(The image above is a reminder of what Summer should look like. Sadly, that is not what we have today.)
Here's our summary of key economic events over the holiday that affect New Zealand, with news the US Fed seems to want ‘more evidence’ of easing inflation and it backs fresh rate hikes in 2023, unlike what markets have assumed.
But first we should note than American companies, from tech majors to consumer firms, are bracing for a potential economic downturn by shrinking their employee base to get ready for what they see coming. This updated list compiled by Reuters gives an indication of the scale involved; not massive, but significant.
On a same-store basis, American retail sales held up well last week, rising far more than inflation from year-ago levels (+10%).
US retailers used the holiday sales period to try to reduce inventories. That meant that warehouse pressures remained elevated but that transportation pressures eased sharply. We are unlikely to see a replenishment inventory build in Q1-2023.
The widely-watched local PMI showed their manufacturing sector contracted in December. It was a result broadly in line with the internationally-benchmarked factory PMI we noted yesterday. There is a broad pull-back underway in America's factories.
The data for November shows that job openings and new hires stayed at good levels, but probably things have moved on from there now.
US mortgage applications fell sharply over the Christmas period as you might expect. But they remain more than -40% lower than year-ago levels so still in the doldrums. Meanwhile American mortgage rates are back rising again and that won't help going forward either.
The US Fed released the minutes of its mid-December meeting, and those revealed they thought financial markets were misreading their signals. They are concerned because monetary policy only works when markets interpret their policy directions properly, and a misreading undermines their targets. Markets had been assuming the Fed will ease off in early 2023 and then start to reverse its rate hikes. But that doesn't seem to be what the Fed intends. It still isn't convinced it is on top of the inflation threat. Still, there was no immediate reaction in financial market pricing.
In China, the World Health Organisation says data there shows no new coronavirus variant has been found - it's just omicron - but the Chinese data under-represents how many people have died in the fast spreading outbreak. Essentially, China is being caught out by low vaccination rates. The costs may be high and they may be late, but they are getting the message.
New Zealand stands out by not requiring special testing requirements from China.
Meanwhile, Hong Hong retail sales are in real trouble it seems. They were down -4.2% on a value basis and down -5.3% on a volume basis in November.
In Australia, there are signs that their trade relationship with China may be about to thaw. There are rising expectations that some export bans may be lifted. But a major beneficiary will likely be the Aussie coal industry and a major boost for investors who ignore the climate and ESG trends that have been gaining traction elsewhere. It will make it hard for investors committed to those trends to compete.
And staying in Australia, the level of unsold properties is rising fast now, up +15% over 2022 and the fastest rise in a decade. Older suburban homes are especially harder to sell in the present market environment. They are calling this a 'stale stock' problem.
The UST 10yr yield started today at 3.72%, and down another -7 bps from yesterday. The UST 2-10 rate curve is unchanged at -65 bps. And their 1-5 curve is little-changed at -83 bps. But their 30 day-10yr curve slipped further back into inversion, now at -33 bps. The Australian ten year bond is down -12 bps at 3.83%. The China Govt ten year bond is little-changed at 2.87%. And the New Zealand Govt ten year is starting at 4.42% and down a sharp -12 bps.
On Wall Street, the S&P500 is up +0.5% so far in its Wednesday trade and taking it back to pre-Christmas levels. Tesla's stock is up from yesterday's lows. In contrast, all major European bourses closed higher again overnight, up a sharp +2.2%, but London lagged at just +0.4%. Yesterday, Tokyo started its 2023 session down a sharp -1.5%. But Hong Kong rose another +3.2% although Shanghai was more muted, up just +0.2%. The ASX ended up +1.6% but just making back the first-day loss. The NZX50 started trading in 2023 and ended up +1.0%.
The price of gold will open today at US$1856/oz and up another +US$18 from yesterday. But that is a six month high.
And oil prices start today down -US$4 from yesterday's levels at just under US$74/bbl in the US while the international Brent price is just over US$78.50/bbl. These levels take it back close to its yearly lows.
The Kiwi dollar has recovered +½c to 63.1 USc after yesterday's drop. Against the Australian dollar however we fell another -¾c to 92.1 AUc. Against the euro we are firm at 59.5 euro cents and almost a +½c gain. That all means our TWI-5 starts today at 71, up a net +40 bps from yesterday.
