Here's our summary of key economic events overnight that affect New Zealand, with business news dominated by idiot-managers - Trump, Musk, and Bankman-Fried. Fortunately away from that there is real economic news. Not a lot, but some.
In Canada, November producer prices fell by -0.4% from October, after a +2.4% rise in the prior month. This was in line with market forecasts. Much of the fall can be attributed to declining oil prices. But remember, year-on-year they are up a massive +9.7%, although that is the first time this year-on-year increase has been below +10% since early 2021.
In China, US bank Citigroup said it was winding down its consumer business there, just the next of a broad pullback by western companies keen to lower their exposure to China.
In Germany, business sentiment improved in December, which was a bit of a surprise - and more so because it is the third consecutive month of improvement in this Ifo survey. To be fair, many sentiment indicators are 'improving' in Germany, so a trend is developing. That is no doubt because of growing confidence they will get through the winter without too much difficulty from Russia's attempted energy strangulation. Later in the week we get the December GfK consumer sentiment survey and that is expected to be less negative too.
But it has taken some very large calls to get here. After setting aside almost €450 bln to date tackling its energy crisis, Germany is also poised to take on the risks associated with more than €200 bln of derivatives built up by energy giant Uniper. Germany is nationalising Uniper in what is the biggest corporate bailout in the country's history, after Russia's move to choke off oil and gas.
In Australia, there are official efforts underway to repair their diplomatic and trade relationships with China. The surprise part is that China seems to welcome these, even if the Australians have indicated there will be no retreat from its tight security relationship with the US. At least Australia and China are again on speaking terms. Perhaps this indicates more of a change in Beijing.
The UST 10yr yield started today at 3.58%, and up +9 bps from this time yesterday and still re-building after the recent big drop. The UST 2-10 rate curve is little-changed at -67 bps. But their 1-5 curve is less inverted at -93 bps, while their 30 day-10yr curve is much less inverted at -24 bps. The Australian ten year bond is up +13 bps at 3.60%. The China Govt ten year bond is little-changed at 2.91%. And the New Zealand Govt ten year will start today down -3 bps at 4.30%.
Wall Street has opened its pre-holiday Monday session down -0.6%. This is the fourth straight day of decline. Overnight, European markets were however generally positive, all up about +0.4%. Yesterday, Tokyo ended its session down -1.1%. Hong Kong was down -0.5%. But it was Shanghai that took a bath, down -1.9% in its Monday session. No sign of the home team there. The ASX200 ended down -0.2% and the NZX50 ended its Monday session down -0.7% with a building selloff.
The price of gold will open today at US$1789/oz and down -US$4.
And oil prices start today up +US$1 from this time yesterday at just over US$76/bbl in the US while the international Brent price is just over US$80.50/bbl.
The Kiwi dollar opened today at 63.7 USc and little-changed. Against the Australian dollar we are down -½c at 94.9 AUc. Against the euro we are lower at 60 euro cents. That all means our TWI-5 starts today at 72.4 and down -20 bps.
The bitcoin price is now at US$16,642 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has again been low at just +/- 0.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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110 Comments
news dominated by idiot-managers - Trump, Musk, and Bankman-Fried
If they have supporters, are they still mere idiots?
Grand high wizard idiots, thanks very much.
... true dat ! ... every day I see more & more Tesla's on the roads ... but no Chaston's whizzing about ...
Who's calling who an " idiot " , David ?... Elon also came up with the SpaceLink satellites just 600 km above us , selling superb quality wifi around the world .... and to NZ too ...
Is Musk is looking to run for US President? He's looking daily very in the zone of Herr Trumps play book, of constantly "making the headlines" with vacuous crap about himself and why he's so important.
Twitter is to Musk, what the Apprentice was to Trumpie. He's laying down his lunacy on the US public. Look out here it comes again.
Childhood and family. Elon Reeve Musk was born on June 28, 1971, in Pretoria, one of South Africa's capital cities. Musk has British and Pennsylvania Dutch ancestry. His mother is Maye Musk (née Haldeman), a model and dietitian born in Saskatchewan, Canada, and raised in South Africa.
Ah fair point. He's spending alot of money on Twitter and damaged his other business. There has to be some reason.
Yes he is, and if he wasn't born offshore I would think the same thing.
