Here's our summary of key economic events overnight that affect New Zealand, with news inflation might be easing, but the level of economic activity is as well.
In the US, consumer inflation expectations are falling now. A Fed survey revealed they fell to 5.2% in November, the lowest since August 2021. That is down from 5.9% in October and is the sharpest single-month fall since this survey started in 2013.
The US reveals its CPI data tomorrow and a 7.3% headline rate is expected, down from October's 7.7% rate.
Japanese producer prices rose at an annualised +7.2% rate in November from October to be +9.3% higher than year-ago levels. This recent slowing isn't as much as the +6% annualised rate expected, but at least it is slowing now. Japan's factories have been hit with the combination of high commodity prices and a weak yen. But starting in mid-November these weaker trends started to reverse, so the pressure may be coming off faster in December.
Orders for Japanese machine tools also fell sharply in November. This is leading-edge data for essential technical components in the global economy. The fall was a sharp -4.9% from October and -7.9% from the same month a year ago. Export orders fell -8.4% in November from October.
China's new yuan loans swelled +11% in November, but that was actually slightly less than was expected. But it is very sharp loan growth year-on-year and approaching three times the growth in economic activity. It's not inflation boosting these debt levels, rather a rush to add liquidity to keep their property sector from imploding.
Meanwhile, confusion is growing over the relaxation in China's Covid-response rules. There is a reluctance to 'go out', fearing getting caught by some technical aspect, and a fear that enforcers are as confused as everyone else. Further, infections are spreading very quickly now and there are reports hospitals are overwhelmed in some places. Key city retail zones are struggling despite the expectations the 'relaxations' would bring a surge of shoppers. Equity markets can sense the hesitations, risks and confusion, and yesterday marked down retail-related stocks sharply.
India's industrial production also fell sharply, by -4% in October from a year ago and a far larger retreat than was expected. That's its worst post-pandemic result.
At the same time, India reported its consumer inflation for November, and that rose +5.9% from a year ago, but actually fell marginally from October.
In Australia, there is full-on pushback by the gas industry to proposed price capping to help consumers. A supply and investment 'strike' is being threatened, but probably wont happen.
The UST 10yr yield starts today at 3.62% and up +3 bps from this time yesterday. The UST 2-10 rate curve is more inverted at -80 bps. Their 1-5 curve is little-changed at -97 bps, while their 30 day-10yr curve is inverted by -16 bps and also little-changed. The Australian ten year bond is down -1 bp at 3.36%. The China Govt ten year bond is also down -1bp, now at 2.93%. And the New Zealand Govt ten year will start today up +5 bps at 4.15%.
Wall Street has opened its week with the S&P500 up +0.5% in late trade. Overnight, European markets traded about -0.4% lower. Yesterday, Tokyo closed down a minor -0.2%. But Hong Kong continued its volatile run, falling -2.2%. Shanghai fell -0.9% in its Monday session. The ASX200 closed down -0.5% while the NZX50 ended its session down -0.8%.
The price of gold will open today at US$1785/oz and down -US$13 from yesterday.
And oil prices start today up +US$1.50 from this time yesterday at just on US$73/bbl in the US while the international Brent price is just under US$78/bbl.
The Kiwi dollar will open today at 63.7 USc, and nearly -½c lower than this time yesterday. Against the Australian dollar we are firm at 94.6 AUc. Against the euro we are at 60.4 euro cents and down -½c. That all means our TWI-5 starts today at 72.4 and little-changed.
The bitcoin price is now at US$17,006 and down -0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just +/- 1.1%. In the US prosecutors are assessing whether to proceed with a criminal indictment of Binance, the world largest crypto exchange. The issues are money laundering and evading sanctions.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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62 Comments
Gull te rapa 204.7. Down nearly one third from earlier this year.
Don't buy gas at the moment for at least another 6 to 12 months, because it's going to get cheaper. Falling knife.
Yeah I wouldn't buy gas unless it was atleast 50% off from its peak...
Fuel subsidy comes off in January or Feb I believe.
Unless of course you planning on going somewhere 🚘 I was never good hanging about doing nothing 🏗
Still driving gas guzzlers? How quaint.
Find me an EV that can carry up to a ton 400ks or so thats not a $300,000 EV Hummer.
EV's are so close to being a great choice, its a year or two away at most.
They're an expensive way to commute humans around.
The current technology excludes it for many commercial applications, because once you add weight or length of operation, you can't go very far.
The underlying cause of our high per capita carbon footprint is horrible urban design. The solution is better urban design. EV's are like putting a band aid on a broken leg. The best thing about EV's environmentally is most of the environmental costs happen during production (mining lithium and colbolt etc.) so naturally these costs are incured outside of NZ. This means these environmental costs are not apart of NZ's carbon footprint & we can then engage in a circle jerk over how we are reducing our carbon footprint by adopting ev's when all we are doing is exporting the environmental costs abroad.
The solution is better urban design.
Great. See you in 50 years when the design is sorted out.
