Here's our summary of key economic events overnight that affect New Zealand, with news American data points to the soft landing the US Fed has been looking for as it seems to have successfully navigated the inflation transition.
But first we should note that President Xi has arrived in San Francisco for the APEC meeting, his first visit to the US in five years. The last time he was there, China's economy was in the ascendency and Trump was the US president. This time those factors have reversed. The Biden-Xi meetings have started but there are low expectations for immediate progress on the thorny issues facing them. Progress, if it comes, will come slowly in small steps.
Meanwhile, US mortgage applications had a rare rise last week, and mortgage interest rates were unchanged. But the rise was as much about the year-ago base as any strength this year.
American producer prices fell in October in something of a surprise retreat. But it was driven lower fuel prices so that is a definite upside. Their PPI fell -0.5% in October from September to be +1.3% higher than a year ago. Good prices went down -1.4% in the month, the first decrease since May mainly due to a -15% drop in petrol prices. Services prices were unchanged from the prior month. It is a good result that indicates the American inflationary impulse has probably passed.
Retail sales decreased by -0.1% in October from September, putting an end to a six-month streak of increases, but at least it was much less than the market expectation of a -0.3% decline, so they have held up better than analysts expected. Year-on-year they are up +2.7%.
Going the other way, they was a very large, and unexpected, rise in factory activity in New York State, in the Fed survey for that region. It was most impressive, up +9.1% but it was driven by a surge in inventories, so it is unlikely to last. New order levels were little-changed, but there was a major catch-up in unfilled orders.
In the US Congress, the Republicans recently installed a new leader in the House of Representatives and his first big test was shepherding a budget funding bill through that body. He succeeded, but only with overwhelming Democrat support. 93 Republicans voted against his measure! Don't bother learning his name (Mike Johnson), he may not be around long. But the net impact of yesterday's vote is that shutdown pressures have evaporated - till the next time, probably in early February 2024.
In Japan, their economy shrank -0.5% in Q3-2023 from Q2, worse than market forecasts of a -0.1% decline and after a +1.1% growth in Q2, a flash figure showed. This was the first quarterly GDP contraction since Q4-2022. It was sluggish private consumption that caused the pullback and that was a surprise because intervening data didn't signal such a drop.
China's October industrial production came in +4.6% higher than year ago levels. These increases have been very even each month since March, looking like they will meet national targets in a steady, planned way.
China's October electricity production was up +5.2% from a year ago, but in fact down -8.6% from September and down -16.7% from August. These recent declines just points out how low the year-ago base was. Unfortunately much of the year-on-year rise was from coal-fired generation.
Retail sales in China were little-changed in October from September (+0.07%), but were up an impressive +7.6% from a year ago, which says more about the weak year-ago base than anything else.
In Europe, September data for industrial production looks kind of awful, no matter which way you look at it. Declines everywhere.
In Argentina, we should note that they are now close to the final round of voting in their presidential election. It is a Peronist vs a libertarian contest. Hyperinflation is the key backdrop.
In Australia, wages rose +4.0% in September from a year ago, the highest rate since 2008. A large part of this was because their Fair Work Commission annual wage review decision of +5.75%, rises in their aged care sector affecting about ¼ mln workers, and ratchet clauses in many wage and salary contracts. There were some chunky public wage settlements as well. In the same year, Australia had 5.4% CPI inflation. (For reference, NZ CPI was 5.6% in the same period and the QES reported weekly gross wages up +5.5% - so holding their own in New Zealand).
Optus has confirmed the software upgrade that triggered its nationwide meltdown last week was from the network of its parent company, Singtel.
The UST 10yr yield is up +8 bps from yesterday, now at 4.55% in a bounce of yesterday's dump. And their key 2-10 yield curve is slightly less inverted again, now by -36 bps. Their 1-5 curve is also less inverted, by -76 bps. Their 3 mth-10yr curve inversion is now -84 bps and much less inverted. The Australian 10 year bond yield is now at 4.60% and up +3 bps from yesterday. The China 10 year bond rate is little-changed at 2.68%. But the NZ Government 10 year bond rate is down -17 bps for yesterday's catch-up, now at 5.09%.
