Here's our summary of key economic events over the holiday that affect New Zealand, with news that 2023 is starting with wobbles.
China's pandemic stresses are growing and are the primary cause of the year starting with downbeat notes.
But first up today, the first 2023 dairy auction was another retreat, down -2.75% from the prior event on December 21, which itself was down -3.8%. This time, 33,478 tonnes were sold, the most at one of these events in more than two years. Butter (-2.8%), cheese (-2.7% and SMP (-4.3%) were the hardest hit this time, probably a reflection of stuttering demand out of China's food service industry. WMP fell -1.4%. This time, the currency came to the rescue to some extent, limiting the overall decline to -1.6% in NZD.
Dairy prices aren't the only commodity in retreat.
Perhaps this is what we are going to have to expect in 2023. The head of the IMF said the new year is going to be “tougher than the year we leave behind. Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously,” she said.
She is not wrong.
The internationally-benchmarked American manufacturing PMI reports a sharpish contraction in their factory sector, with operating conditions deteriorating at their fastest rate since May 2020. Output fell at a sharper rate amid a faster drop in new orders. Inflationary pressures eased notably however and the US Fed will have picked up on that fact. Employment rose only fractionally.
In China, their official PMI's were weaker than the weak ones anticipated. Their factories are contracting sharply now, but their service sector businesses are in very bad shape, especially their retail sector. It is nationwide and will have severe consequences on the global economy if it doesn't pick up soon with their new pandemic relaxations. From this data it is easy to see why our dairy auction sagged.
Their unofficial private sector factory PMI however, didn't paint anywhere near as dismal picture as the official survey. In this one, factories are contracting at only a minor rate - and less than the US retreat.
And the EU remains in contraction territory, even if inflation is easing slightly there.
In Germany, their inflation rate is retreating, falling to 8.6% in December from 10% in November and below market forecasts of 9.1%. It was the lowest rate since August, but we should also note that their government paid December natural gas bills for some households and businesses, which will have impacted these results. In December alone, inflation actually fell -0.8% from November.
But not everywhere is in the doldrums. In India the picture is actually quite bright. Their factory PMIs report stronger December increases in factory orders and production. Output growth reached a 13-month high. They have their fastest rise in new orders since February 2021 generating job creation and boosting input purchasing.
And the world's third largest economy, Japan, is managing to hang in there, even if their overall expansion is hard to see at the moment. Their factory sector may be contracting, but their service sector is still expanding.
In Australia, their PMI slipped to be now barely expanding. Output and new orders fell in December. Buying activity and input inventories declined. Input cost and output price inflation rates dropped. This is a decline that has lasted nine months and doesn't look like it is about to end.
At least the Australian factory sector is doing better than their housing sectors. For all of 2022, house prices slipped -5.3%, more in the main centers. Annual value falls were the most significant in Sydney (-12.1%) and Melbourne (-8.1%) where conditions peaked early in the year. But what is eye-catching about this data is that in December, national prices fell at a -13% annualised rate.
The UST 10yr yield started today at 3.79%, and down -9 bps from the end of 2022. The UST 2-10 rate curve is more inverted at -64 bps. But their 1-5 curve is less-changed at -80 bps. But their 30 day-10yr curve slipped further back to inversion, now at -27 bps. The Australian ten year bond is down -10 bps at 3.95%. The China Govt ten year bond is unchanged at 2.88%. And the New Zealand Govt ten year is starting 2023 at 4.53% and down -5 bps.
On Wall Street, the S&P500 is down -0.8% so far in its first day of 2023 trade. Tesla's horror run is extending into 2023. In contrast, all major European bourses closed higher overnight, led by London's +1.4%. Yesterday, Tokyo was on holiday yesterday. Hong Kong rose +1.8%. And Shanghai ended up +0.9%. The ASX did trade but ended down -1.3%. The NZX50 of course didn't trade.
The price of gold will open today at US$1838/oz and up +US$17 from its ending 2022 trade.
And oil prices start today down -US$1 from Saturday's levels at just under US$78/bbl in the US while the international Brent price is just under US$83/bbl. European natural gas prices are now lower than before the Russian invasion of Ukraine.
