishments for those in charge. Which is disappointing, given the numerous instances that mandates, lockdowns, and other responses deemed illegal by the courts. Then we have the whole protest response. Mallard should be imprisoned.
NZ year to date all causes of death 2022 week 1 to week 45(inc) by age group.
https://twitter.com/Thoughtfulnz/status/1598046988784009216/photo/1
You're obviously confused. Data doesn't matter anymore.
If something comes from "us", or "we" do it, then it's good by definition. If it comes from "them", or "they" do it, then it's bad. That's all you need to know.
Lockdowns, vaccines, zero-covid strategy, censorship, foreign policy, the same rule applies to everything. The world becomes much easier to understand when you don't have to think about it.
These improvements are confusing equity and bond markets.
Not just Est Survey v HH Survey, the divergence btw the unemployment rate and the participation rate is back in a big way. Since the Fed got embarrassed the lats time this happened just a few years ago, there's a lesson here. Maybe Powell & co remember. https://youtube.com/watch?v=zzpVW2
Payrolls like Jay Powell are boxed in by employment.
There's a battle going on with the labor market data, an unprecedented divergence in statistics. CES or the Establishment Survey suggests one thing about the economy while more and more evidence across the CPS aligns directly against it. The timing couldn't be more inconvenient, implications just massive given where we are. Will policymakers allow themselves to be imprisoned with the one, or have they given more consideration to the other already? Link
https://www.washingtonpost.com/business/its-the-65-trillion-in-debt-you…
Sixty-five trillion dollars is a not big number: It’s a huge, barely comprehensible number. It’s more than 2 1/2 times the size of the entire US Treasury market, the world’s biggest. It’s 14% of the value of all financial assets globally, according to a tally from the Bank for International Settlements.
It’s also the value of hidden dollar debt unrecorded on the balance sheets of non-US banks and shadow banks as of June this year, also according to the BIS, the central bankers’ central bank. It has been growing rapidly, having nearly doubled since 2008.
Which, depending on your documentation, can be worse than it seems.
You can have a fully offset counterparty risk ie: I have contracts for $X with party A and they that same $X with me; $zero net difference. But if A 'goes down' I may have to fully settle my $X and then stand in line as a creditor for whatever I might get from A's resolution
Original article - Dollar debt in FX swaps and forwards: huge, missing and growing
From the above link:
Greater Fools are soon wiped out and then there's nobody left who's dumb enough to buy assets that are in freefall and still far above any financially prudent valuation. The magic circle reverses, and as valuations fall, collateral shrinks and credit collapses. Lenders who greedily reckoned valuations and thus collateral would rise forever are stuck with life-changing losses--along with all the punters who built shanties of credit and leverage they mistakenly viewed as permanent palaces.
In making the economy dependent on the financial sorcery of self-reinforcing credit-asset bubbles, central banks and all the greed-crazed punters who participated have guaranteed a self-reinforcing death spiral as the "virtuous" self-reinforcing wealth-creation machine reverses into a self-reinforcing wealth-destruction machine.
Great read, thanks for the link Audaxes
David, it is not a vaccine. This clinical trial on Team NZ (Pfizer experiment) is still in progress and government seem to be hiding all cause death data. Every death should be reported as being vaccinated or unvaccinated as any clinical trial would do. Perhaps their science does not fit the 'experts' agenda. Transparency is non-existent and you have to wonder why?
Why are they hard to reach Minister?
Because they Are Hard to Reach!
https://www.stuff.co.nz/national/300440044/officials-slient-on-why-waik…
Gangs do not talk or narc, hard to reach.
Labour Soft on Crime.
Because it was a novel virus. No one had immunity. And it killed. And no one knew how it would evolve. Those not immunised in a public role were a danger to others. We had to wait until we had a form f herd immunity via vaccine. Like most vaccines, the Pfizer jab would reduce the severity of the disease and save many lives.
Those not immunized in a public role were a danger to others? Herd immunity works better, certainly in the long run, by natural infection. I had great immunity, I choose a good diet, exercise and sunlight instead of an unproven mRNA injection forced on the public by a pharmaceutical company, immune from liability and solely profit driven. You have no proof the Pfizer jab reduced the severity of the disease for anybody. A good diet is way more effective than getting jabbed with experimental chemicals. Obese diabetics suffered the most, as they will with any virus.
Seriously? There are thousands of studies that show those who have received two or three doses of an mRNA COVID-19 vaccine are significantly more likely to have milder, more short term illnesses if infected with the Delta or Omicron coronavirus variants than those who are unvaccinated. Do the research. And, yes, of course an unvaccinated nurse/cop/teacher was far likelier to spread the virus to close contacts coz he/she was far more likely to have a greater virus load for longer.
Commiserations. When the flu jab was introduced into care homes in the 80s, the incidence of flu deaths and those dying in their sleep during winter dropped dramatically. Several days a week, the morning shift would come in to find there would be one or two deaths. That stopped literally overnight.
I don’t get the flu vaccine either. Yeah if you are old the covid vaccine is probably worthwhile, if you are younger I would say it’s almost pointless, and while I am very pro science and not anti vax, it’s hard to think something that was rushed through testing is worth the risk to slightly reduce the odds of dying from a condition that is unlikely to kill you in the first place. We didn’t get our youngest vaccinated and I can’t see any reason to do so, she got covid with the rest of us and didn’t seem any different.
