Here's our summary of key economic events overnight that affect New Zealand, with news of generally positive news in the US, but extended worries about China's property sector.
After quite a jump in the prior week, American mortgage application levels slipped last week and for the first time in six weeks, despite a hefty retreat in benchmark 30 year mortgage interest rates. Those came in at 6.83% plus points, down from 7.07% the prior week, the first time they have been below 7% since early August.
All that was despite an impressive rise in American consumer sentiment and optimism in December, as tracked by the respected Conference Board survey. It hasn't been this high since mid-year. This rise mirrors the recent parallel University of Michigan survey. To be fair, both are back in the range from 2021, but there is a rising optimism about future expectations.
Perhaps reflecting that, US existing home sales rose in November, and for the first time in five months.
Also positive, the American current account deficit shrank to -US$200 bln in Q3-2023, 'only' -2.9% of GDP. That's its lowest level since Q2-2021 in dollar terms and its lowest since pre-GFC. For comparison, the New Zealand current account deficit is -7.6% of our GDP.
Australia and New Zealand are not the only countries facing record high immigration; Canada is as well. The post-pandemic surge seems to have caught many countries by surprise.
Japan's exports shrank in November when a small gain was expected. Data released today shows they fell -0.2% from the same month a year earlier mainly because China-bound chip shipments dived, underscoring worries that slowing overseas economies may deal another blow to the trade-reliant economy just as their domestic demand slows. At the same time imports dived significantly and that meant their trade deficit shrank rather quickly.
Taiwan's export orders didn't bounce back in November as expected, rising just +1% from a year ago and well short of the +4.3% rise expected. But that was their first rise in more than a year.
Another large Chinese property developer has filed for bankruptcy in the US, using its protections while it "restructures". (Evergrande was the last major Chinese property developer to try that manoeuver.) Interestingly, it didn't notify investors in stock exchange filings, of the move. This may be behind the chunky drop on the Shanghai stock exchange yesterday. But they aren't the only listed company facing existential pressures.
In the EU they are 'reforming' their fiscal rules which have become a straightjacket for some countries. EU finance ministers have bowed to German pressure for tough debt-reduction rules, as part of a deal to phase in a sweeping overhaul of their budget framework. After months of haggling, the new rules gives member states greater independence on debt and deficit plans, but only within tight spending limits demanded by fiscal hawks.
German inflation is likely to return to target ranges if their producer prices are any indication. Those remain in deflationary mode, falling -7.9% from a year ago driven primarily by much cheaper energy costs. The sizable retreat is essentially a base effect.
British consumer inflation is falling from the same energy cost retreat, now down to +3.9% in the year to November. But without those energy effects, their core inflation is still running at +5.1% - a small retreat but far above its neighbours and far above their central bank's target still. (Locally, they fudge the international standards of reporting inflation, but it is still high on their local basis.)
In Australia, the Melbourne Institute leading index has stopped falling which is a good way for them to end their year.
The UST 10yr yield has slipped -3 bps today, now at 3.89%. The key 2-10 yield curve is marginally less inverted, now by -50 bps. And their 1-5 curve inversion is still inverted by -102 bps. And their 3 mth-10yr curve inversion is marginally more inverted at -144 bps. The Australian 10 year bond yield is now at 4.05% and down -4 bps from yesterday. The China 10 year bond rate is up +1 bp at 2.66%. And the NZ Government 10 year bond rate is down -3 bps from yesterday at 4.58%.
Wall Street is up a minor +0.1% on the S&P500 in Wednesday trade. Overnight, European markets featured London's +1.0% rise but other markets were little-changed. Yesterday, Tokyo rose a strong and consecutive +1.4% in Wednesday trade, Hong Kong recovered +0.7%, while Shanghai took an unusual -1.0% dive, worsening as the day went on. The ASX200 ended its Wednesday session up +0.7% whereas the NZS50 fell -0.3% with a late dive.
The price of gold will start today down -US$9 at just on US$2034/oz.
Oil prices are +50 USc higher at just on US$74.50/bbl in the US although they have been higher in between. The international Brent price is now at US$80/bbl.
The Kiwi dollar starts today at 62.8 USc and marginally firmer than yesterday. Against the Aussie we are also firmer at 92.9 AUc. Against the euro we are unchanged at 57.1 euro cents. That all means our TWI-5 starts today just on 71, up +20 bps from yesterday and the highest since May 23, 2023 - just before the RBNZ's MPS signaled that its rate-hiking cycle was over.
The bitcoin price starts today at US$43,770 and up another +3.4% from this time yesterday. Volatility over the past 24 hours has been moderate-to-high at just under +/- 3.0%.
Although this is the final Breakfast Briefing for 2023, we will be releasing Holiday Briefings through until January 13, 2024. During that time, our general coverage will be at a lesser intensity, more focused on holiday reads, reviews, and catch-ups. The advertising that powers much of our sustainability is already on holiday-mode, so this is when we really appreciate the vital support of readers. If you can support us during this commercially fragile time till the end of January, the team at interest.co.nz will be very appreciative.
Happy Holidays!
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107 Comments
True and in the end when the people realised they were fed a line to suck them in the vote for different leaders like Trump who are even bigger liars, but feed the evil side of human personas.
It's not sapience PDK it's emotions, and emotions are always the first response for everyone. True strength is in being able to take a deep breath, wait for the emotions to die down and then think through what is happening and what is the best response. Better than 90% of the population can't do that fully for a variety of reasons.
What it comes down to is the information they are provided from mainstream sources. The links you provide would be considered by many to be fringe, and big money would consider them a threat. But it is big money that controls most of the mainstream feed through what they sponsor. Find major sponsors to deluge mainstream media with your links and the types of discussions we see will change significantly.
