Here's our summary of key economic events overnight that affect New Zealand, with news China's rapidly changing demographics are weighing heavily on the country.
But first, and maybe related, today's dairy auction was a weak one. Prices were only very marginally lower in USD terms, but they fell -2.2% in NZD terms as our currency rose overnight. The key WMP price was up +1.9% in USD terms, but SMP fell a sharpish -3.8% and cheddar cheese fell a whopping -9.7% from the same event two weeks ago. That speaks to extended weakness in foodservice markets, probably in China. That leaves prices -10% lower than last years level which themselves were -18% lower than the year prior. The long slide continues, hurt by both China's continuing weakness, and the USD's new-found weakness.
Meanwhile, American retail sales are managing to rise at inflation's level however. They were up +3.4% in the latest Redbook survey of bricks & mortar stores on a same-store basis.
But things remain weak in America's real estate market with existing home sales down -4.1% in October from September to be -15% lower than year-ago levels. Average prices are inching up however, even if the inventory of unsold properties is growing.
The American National Activity Index monitored by the Chicago Fed fell in October to its lowest in seven months. All four major categories they monitor retreated.
The AtlantaFed's GDP Now monitor is suggesting American Q4-2023 economic activity is expanding at a +2% rate. It is worth keeping an eye on this indicator; it was one of the few that correctly predicted the strong Q3 gains. It turned out far more positive than most private sector forecasts.
In Canada, CPI inflation is easing back now. It came in at 3.1% in October, down from 3.8% in September. It was a larger fall than expected. That means they are getting close to their central bank's target range of 1%-3%.
In Hong Kong, the weak Chinese housing market is affecting them too, with a new development offering new homes at prices that are a six year low.
As anticipated, China’s birth rate reached a new low last year, with the number of newborns falling to 9.6 mln, the first reading below 10 mln since 1950.
We should note that EV battery manufacturers are buying much less lithium carbonate, and the price of that raw material continues its sharp retreat. Much like the nickel price we noted earlier in the week. Lithium is down -75% in a year, which was when it peaked. Nickel is down more than -50% in 2023.
The UST 10yr yield is little-changed from yesterday, now at 4.43%. The key 2-10 yield curve is still inverted by -47 bps. Their 1-5 curve is marginally more inverted, by -84 bps. Their 3 mth-10yr curve inversion is now -98 bps and also more inverted. The Australian 10 year bond yield is now at 4.44% and down -7 bps from yesterday. The China 10 year bond rate is little-changed at 2.68%. And the NZ Government 10 year bond rate is back down -4 bps at 4.98%.
On Wall Street, the S&P500 is down -0.3% in light trade in its Tuesday session. Overnight European markets all closed down about -0.2%. Yesterday, Tokyo ended its Tuesday session down -0.1%. Hong Kong dipped -0.3%. Shanghai ended its session unchanged. The ASX200 closed up +0.3% in Tuesday trade while the NZX50 was down -0.4%.
The price of gold will start today just on US$2000/oz and up +US$26/oz from this time yesterday. It was last at this level in late October.
Oil prices have slipped -50 USc to be just over US$77.50/bbl in the US. The international Brent price is now at US$82/bbl. It is probably a weaker move than it seems given the falling USD.
The Kiwi dollar starts today at 60.6 USc and up another +¼c from yesterday. Against the Aussie we are up +½c at 92.4 AUc. Against the euro we are up +½c too at 55.5 euro cents. That all means our TWI-5 starts today at just under 69.6 and a +40 bps rise.
The bitcoin price starts today at US$37,286 and virtually unchanged (up +US$17) from this time yesterday. Volatility over the past 24 hours has also been moderate however at just on +/- 2.0%.
The Wall Street Journal is reporting that Binance and its CEO Changpeng Zhao have agreed to plead guilty to criminal and civil charges under a deal worked out with the Justice Department. A fine of more than US$4 bln has also been accepted. And there's also this.
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61 Comments
Not unlikely unfortunately nkt. Would likely start with a softer option though, maybe Mongolia. They seceded only a little over a 100 years ago. There is quite a bit of “cultural correction” being applied now by China. Russia is otherwise occupied and needs China more than vice versa and it’s a good remote wide open territory suitable for the army but unsuitable for international intervention and scrutiny. Just a thought.
Any recent tensions between the two?
another possibility is pushing the territorial spats around the South China Sea and Taiwan to a point where one of the parties opens fire with real weapons. China may even go so far as engineering the event and blaming it on the other party.
PLAN ships have opened fire on Vietnamese fishing vessels before with little or no international reaction. What will the reaction be if they did that to a Philippine Navy ship with the US presence increasing in the Philippines? They tweaked the Aussie navy last week while they were in the southern Japanese waters and while their PM was in China talking to Xi which clearly shows they will not be bound by normal standards while they hold others to them.
