Here's our summary of key economic events overnight that affect New Zealand, with news that all the 'rich men north of Richmond' have now decamped to Jackson Hole WO, and are awaiting Fed boss Powell's speech.
So today we are left with the granular details of the American economy - which is actually doing remarkably well for the non-rich men south of Richmond (even if they can't actually acknowledge it).
New jobless claims last week fell to under +200,000 which is a low benchmark and confirming their labour market is in pink health still. There are now still 'only' 1.8 mln people on these benefits, an unusually low level even if has become normalised over the past two years.
American durable goods orders in July recorded a rather sharp -5.2% decrease following a +4.4% rise in June. But the July drop is all about the timing of large aircraft orders. Excluding those, durable goods orders rose in July. And overall they are +3.3% higher than year-ago levels. Orders for capital goods are +4.2% higher than a year ago. None of this suggests rust-belt activity is under any special pressure.
And the Chicago Fed's more broad national activity index pointed to a pickup in economic activity in July, again belying the doomsters.
And this in turn is confirmed by the Kansas City Fed factory survey which reported a sharp recovery in their key measures. And firms surveyed indicated that they expected a further pickup in the months ahead, so hiring remained positive.
The rich men north of Richmond seem to be organising an expansion that is keeping those south of Richmond in a positive economic state. New research shows that Americans won't leave their jobs unless the new offer is US$78,645 pa on average (NZ$133,000), +8% higher than a year ago when CPI inflation is only 3.0%. That is the highest on record. (And for men - who seem attracted to the viral anthem - they won't switch jobs unless the offer is US$91,000 (NZ$154,000).) They may 'feel' left behind but clearly it is their sense of entitlement that is the thing that is unmoored.
In Turkey, the shift back from the disastrous Erdogan experiments with their monetary policy positions is requiring some rather sharp changes. Today they raised their benchmark policy interest rates by +750 bps to 25% following a +250 bps hike in the previous meeting. This rate has risen from 9% in June. All this is in the face of a currency that devalued by -77% from the pre-pandemic period and an inflation rate that is still at 48%. However, this latest indication that they are serious about tackling inflation saw the Turkish currency gain more than 5% against the USD in a day.
In China, the stories about foreign investors pulling out their exposures just keep on coming.
The recent rise in container freight rates hasn't been maintained in the latest weekly assessment. They fell -3.5% last week from the prior week, with the falls occurring on all major routes. Bulk cargo rates reversed to be lower too.
The UST 10yr yield will start today at 4.23%, recovering +3 bps from this time yesterday in a small bounce. Their key 2-10 yield curve inversion is a tiny bit deeper at -77 bps. Their 1-5 curve inversion is unchanged at -101 bps. Their 3 mth-10yr curve inversion is also little-changed at -115 bps. The Australian 10 year bond yield is now at 4.13% and up +2 bps from yesterday. The China 10 year bond rate is unchanged at 2.57%. And the NZ Government 10 year bond rate is down -9 bps, now at 5.05%.
Wall Street is not feeling good today with the S&P500 down -1.0%. Overnight European markets were less enthusiastic but London was up +0.2%, Frankfurt was down -0.7% and Paris down -0.4%. Yesterday, Tokyo ended its Thursday session up +0.9% with a late surge, and Hong Kong ended up +2.1%. But Shanghai couldn't hold earlier gains and ended up just +0.1%. The ASX200 ended its Thursday session up +0.5% but the NZX50 ended down -0.6%.
The price of gold will start today at US$1917/oz and unchanged from this time yesterday.
And oil prices are down yet another -50 USc at just over US$78.50/bbl in the US. The international Brent price is now just over US$82.50/bbl.
The Kiwi dollar starts today another -½c weaker at just on 59.2 USc. Against the Aussie we are softer at 92.2 AUc. Against the euro we are -¼c softer at 54.8 euro cents and off a two week high. That all means the TWI-5 is now at 68.4 and down -40 bps from yesterday.
The bitcoin price is lower today and now at US$26,033 and down by -1.8% from yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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It wasn't that long ago that 7% was normal and affordable here. Was it due to the worldwide pandemic or has the pandemic just highlighted the illness in our debt based command economy?
Proper independent reserve banks? Beholden to 'too big to fail', unwilling to regulate credit creation, pimping debt and blowing asset bubbles, and part of the ruling 'elite'. They don't sound so independent.
A strange interpretation of the statistics you linked to David. Those statistics are consistent with a more precarious employment environment for younger people, and higher salary expectations for those more qualified. I don't see anything supporting your inference that the demographic the song appeals to are doing well.
Climate change warming of the planet factiod.
The centre of our planet is as hot as the surface of the sun.
https://www.smithsonianmag.com/smart-news/the-center-of-the-earth-is-as…
Yet it is less than 3959km from us!