The Kiwi dollar has started the year down a whole -1c at 62.5 USc from where we left it on New Year's Eve. Against the Australian dollar we fell another -½c to 92.8 AUc. Against the euro we are at 59.1 euro cents and a minor dip. The Japanese yen has appreciated sharply over the New Year break. That all means our TWI-5 starts today at 70.6, down -80 bps from New Year's Eve.
The bitcoin price is now at US$16,628 and barely changed from either this time yesterday or where we left it on New Year's Eve. Volatility over the past 24 hours has remained low at just +/- 0.5%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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143 Comments
Digest that and conclude not an appetising outlook for anywhere much, this planet at least. Start to wonder if covid being loosed on the world three years ago was the rake handle through the spokes that took the day of reckoning out of cold storage and brought it into reality.
A rake handle through the spokes would stop you dead,...rather we seem to speeding towards a cliff with no thought of braking?
True. Mind you, from a not forgotten childhood experience, there is still some forward momentum once you have cleared the handlebars.
Agree the landing was not pleasant...
And what's needed is a rake handle through the spokes to throw the passengers off before it's to late.
The Kiwi dollar has started the year down a whole -1c at 62.5 USc
It wasn't the protests which changed Xi's position. China's Year of the Tiger slaughtered by King Dollar. And the dollar isn't rate hikes, either. https://youtube.com/watch?v=l2f4KF Link
Tesla's horror run is extending into 2023
Indeed. Tesla is getting smashed.
What's the lesson to be learned here (other than that Elon Musk is obviously a far-right Russian troll who hates our freedoms)? Well, it paints a picture of how people "invest". TSLA is down almost 73% YoY now. Did people buying TSLA 12 months ago really get it that wrong? Or were they just chasing momentum, blindly throwing money at the latest trend and not paying any attention to fair value?
Remind you of anything else closer to home?
For every $1k you invested in Tesla in 2013 its worth today is over 54k
Share price is up 5,461%
Johnny come lately might be getting hurt not everyone.
$54k is still 73% down on where it was a year ago. If you still own TSLA stock from 2013 then you're only holding it because you expected it to keep going up.
Not necessarily, you could be drawing down on it periodically to buy worthwhile things like aging social media platforms.
Exactly chebbo, just because Tesla was a good value stock 10 years ago that doesn’t mean it is now.
And when Tesla goes bust - which is inevitable at this point, because is one of the world's great frauds - even the early birds' investment was worthless, unless they cashed out in good time.
The problem with shares like Tesla is people are valuing them like they're a tech company when they're really just a car company. Ditto with the likes of WeWork, Uber, or any number of other businesses.
Now that it's stopping raining money perhaps some normality will return to some values.
Imagine if the Americans got over their obsession with printing money to make themselves feel wealthy and actually paid each other more.
The federal minimum wage is absurd. But wage inflation is the only way out for them, much like it is for us. We don't seem to have the same ingrained culture of expected servitude or power distances they seem to have, so we might have a shot at actually being OK. The Yanks still haven't mastered the concept that people being well-fed and well enough to work productively is better than whatever bastardised 'hustle culture' crap they've dreamed up to convince themselves that their time being poor is only temporary.
Europe is planning to be poor:
A year of war and energy and climate crises
02.01.2023 Josep Borrell, High Representative of the European Union for Foreign Affairs and Security Policy / Vice-President of the European Commission
I agree. The big difference between a tech company and Tesla / Uber is the potential profit margin. A successful tech company can make big money for almost nothing, while Tesla has to buy a lot of expensive materials to make cars and Uber need to pay a lot (>100% apparently) in labour.
Also good tech companies can be quite sticky to users, while Tesla has to maintain an edge over many competitors to maintain sales.
Tesla also got a massive first mover advantage, which you'd expect as all the incumbents were still fiercely invested in internal combustion. 10 years or so down the track, they have a supercharger network of some value, but the cars themselves look to be easily replicated by a growing number of competitors.
Funny - I just kind of added that at the same time of your comment.
Its hard to imagine Tesla being significantly more dominant or profitable than the likes of Ford or Toyota, so the value should be at most those kind of levels.
