Here's our summary of key economic events overnight that affect New Zealand, with news today is Budget Day in New Zealand and we will have full coverage this afternoon.
But first in the US, the good rise in mortgage applications we noted last week have been reversed in the latest report and they were down a sharpish -5.7% to be -26% lower than year-ago levels. The benchmark 30 year fixed mortgage rate was little-changed.
American housing starts unexpectedly rose in April from March, advancing +2.2% to an annualised rate to above 1.4 mln. But data for March was revised lower. And building permits fell although they are still sitting at a higher level than completions.
This American data may not be stellar, but fears of a debt default seem to be easing with both sides saying a deal can be done. And we should note that stresses in the US regional banking markets seem to be easing - and you can see that as share prices for those thought most at risk, recovering.
In China, house prices were little-changed in April - for new builds at least. But the declines for existing resales continue with 34 of 70 housing markets recording falling 'second-hand' house prices in the month and 61 or the 70 recorded falling house prices year-on-year.
Foreign direct investment into China was also weak in April, continuing the 2023 trend. It rose just +2.2% from a year ago and far below what they are used to.
In China, official April data put their jobless rate at 5.2% and for those 16-24 their unemployment rate was 20.4%. (For perspective, the March New Zealand jobless rate was 3.4% and the 16-24 jobless rate here was 10.4%.) That youth unemployment rate in China is a massive problem for them. And some in Beijing are suggesting graduates that can't find work should be sent to the countryside to work as farm labourers.
Japan's economy expanded more than expected in Q1-2023. However, it only grew by +0.4% over Q4-2022. That is a +1.6% expansion (real) over the past year and was the fastest pace since Q2-2022.
In Australia, wages rose +3.7% over the 12 months to March, and growth at this rate is approaching levels the RBA will find uncomfortable without higher productivity. But growth at this rate is much more modest than expected and far lower than their 7.0% inflation rate in the same period. (For perspective, New Zealand total hourly earnings rose +7.6% in the year to March while inflation ran at +6.7% in the same period.)
The UST 10yr yield starts today at 3.58%, and up another +3 bps from this time yesterday. Their key 2-10 yield curve is a bit more inverted at -58 bps. Their 1-5 curve is a bit less inverted at -133 bps. But their 3 mth-10yr curve is also less inverted at -193 bps. The Australian 10 year bond yield is now at 3.48% and unchanged. The China 10 year bond rate is little-changed at 2.74%. And the NZ Government 10 year bond rate is at 4.25% up another +7 bps from yesterday.
Wall Street has opened its Wednesday session with a solid +1.2% gain on the S&P500. Overnight European markets were mixed with Frankfurt up +0.3% and London down -0.4% to bookend these markets. Yesterday Tokyo closed up another +0.8%. But Hong Kong was down a very sharp -2.1% and Shanghai was down -0.2%. The ASX200 closed its Wednesday session down another -0.5% and the NZX50 was little-changed again, up just +0.1%.
The price of gold will start today at US$1981/oz and down -US$8 in a day.
And oil prices are up +US$2 from yesterday to be just under US$73/bbl in the US. The international Brent price is now under US$77/bbl.
The Kiwi dollar is a +¼c firmer against the USD from yesterday and now just over 62.6 USc. Against the Aussie we are up +¼c at 93.9 AUc. Against the euro we are up +½c at 57.8 euro cents. That means the TWI-5 is now under 71 and up +50 bps from this time yesterday. We should also note that the Chinese yuan keeps sliding now past 7 to the USD, a point it hasn't been at in 18 months.
The bitcoin price is very little-changed today, now at US$27,084 and up a mere +0.1% from this time yesterday. Volatility over the past 24 hours has remained modest at just on +/- 1.2%. In Britain, a parliamentary select committee has urged their government to treat retail investment in cryptocurrencies such as Bitcoin as a form of gambling and be regulated as such.
Finally, it is Budget Day in New Zealand, with the added spice that it is an election year. Join us this afternoon for full coverage.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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118 Comments
Having more money means you're more intelligent?
This article suggests not https://www.sciencedirect.com/science/article/abs/pii/S0160289607000219
Income is slightly correlated but wealth isn't, and the smarter you are the more likely you'll end up in financial distress!?
Well Christopher (who once ran an airline did you know?) is currently seeing his net wealth decline by a far greater amount than Chippy from the Hutt (don’t be fooled by the houses that he’s got, he’s still he’s still chippy from the Hutt).
so you tell me whose smarter?