In the US, regulators have issued a joint warning to banks over the risks in the cryptocurrency market. They told banks to be wary of potential fraud, legal uncertainty and misleading disclosures by digital asset firms. They also said there is "contagion risk" from the sector. The bitcoin price is now at US$16,887 and +1.6% higher than this time yesterday. Volatility over the past 24 hours has been low at just +/- 0.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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65 Comments
David : you're welcome to visit us down in Gummiland where it is indeed summer ... sunny & warm ... the sweet smell of BBQ's grilling ... lawn sprinklers splishy splashing an abundance of free water upon the lawns : great joy , my man 🍺😊
Not going to be free for long GBH. Mahuta & her “collectors” will soon be charging by the bucketload! Hope you don’t go pail at the prospect?
11 months , Mr F ... 11 months & counting down ... the delightful Nanaia will be gone from our lives forever ....
... off on a big boyz beer trip today : apologies to Adrian Orr ... I'm not tightening my belt , gonna need to let it out a notch or three ... Fantastic !
Doesn't sound like there will be any cooling of the jets either... half a dozen crafty double IPAs tends to get the old afterburner fired up.
Home style here, Foxglove’s Brewery. Basil Brush Best British Bitter. All the Bs, guaranteed B grade. Brilliant, billowy bowel booster!
boom boom!
Rhyme & Reason taproom , Wanaka ... thirst stop on the journey : OMG , Kiwi craft beers are de-freaking-licious .... cheers 🍺😋😊🍺
Go for it, the whole damn range in the whole damn shooting box, especially the pale ale you can stand a fork up in. But just don’t do anything that I would, and you’ll be fine.
... and ... just down Gordon St is Ground Up Brewing ... Fifth Voyage Choc & Coconut porter ... Jimminy Cricket ... that's a great beer , co-mingled with a pepperoni pizza ...
2023 is blasting off in grand style , Mr F ... very grand , mon ami ...
"Abundant Three Waters upon the lawns "😁
Been a a fairly dull cool summer in the Eastern BoP so far and that soil map is about correct, still pretty damp and looking to stay that way for a bit at least. Just a pity the grass and crop growth rates have been a bit slow. Buying watermelon yesterday about 1/2 the normal size. Still, droughts suck so we'll take it.
How's those Nitrites tasting gummy....fizzy?
How's that envy of others enjoying something good, going Baywatch?
... why so glum , chum ?... c'mon Mr Bay ... lets boogie , let's have some fun ... 2023 dude : crack on with living & loving ...
Not exactly free water. Is it not $1.35 per cubic meter in Christchurch?
If you really want relatively free water then you can do as I have and spend $50k to drill a 200 meter hole in your back yard.
It's free up to 700 litres per day, then $1.35 each 1,000l above that as you say. Only hits high users.
Believe GBH resides in the Waimakariri catchment?
... indeedilydoodily yes , Mr F ... darling Dan's jurisdiction ...
That's just mental, just get a couple of water tanks off the roof, how much water are you using ? The stuff falls out of the sky for free. In a family of four we never ran out of water ever over 17 years with a couple of 6000 gallon tanks and the roof area on the house was smaller than average.
Because people go "ew, I don't want bird poo and dead possums in my water thankyouverymuch".
But people don't realise what's in the stuff which comes out of the tap.
... bird poo & dead possums ? ... that's flavour ... there's body in that water ...
Boring radio and TV over the break. The most interesting was squawk-back radio on full throttle cat attack last night. 😩
Good cricket on TV however.
The UST 10yr yield started today at 3.72%, and down another -7 bps from yesterday.
And with it, global inversions roar back.
Was the lessened pessimism of the second half of December an illusion? For the first full trading day of 2023, it sure seemed like it. Pummeled by China's awful numbers, LT bonds worldwide were bid. Then came another major CPI down big, and so, too, were rates. Inversions are back big.
New Zealand stands out by not requiring special testing requirements from China
Although the minister will be emailing a small number of tourists with a voluntary questionnaire
Big bold move
Maybe NZ is finally seeing some sense. The latest Infection fatality ratio data is embarrassingly like a bad flu season than a pandemic.