I think he’s definitely thinking of Presidency.
Need to be born in the USA to be president.
Lol facts aren't going to stand in the way of their conspiracy theories.
Maybe the right wingers will do the opposite of what they did re Obama... Musk was actually born in the USA and the left wing media have tried to cover it up!
Musk is so obviously deep state there is no way he can be president.
Oh ok, that’s right he’s not American-born. I really have almost no interest in the guy.
How can you say you think he wants to be president in one statement then follow it up with the comment that you have no interest in him? It’s like listening to talk back radio…
Oh come on.
I have ‘next to no interest in him’, does that extra precision satisfy you?
yawn.
Not really, but I understand this is a defence mechanism to protect your ego. You are interested in him you just haven’t invested the time and effort to understand him.
Nailed it thanks IanME, this guy likes to call other names and complain they should be shut down. I owe you one 🍻
It's been remarkable how effective the click driven mainstream media has been at making Elon Musk into the next Orange Man (Bad).
Ol Gobbels knew about repeating the lie often enough. Still works very well.
Can now actually encounter people in the real world suffering full blown Musk Derangement Syndrome through their media programming.
It's scary just how dumb people really are.
I fear for my children, no joke. The average person is an 80kg hand puppet for the social/mass media. The digital platforms are part of the problem, but my money is on reduced attention span being the bigger evil. No one checks for facts, almost every data point is highly debatable with the source "research" being statistically shakey as a norm.
To be fair, it is hard to see Elon's plan here, unless he pays the ferry man he will struggle to get people on board. My view of what I know, the WeChat of the western world, is not a bad play, tie it in with the BTC Lightning framework and it could be something. His way of making decisions democratically is nice but must be open to manipulation, if not from himself, via bots.
The short videos now being rammed down your throat on every media platform are unbearable.
Symptom or cause of short attention spans?
It's the inevitable conclusion of commodifying people's attention spans.
Indeed it is a base optimisation. The new terror is the echo-chamber effect of self-reinforcing selection, your addiction to the scroll is driven harder by the videos being largely hand picked for your viewing.
Musk didn't have a plan, he let his ego get in the way. The guy has totally the wrong personality to run a social media platform. Its only a matter of time before twitter goes down the toilet.
Twitter was already so far down the toilet it wasn't worth going there. It's actually gotten a lot better.
lol - they used to say that about radio and tv and gaming and - oh dear - the internet.
Musk has always been an idiot, but he was our idiot right up until he decided to eschew the tightly-held Western value of mass censorship. Now that he's a far-right Russian troll, we have another issue to resolve: convincing everyone that the super rich actually deserve all their money.
There's been a big song and dance in the media about him losing the top spot as world's richest man already, but it's not enough. He'll likely have to be sanctioned like a Russian oligarch and have his assets seized eventually.
But also remember: Elon will still own the company regardless of whether or not he is CEO so there's that :-)
BREAKING: Elon To Stay As Twitter CEO After Counting Mail-In Votes https://babylonbee.com/news/elon-to-stay-as-twitter-ceo-after-counting-…
You're talking about my in-laws, aren't you?
Lovely people, but I'm unironically starting to believe they have been engineered in a laboratory to regurgitate whatever the 6pm news tells them to believe. It's incredible to see how they've gone from thinking Musk is an eccentric genius to being on par with Trump or Putin, based on nothing more than what "presentable" and "respectable" journalists - or well-credentialed public servants - tell them.
Same with Covid - they were opposed to vax passports, until Ashley and Siouxsie said they were important (and Mike McRoberts and Simon Dallow said so too), and suddenly they wouldn't leave the house without clutching their printed lanyard passes. Ask them today, and because the big concern is now ram raiding and not Covid, they'll tell you they don't mind being in the company of the unvaccinated and the passes were never that important anyway.
Still, they do a mean Sunday roast, so I can forgive them.
It happens even more so in the USA. For instance, back some twenty years, when CNN was showing the terrible images of beef carcasses stacked up and being burnt, due to foot & mouth in the UK some of our neighbours stopped eating beef, full stop.
Yup, It so obvious who they want to make him a villain . The scary thing is people just jump on the band wagon with their pitch forks and burning torches. Sigh...