Mammograms and testing for prostate cancer are reserved for the elderly. Makes sense. The push to get everyone Covid vaccinated including the low risk young adults resulted from the fear that an epidemic would spread from the young to the elderly. I am over 70 and rushed to get vaccinated but I live with my adult children and one grandchild. I was pleased to see those children vaccinated and at the time pleased to see schools closed too. Incidentally it was when the schools reopened then my family caught Covid. With hindsight they knew Covid was seriously dangerous to the elderly and infirm and they had insufficient vaccine to give to everyone so I'm guessing our govt did the right thing. But next time we should do less govt imposed lockdowns and closures of schools, some shops and businesses and leave more to the intelligent discretion of citizens. Conclusion - don't lockdown as we did until a certain percentage are vaccinated but do lockdown until everyone has had the opportunity to be vaccinated.
UMMMM. Sorry about the caps, but yesterday the other half went for a check with the GP and booked for a longer appointment. He is 76.
He was told that for the over 70's we no longer do prostrate checks! He insisted on at least having a blood test which he got. After fifteen minutes the GP indicated he appointment was over, and to make another appointment for any other issues.
Of course it was wrong because before relocating to Auckland he had had a physical prostrate check with the GP in Blenheim.
Vaccine - Inoculants that produce immunity to a specific disease. Last September as the failure of the Covid-19 vaccines to produce immunity was realized, the CDC changed the definition. It is now a preparation that is used to stimulate the body's immune response against diseases. In other words, it does not stop infection or transmission.
If the therapy does not work, then we need to know what the adverse effects of this experiment are and why all cause deaths are 17% above normal levels. Did this type of therapy (forced) accelerate cancer, infections, heart attacks, by messing with our immunities. That is what this clinical trial should be about.
It's never been a binary where either a vaccine 'works' or it 'doesn't work', when you're dealing with a diverse population of humans the situation is always much more complicated than that.
I'm not aware of any vaccine that 100% confers immunity, it is all about balancing risk and benefit. As with all interventions. For adults and particularly the elderly, the evidence is pretty strong for getting the Covid vaccine. For kids and perhaps young adults the balance is finer.
I think we have reached the stage where we can say this "vaccine" doesn't work. The first course kind of "worked" for 6 months (it was meant to be much longer) any efficacy after that is much harder to find and it relies on questionable statistics.
There is almost no remaining evidence that it provides any positive effective immunity (and no one believes that being up to date stops you from catching it). The boosted are over represented in catching (testing positive) and being hospitalised with covid. Has everyone noticed that after the winter 2nd booster how reluctant they are to approve another dose? and we never got the stats separated out for it?
I'm in the 70-80 group with some medium level co-morbidity (my assessment) and had the 1st three vaccines. Not having the 4th (2nd booster) as I believes it is of no value for the last two major omicron variants. I'll take a 2nd booster or "new" vaccine when the update gets approved in NZ. This is likely to occur in the first qtr next year in NZ.
I've also had the flu jab since about 60 and have been comfortable with that without any problems. I just don't want to get a dose of flu and feel miserable for 2 weeks or so. If I did catch it then it would very likely be mild.
So, after believing that the boosters were effective against the current disease because the government and "experts" said so and later coming to the realisation that it did not, you now believe the latest marketing and propaganda that the next shot will work? (Just using you as an example)
First, it wont be B.A 4/5 in circulation by the time the booster gets here (that's the current wave now) and second, you might want to look up what trials were done to prove this one works (you are going to have a hard time finding the human ones on effectiveness).
Yesterday, interest editorial appeared deem our covid response relevant to our economy, as it most defiantly is. What would be the economic consequences of doing this again?
Do you have the full MSM/PM accreditation to decide what's misinformation? What expert analysis? (It's all self explanatory ideas, you can take the time to think about or ask good questions if need more explaination.) I don't think the lack of proper effectiveness trials for the variant vax has been denied by the MSM.
No I don't and I am 100% certain less than 1% of the people giving "expert" advice on covid, how to best understand the risks and how best to mitigate those risks do either.
Today's comments have been hijacked by bullshiters.
It's like listening to 11 year olds talking about sex and trying to impress their mates with half-understood notions, kids pretending to be grown ups.
What is "expert" about anything? It's all just one step further than what's in the media and not believing the same lie or propaganda a second time? I try hard not to post anything more than this.
My only possible expertise is maybe overestimating peoples' ability to reproduce maths without supplying the full working.
Sounds like 2nd and 3rd tier New York office blocks are not chugging along too well. This problem will move to San Fran, London etc etc etc, Same problem in Auckland as the Language schools not exactly chugging either. Though in NZ this rubbish is now inside the listed property funds who focus on Tier 1.
There is never one cockroach.
by Yvil | 6th Dec 22, 9:44am 1670273066
"Debt holders clearly haven't got the message"
So what do you suggest debt (mortgage) holders do, in a market with no buyers?
No buyers in the market at current prices.
There are buyers in the market at lower prices. So they need to drop prices further if they want to sell.
Could we see a situation where banks become landlords?
Had this very conversation with a smart poster to this site earlier today, opens up a lot of valuation issues, that are normally resolved via the mortgagee auction process.
NZ is very different to the US, with debt sitting directly on the banks books as an asset, rather than sold off into CDO/CLO's.
Having interest only loans has allowed ,what is in effect, a rent to buy scheme for many?
all great when things are going up
I think Orr needs his head read when he says people can negotiate with the bank to go onto interest only if it gets a bit tough making payments
thats all great if the prices go back up and incomes hold
what if they dont?
zombie banks holding a gun to tens of thousands mortgage holders…. nuts!
Already happening in UK:
Lloyds plans big move into UK rental market with 50,000 homes | Lloyds Banking Group | The Guardian
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.