"The median IFR was 0.0003% at 0–19 years, 0.002% at 20–29 years, 0.011% at 30–39 years, 0.035% at 40–49 years, 0.123% at 50–59 years, and 0.506% at 60–69 years.∗
At a global level, pre-vaccination IFR may have been as low as 0.03% and 0.07% for 0–59 and 0–69 year old people, respectively."
https://www.sciencedirect.com/science/article/pii/S001393512201982X
For the USA the vast majority of covid fatalites had four or more comorbidities.
"For over 5% of these deaths, COVID-19 was the only cause mentioned on the death certificate. For deaths with conditions or causes in addition to COVID-19, on average, there were 4.0 additional conditions or causes per death."
https://www.cdc.gov/nchs/nvss/vsrr/covid_weekly/index.htm?fbclid=IwAR3-…
It's kind of astonishing how so many people are refusing to address the cause of metabolic disorders. These disorders are a far greater threat to human wellbeing even without COVID and a major factor contributing to overall fatalities for those with COVID.
Get some exercise, get some sunlight, radically reduce your consumption of nutrient deficient high energy foods. Avoid alcohol and drugs. Think about what would be ancestrally appropriate food for an apex predator.
Live until 35?
Seems like a lot of these solutions shuold be prefaced with "Have the time and money to" which starts to put a bit of a lens on things.
Nothing does more for your life expectancy than just "Be well-off" which is generally going to give you a lot more time for all that other stuff.
Metabolic disorders are largely diseases of affluence. Certainly the more affluent in an affluent society such as NZ's have advantages when it comes to high quality food and better able to apply reasoning skills due to better education and life experience. I have noticed that most of my male peers in the IT industry have markedly improved their body compositions lately.
Metabolic disorders, while diseases of affluence, appear to afflict certain groups more than others in affluent societies. Capitalism doesn't help the state of things as companies try to outdo each other marketing essentially celebration food as daily fare, adding more salt and sugar and flavourings and even touting it as heart friendly "health food". At the same time the authorities push products that are expensive and are largely comprised of water, indigestible compounds, toxins and few nutrients along with fruits that are so high in fructose that they should really come with a health warning. Very hard for the average person to navigate this dystopia.
will screw it up potential for kiwis who travel from here thou....who are they meant to represent....
They are concerned because monetary policy only works when markets interpret their policy directions properly
It's getting to peak stupid now isn't it? Basically, everyone knows that prices are steadying and this phase of aggressive hikes is over, but the Fed doesn't want the market to move ahead of them so they have to act tough as if they are going to continue to hike rates aggressively. It's a stupid game of bluff - the twilight era of monetary policy.
So many people think FED will save the market but if they lower rates the USD will be very weak and inflation will skyrocket the us OCR will stay around 5% to 7% for years.
I think the era of ultra-low rates is over - cheap credit just feeds speculative investment and asset bubbles.
However, my view is that US rates will settle at around 3.5% by year end, with zero (or negative) rate credit and grants available for investments in initiatives that align with US industrial policy - chip manufacturing, green tech, energy efficiency etc.
On Wall Street, the S&P500 is up +0.5% so far in its Wednesday trade and taking it back to pre-Christmas levels. Tesla's stock is up from yesterday's lows.
Apple’s Slide Topples Last Stock in $2 Trillion Club
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IPhone maker’s market cap shrunk by about $1 trillion
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There is now no company with a $2 trillion market valuation
The US Fed released the minutes of its mid-December meeting, and those revealed they thought financial markets were misreading their signals. They are concerned because monetary policy only works when markets interpret their policy directions properly, and a misreading undermines their targets. Markets had been assuming the Fed will ease off in early 2023 and then start to reverse its rate hikes. But that doesn't seem to be what the Fed intends. It still isn't convinced it is on top of the inflation threat. Still, there was no immediate reaction in financial market pricing.
Talk is cheap - show me monetary policy money.
So the government stated: "Covid data out of China cannot be trusted" they then concluded paradoxally that "travellers to NZ from China won't need a pre departure PCR test" but that the government will contact a few randomly selected Chinese visitors to ask: "have you got Covid" once they're in NZ.
