Here's our summary of key economic events overnight that affect New Zealand, with news we again need to keep an eye on an outbreak of respiratory illness in China that has rapidly filled hospitals there.
But first, with both the US and Japan on holiday, data from other countries are getting a chance to shine through today. But holiday season retail sales are underway and observers around the world will be looking at the American demand impulse. Any weakness will echo worldwide. Strength will have similar echoes.
Taiwanese retail sales came in +5.1% higher in October than a year ago, although the expansion was slightly less than in the prior month. And after a year of sharpish declines, Taiwan's industrial production is almost back to year-ago levels. It is up +20% from its low point in April. Taiwan's inflation is running at 3.0%.
Singapore reported October inflation and that rose to 4.7%, a sharpish and unexpected increase from the September 4.1%. It is being pushed up by transport and healthcare costs.
As expected, Indonesia kept its official interest rate benchmark at 6% overnight; inflation is low there running at only 2.6%.
The Swedes reviewed their official interest rate overnight and they were expected to raise it +25 bps to 4.25% because inflation is running at 6.5%. But they surprised markets and made no change. They also said inflation is falling and inflationary pressures have eased. But they threatened more increases if that easing doesn't continue.
South Africa reviewed their rate as well and as expected made no change at 8.25%. They have inflation running at 5.9%
And Turkey also reviewed rates overnight. In their case they surprised with a much larger rate hike than expected, taking their official policy rate up by +500 bps to 40%. They have inflation running at 61%.
We should perhaps note that the WHO is casting a wary eye on China over fast-spreading respiratory illnesses and reported clusters of pneumonia in children. China has 48 hours to respond to the WHO request for details. The main area of concern is in northern China. More here. Hospitals in Beijing, Shanghai, Wuhan and Guangzhou, have recorded a spike in mycoplasma pneumoniae infections, with some facilities in the capital already at full capacity.
In Hong Kong, CCP indoctrination has started in primary schools with the release of a new curriculum.
The OECD said G20 merchandise trade contracted again in Q3-2023 from the prior quarter with exports -5.5% lower than a year ago, while the services trade growth appeared to flatten.
So it will be no surprise to learn that container freight rates fell a sharpish -6% last week, taking them back to near their October lows. Rates out of China were particularly hard hit. Bulk cargo rates are unchanged from a week ago, but that hides a rise and then a reversal in between.
European bond yields have pushed higher overnight. And the UST 10yr yield is up +2 bps from yesterday, now at 4.45%. The key 2-10 yield curve is less inverted, now by -44 bps. Their 1-5 curve is marginally more inverted, by -84 bps. Their 3 mth-10yr curve inversion is now -94 bps and less inverted. The Australian 10 year bond yield is now at 4.54% and up +4 bps from yesterday. The China 10 year bond rate is up +2 bps at 2.71%. And the NZ Government 10 year bond rate is down -2 bps at 5.02%.
Wall Street is closed today for its Thanksgiving holiday. It will only trade for half a day tomorrow, and then back fully on Tuesday NZT. Overnight European markets closed all up a modest +0.2%. Yesterday, Tokyo was closed for its own public holiday (Workers Day). Hong Kong ended up +1.0% and Shanghai was up +0.6%. The ASX200 closed down -0.6% in Thursday trade while the NZX50 was up +0.2%.
The price of gold will start today just on US$1991/oz and up a mere US$1/oz from this time yesterday.
Oil prices have firmed back up +US$2 to be just over US$76/bbl in the US. The international Brent price is now at just under US$81/bbl.
The Kiwi dollar starts today at 60.7 USc and unchanged from this time yesterday. Against the Aussie we are softish at 92.2 AUc. Against the euro we are also unchanged at 55.5 euro cents. That all means our TWI-5 starts today still just on 69.6.
The bitcoin price starts today at US$37,129 and up +2.0% from this time yesterday. Volatility over the past 24 hours has also been moderate at just on +/- 2.0%.
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60 Comments
Just read the October trade deficit! The year numbers are still increasing compared with 2022. It is amazing how much credit worthness we still have with overseas traders and investors. The import and export numbers are also down compared with last month and October 2022. I guess the overall economic activity must be a bit subdued.
Import wise, my situation in march this year, we had double the amount of stock we would normally hold, A lot of this was down to the massive logistical issues we faced in 2021, we stocked up to mitigate this happening again last year. This year we have imported roughly half of the previous years imported stock. I would say we arent alone in this. Its about driving inventory down to the long term average, not a slow down in draw through.