The 'Elon is a blameless victim' band wagon is a lot more tiresome. Everything that happened was because of Elon's choices. He managed to build up a lot of capital from his name and brand, and he has almost completely burned it all with his own poor business decisions. There is no left wing conspiracy to tear him down because he bought twitter, just natural reaction to his unhinged behaviour.
For just one such example. Would you advertise your company on a platform that openly threatened its advertisers with boycotting and reputational damage if they ever decided to stop advertising on the platform? That is exactly what Elon did. His exact words were 'thermonuclear name & shame'.
there is a precedent for a US President born in Africa apparently.
Which President was that?
Donald Trump ... he's from a small tribe called the Oranje Blume ...
Ha Ha nice one :)
Well technically Van Buren was the first president born in the USA. All his predecessors having been born as British citizens before the USA became independent, actually existed. Another oddity is that english was his second language after dutch. On top of that rumours abounded at the time that he was an illegitimate issue of Aaron Burr.
Fitz Buren?
But also remember: Elon will still own the company regardless of whether or not he is CEO :-)
Germany making do. Maybe a turning point at the crossroads of national philosophy, pride and subsistence. When the original 6 of the EEC, buoyed by the generosity and impetus of the Marshall plan, set out the resolve was mutual cooperation for their greater good, and self sufficiency. Instead they and all the subsequent members ended up reliant on Russian energy, USA military and Chinese manufacturing. Trump gave them the warning about the military, so too did Russia in an oblique manner via Ukrain followed with a salvo about oil & gas. Just maybe the giant bureaucracy of the now EU needs to revisit the ideals of that original charter of 1957. But oh yes, granted the borders are pretty easy to tourist through though.
Townhouses for rent in Auckland on TradeMe very high for this time of year, at 485. Probably because so many new builds are being completed.
The negative net migration in recent times is likely also playing a part.
Oh, and maybe more people are living with each other to save on housing costs due to the high inflationary environment.
Probably many things.
Going to be a big problem interest = 7% but rent yield = 3% if that
On top of capital losses! Ouch, how long can investors take that pain?
If this is your first investment then yes, you are going to get smashed. At the moment investing in housing is a non-business, it's actually a charity until the rules change again.
I have recently bought a 2 bed townhouse bought off the plan in 2019, when the market cools a little more (15%) then I will have no capital gains and be entering negative equity. I will be fine with that and can wait until immigration at least makes it neutral again but we will be investing no more until housing investment can be seen as a business again.
So you need positive cashflow? before even considering it?
No, positive cash flow is not enough. This is not a business anymore. The main cost of the "business" was the interest costs of the mortgage, this is no longer allowed to be claimed as a cost (even though by any accepted definition of a cost it is) and so is "disappeared". Therefore the business is no longer a business so to speak.
I have been an investor for 20+ years and had built 6 new houses in that time. But now I will just focus on paying down the mortgages.
If you are considering it as an investment IT Guy, please don't, it has never been harder to make work that it is now.
You don't really understand leverage do you? Leverage = money creation. Money that isn't for productive enterprise, it is gambling. You buy a house at 20% deposit you are leveraged 4:1 and you are gambling. 40 years of leverage needs to be wiped out to reset an economy that can pay it's way. Look at house prices from 40 years ago and tell me if you have stress tested yourself for that.
Lol leverage, how do you think I built my portfolio? Scarfie you best stick to the books, bless.
If a house is new isn't the interest deductable still?
Good question and good catch. It is but I missed the window. New builds are able to have interest as an expense.
- Interest cannot be claimed for residential property acquired on or after 27 March 2021 unless an exclusion or exemption applies.
- The ability to deduct interest is being phased out between 1 October 2021 and 31 March 2025 for properties acquired before 27 March 2021.
https://www.ird.govt.nz/property-interest-rules#:~:text=Since%201%20Oct….
Having said that it is still not a business that can be recommended, the almost certain loss of capital, the almost certain loss making of rents failing to cover mortgages.
Do you have an accountant? Business people have accountants. Business people complete an IR3 and submit to IRD
Are you soliciting for my business? I have accountant(s), thanks for the concern.
My accountant does the annual statements and Ir3R for us, which makes it a business.
Whether it is a business can depends on the number of rentals. Just posting for the info of others, not necessarily calling you out.