Reading some of the stories that are slowly filtering out of the US Navy Submarine force, we got a lot closer than many would care to think. Both sides needed to get close to the other to develop the required skills and this led to some interesting miscalculations. The balance between recklessness and professional development of a force can be questionable and potentially dangerous. And then there is the misreading of pure accidents and attributing them to the other side. With subs this is playing blind man's bluff with high stakes.
The big question is what is China trying to achieve? Is there a real threat behind it if we call their bluff? The stakes are huge.
Has Xi mentally crossed the line yet from nasty but rational leader to deluded and irrational leader?
The former probably wouldn’t invade Taiwan, the latter probably would.
A rational leader / leadership would know the costs of invading Taiwan would be much greater than the benefits. But I guess if they counted ‘righting historic wrongs’ a benefit which they placed outsize weight on, then who knows…
Excess deaths still perky. Only 2 weeks, in past 40, had a negative excess death rate.
Typical average annual increase over the previous decade was just 1.4 percent due to aging population. Weekly excess deaths are now ranging from 4-32% excess compared to average. An extra 3500 deaths to week 40.
https://stats.oecd.org/index.aspx?queryid=104676
https://www.stats.govt.nz/information-releases/births-and-deaths-year-e…
The same site reports about 1,000 Covid deaths during the year which could be part of the picture. Perhaps we're still seeing that mortality bump that was expected after lockdowns delayed thousands of deaths by wiping out flu and reducing other infectious diseases?
Could be. Treatment continued all the way through Covid and my service didn't have delays for patients where treatment is time-critical - we worked right through all lockdowns. I would not be surprised if some diagnoses were delayed for various reasons, and certainly some stress caused by delays even if the procedure was not time-critical.
As I've posted before, my specialty has had a real-terms pay cut of about 10% since 2020 which does not help.
There is plenty of published studies demonstrating made no difference in "wiping out covid". While you were under house arrest Swedish school kids were at school.
"Fairly early on in 2020 it became clear that the lockdowns had little impact on Covid-19 mortality. This was true if one compared across countries at a point in time (Chaudhry, Dranitsaris, Mubashir, Bartoszko & Riazia, 2020), across counties in the United States (Gibson, 2020a) and within the same country over a span of time (Meunier, 2020). It was also clear early on that the main drivers of Covid-19 mortality had more to do with human action as people voluntarily adopted precautions than lockdowns. (Allen, 2021). It was also clear relatively early and long before countries were imposing renewed lockdowns in the later part of 2020 or even into 2021, that the aggregate costs of lockdowns exceeded any benefits by large magnitudes, something that led Allen (2021) to refer to lockdowns as a huge public policy failure. See Allen (2021), Gibson (2020b) Heatley (2020) and Miles, Stedman and Heald (2020) and other papers cited by Allen (2021)."
Flu was basically eliminated from NZ by the harsh initial lockdowns. Obviously it returned once the borders and society opened up again.
https://www.rnz.co.nz/news/national/480620/covid-19-vs-the-flu-death-ra…
From a few thousand Flu admissions a year to 150 in the whole of 2021. I don't think I'm saying anything controversial here.
Lockdowns were a panic response to a modestly higher seasonal flu fatality rate.
"Age-stratified infection fatality rate of COVID-19 in the non-elderly population
...If we assume half of the global non-elderly population infected without the benefit of vaccination or other beneficial interventions, this corresponds to 2.3–2.6 million deaths in people 0–69 years old, including 16–49 thousand deaths of people 0–29 years old. These absolute numbers of fatalities are overall probably modestly higher than seasonal flu fatalities over three typical pre-pandemic years (Ioannidis, 2022) when the entire 0–69 year old population is considered, but they are lower than pre-pandemic years when only the younger age strata are considered. For example, Iuliano et al. (2018) estimate 9243–105,690 deaths for children <5 years old per year based on data from 92 countries for seasonal influenza.
Science report recently suggests COVID mucks with your immune system. It has been identified that the severity of the impacts of the common cold and flu virus's after having caught COVID is significantly increased. Having been vaccinated eases the impact to a degree, but not totally.
How?
I have questions about why it works, but there is NOTHING I have read in any scientific report to suggest what you are saying.
Conventional vaccines train the immune system by exposing them to inert fragments of a virus. The MRNA vaccine is reported to teach the body to produce proteins associated with the layer below the spikes of the virus outer shell, and have the immune system recognise them as a virus and then attack it. A slightly more convoluted way to achieve it but also targeting a layer that doesn't change so much with mutations. My doubts are around the fact that if our own body produces the proteins, why then would the immune system recognise them as a virus to be attacked?