It’s interesting to note the Arson Loafers news being so low down the Herald Website. Is it being pushed down by Govt? I suspect so. ‘Look at Harry! Look at Megan! Don’t worry about the truth.’
Also note the attempted murder by car on North Shore Emergency Department article. The Mental Health Crisis has moved on from the theft phase to the murder phase (Addit note how the attacker also had a knife and was not searched for this while in the ED as a mental health patient).
No one cares when poor or the ones who are down the social class die.
If this was a fire in multi million dollar apartment building and one of the bureaucracy had died, the news would be on front pages and there will be no end of it for months to come.
This will be swiped under the carpet and no one will talk after a week.
I wouldn't worry the whole thing is coming to an end after Charles. Up and coming generations have changed, they are pretty lazy and no way are they going to tie their whole lives up with public engagements, but no doubt they will enjoy a big spend up with that kind of wealth to get through.
Sorry, got that wrong
Both get killed
10And the man that committeth adultery with another man's wife, even he that committeth adultery with his neighbour's wife, the adulterer and the adulteress shall surely be put to death.
More likely we will see a new model - local food, locally-traded. The BigAg model was dependent on cheap abundant energy, and on draw-down. As was the whole system.
https://consciousnessofsheep.co.uk/2023/05/17/next-phase/
'Such a stagflation – with the absence of any cheap and abundant alternative energy source to save the day, as happened in the 1930s and 1940s – would entail an almost total collapse of an over-financialised import economy like the UK, as we had to abandon consumerism in a desperate attempt to produce essentials ourselves or to figure out how to manufacture something of value to continue trading for vital imports… And no, computer coding, search engine optimisation, making artwork using machine learning, and all the other bullshit jobs so many of us do these days do not count as essential skills within a collapsing economy.
This interview got me reassessing the timing of peak everything. AI may be the ultimate tech extraction extender. Found the content more than a little depressing, although should be mandatory viewing for students, but especially economists.
It's a bit sad you think like that. If a baker makes bread and sells it to a customer who can then eat the bread, even though the baker made money, I don't think it's a bad thing. The mentality that you have to "rip someone else off to make money" is a very sad one. How about you provide someone else with something of value, so that they are happy to part with their money for the benefit they're getting?
It's funny you mention that actually I've seen that in some cases the "budget branded" blue and white tins are more expensive than some of their counterparts. I'm avoiding shopping at the foodstuffs branded stores (stupid I know) because I hate how much they are gouging us.
I recall someone once said that before lunchtime paknsave makes enough profit to cover all their expenses, and everything after that is pure profits
I was at Pak n Save yesterday and what struck me is that not only are prices going up, the quality items have disappeared. For toilet paper, Klennex is gone from the shelves and only the budget brands were available. The same applies to paper towels - I filled a paper towel holder and realized quickly that the paper is thinner and the rolls themselves have less. The question has to be asked - NZ makes paper, so where are the quality items going to?
I'm pretty sure the quality stuff goes to the New World rather than Pak n Save.
We shop at New World. Prices on certain items (particularly junk food) make the nose bleed, but we don't buy those anyway. What we have noticed is that, whilst prices seem higher, because we don't buy the junk items, our overall shop is cheaper than Countdown. And they are almost never out-of-stock of anything (probably because of the perceived expense).
I've noticed the prices have increased (I particularly note the prices are dictated by the amount of stock present - my favourite beer fluctuates quite noticeably), but we have a budget and stick to it. If that means one less packet of biscuits, well, it's a luxury item we didn't really need anyway.
In Britain, a parliamentary select committee has urged their government to treat retail investment in cryptocurrencies such as Bitcoin as a form of gambling and be regulated as such.
The Committee is considering central bank digital currencies as a separate piece of work.
"Office for National Statistics (ONS) published the latest UK trade figures which showed UK exports reaching £815.2b in 2022 — up 25%.
That represents the highest export number ever recorded in UK history; some 17 per cent higher than the pre-Covid peak in 2019 and some 43 per cent above 2016 levels"
Quadruple to NZ's export performance since 2016. Can we have some of that Brexit failure please?
https://www.gov.uk/government/statistics/uk-trade-in-numbers/uk-trade-i…
https://www.macrotrends.net/countries/NZL/new-zealand/exports
I love the comment on Australias Wage levels - Australia, wages rose +3.7% over the 12 months to March, and growth at this rate is approaching levels the RBA will find uncomfortable without higher productivity.