Wall Street started its Wednesday session losing all its earlier session gains but holding all of yesterday's big gain. Overnight, European markets closed up about +0.6% on average. Yesterday, Tokyo ended its Wednesday session up +2.5%. Hong Kong rose +3.9%, and Shanghai ended up another +0.6%. The ASX200 ended Wednesday up +1.4% and the NZX50 topped that, up +1.6%.
The price of gold will start today at US$1961/oz and down -US$2/oz from yesterday.
Oil prices have softened about -US$1.50 overnight, to be just under US$77.50/bbl in the US. The international Brent price is down to US$81.50/bbl.
The Kiwi dollar starts today at 60.3 USc and up almost +½c from yesterday. Against the Aussie we are up to 92.5 AUc. Against the euro we are also up at 55.5 euro cents. That all means our TWI-5 starts today at just on at 69.6, and a net +40 bps higher.
The bitcoin price starts today at US$36,365 and down another -1.4% from this time yesterday. Volatility over the past 24 hours has also been moderate at just on +/- 2.3%.
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58 Comments
Not sure either of the accuracy of a role reversal between the two in so much that the USA is in the ascendancy? Would think China on the quiet has been making some substantial gains. Firstly a sphere of heavy influence, Myanmar, Pakistan, Afghanistan, Iran, Syria and Iraq and Lebanon on the make, from the subcontinent to the Mediterranean. Secondly the weakening of Russia and its resultant reliance on China creates opportunity of interest in all the vast territories lying between the two.
Relentless cost-of-living pressure, rising interest rates, uncertainty about the direction of the economy and growing concern about inequality has undermined Australia’s sense of social cohesion.
https://www.theguardian.com/australia-news/2023/nov/15/social-cohesion-…
Australian and cultural cohesion in the same sentence?
Dang me...
I lived in Ramsgate Ave for several years; now snobsville. I remember being told at my first Aussie party - on the side of Pittwater as Gretel 2 slid past; "there's a culture here, but it's spelt with a 'K'. Mind you, when Gordon Ingate took Gretel to Newport (they were none of them young) they printed up a T-shirt which said: 'Daughters of America, Lock up your mothers'. I guess that's a culture....
Crime is an action, not a person. If you locked up everyone who ever broke a law, very few would be free.
'Tough on crime' is a rhetoric that placates the simple minded. Keeps them afraid while ignoring the inconvenient drivers of crime, and gives them someone to blame/hate/fear.
I notice you forgot to mention any white collar crimes in your list though? Was that an accident?
Tax evasion on property always seems to be missing from the tough on crime rhetoric too.
Moreover, I've already lived in multiple developing countries where they spent years disenfranchising the lower classes and funneling wealth up, only to have to hide in gated subdivisions. Funnily enough, "tough on crime" didn't seem to have the results folk here sing about from their hymn sheets.
Jesus drove the financial machinators who disenfranchised the poor out from the temple with a whip. We seem to reward them and elect them.
"Tough on crime" might not fix things like our earlier generous social support for the likes of poorer John Key and Paula Bennett did, but it sells and it's easier than accepting a little less free wealth.
Money chopping eco-crucifixes.
"MUNICH, Nov 15 (Reuters) - Siemens Energy (ENR1n.DE) may exit some markets and products of its struggling wind turbine business, it said on Wednesday, in a bid to return Siemens Gamesa to profit after it triggered the group's 4.6-billion euro ($5.0-billion) annual net loss.
Siemens Energy on Tuesday secured a 12-billion euro credit line from private banks that was partly backstopped by the German government"
On Wednesday the parent company, spun off from Siemens AG (SIEGn.DE) in 2020, said it was making no further provisions for faulty onshore turbine platforms having set aside 1.6 billion euros in August to tackle the problem, but would review the "scope of Siemens Gamesa's activities", which includes the manufacturing of blades and turbines.
Making a good product would solve that problem but nice try Profile - Gas and Oil cheque due the 20th?
He misses the point.
Always.
The point is that below some EROEI ratio - it seems to be below 11:1, but debt and maintenance-deferral can skew that - society cannot afford itself. This is exactly the problem with tertiary education, health, local authority services; we are traversing the 'affordability' threshold, but in energy terms.
There are those who claim renewables (they tend to group them) are getting ever-cheaper. In energy-demand terms, this cannot be so. That doesn't meant that moving to renewables is wrong, though; fossil energy is moving away from us and we are late already. But expecting profits as per the fossil era, on the post fossil one, is a misunderstanding.