Michael Hudson - Understanding America’s Post-Industrial Economy
Well, you said that the United States has lost its competitiveness. And actually, it’s worse, the United States decided it didn’t want to compete. And this goes back to the Clinton administration in the 1990s. The Clinton administration’s objective, and that of the Democratic Party, was basically a class war against labor. How do we lower the wages of labor so that we can increase the profitability? Well, the way America had of lowering the wages of labor was, let’s hire Asian labor, especially Chinese labor. Let’s let Chinese into a trade relationship with us into the WTO. And then instead of having to bid up the price of labor in our industrial centers, Detroit and the South and the Midwest, we’ll hire products made by Chinese labor that will keep down wages here. And America can be in a post-industrial economy.
During the 1980s and 90s, all of the economic discussion was, how do you have a post-industrial economy? They didn’t want to industrialize. They thought that industrial labor was blue-collar labor. And in America, you’re not going to have college graduates or even high school graduates wanting to have a blue-collar job. They want a service industry job. They want to make jobs, something that’s not industrial, a managerial job. So a new phrase came into being, the professional managerial class. Technology.
The idea of American economic growth from the 1990s on was, instead of producing manufactured goods, we will develop intellectual property monopolies, especially in information technology, in pharmaceuticals. And America will make its economic growth in GDP, not by making profits to employ labor to produce more and more goods and services, but to have monopoly rents for our pharmaceuticals. So we can make pills that cost 10 cents each and sell them for $500 each. We can make computer programs for automatic artificial intelligence and for computer chips and for all of the information technology we have at enormous markups. And we can live on our economic rents, live off the fat of the land, as they used to say. We don’t have to have blue-collar jobs. Everybody can work in an office and make money that way.
So in a way, what’s happened today is exactly what America wanted. And all of a sudden, they’ve woken up to the fact and said, how can America run the world and be number one if it doesn’t have a manufacturing power, if it’s dependent on other countries for its manufacturing and now for its technology, and if all of this is financed by running into debt that the economy runs up for the military spending abroad to prevent other countries from competing with the United States, when actually it’s the United States that has decided we want you to compete because your production and competition with us is what’s winning the class war against labor. Your competition is what’s holding down the price of labor. So they haven’t really thought, what does a post-industrial economy mean? Well, it turns out to be a financialized economy.
You have today, as the election for 2024 is being prepared, the bewilderment of the Democratic Party here. If you look at the GDP, President Biden says, you’re doing so well, look at GDP. And the vast majority of Americans, according to every poll in every part of the country says, we’re not doing well at all. We’re doing awful. And it turns out that when you look at what is the American GDP, well, almost all of it is the growth in prosperity, the growth in financial benefits for the 1%, maybe for the 10% of the population. And the 1% and the 10% has increased its wealth so much since 2008 led the Federal Reserve to slash interest rates that the 1% and the 10% gain is larger than the loss for the 90%. So all that the President Biden can say is, who are you going to believe? Are you going to look at the statistics or are you going to look at your own life and what you have to spend at the grocery store and what you have to spend on rent and housing as America turns away from a homeowner’s economy into a rental economy?
There’s a huge concentration of land and housing in the hands of absentee landlords instead of private homebuyers who now cannot afford to buy a home when the interest rates are soaring to over 7.5%, in which case, if you buy a home with a 10-year mortgage, in only 10 years, the bank makes more money for the mortgage than the seller of the house makes.
So indeed, America has found that, yes, what is the post-industrial economy? It’s a financial economy. And a financial economy has savings on the asset side of the balance sheet and debt on the liability side. But the savings on the asset side are held mainly by the 1%. And the debt on the liability side is owed by the 99%. So when President Biden said, and the economists profession, Paul Krugman and the Nobel Prize winners all say, well, you don’t have to look at debt because we owe it to ourselves. Well, the we who owe it are the 99%. And the ourselves are the 1%. And that’s what is leading the United States to be not a very happy economy these days.
Sobering! Tks Adx. Clinton’s presidency set things off downhill in more ways than one. If it hadn’t been for the accusations of philandering etc Gore may have succeeded not Bush junior. Then as Helen Clark quite rightly opined the second Iraq invasion would likely not have occurred and the Middle East not become even more discordant.
ps. mind you Clinton’s supposed wanderings hardly compare to those of Trump do they.
Brilliant piece Audaxes.