I've still got a 'gas guzzler' as with the amount I drive (mostly biking for transport) I simply cannot make the maths stack up on an EV. No amount of torturing the figures produces a reasonable timeline to paying back the difference.
I like EVs, but I can't be the only person in this situation.
I'd suggest that applies to the majority of car users. I'd also like an EV for around NP but 4-5 trips to Akl a year knock that out. Not bothered to work out if buying and EV and renting a car for Akl trips is worth it
I don’t understand that, why can’t you drive your EV from New Plymouth to Auckland? Will save you money on gas.
You can if you get a decent EV, if you buy a second hand leaf or similar it would be an incredibly slow, tedious trip with multiple charging stops.
That will change once there is a second hand market.
DP
I'd happily be back in an EV, but I have 24 number 1 strainer posts to pick up on the trailer this afternoon, and I don't think there's an EV available in NZ that will comfortably pull 2,500kg+. If Ford ever got of their collective chuffs and built an EV Ranger in the manner of the F150 Lightning I'd be down there trading in the Q7.
Go check out how far those Lightnings go once you shift weight.
I'm aware the range drops off dramatically, but I tow heavy loads, not long distance.
A 150-200km range towing a 3,000kg load, and a 400-500km unladen range would be fine by me. That unladen range would get me to Auckland or Wellington without stopping (well...maybe a "range anxiety" stop in Taupo if heading to Auckland), and if I'm getting a heavy load from anywhere further afield I just get it delivered to my gate.
Very hard to justify a subsidy on the only thing that is cheaper than pre covid. Particularly when it is the biggest preventable cause of CO2 emissions in NZ.
the biggest preventable cause of CO2 emissions in NZ
Modern humans?
Just shows you how much the fuel companies are fleecing you elsewhere. North shore average $2.49-$2.59
"In Australia, there is full-on pushback by the gas industry to proposed price capping to help consumers. A supply and investment 'strike' is being threatened, but probably wont happen."
In this instance it seems a windfall tax is the better option to prop up consumers.
And that's the problem Government's face. They bought into the 'free market' economy that essentially espouses minimal government regulation, and now as governments begin to realise that they are supposed to, and are required to regulate markets the big players fight back. This is going to take some strong pollies to stand the pressure, but the bribes will start rolling out (and up) from the lobbyists to stop the regulation. The pollies who persist in fighting to regulate the markets are the ones the public should put their faith in, in the first instance.
I strongly believe in free markets but you also gotta know the term is an oxymoron.
Our big companies fight to be in a position of not being in a free market. Then they can charge big.
We don't need bureaucracy like price controls. We do need regulation with a big stick to ensure open competition.
So most of our cartels need broken up. Groceries, fuel, banks. For example we should have many supermarket options. Like 12 groups not 2. You could get there by saying no more than 50 outlets to a group.
Impose competition, not price control.
Regulation doesn't have to mean price controls, but price controls would be an available tool if necessary in some markets.
As to breaking up cartels; I like your thinking but wonder that with the size of any market in NZ how that would work?
At the end of the day it is the cost to the consumer. So some of the layers in a supply chain have little control, a bit like subbies for construction companies.
Before industrialisation there were cottage industries, before that we had to do everything for ourselves. The economies of scale are important - too a degree - and that is in regards to security of demand to underwrite the investments to scale production and lower costs. The majority of our markets are oligopolies and the offensive levels of profit being extracted from captured consumers is a national shame.
Not convinced size of the cartels is efficient Murray.
Yes, me too. But what is most efficient? How do we get the best balance of business functionality and benefit to the consumer? Note that by 'business functionality' I mean the business must be profitable, but not excessively so. Supply chain issues must be clearly understood too as a part of this picture.
Nail on the proverbial head there. Let’s not stop there. Regulate extortion wherever we find it. Very unpopular with the investment group, which probably includes many of us on this site. Worth it though to help offset poverty and begin to create a fairer society. I for one would accept such a system along with all paying their fair share of taxes. Be a good start.
Whats a fair share? Low-income earners pay damn all at the moment, especially when you factor in wff etc.
Have a look at the table on who pays and then tell us all about your new fairer system.
Who pays income tax… and how much? (treasury.govt.nz)
We could start with getting the top earners to pay more than the 12% they pay on average.
https://www.treasury.govt.nz/information-and-services/financial-managem….
The top 3% pay 24% of all tax. Where did you get your 12% from?
....yet another victim. Everything is somebody else's fault and if anyone does well, it must be unfair and so we must stomp them out with more tax.
That doesn't make what he said incorrect though. That just indicates they also earn significantly more as well.
According to the Treasury Department it does. Unless you think they are lying on the data?
They are two different statements.
He said, they pay 12% on average.
You point out, they pay 24% of all tax.
Both statements can be correct, because those paying 12% of their earnings may then earn (paper maths) 8x average incomes.
The word fair is the problem. It means different things to different people. For many, earning a lot of dosh is unfair - and they want it taken off the earners.
I see, OK thanks for the explanation.