I'm not that worried about CV, but I find the naivety, lack of comon sense and logic from the government just staggering
Agree but curled up in that as well, is the inconsistency and too often incompetence that issues forth from the ministries themselves. No fan of this government but they were quite obviously often left in the lurch by the MoH during the height of the pandemic, and still are at times it seems. Hard to imagine how restructuring a monolithic centralised power base in Wellington will correct anything at all. I go along with Dr Reti’s informed opinion “same team, different jerseys.”
It don't think it's that complicated, the simple question is; given data out of China is unreliable, do you:
A) request a pre-departure PCR like many other countries do ?
B) NOT request a pre departure PCR and ask a few Chinese visitors if they have Covid, once they are past immigration, in NZ ?
What's the point of requesting a pre-departure PCR if as you just said its unreliable or are we selective in what we believe.
No predeparture test for those coming to NZ yet predeparture test for those wanting to go to China? Sounds logical...lol
NOTICE FOR PASSENGERS BOARDING CHINA-BOUND FLIGHTS FROM NEW ZEALAND
2022-12-27 14:59
Starting from January 8, 2023, COVID-19 will be managed as a Class B infectious disease in China, and border control measures will be adjusted accordingly. China-bound travelers are advised to read the following information on the adjustment to facilitate traveling:
1.Nucleic Acid Test
Travelers are required to take nucleic acid test within 48 hours before flight departure, and can only take flight when the test result is negative.
The above measures will be effective for all passengers arriving in China after 12:00 am (included) on January 8, 2023.Embassy of the People’s Republic of China in New Zealand http://nz.china-embassy.gov.cn/eng/lsfw/zytz/202212/t20221227_10995885…
Foxy, "..Dr Reti’s informed opinion “same team, different jerseys.”..is this referring to changing the government??
NZ - the place where good ideas go to die.
"Environment Canterbury has declined to process the revised application for a proposed waste-to-energy plant in South Canterbury.
“This is due to insufficient information being supplied relating to the activity and its effects on the environment – in particular, the lack of a cultural impact assessment,” the regional council body says.
In November 2022, South Island Resource Recovery Limited lodged seven applications for reassessment, after its initial applications were returned in October.
ECan regional leader of consents delivery Hayleigh Brereton acknowledges the resubmitted application addresses many of the matters raised in the previous version regarding adverse effects of the discharges to air, stormwater and wastewater. But she says one critical issue has not been addressed.
“This is a very large proposal and the first of its kind in New Zealand, and would have some wide-reaching potential effects, including many unknown effects on mana whenua,” Brereton says.
“A site-specific Cultural Impact Assessment is required to be completed either by, or in close consultation with Te Rūnanga o Waihao. This remains an outstanding matter, and we, therefore, consider the application incomplete.”
http://offsettingbehaviour.blogspot.com/2022/12/not-outside-of-asylum.h…
These the same identities that not only allowed, but used ratepayers money to fight in court to continue to do so, billions of gallons of pure Canterbury artesian water to be extracted for free, bottled and sold for great profit in China while those same good ratepayers of Canterbury drank and paid for chlorinated water.
Can we not get rid of all Iwis and land claims, so that we have equal rules for all New Zealanders?
No.
I actually see iwi protecting my interests despite not being associated with any iwi.
As per foxgloves instance a bit of intervention on behalf of mana whenua would be a good thing. My reading on the waste plant it would be a damn good thing to widen the consultation and get it right first time.
That's a good point regarding iwi consultation. If people look past the identity, and actually see it as an extra layer of scrutiny or providing another perspective to the mix, then we're more likely to see positive outcomes for all.
And what is this extra layer of scrutiny and perspective they are offering that hasn't already been covered by the other requirements that they have already provided evidence of?
I agree, however the multi-generational aspect of iwi consultation often means no decisions of any meaningful outcome ever get made (in my limited experience dealing with a forestry trust), in any relevant timeframes (perhaps I need to adjust my expectations of time).
In theory what we are after is a long term strategic benefit and sustainability analysis, not based on race, but on resource availability for all citizens, that can be achieved within a sensible timeframe, at a reasonable cost.