Meanwhile in NZ we have a wage increase of 7.6% and not a murmur about productivity.
Anybody thinking inflation in NZ is about to fall dramatically - I've got you an Auckland Harbour Bridge to sell you.
Nz cant talk about productivity... no one in leadership actually understands what it is or what to do about it. Even our 'business' party (national led by 7houseLuxon) sees economic growth as coming from pumping house prices and letting in more unskilled immigrants to make picking fruit cheaper and cheaper.
We will become a great big farm with some retirement homes and a touch of tourism tacked on. Everyone with any other skills is off to Aus.
I think there are plenty of private sector industries that can talk about productivity, that's how they survive. Issue is the government think they know more, most of the behind scenes wellington workforce being book worms from Uni and straight into a government job know very little about productivity, and like to take dollars out of the private sector and dish it out themselves to top heavy Ministries that have very little accountability on expenditure, as "they know best".
Nz cant talk about productivity... no one in leadership actually understands what it is or what to do about it.
Enter the bloated government sector where they will create meaningless jobs with mid-high salaries simply because nobody in middle management has the guts to stand up and say it isn't necessary when it could be done by current employees. Fear of speaking out driven by over-sensitivity and worrying if it will offend anyone and effect ones career. Welcome to the Labour Government culture - there will be a LOT of offence coming post election in the form of a large scale employment reality check.
It's the Professional Managerial Class makework employment scheme & probably isn't going away anytime soon.
https://www.spectator.com.au/2023/01/elite-revolt/
Its amazing in a country that is pretty good at food production that food is so damn expensive.... I guess if each item is exported into the top end of quality and luxury then that is why... every piece of fruit at Pak n Sav is perfect size and shape vs Avondale market , things cost money to be perfect.
We have own sheep and cows, but I still buy chicken and fish. Well I tend to catch more fish then buy nowdays. And I grow veges where we can. Its been a tough growing season for fruit and vege all the rain I can see why prices where so high.
I can actually see the regions being the preffered place to live powerdown... if you have no land in a city you will be screwed.
Apartments will be worthless
High incomes to pay the high costs to live here, and slow processes and attitudes to go with it. Any piece of equipment you buy gets highly inflated. We are more and more woke and bureaucratic by the year, even in the old days people complained of red tape. Then Lange and Douglas changed that, they created competition and efficiencies. We were on fire and customer service was a priority. Now its all about the staff demands, stuff the paying customer. Some say Lange and Douglas did a bad job but at least they tried.
Australia is a go-getter place if you want something done. But becoming woke towards the abs.
I have always imported stuff from the US etc, back when I was young you had to have an import license for most items, there was like a telephone book of items etc, it was nuts. Rich families held many of the licenses blocking you. Muldoon got turfed out and Lange had to do an emergency devaluation as the country was broke. They turfed all this out, made us a free economy introduced GST etc, they did what you would expect a National Gov to do.... I have a lot of time for that Labour party, this one is just stupid woke ideology and no economics.... you have to have money to dish it out to pet projects, borrowing it is not having it.
Since then we have gone full circle back to Govt control of the economy - and the losers again are the poor/middle class. With Muldoon it was import controls and SMP's now its resource consents and accommodation supplements (as well as other restrictive rules). There was lots of doom and gloom when SMP's were removed - and almost over night - but primary production survived and thrived.
Imagine what would happen if the same change was made to remove lots of consent restrictions and accommodation payouts
When the unemployment starts ticking up, which it will, there will be greater competition for jobs and this will drive staff to have to work harder to get a job, and achieve within a job to progress their career. After study I can remember the level of competition around 2012-2013 and that wasn't even as bad as the more recent post-GFC period
In Britain, a parliamentary select committee has urged their government to treat retail investment in cryptocurrencies such as Bitcoin as a form of gambling and be regulated as such.
Dreadful. This was determined after public submissions and hearing evidence from bureaucrats from the BoE, the Treasury, and financial services regulators similar to the FMA. The findings in the summary report were are all highly predictable and similar to what you would expect from normies. Understanding the crypto space at any meaningful level requires much more that what the UK Govt has done here.
Can safely be ignored.
Bitcoin, Not Crypto. Significantly different.
Yes buying shitcoins is like a high risk tec stock. Some are trying to sell a product for a problem that doesnt even exist, and most dont even have a product.