"fossil energy is moving away from us"
https://www.firstpost.com/world/chinas-increased-appetite-for-fossil-fu…
https://www.iea.org/news/global-coal-demand-set-to-remain-at-record-lev…
https://energy.economictimes.indiatimes.com/news/coal/india-fires-up-co…
Transition to renewables low on energy and intent
Infrastructure Partnerships Australia says it all. “I’ve not met a single person in the ecosystem that believes there is any possibility of meeting the 2030 target. It’s mathematically impossible today – with the current framework for approvals, construction costs and timelines, the procurement methods,”
www.theaustralian.com.au%2Fcommentary%2Ftransition-to-renewables-low-on…
https://www.mdpi.com/1996-1073/2/1/25
'The calculation of this is beyond the scope of this paper but our guess is that we would need something like a 5:1 EROI from our main fuels to maintain anything like what we call civilization'
https://www.mdpi.com/1996-1073/14/24/8411/htm
https://www.sciencedirect.com/science/article/pii/S2211467X19300926
(Fig9 is a doozy)
Oh I could take it from the 2017 highs and were still up 80%. And then I could say if you dollar cost averaged in everyday starting at the peak in 2021 you are also in profit.
And ask yourself honestly, after looking at BLX on tradeing view (the bitcoin chart going right back to the start) do you honestly think Bitcoin will never make a new all time high?
And we can just ignore the fact there are 12 spot etfs waiting to be approved in the USA, which are all just a matter of when not if.
But hey, everyone has their own willingness to learn,and you are more then welcome to ignore it.
I guess that taking 6 months to help build the family home when I was 17 had a long term payback. Never really thought about it at the time, just got on and did the job that needed doing to save money. Funny how life pans out really, but some of those early decisions make a huge difference in your life. Sadly most people on here can only see the final result, not what it took to get there.
Very well said. I 'helped' the old man build his house (I was 4 - brought the flooring nails to him with a plastic tip-truck).
He taught me to lay 16-inch blocks when I built my first.
But it's gotten harder - no2 offspring is entirely capable but 'got one built'. Too many have commandeered the Commons; too many clipping the ticket.
No2 was here with his digger yesterday, though, the payback comes in many forms, just need to be a giver rather than a taker - it usually comes back.
Oil prices have softened about -US$1.50 overnight, to be just under US$77.50/bbl in the US. The international Brent price is down to US$81.50/bbl.
The media likes to blame "short covering" for huge buying in bonds, but it isn't just bonds. WTI today dropped another contract (Feb) into contango today. 3-month spread is upside down now, too. These aren't separate technical quirks. Two sides of the same rotten coin. Link
Is anyone else frustrated that National, Act and NZ First are holding meetings in hotels in Auckland? Luxon and Seymour have gone on and on about 'wasteful Govt spending' and now they are wasting money flying up and down the country and hiring hotel meeting rooms. Get a room. At Parliament.
There is a third category.
Those of us who realise that the narrative-to-date - economic growth is possible forever - has run its course.
That category realise that this circus are a grouping of prior elites, attempting to recreate the past. That will just waste time. The bigger question is: As events wash over them, are any of them capable of adapting?
In other news - laugh of the day! Has anyone else here tried to drive an e-scooter with a coffee in one hand?
Check out Chris Bishop's Facebook post in explanation :-).
That he didn't discard the coffee before mounting the scooter - suggests he too is feeling the pinch of rising costs. Can't waste a few bucks paid for a cup of coffee!
Moral of the story: do not drink and scoot.
National MPs don't have the best record on scooters. Nicola Willis famously fell off one.
To be fair, wearing a helmet for cycling has the same safety reason as wearing for one when you walk down the street, around your home and even driving your car. The safety benefits are the same for some reason we just legislate to make people on bikes wear them and not others. Interestingly the countries with the best safety records for cycling do not have helmet laws.
Do I miss the daily political drivel? Not a chance. This is nirvana right now. In Spain their election results in July are still in coalition negotiations as we speak. The socialist Shanchez PM is supposedly doing a deal with the Catalonian separatists, including the release all those in jail for stoking the debate 5-6 years ago. Politics!
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