Its a sad state of affairs when (like you allude to), iwi consultation is the only real means to an end (for this country) to not sell the family silver, whilst also getting valuable buy in from segments of the society who would otherwise have no say, for otherwise sensible projects.
There is an app for that - “The chiefs of the confederation of united tribes, and the other chiefs who have not joined the confederation, cede to the Queen of England forever the entire sovereignty of their country.”
profile,
Do you really believe that those Maori chiefs knowingly signed away all sovereignty in perpetuity? The Maori text was translated back into English by Henry Williams for Governor Gipps and signed by Hobson and Williams with these words; " I certify that the above is as literal a translation of the Treaty of Waitangi as the idiom of the language will admit of". (Public Record Office London, CO 209/7, 13-15)
I suspect that they meant something quite different, but whether they did or not is surely irrelevant. They simply did not have the right to bind Maori to any such promise in perpetuity.
I speak as a Scot. The 1707 Union of the Parliaments was only forced through by bribery and certain concessions to such as the Church of Scotland, but though it took some time, Scotland again has its own parliament.
Have a read of Ian Wisharts book on the matter and let me know what you think. He makes some very good points that bear consideration.
Maori, where they have kept control of their land and not sold it off, do have sovereignty over that land. But they willingly signed up to centralised power, in particular the judicial system, as they realised it was far better than their feudal system.
Like it or not, the system of the crown controlling title to land has worked. How much longer it will still work is another matter.
I don't have a problem with Maori ceding control to a central government and have them treated as equally under the law. But quite patently they were not looked upon or treated equally. Basically those that said no we won't sell had their lands invaded and those that did sell often had the agreement ignored or adjusted, the 10% reserve being classic.
We will continue to pay for that lack of one law for all for a number of generations to come.
DJI, Dow Jones, closed this morning at 33,269. A small solid Santa gain ':o
So a positive start to markets in 2023
Newsflash: this from Corelogic
"CoreLogic’s House Price Index (HPI) shows property values fell -0.2% ..... December’s fall means values were down -5.0% nationally over the calendar year"
Smoke and mirrors perhaps BUT That is the result for 2022! Possibly those who predicted a flat market were much much closer to being right than others were
I'm surprised no one has blamed Ardern for the egg shortage.
Eggs benediction then?
Is that sarcasm or you've not read the likes of stuff comments?
You'd think the egg shortage was cause she was on holiday and hadn't asked the niegbour to collect the eggs.
We could talk about the fact that greengrocers were not allowed to operate during the first lockdown and many small-scale egg farmers made their dough off this retail channel.
The small players that went under around this time has a part to play in the ongoing egg shortage.
Jeez,what ever...
https://www.stuff.co.nz/business/farming/8045847/Battery-hens-phased-ou…
Battery hens phased out in 10 years
Ali Tocker10:30, Dec 07 2012
They've had 10 YEARS to sort themselves...
I think most just said "no more, we're done". Probably amplified by murmors of banning colony as well as battery laying.
They have sorted themselves into an opec style org.....theres plenty of shortages ahead....lol "They keep prices high by lowering supplies "..lol
Markets had been assuming the Fed will ease off in early 2023 and then start to reverse its rate hikes. But that doesn't seem to be what the Fed intends. It still isn't convinced it is on top of the inflation threat.
The FED targets a 2% rate of inflation which they last achieved in February 2021. US inflation is currently at 7.1%.
How on earth would anyone talk themselves into believing that the FED would slow down rate rises?
Inflation has started to reverse. Lots of layoffs. PMI data all bad.
Lots of hiring as well. PMIs aren't that bad, we saw similar levels in 2016.
Those fed minutes are a few weeks old. What matters a lot more are the data coming in from the major economies and its all bad everywhere.
There must be a way to blame Jacinda for this,surely...
https://www.drive.com.au/news/police-warn-drivers-about-dangerous-potho…
Police issue warnings for potholes on regional roads, update caravan safety
Heavy rain and floods in recent months have destroyed thousands of kilometres of country roads, and there hasn’t been enough time to fully repair them. And caravan warnings have been updated. Here’s what you need to know.
Tide goes out and the swimmers are in y fronts from Kmart not Speedos
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