Others are literal meme coins eg Doge and Pepe that are for the shits and gigs.
I would encourage you to learn what Bitcoin is and why it is different :)
https://www.swanbitcoin.com/bitcoin-is-the-future-of-money-not-just-ano… Quick High level overview.
I know of at least 1 person in the UK whose bank has asked to terminate his accounts on suspicion of owning crypto assets (which is true - on a large scale - with a value much larger than most bankers would have experienced). The guy was quite disappointed as he had been using the bank his whole life. But he had to get over this sentimental hurdle. And ultimately he understands that the bank doesn't give a rats abut his financial wellbeing unless he's going to stump up for more debt created by his bank.
Crypto needs to be separated out so when it falls over it doesn't take anything else with it. If its as good as you say then it can stand on its own two feet. Most people see it as pure speculation and a Ponzi so it needs to be isolated.
Assets like Bitcoin have no counterparty risk to banks so they don't "take anything else with it." This is not about banks acting as a custodian of crypto assets for a customer. The UK is still in the stone age so don't expect that to happen in a hurry. And ultimately people should graduate to a level where they don't rely on anyone to handle their crypto assets.
And what my example shows is that retail banks don't care about what retail customers think belongs to them. In fact, those funds don't belong to customers who are really little more than unsecured creditors. Ultimately, you have little value to a bank if you're not a debt slave.
Looks like Trump understands MMT.
“People said I want to go and buy debt and default on debt, and I mean, these people are crazy. This is the United States government, First of all, you never have to default because you print the money, I hate to tell you, OK?”
https://fox2now.com/news/trump-u-s-will-never-default-because-you-print…
Wait until people realise that is THE ONLY way they are ever going to get out of debt. By inflating it away.
https://jameslavish.substack.com/p/-whats-a-debt-spiral-and-is-the-us
Interest repayments alone are approaching $1T already. That is almost a quarter of their entire yearly income.
From, in all likelihood, the next UK Prime Minister
Starmer told the British Chambers of Commerce annual conference on Wednesday that he believed prices should come down to make homes more affordable.... His comments are an unusual admission from a senior politician that falling house prices could be a good thing.
Reality and government policy seem to be working against each other?
Starmer leads a socialist opposition party. If over half the country want house prices to fall he is gonna back them verbally to get their votes
He is also a rich lawyer and politician.so once in power ... nothing much will change. If he learnt from JA then prices will rise.
Starmer btw leads a particularly messed up socialist party who will get in because the tories have become unelectable. Uk in a few years will be a horrible place to live regardless who u are.
Wall Street rises as fears ease
Animal spirits are still running somehow loose even with Fed Funds at 5%. Stocks mooning just because they mention AI and some s**tcoins still getting pumped with 2021 vibes. Another example that markets can remain irrational longer than investors can remain solvent. Link
More Than a Third of American Homes Struggle to Make Ends Meet, Census Says
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About 38.5% of households face difficulty in survey period
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More households turn to credit cards to cover spending needs
Yes! Put it somewhere not far north of Auckland. Tectonically stable, no near by volcanoes, plenty of water sources for cooling and is close to the largest power consuming location in the country.
This would also reduce the pressure on our transmission lines, and reduce energy loss due to transporting it over long distances.
They are very safe, and the cleanest form of energy generation in the world.
But Noooooo we are ProUdlY AnTi NUclEaR.......
A sacrifice I would gladly make to move NZ forward into the 21st century.
Not really. We'd need two, so that we have something suitably huge as backup for when the first plant goes down for maintenance or fails. Our system requires near- instant backup to be available for the largest current generator, and any current tech nuclear plant would dwarf all our other generators.
If the smaller nuclear power plants are proven out that could be a good fit (and I expect they will be proven in time, we're just not quite there yet)
Sounds familiar.
"That’s a really vicious circle – planning restrictions make existing homes more valuable, which turns them into money-making machines for their owners, which then makes it even harder for the next generation to get a fair go. Yes, we’re an entire continent. But we’re also one of the most urbanised nations on earth, and our failure to properly plan our cities is steadily dudding us.
NSW’s new premier seems to get that. But solving the housing crisis will be a hard, messy and long fight. That’s because it needs to be fought suburb by suburb against the most formidable political foe in the land … me. Or, to be more exact, millions of people just like me – older and richer, we make money from stopping things happening around us."
https://amp.smh.com.au/national/negative-gearing-isn-t-the-problem-it-s…
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