Things got obfuscated somewhat by Tesla having much higher margins than the industry in general. Which you'd expect, as they had a whole segment virtually to themselves. But that's all going bye-bye now as competition is only going to ramp from here.
... some things when they're smashed down actually represent good buying ... tech stocks , Tesla ... could be a stellar year for these ...
Others dont , at any price ... Bitcoin , My Food Bag ...
... some things are being smashed slowly , grinding down ... NZ house prices ... no hurry to buy ...
To be fair he has helped the Ukraine with internet from about day one and still is.
... it seems to be open season for hating on Elon ... forgetting all the good he has done in the world : thanks for reminding us ... when he wakes up from his Twitter coma , he'll stun us again ...
He's been helping out Iranian protesters too, by giving them an alternative to Iran's heavily censored Internet.
But apparently none of this makes up for the cardinal sin of exposing the West's own censorship. Plus if we applauded it, we'd end up looking like hypocrites. So we ignore it instead.
Two Iranian warships are heading our way ... how jolly nice of them to pay us a courtesy call ... truth be told , I didn't realise that the Mad Mullahs had a navy ...
Maybe Ardern wasn't wearing her hijab properly.
How cool would it be if the Iranians dock here & seek diplomanic immunity ... we'd get 2 warships for nothing ...we could get Jacinda to sign the bulkheads ... then hock 'em off on TradeMe , raise funds for cancer research or something ...
As far as I can tell they priced the terminals at $2000 USD (normally $500 for consumer terminal) and Poland and the US taxpayers paid that for 10,700 of those terminals to go to Ukraine. Then the service the terminals are on was priced at 4500 USD per month (compared with normal ~$100 cost) which Elon claims to have paid for 70% of the bill. I think Starlink still did pretty well out of the deal, considering what they charge normal consumers for what I expect is the exact same service. Last I heard Starlink was trying to get the US taxpayer to pay the full 4500 monthly service fee per terminal. Sounds not quite 100% charitable to me.
If 2023 is going to be tough as per IMF, can experts on here suggest if we should start to stash some cash in the secret pockets of our pants, just in case?
What would be a good number to keep handy?
Couple of mil should be enough.
That shouldve been going on since 2020. Actually maybe earlier again.
For extra points you should be aiming to be as self sufficient as possible in basic commodities.
I'm not an " expert " , just a humble Gummster : but I'd say tech stocks , medical devices , stem cell companies , lithium / copper stocks should do exceedingly well in 2023 ... Tesla should turn around , and finish the year 100 % up from here , around $US 200 per share ( TLSA is a beautiful combination of tech & high end manufacturing )
... share markets generally should do well ... but carefully selected niche stocks ought to do even weller .... 2023 is gonna be awesome ...
This is in my opinion , only ... not an expert like those fabulous financial brainiacs at the IMF ...
The best advice for most people was and still is to pay down debt. Unfortunately many people did the opposite and borrowed even more money and bought stuff. 2023 is going to be a very bad year for a few people but most will pull through.
Bitcoin still not zero Carlos...prediction for next Xmas?
Let's say bitcoin will halve in value each year, at least that way it never goes to zero!
Let's say bitcoin will halve in value each year, at least that way it never goes to zero!
US interest in "how to buy Bitcoin" is up 500% since August with searches highest in Honolulu, Anchorage, Lafayette, Odessa/Midland and Miami, Florida. "Plebs buying while Wall Street is sleeping?" he asked. Bitcoin was the most popular crypto in google search across 2022, accounting for 28.41 million searches each month. Dogecoin is second with 5.9m, Shiba Inu third with 4.4M and Ethereum fourth with 3.8M. Meanwhile Bitcoin critic Peter Schiff ran a poll asking "How low does Bitcoin have to fall before you admit that you're wrong and sell your stack?" More than 62% of 64,000 votes cast were for "I'm right. HODLing till 0".
https://trends.google.com/trends/explore?date=2016-10-30%202022-12-30&g…
The usual trend is bitcoin tanks until EOY and starts to creep up in time for halving season, which should be in 2024.
The only thing that keeps crypto alive is Bitcoin halving season.
NFT is nice, be great to recieve one with a happy meal one day as a replacement for trading cards. Not sure about all the other crypto use cases.