IgG4 Antibodies Induced by Repeated Vaccination May Generate Immune Tolerance to the SARS-CoV-2 Spike Protein
"...However, emerging evidence suggests that the reported increase in IgG4 levels detected after repeated vaccination with the mRNA vaccines may not be a protective mechanism; rather, it constitutes an immune tolerance mechanism to the spike protein that could promote unopposed SARS-CoV2 infection and replication by suppressing natural antiviral responses. Increased IgG4 synthesis due to repeated mRNA vaccination with high antigen concentrations may also cause autoimmune diseases, and promote cancer growth and autoimmune myocarditis in susceptible individuals."
Thanks for the link. It is interesting but a stand out in the abstract for me was that the IgG4 is also produced by other, conventional vaccines ("HIV, Malaria, and Pertussis vaccines have also been reported to induce higher-than-normal IgG4 synthesis" and "An extensive review of the literature showed that mRNA vaccines are not the only ones that induce IgG4 antibody production. The HIV, Malaria, and Pertussis vaccines also elicited such a response. Overall, there are three critical factors determining the class switch to IgG4 antibodies: excessive antigen concentration, repeated vaccination, and the type of vaccine used.") and we need to understand why. It appears to be linked to the mRNA vaccine but there is also evidence that the reponse can be elicited from other vaccines. Your use of this tends to be the emotional hysteria driven by conspiracy theorists while the evidence is less clear. Yes IgG4 is a problem in excessive quantities, but the article makes it clear that the research does not yet understand why the response occurs for the different types of vaccine.
Well for starters it wasn't actually a vaccine was it ? Some people have had Covid four times, how is that a Vax ? You were better off letting your immune system take care of it naturally, I put it to you that the Covid Vax has clearly messed up many peoples immune system so it was actually detrimental to your health worse than what it was trying to protect you against. Sure some people are going to die, shit happens people die every year of the flu.
It's more likely explained by COVID existing. On the same site, you can see that COVID still makes up to 13% of all deaths. I'd suspect, like flu, it is good at finishing off the elderly and frail who might otherwise have lived longer if they hadn't contracted it.
Yeah I'm not surprised really, we have largely swept all the vax related injuries under the carpet and ignored them statistically, however its much harder to ignore total deaths isn't it. Amazing how they persecuted that doctor on TV for handing out about 380 vax exemptions, its a sad case in society when just because I had to take it you have to take it to, well its the middle finger from me, you suckers keep pumping that shit into your body.
Navigating Through a Global Recession The global economic picture is becoming clearer and more concerning: the US, Europe, and the world at large are deep in a recession. Production, trade, and consumption are down, yet businesses seem unfazed, thanks to the price illusion. Link
that caught my interest.... but currently looks like AGM $209 vs $1099 for lithium?
500% higher pricing doesn't quite qualify as 'on par' in my book
https://www.jaycar.co.nz/12v-100ah-agm-deep-cycle-battery-v2/p/SB2560
https://www.jaycar.co.nz/12-8v-100ah-lithium-deep-cycle-battery/p/SB2215
i'm talking about the higher voltage , Bms linked batteries. They are a similar price based on system lifetime costs , not AH to AH. Because the battery BMS are linked to each other , and the inverter and charging systems, they can be sized to discharge to 90 % , vs 50 % for lead acid . And then have double the lifespan of the lead acid at 50 % depth of discharge.
but the takeaway is , expect the price to drop in the near future.
The Wall Street Journal is reporting that Binance and its CEO Changpeng Zhao have agreed to plead guilty to criminal and civil charges under a deal worked out with the Justice Department.
CZ announced he's stepping down as CEO of Binance in the past hour. A controversial figure.
Anyway, a $4 billion fine sounds like desperation from the DOJ side - does it even make sense? Surely a fine that big would mean serious criminal behavior that really should be tested in court.
Binance, Kraken, Coinbase - none have never lost customer money, yet the DOJ and SEC go after them.
FTX - biggest fraud since Madoff & customers left stranded. Politicians accept millions in donations from SBF and the bureaucrats all get cozy with him.
Two minutes after your post, this appeared: Cryptocurrency exchange Binance & its founder plead guilty to US charges, fined more than US$4b | interest.co.nz
It's the "willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform..." bit that they are getting onto.
Future growth models. The sort of thing that gives current collectors exponential returns.
Billions of potential unbanked users sounds pretty sexy.
Except they got no money.
Even the other day you talked about "being early". This implies there's extra pieces to the Bitcoin story you are hedging.
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