We have known for decades that the carbon monster is manmade - both the aquatic and aerial components.
https://www.realclimate.org/index.php/archives/2004/12/how-do-we-know-t…
The rich men north of Richmond seem to be organising an expansion that is keeping those south of Richmond in a positive economic state.
The Problem Isn't A Housing Shortage, It's The Concentration Of Ownership By The Wealthy
The fairest option would be to allow interest cost deductions across the board for mortgages. Both investors and owner occupiers.
That way Governments have an incentive to prevent credit fueled bubbles from forming, as it'll hit the tax revenue if interest rates go up on large principal amounts.
Be even fairer if we fixed the broken tax system that incentivizes people to stack debt into 'businesses' to reduce tax liabilities - tax on profit for one class, tax on revenue for the other is a major root of our housing woes. Businesses don't pay tax on premises rent, but households do? At least they now both pay tax on money rent, but boy are the 'businesses' squirming about it.
How many?
Banks have migrated away from lending to productive business enterprises because the risk weights can be as high as 150%. Thus around 60% of NZ bank lending is dedicated to residential property mortgages owed by one third of already wealthy households, at around 35% risk weighting.
Furthermore, banks choose their mortgage customers carefully.
Rationed markets are determined by the short- side principle: whichever quantity of demand or supply is smaller determines the outcome (as it is the smallest common denominator for transactions to take place; see Muellbauer & Portes, 1978). Disequilibrium and rationed markets create circumstances that immediately bring economics and politics together: the short side of any rationed market has allocation powers. In other words, the short side has the power to pick and choose with whom it is doing business and how resources are allocated, irrespective of the transaction price. In equilibrium, it is apparently neutral market forces that produce politically palliative outcomes. In disequilibrium, the reality of discrete and arbitrary decisions by allocators (read banks) becomes visible — allocators who can, if they wish, exploit their selection power to extract non-market benefits or ‘rents’...Link
That is the point. Labour are proven as an incompetent government and for that to continue, but now in combination with the Greens & TPM, is undeniably going to be even worse for NZ. The alternative could hardly offer anything worse than that track record could it.
Interesting point. PM Cameron’s call to put Brexit to a vote and then May’s subsequent ill- fated snap election & then covid and then Boris. Quite a trail of a tale. Perhaps in a similar vein, the current NZ government might have likewise offered a referendum on the proposals for co-governance, still to be defined, , but unmentioned prior to 2020. Perhaps, to a measure though, this element will nonetheless, feature in the forthcoming election’s outcome.
Traders in CO2 Credits Saddled With Vast Stranded-Asset Pile Millions of carbon credits lie dormant on traders’ accounts A number of major carbon traders are finding that offsets they bought may now be valueless. Trafigura Group, the world’s largest trader of carbon-removal credits, has suspended a consignment as it awaits the results of a probe into the forestry project behind the units. The situation has led the company to replace the offsets in a contract with a corporate client and instead keep the stranded credits on its own books. Hannah Hauman, global head of carbon trading at Trafigura — and a former oil trader — says the complete loss of value seen in some corners of the voluntary carbon market is unlike anything she’s witnessed in oil markets. It’s the latest in a string of cases in which traders handling carbon credits are having to treat such assets as stranded. Just over 75 million carbon credits currently lie dormant on the accounts of Vitol SA, the world’s largest independent commodity trader. And Dutch trader ACT Commodities Group BV and ACT Financial Solutions, which are both units of SMS Holding BV, last year wrote off about 1.5 million credits. But independent scientific analysis of a project’s CO2 reduction claims often lags behind the issuance of the corresponding carbon credits, leaving buyers in the $2 billion market exposed to losses. https://bloomberg.com/news/articles/2023-08-22/traders-in-co2-credits-saddled-with-vast-stranded-asset-pile Link
this is hilarious! Even the traders were not able to see that an entirely artificial construct that allowed rich individuals and conglomerates avoid being accountable for their climate harm was complete BS and bound to fail in some way. The creator of any ETS should be charged with running a ponzi fraud. The worst of them are the Greenies who are so enamoured in their own brilliance they can't see the obvious flaws in the system.
Brics is now a motley crew of failing states
From Russia to China and Brazil, these nations face major problems, with the notable exception of India
Well, poverty stricken, energy less Britain would know, wouldn't it?
Remember the scene in 'The Big Short' where they interview the ex-bartenders turned mortgage brokers?
America is in the midst of a housing affordability crisis, and saving for a down payment is one of the biggest barriers potential home buyers face. That’s why Zillow Home Loans is supporting eligible home buyers with its new 1% Down Payment program. Borrowers who qualify can now put just 1% down on a home, and Zillow Home Loans will pay the other 2%. The program aims to reduce the time some potential home buyers need to save and opens up the possibility of homeownership to those who are ready to take on a mortgage.
https://www.zillowgroup.com/news/zillow-home-loans-new-1-down-payment-o…
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