Maybe a voting system via a blockchain network?
who knows eh
What the loss of like 2/3 of its value in 2022 wasn't enough for you ? How big of a kick in the balls do you need before you wake up ? Maybe you will still be banging on when its down to $20 that it has not gone to zero ? Its going to be a very bad year for Crypto, it seems like only one person I know here admitted bailing out last year and took the money and ran.
What the loss of like 2/3 of its value in 2022 wasn't enough for you ?
It is what it is. Assume that someone bought BTC at ATH with an equivalent fiat value of $100.
And assume that $100 was all the person could afford to lose.
The emotional damage is quite minimal.
And likely much less that the perceived loss of $100K on the value of a home.
True, but losing $100k on a house does not remove a bedroom or reduce the size of the lounge.
If the home owner increases their mortgage payments each year at a similar magnitude to rent increases, and they get that mortgage wiped out in 15 - 20 years, how many mortgage free years will it take to recoup that $100k loss when measured against annual rent? Current run rate would be 4 - 5 years? What will the annual rent be in 20 years time? 3% compounded probably $45k?
True, but losing $100k on a house does not remove a bedroom or reduce the size of the lounge.
Yes. And Adrian Orr said that housing is a consumption good anyway.
House prices still have a long way to fall yet before they enter into Bitcoin's peak to trough territory of -75%. But it's okay, Bitcoin provides shelter and security too right?
But it's okay, Bitcoin provides shelter and security too right?
No. Apples and oranges. But usually it's normies who are wholly focused on the price of BTC.
Normies: Fans of Big Norm from Cheers?
You can always reformat your physical crypto wallet and use it as a regular USB drive.
Finally a response....so down to $20 then. I am just asking ..it has been you banging on it's going to zero for a number of years.
How many other assets were dumped last year?
With such firm convictions I will be checking in with you regularly Carlos to see how the price goes this year.
Hope you are enjoying your new Mazda.
So the Irish housing experiment seems to be failing hard.
11% price increase in 2022
Average price/income ratio now 7.7:1
Lending requirements let you borrow half of that
Is Ireland possibly seen as a safe haven in Euro terms?
It's a tax haven for European arms of multinational corporates. Is that safe?
Apple is also in trouble in several countries, most especially the US and Europe, for what may prove to be a vast and illegal tax-avoidance scheme. The company has cleverly arranged its affairs, moving its headquarters to Ireland where it pays virtually no tax, and further creating a web of shell companies that are apparently resident in no country anywhere, through which it funnels much of its revenue and pays no tax of any kind. Apple apparently paid only about $10 million in taxes, if I recall correctly, on income in the tens of billions. In Europe, the European Commission ordered Ireland to levy nearly $15 billion in taxes that were avoided by the clever tactics of Apple’s executives, the European Commission reporting that in 2014 Apple illegally paid tax on its profits of only 0.005%. The European Commission said Apple was also accused of fraudulently repatriating its foreign profits to the US by having its Irish subsidiary pay large amounts of money to the US parent for R&D
I reckon a minimum profit margin for tax purposes makes sense, probably around 5% or so, so no company can claim to be making less than 5% profit on their revenue. I mean any company that doesn’t make that shouldn’t exist anyway right?
it would probably also eliminate zombie companies, loss leaders, shell companies, etc.
Ever decreasing margins seems to be a hallmark of a modern economy, and huge international conglomerates. 4% on 10s or hundreds of billions of turnover still flicks some people's buttons.
Well they certainly fixed the NZ housing shortage....
Is there a shortage now..or just a shortage of affordable homes...quite different...
On their own,foreign buyer ban may not be a complete fix..but add in removal of mortgage interest deductions, brightline etc...just need to add in DTI's and some controls on AirBnB as in many cities overseas...
And then halve the cost to build and slash immigration so we can have a utopia?
Now you are being silly...we just need house to be homes...not internationally traded commodities..
Too late, we doubled down on global free trade.
It's obviously a double edged sword. We get cheap stuff from overseas, and our companies get better funding, but only because we sell them to international conglomerates.
I'm not sure how you would halve the cost to build but yes it would likely make houses more affordable.