So if that is the proposition how do they pay on 12% on their income when GST is 15%, Corporate Tax is 28% and PAYE for them will be 39%? I am genuinely interested in that data.
https://www.interest.co.nz/personal-finance/109223/inland-revenue-estim…
i should have included the reference.
You are making the mistake of adding government social spending onto the low income earners, it's not their choice to recieve subsidies in leu of wages. Along with that income tax is not all the tax paid, not even half.
the mistake is also that as an employer I should pay my staff more because the landlord has put the rent up - or the bank has put the interest rate up -and somehow this suddenly becomes my problem
The world is a hard, hard place and it surely is not fair. Low income earners do not earn as much as the job that they have is not valued highly (not them as a person to be clear). This is most often due to the fact that their labour type and skill set is easily available, the market rate for their time is lower or that their work can be substituted by machines or importing the labour by having the task done overseas.
It is not their choice to receive benefits but they are given them to stop society breaking down. I lived in India for a year, almost no social benefits (healthcare to a degree), poor people live in absolute deprivation. We don't want that in NZ.
Singapore has had hard anti bribery legislation in place since the 1960s. Basically you can end up in jail if you are potted for offering a bribe, and the other way round, for accepting one. It is still murky enough though. A businessman I dealt with had a “minder” who protected him from other “minders” and that was hardly unusual.
What do you think it might mean to future oil and gas supplies if the producers get wacked with taxes? You think we are ready to run the world on an alternatives?
We will be forced into a situation where the people decide what is a fair return on capital employed (ROCE) that allows an enterprise to be profitable enough to make it worthwhile for the proprietors. Because the ‘free market’ has failed dismally in eradicating poverty we need to to choose a different direction without killing the golden goose.
well the alternative socialist systems havent done very well either - and usually worse
want to eliminate poverty - education, education and more education
You are very correct. No system seems to work to date. Education certainly helps. We need a new system.
I'm struggling to reconcile the "be kind" messaging with actively considering imprisoning Kiwis for having the audacity to exercise their right to return home:
https://www.newshub.co.nz/home/politics/2022/12/jacinda-ardern-doesn-t-…
You kinda get to thinking the government & its officials got quite some satisfaction in the way the border closure & lockdowns gave them great control over the people. The old we know, we say you do mentality at large. Then the control got out of control to the point it became heavy handed, draconian and unnecessarily ignored basic human rights. We are in charge, you do, or else!
What’s the old parental lore, be unkind to be kind or something like?
perhaps that applies here given we have such a paternalistic government.
Paternalistic yes but more than that. An old expression of my father’s describes it I believe. You give a man, a white coat & cap, a whistle and put him in charge of a car park and within three weeks he will think to rule the world. It could be suggested that deep in the psyche of politicians and senior bureaucrats is a latent desire to tell other people what to do. This percolates out of some more than others for sure but getting to be in charge too often borders on bullying if opportunity presents itself.
This is possibly a manifestation of our rampant bullying culture throughout our society.
Maybe its actually the inverse - we have a bullying culture because thats how our management works ( in lieu of leadership)
I was all for MIQ, but the system was totally broken. A lottery instead of doing it based on needs? Massive failure.
When billed for MIQ I refused to pay. I said to them that before I paid I required some evidence that lockdowns at a policy were effective at controlling a pandemic. I was confident of my ground, confident they didn't have that evidence. I also stated to them I wanted to see the cost benefit analysis, that lockdowns would save more lives and illness than they would cause (that they do cause is not in dispute).
They still haven't furnished any evidence, and have left me alone.
Now we also know that death rates are sitting 8-9% higher than before covid. Statistically pretty significant and everyone seems to be avoiding acknowledgement, let alone asking why.
As a public health policy it was failure. It was also predicted to be a failure, and to a rational thinker failure was predictable.
You make some intelligent comments on this forum, however I'd say you need to re-examine your stance on covid and civil rights issues. One thing is highly desireable in thinking, that is consistency of thought.
Gosh I must try that with IRD next time I decide to not pay tax for something I'm very clearly obligated to pay for.
Me to, this is genius :)
So you left us to pay for your stay. Lovely.
Seriously bad reasoning.
No. Healthy people like me (I haven't had covid at all) are paying for unhealthy people like you. Completely fraudulent of course, you can't hide the risk from bad lifestyles. And my children will also be paying for the government borrowing to pay for your folly.
Where do you think all this inflation is coming from? Covid money thrown about for people to do nothing.
That's what I don't get. I know a guy that couldn't return to see his dying Dad. Another guy I know "won the lottery" and came back for 6 weeks to get on the beers with the boys.
Where I lost any sort of respect for our Covid response was when they flew back the mystery High profile WHO staffer. Why would you priortise non Kiwi's over Kiwi's?
https://www.nzherald.co.nz/nz/covid-19-positive-patient-from-fiji-being…
I think a friend of mine summed it up well. He is a fairly wealthy businessman, his businesses in New Zealand, and has retired early to coastal Portugal.
He said I can't believe that I can't return to the country I pay tax in.
My pick is that he will minimize he tax payments to New Zealand now. But before that I think he was proud to be be paying his fair share of tax here.
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