The amazing thing is that it was the party which claims to represent the working classes who led the charge to betray the working classes. And now they're having their Doh! moment. Greed is extremely short sighted, and everything is connected and has consequences.
And the exported their attitude, even to NZ. Our trade agreements respect the US patents on pharmaceuticals when we know they are a huge rip off. (We would be better off following India's example). When we export our manufacturing capability, we also give away our sovereignty. How do we get our politicians to understand this?
Interesting post. In New Zealand we lost the people who could do stuff and make things. And bred a tribe of folk who communicate with each other. Policy analysts, rule makers, lawyers etc. Lot's of those to control the few.
I think it's why infrastructure now costs ten times what it should.
A related link.
Bollocks. It's not a failure of government. It's the false narrative of the right leaning parties who get elected based on cutting bureaucracies. What do you think a Ministry of Works used to do? All those engineer employees were civil servants, now we slam all civil servants as being lazy and useless and vote out the parties that try to rebuild the state bureaucracies.
A false narrative alright - if you gut back office functions then the front office will be spending more time on admin. How does that increase the productivity of Nurses Teachers and Police?
I suspect they will unwind landlord legislation, expand WFF and OAP subsidies to sort out their RE sponsors, unwind transport legislation to sort out their Trucking sponsors and then it'll be back to incrementalism.
"No lifting of the Foreign buyers ban" - budget blown already
"As the institutions lard themselves down with affirmative action hires who cannot competently discharge the duties for which they are paid, those institutions will become increasingly incompetent. In the short term, they will try to cover for these deficiencies with outside contractors – surely generating opportunities for those who, on account of their skin colour, have been forced into freelancer status. In essence this will mean that the institutions are having to meet payroll twice over: once for their incompetent employees, and once more for the contractors who actually do the work. This inefficiency will gradually kill the beasts, and the proliferating swarm of free agents doing the actual work will in time feast on their great stinking carcasses, and grow to replace them."
Reports now being published from the KPMG investigation at Christchurch City Council include disclosure of considerable staff numbers being employed with neither correct process nor authority. Also condemned the inadequacies in the subject department’s reporting but that was said to be most unfair by a senior staffer as it was no worse than any of the other departments. Said it before and say it again a bureaucracy that is self serving, opinionated and unaccountable is a threat not only to its society, but democracy itself.
"And it’s not just agriculture that could be flattened by climate policy. As a Politico profile of Timmermans this week notes, the much-vaunted European Green Deal could be about to set off a wave of deindustrialisation – on a scale not seen for 50 years. Politicians who think they can get away with impoverishing their citizens, while hiding behind waffle about Net Zero, are in for a very rude awakening.
...To say the victory of Geert Wilders in yesterday’s Dutch elections came as a shock might be the understatement of the century. Not even his aides in the PVV (Party for Freedom) were fully prepared for the earthquake to come. The tiny, cramped venue where it held its election party last night was booked just four days ago, after Wilders enjoyed a last-minute surge in the polls."
https://www.spiked-online.com/2023/11/23/the-humiliation-of-the-dutch-e…
Profile is a small cog in the peddling of piffle.
Writ large, that piffle drove the social narrative; that growth was perpetually possible.
As that narrative is increasingly falling short of delivering, the bottom-end are voting incumbent (anything) out. As there is nothing satisfactory to vote 'in', this will repeat, everywhere, contributing to ever-more discontinuity.
"that growth was perpetually possible" said no one ever. You are endlessly commenting/lecturing on a bogeyman that doesn't exist. Population growth rates peaked in the 1960's chap.
Fertility rate: 'Jaw-dropping' global crash in children being born
https://www.bbc.com/news/health-53409521
China's fertility rate drops to record low 1.09 in 2022- state media
https://www.reuters.com/world/china/chinas-fertility-rate-drops-record-…
Ordered a new tent today. Doing my bit, albeit at 50% off. Ironically that's so we can slum it around some cheap campsites over the coming weeks and not have to fund much else :-)
I sort of know what clothes I need for the coming year and will get them on Saturday. Retail contribution over.
Is anyone else fed up with this ultra consumerist Black Friday nonsense?
I have long hated December - the lead up to Xmas - but my disdain has now extended well back in to mid November.
All I can say is thank god I will be overseas in two weeks time. Keen to get out of the country every year at the same time
You might like this..
https://www.thepress.co.nz/nz-news/350114487/countering-crass-consumerism-black-friday
His company makes great products too.
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