We could with the stoke of a pen slash immigration and reduce [future] demand which would definitely lower prices all else being even.
If your definition of utopia is more people being able to afford to own their own home then both your suggestions would be a step in the right direction.
I'd add in a land tax as is The Opportunities Party (TOP's) policy so we get there faster.
I'm not sure how you would halve the cost to build but yes it would likely make houses more affordable.
Around 25% of the current new build costs are to satisfy councils.
And probably another 25% because we build houses like custom cars instead of Toyota Corollas.
How do you get 25% to satisfy councils? Would be more like 7-10%
Around a hundy to make a section for a start.
Then all the requisite experts and materiale involved in design/plan/build, inspections, contributions, etc.
Makes sense, they can make more cash off one new property than half a century or more in rates on an existing one.
It’s not just the bill the council sends you, it’s all the experts you need to design, the stoppages waiting for an inspection, not being able to substitute materials or make changes, the time taken to get building consent or resource consent, having to use companies that will sign away the councils liability (producer statements), having to use licensed practitioners, the list goes on. We did a fairly simple addition to our place and I do think the council added 25% minimum. Not sure what the alternative is though, buyer beware?
Ok fair enough if you count all of those things.
But as you say what’s the alternative? Even with so much regulation a lot of the building work is average at best, without it one shudders to think what would be done.
Councils just do safety checks (prob 2 or 3 inspections) and buyer beware. You could choose to pay 25% more for an independent company to do what council does now. Would you pay 25% more or just rely on post build inspection costing say $1k?
Big brands might come into play more - would you trust a car made by Bob down the road or made by Toyota?
Sometimes I feel that's a chicken and egg scenario. As we become more reliant on rules, regs and systems, the overall quality of people carrying out the work suffers, because energy and focus is diverted from doing the actual building work, and being shown to be compliant.
Cost of build excluding land and professional fees for a medium density unit at a market price of $600k (using this value as it aligns with the timing of the costings).
Council DCs and water connections = $35k
Council consenting fees = 3k
Traffic management = 6k
Construction including site preparation, foundations, landscaping and superstructure = $286k
Total = $330K where council and infrastructure makes up $44k which is a LARGE chunk of the actual structural and ground cost.
On top of that we have land at $71k, professional fees at $37k (high due to council requirements, finance compliance costs), and of course GST at $80k.
This leaves roughly 80k per house to cover the cost of finance (which may not be light due to COVID delays), pay a tax on profit, and leave something for the developer as reward for risky work.
Right now, many have come unstuck.
The only place to trim cost is in the land price or to hope that no one is over charging in the build and preparation costs.
Compared to wages most houses in Auckland and many other areas in NZ are way out of reach for 80% of the population who are starting from scratch. People who believe million plus houses are not going to continue falling in value don’t have a grip on reality rates will stay around the 7% range and people refinancing will find themselves paying over 1500 per week rather than 950 the crap will hit the fan over next 18 months.
Lots of building cost in NZ comes from the inability of our so called civil servants to understand the evil of monopolies (given they themselves are monopolies) and the reluctance of our weak politicians to deal to them.
What does “a shortage of affordable homes” mean? We have plenty of crap houses around that should be affordable, lots of very basic 2 or 3 bedders in poor condition, yet they still cost a fortune. Compare to the second hand car market, the average price is set by how many second hand cars are available, not by how much those cars cost in the first place.
The great deleveraging has arrived. Interest rates to be in retreat by June 30 guaranteed.
If that happens, what good would that do to the society? Passing the crap to next generation?
All the news seems quite good this morning. Prices coming down and everything rather subdued. Inflation is easing. 2023 will reveal the prophet to have been a false one.
... stick the middle finger up to Adrian Orr ... let's party hard & have a rollicking good time in 2023 ...
... last year sucked ... as did 2021 ... and 2020 ...
Enough ! ... fun times ahead , joy 😊
I agree gummy. No one predicted that in the 2023 predictions- people just getting on with their life and spending up. I’m sure that would be the usual response to a pandemic ending.