A taxing decision for rentals | interest.co.nz
The taxpayer argued that despite accepting a rental property operation involving the number of properties in this case can amount to a business, there was no business for the following reasons
I feel the business of buying residential houses and renting them has been a marginal proposition for nearly 20 years, especially in the main centres.
It looks like the model going forward for people doing it as a serious going concern is building new, and leasing to whatever we call Housing NZ now. Interest deductibility, and usually the leases push most of the upkeep costs onto the state.
Yes, agreed, I would add perhaps building motels so as to have a bet both ways.
So you are at least somewhat cognisant you are betting then.
But you can claim interest costs on new builds?
Businesses pay GST. No GST, no business. If I can't claim personal interest deductibility, then neither can a landlord. Seems fair to me.
From what you are saying, the business model relies on capital gains. Like buying art, classic cars, antiques etc... Except most money for rentals is borrowed.
I run a business, I dont base its success on my stock being worth more next year than this, I sell it for a margin.
My point is, rentals bought with borrowed money are an outlier, they are not a traditional business operation.
Usually if you're in a business for the long game you will want a way to build equity rather than just positive net cashflow.
At an individual level probably longer than developers who may have a dozen or way more
There might be more town houses for rent as more town houses have been built 🤯
What idiot would call Musk a idiot, a man that has know idea what he has achieved in developing self landing rockets, has contract to build moon lander for Nasa don't think Nasa deals with idiots!!
Hopefully one day this wonderful man Musk will pull off the unthinkable and send a man to the moon. Again.
Delete the word "Again"
Are you a proponent of the moon landing hoax conspiracy theories Carlos?
Would not surprise me ...
Nothing to do with the conspiracy theories, the technology was not available at the time and arguably it still isn't. Whats all this rubbish about flying unmanned missions ? Getting Elon to build a lander ? Hell there is already a 50 year old design that worked didn't it ? Too many "Landings" without significant incident, people actually got bored with it, just another moon landing..."Yawn". My money is on China to actually make the first landing, its scheduled for 2025ish. There will be a another space race for sure because when the Chinese get there and find no evidence the USA ever having been there.....who would you believe then ?
Oh dear.
Yes, sad really....
So what are you going to say if the USA turns around and says they are NOT going to attempt "another" moon landing ? or says they will maybe have another crack at it in 2030 ? Basically the longer they leave it means the less likely it ever happened in the first place.
the Apollo moon lander (1968) was a self landing rocket, as was the Hoveroc (1981) & the DC-X (1993).
Elmer is not a developer, all he brings to the table is money.
And attention. That's worth money.
Depending on the kind of attention
Auckland rental listings down 11 percent in a month.
More than 1000 net arrivals from offshore per day, last 2.5 weeks. My brother and family arriving next month and will be renting
Yep. Some things going one way, others going the other. And changing month by month...
Uncertain times.
100k net arrived previous 3 months, also >1000/day. Most are probably sitting in vans (wakena) sprinkled around the motu
So we bring in 1000 people a day… increased demands on rentals, food, vehicles, appliances… isn’t that inflationary??
No I wont feed you ... dont feed the troll
AirB&B will be back in full swing with all the tourist flooding back. Less rentals
I own one. Booked solid for weeks.
Migration has always been inflationary in NZ. Non-tradeable stats consistently clocked above RBNZ's mid-range of 2% in many of the quarters over the 2014 to 2019-period, which was also a period of high net migration.
Back then, we could simply offset expensive housing, energy, education, etc. with cheaper TV sets, shoes and clothes imported from overseas. This is going to be less of an option going forward as we dig ourselves deeper into a current account hole in a high interest environment.
HW2, wheres the best place to look at that rental data dropping 11%? Btw what you're talking about, the net arrivals is a game changer...
Another day with higher interest rates than our peers, another day of handing over $6.4 million to our very profitable banks (about the same as they pay in tax). RBNZ pay the banks this interest to keep the cost of borrowing artificially elevated - so borrowers have less money to spend in the economy.
Apparently the best way to tackle high international oil and fertiliser prices is to take money from average households, and protect the wealth of the wealthy. This is the way.
This is the way.
If I could make 14% return on selling people back their own money I would indeed invest in substantial PR around (just a sample) - "big employer", "pay a lot of tax", "investing in new energy tech" lol etc.