The German intervention on gas prices is far more than 'paying bills' - they have implemented a really well thought out policy that also incentivises reductions in use [great Odd Lots episode on this here]. The gas 'price brake' policy sits alongside a range of other interventions that have been discussed with industry leaders and trade union representatives at regular meetings with Ministers. Sounds sensible doesn't it? Perhaps better than leaving the central bank to wiggle the cost of money around?
The debate on inflation over Xmas between prominent economists has been refreshing as the consensus shifts quickly. Oliver Blanchard, for example, caused a stir by saying that “Inflation is fundamentally the outcome of the distributional conflict, between firms, workers, and taxpayers. It stops only when the various players are forced to accept the outcome”.This 'inflation as conflict' thesis is of course not new - after all, if someone is paying more for something, someone is getting more for that thing. Inflation is always redistributive. What is increasingly recognised though is that central banks and monetary policy are not playing a neutral role in this conflict - they are setting out explicitly to weaken the bargaining power of workers (so they lose out in the 'conflict' to shareholders and the wealthy).
Germany started subsidies in Oct 2021 (prior to russian invasion) to reduce costs for low income households,Since then the subsidies and caps not only for households but derivative risk for utilities has blown out to over 7% of gdp,mostly replacing gas for imported gas.
The trillion cost to europe is all borrowed money,of which is getting more expensive as debt rolls over.
Yes, Germany are currently transitioning from the previous subsidy regime to the new gas price brake. The December 2022 payment was a halfway house, with new regime applying from March 23 (from memory). Germany have also started to nationalise energy companies that are exposed to huge derivative risks. More countries should ponder whether something essential for human life should be left to profit-driven, monopolistic, over-financialised, just-in-time energy companies.
I would question whether the 'cost to Europe' is actually material. All that really matters in the current environment is the level of interest payments (on bonds and reserves) - i.e. the Govt money being given to people who have money. Interest payments are below historic norms (and way lower than inflation) - and the ECB is actively exploring ways to stop giving so much free money to banks.
Recent interview with Ashley Church. He's writing a book about the 'end of times'. It's not about the property ponzi but the world (all based on his bible readings). Perhaps Granny Herald could start a column dedicated to Armageddon.
This is the last session with Ashley Church. In this episode we're talking about Ashley's connection to a personal God, whom he believes is responsible for his wealth.
Must be something to do with gay marriage being legalised. It caused the Christchurch earthquakes didn’t it?
Armageddon! Then perhaps, as per Spike Milligan, I’m a geddin out of here.
The god of tax free capital gains, interest write offs, and stupidly low OCRs. It’s probably the biggest religion in NZ. Luxon is the next disciple.
The Crusaders of this religion (landlords, speculators, REAs) will panic once they realise the Ponzi has gone too far and genuinely skilled workers no longer want to move to NZ to become feedstock.
Interesting article: https://www.oneroof.co.nz/news/42800
“One can only assume the Government is trying to dissuade people from becoming landlords on a philosophical basis.” - or maybe the government are trying to prevent so many people pushing up house prices for tax free personal gain.
Puke
Btw did he ever disclose any of his property businesses when writing for OneWoof?
didn’t think so…
Random banking question someone might know the answer to.
On Jan 1 I transferred some money from ANZ to ASB. Transfer was only completed on Jan 4 at 9am.
Is that normal? Do these transfers still need some sort of manual process or approval at the bank's end? Can't they get the skeleton crew to do it other the holidays? It seems a bit 1980s to me.
Yeah normal unfortuantely...NZ banks exchange payments between 9am and midnight on business days only. If the payment has been made after midnight, during the weekend or a public holiday, funds may not arrive and be processed until the morning of the following business day.
It's fairly normal for banks not to transfer between one another over weekends and public holidays. I don't actually think anyone's checking anything though.
https://www.rbnz.govt.nz/payments-and-settlement-systems/exchange-settl…
It's called Real Time Gross Settlement and uses the banks ESAS accounts. Not sure which hours it runs though it is not 24/7, I think Nifty has it at 9am - Midnight.
Yet in numerous third world countries transfer is instant.
Imagine a form of settlement that takes seconds and with no middleman clipping the ticket, that runs 24/7 ....
FTX?
Founded by Sam Bankman-Fried in 2019, FTX used customer funds to finance political donations, buy real estate and invest in other companies, U.S. authorities said this week. FTX filed for bankruptcy in November after being unable to meet about $8 billion in customer withdrawal requests
not even close Jimbo..but feel keep up the FUD
According to an article i have just read on Yahoo,70% of the 1200 members of TIGER 21 (who) intend to avoid the sharemarket and POUNCE (there words) on Real Estate opps over the next 12 months.Collectively they have assets worth 130b
Not sure what to make of that
It's certainly plausible. Despite how bad things might get in general there will be money looking to find a home.
Surprisingly, the world has not ended, without all the Interest commenter's posts over the holiday ;-)
When you see how places like Russia and Sri Lanka keep stuttering on, you see how things just keep going. Just not always as good.
Ideally we want them getting better though, not worse. There's some inescapable realities that need resolving, like 'how do less workers pay for more dependents whilst also improving services, paying nurses more, etc'.
The answers will not be to everyone's taste, but they cannot be avoided. We should be learning from the likes of Greece and Italy.
House price’s in Australia also taking a tumble the December figures showing steeper falls but still way better than New Zealand I think in many places in NZ another 20% off will be seen.
The price of gold will open today at US$1838/oz and up +US$17 from its ending 2022 trade.
Silver price charging last night and up 3.5% at one point in USD. Seems to have broken through trend, which has only happened twice since 2009. On one occasion, price exploded 100%+. Priced in Kiwi pesos, price looking dandy and up 20% in past 6 months. Watch the miners.
Important to remember that the investment banks have hold net-short position in silver (say New York futures market) while holding corresponding long positions (London market). The manipulation is strong with this one.
Good news for lovers of the keto diet ... it's no longer ranked as the worst possible diet for a human bean .... bumped out of bottom spot by the raw food diet ....
I think it’s funny how they still go on about the Mediterranean diet. How about the Japanese or Honkanese diet, the 2 countries that live the longest? It’s all fried isn’t it?
... the " backbone " of the fabled Mediterraean diet is almost the same as the Okinawa diet ... whole grains , fruit & vegetables , seeds , nuts , legumes , some dairy , wine/sake , eggs , seafood , white meat , pickles .
The principle is identical ... but individual plant products differ ...
I think the best diet is just a homemade diet. Commercialism has made us fat and unhealthy, they make the food taste better by adding fat, sugar, salt and chemicals and then they serve us too much to make us feel we got a bargain. But boy does it taste good!
Buy 95% of your groceries from the "outer rim" at the supermarket, so produce, meat, fish, etc and avoid the processed and packaged stuff in the aisles. Job done.
... and as much as possible , cut added sugar ( sucrose ) out of your diet ... sugar substitutes too ...
You're not children anymore , start eating adult food ! .... teeee heeeeeeeeee .....
Jeez, what an awful piece. The world has moved on from this simplistic 'money supply', 'rational consumer' nonsense. The quality of the debate is the better for it - check out this piece from ex-Fed economist Claudia Sahm, which includes links to some discussions with actual insight.
The world has moved on from this simplistic 'money supply', 'rational consumer' nonsense.
You think so Jfoe? On the whole, consumers have been behaving "rationally" in that they have been responding to the cues set them by the rulling eilte.
I probably agree with that. I was referring to the dominant economic theories of the last 50 years - theories that make ridiculous assumptions about rational consumers and businesses, and then use these assumptions to justify the current model of medieval monetarism.
I'm picking stocks to bounce this year, especially big tech. Even Tesla looks tempting. Won't be buying any more houses in 1H of 2023. Waiting for Robbo's election handouts/bribes in 2H.
Still hoping Luxon & co will step up this year. She's got to go.
You'd be better to buy the house in 1H, prices will be rising in 2H....
.... ha ha haaaaa ... 🤣 ... yeah , right ... good one , needed a larf ... cheers ...
Yeah, time will tell, huh, but we've recently learnt that what goes up will come down, and soon we're going to find out that what goes down will come up, especially with the widening gap between existing house prices and cost of replacement....
The average NZ house costs $1 mil, quite a lot more than building a new average house.
The cost of replacement would be all in including dirt.