On the other hand I do appreciate the government putting on a Circus, the clowns at the Commerce Commission on their Uni-cycles looking bewildered as the crowd cries "look over there..."
I follow the banks as have shares in some, most NZ banks pay about 22% of profit in tax, they are NZ's BIGGEST tax payers.
At current rates, RBNZ will be paying banks $2.4 billion this year. Over the last 12 months, banks paid about $2.8 billion dollars in taxes. So, the Crown basically gets $400m net taxes.
Meanwhile, the banks extract $22 billion in interest payments from NZ, and pay over $8 billion per year to shareholders and about $8 billion in interest payments to savers. The difference is operating costs etc.
My point is that the bank are one of the most efficient parts of our economy at channeling money from workers to wealthy shareholders.
What happened to the put options on banking shares
"after Russia's move to choke off oil and gas" no, Russia is still selling its oil and gas, NATO countries stopped buying from Russia.
They are selling oil. They are having a hard time offloading the gas.
Exactly. So often people group them together without understanding how different they are. Russia was setup to pipe gas to Europe - now the pipes are mostly closed or blown up they can't just send it elsewhere on a whim, that takes years of investment in infrastructure (as you can see from Europe's corresponding gas shortage).
Oil is completely different - pipe it into a tanker and away you go. Gas needs expensive plants at both ends of the shipping route to compress and liquify it, or pipelines to where you want to sell it.
Is this actually true? "Russia's move to choke off oil and gas."
Or is it that Europe stopped taking the gas as part of sanctions against Russia.
Genuine question, interested in opinions.
I'm reasonable sure it started off as sanctions first followed by Russia then switching off. Not straight after but about a month or three.
So seems that the CCP might be going on the charm offensive again, domestically and internationally. Perhaps they have seen the error of their ways.
Or perhaps this is an aberration, a chance to build up their economy a bit more to fund their authoritarian ambitions?
It does seem that way, might be as easy as seeing them close off a couple of fronts to focus on their internal front.
They are staring down teh barrel of 18 months Covid disruption minimum and probably to a higher degree than the rest of the world has experienced -- their economy is looking very fragile at this stage and they may lose a lot of long term business out to more hungry developing economies in that 18 months -- that may never come back -
David, by what metric do you feel qualified to call Musk an idiot?
I asked ChatGPT if Elon Musk was an idiot and it said:
It is not appropriate for me to make judgments or comments about a person's intelligence or character. It is important to respect and appreciate the accomplishments and contributions of others, regardless of whether or not we agree with them or their actions.
I can’t see A.I replacing journalists anytime soon, that’s not going to generate clicks
The mighty dollar is the greatest force known to man, that model will be revised in version 4 I am sure ;)
The information you seek is in the training datasets. It's just a matter of phrasing the question in the right way to bypass the gates.
smart people can be idiots too
... critical thinking and intelligence are two separate things ... Elon exhibits a high degree of intelligence ... but , he's not so endowed with the ability to think critically ...
If he is an 'idiot' it matters little when your market is more of an idiot.
Anyone who supports the insurrectionist Trump is an idiot let alone someone who uses their high profile platform to promote his incendiary lies.
TDS to MDS in real time.
I don't think Musk is an idiot, but I think he made a very bad business call.
His previous successes came from fostering struggling companies, with low profiles but great ideas and big goals. Twitter was already a behemoth before Musk bought it out, with a well-established image and market. There's nowhere useful for Musk to take it, so it just looks like a power grab.
Meanwhile he's lost interest in Tesla, and what was his greatest success is going stale and rapidly losing ground to competitors. Check out that swan-diving share price.
"In Germany, business sentiment improved in December, which was a bit of a surprise" ......
"After setting aside almost €450 bln to date tackling its energy crisis, Germany is also poised to take on the risks associated with more than €200 bln of derivatives built up by energy giant Uniper. Germany is nationalising Uniper in what is the biggest corporate bailout in the country's history, after Russia's move to choke off oil and gas."
this has to be schadenfreude about themselves.
Anyone who tokes on a joint in a Rogan podcast is ok in my book.
Although his Starlink space junk is a bit of an eyesore to astronomers and Tesla will get it's lunch cut by the big boys at some stage.
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