I think that’s my point. The cost to build an average NZ existing house (prob 3 bed, 1 bath, minimal insulation, single glaze, single story) wouldn’t be much more than $300k. The million dollar average for existing houses can’t be justified by high build costs, it’s mainly land costs, which is mainly speculation.
Well no, what happens is all the components that go into building a new house rise in price to meet the $1m price tag, on a per sqm basis.
You'd have to be a moron if you were responsible for price quality at Winstone Wallboards or Carter Holt Harvey, and you didn't adjust the wholesale prices to reflect what the market was able to pay for a finished product.
And then people parrot the idea that house prices cannot fall due to the price of Gib or framing timber.
Don't forget council connection fees!
2H 2034 could be correct
... that sounds more likely ... 😊....
Many countries have made special concessions that have temporarily lowered inflation. In Europe that's gas but in New Zealand it's petrol taxation. Obviously once those pricing mechanisms are removed inflation will bounce back again.
Reserve Banks have made only a little progress with inflation and have needed a lot of help to get there. What's really worked against them is that, not least to my surprise, consumers have not trimmed back spending to any great extent despite rate rises. A chorus of economists keep forecasting "it's coming" but I wonder if they have substantially underestimated just how much demand has been unleashed by QE and ZIRP.
They've actually done enough.
https://www.wsj.com/articles/big-banks-predict-recession-fed-pivot-in-2…
Sahm rule indicates US recession is unlikely. The US yield curve indicates a 38% probability.
My view? As the underlying data suggests it's far from a foregone conclusion.
The assumption is the Fed will jump in straight away.
I wouldn't be surprised if they are going to allow 6-24 months of burn off.
Those looking for Green Shoots might be disappointed looking at economic data,
"Early 2023 thoughts via JPM's great Andrew Tyler (head of US market intel):
1. The US is likely in a bear market as long as the Fed remains active
2. Some investors are "looking through" inflation, but those with shorter investment horizons may not try to anticipate the Fed's actions
3. The Fed typically tightens until the Federal Funds rate exceeds headline inflation
4. According to JP Morgan's forecasts, this may occur in April, with the Fed increasing the Federal Funds rate by 50 basis points in the next two meetings and headline CPI YoY falling from 5.5% in March to 4.5% in April
5. The biggest potential risk to risk assets is a tight labor market, which could prompt further tightening action from the Fed if there are signs of accelerating inflation"
https://themarketear.com/posts/cSGAofCAge
And as far as NZ goes, regarding Point 3. Why would the RBNZ be any different? And if it isn't, and the objective is to return interest rates to an historical norm of 2% above the CPI, then there isn't a whole heap of room for the OCR to fall, at all. So the Risk could all be to the upside.
If the desired pullback is underway, do you keep raising rates to speed it up and make it harsher, or pause and watch where things settle?
Pause
Historically in times of inflation, the US Federal Reserve has continued to raise the Fed Funds Rate to above (or well above) the rate of inflation to get inflation under control. I believe that they have done this every time, so unless there is a large systemic financial crisis before they get there I would expect they do the same this time around. The RBNZ will likey follow suit.
Imagine, interest rates at 9-10%. Those ready for it will prosper. Those over leveraged in overpriced assets will not.
I think inflation has probably peaked in most countries but perhaps not here (although we won’t know for a while…
Either way, my prediction is that once central banks start cutting rates Q3-Q4 2023 (due to recession), all markets will see a second inflation peak in 2024 once they turn the money printers back on.
Most here have rubbished by views of interest rates being cut late 2023.
Time will tell.
I personally don’t think they should be but I think they’ll have to given the macro!
Good thoughts. Though looking back, the waves of inflation in the 70's peaked over near 5 year periods - I'd be thinking of a longer timeline than a year or so between peaks. The US Fed is certainly wanting to avoid a repeat of the 70s but I question how much control they have to engineer an elegant decline of inflation to 2%.
It's interesting to see the two Blokarts sailing on the beach in the introductory photo. As a competitive Blokarter i can recommend it to anybody as a great leisure activity and we have several clubs around the country where you can give it a go. https://bai.nz/
“Growth recession”, it is not about money this time. Lack of everything else but money.
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