I don't agree that he is fringe Zac, but it really depends on how you define what "fringe" really is. I believe he is promoting fact over hyperbole. It's just as I said, vested interests tend to control the mainstream media feeds and thus most of the information we are being fed on a daily basis is rubbish but the media and politicians are all captured by it. Seeing through it all is the trick, but it is the politicians who make the policy decision and it is these which are killing us all.
Classic wasn't it? Shoot the undesired message by denigrating the messenger, 101.
No facts, no figures, no referenced papers, zilch. Just Hopium.
And of course, if mass agreement was the driver of factual realities, the world is still flat and 4,000 years young, and we were created by a (male but don't think about that too deeply) god who apparently didn't need creating. Luckily, we throw up the odd thinker...
I think your posts are fantastic PDK. Thanks for how you educate us all.
It’s been said that when you’re one step ahead of the crowd you’re a genius but that two steps ahead make you a crackpot.
Not sure what we call those who just sit back wallowing in self content? Landlords maybe??
Have a good break :)
He is not nutty - it is perfectly normal to fantasize about lynching fellow Interest commenters as 7.55am!
by powerdownkiwi | 27th Nov 23, 7:55am
"And it won't be my grandchildren who lynch Profile; his own will likely do the job for them. "
Is this better dollar_bill? I underestimated how unhinged Chicken Littles are.
He is not nutty - it is perfectly normal to fantasize[/post rhetoric] about lynching fellow Interest commenters as 7.55am!
by powerdownkiwi | 27th Nov 23, 7:55am
"And it won't be my grandchildren who lynch Profile; his own will likely do the job for them. "
Totally irrelevant when their most basic needs are not met. Good luck with that.
If its cold and rainy, or hot and dry they still need affordable houses to live in
I just listened to a blinkered person who thinks without an environment there is no economy, therefore we should make the the environment supreme in all decisions and policies. That person didnt learn anything from the flawed covid response.
The point is that there is an environment that doesn't have to be to any standard set by someone. BUT It's the economy that pays for all.
There's some pretty illogical (aka stupid) situations with the sandle wearers. One of the funniest is that the Natural Built Environments Act opposes green wind farm energy. Please tell me this isn't so
Unless PDK is living off grid, hunting/gathering/working the land and building bomb proof shelter and generally not engaging in any of the goods and services of the modern world... then I call him hypocrite.
The fact he's on the internet tells me he's willing to keep feeding the beast that is humanity... run dodo run!
Have lived off grid for more than 20 years
Live largely self-sustainably, low impactly, and realised the need to grow a forest (for the good of others) a LONG time ago.
And I first heard that bullsh-t argument 50 years ago; first time I went cruising yachting. It is a false argument. Period.
And why bomb-proof? My house is energy efficient enough to rate Homestar 8 (to be low impact, low energy demand) but bombproof? How about resilient? It IS that...
PDK tries to explain why ostriches need to get their head out of the (oil) sand. "I'm alright Jack" is not only selfish, it's plain daft, open your mind and eyes. The (new) government is wilfully blind to the issues galloping alongside having been blinkered by its owners. Fact is it's running at a (non-fiscal) cliff and taking us all with it. MSM everywhere tells us all to "Invest in property; farmers are doing their bit; the left are lunatics; greens are worse; vote for this nasty, nimby bigot; reduce tax that we can avoid anyway; Landlords need tax break to reduce rents; 'Oooh look, a squirrel' "; who's pulling those strings?
Not saying the last lot weren't profligate and misguided, but why do we need to revert back 40 years to racism, environmental destruction and social stratification that grinds many into the dust so the rich can carry on gorging themselves at our expense while saying their's is the only way? Now bend over; remember, you asked for this.
Look hard at our waterways, built environments, and future planning (or lack thereof) and PDK makes a lot more sense than sitting in an ivory tower eating gold while the tide rises.
There's a way out of the latter
:)
Spend you holidays perusing this site - it's about the best on the planet, at the moment.
https://www.thegreatsimplification.com/ For newbies, try the 'animated series', especially the energy one. For economics types, try the ones with Kate Raworth. For intellectuals, the Kim Stanley Robinson one probably does it - it did so for Kim Hill.
PDK tries to explain why ostriches need to get their head out of the (oil) sand. "I'm alright Jack" is not only selfish, it's plain daft, open your mind and eyes.
I'm a fan of Power and much of the enlightening references / insights he or she brings. Some of what I don't like:
-- To get population down to the levels that are not an onerous burden on physical resources, it's likely we are going to have to lose much of the world's population. Scary stuff. WEF stuff. Poor people (aka the Global South) lose. Rich people protected (the self righteous in NZ).
-- Power's work is "hard DGM". Apocalyptic. Charles Manson, Jim Jones. Even the 7th Day Adventists. Similar narratives.
Actually, i think it will be the other way round. "Poor" people who already live with low energy/resource requirements will pretty much carry on as normal while "rich" people will fight tooth and nail to hold on to their "riches" and "individualism" which will get very ugly and wipe a lot of them out. The global north will be where that action is.
Indigenous tribes will be the winners in the end. I'm not religious, but the quote " the meek shall inherit the earth" comes to mind. Of course there may be fewer habitable places for them to do that but the secret of their success will be adaptability and knowledge of how to survive in their environment.
Scary stuff is belief in infinite growth on a finite planet. I think population will take care of itself (assume PDK is of the same thought) as globally we can't all have the same level of consumption as we have in the west, so fridges, cars, cold milk and smooth roads for all ain't going to happen due to not enough resource to allow it. Just look at the mess the Hauraki Gulf is in, that's greed and policy at our doorstep.
Apocalyptic. I hope it won't be, but it is our Western collective fault. We all need to do what we can. The rich denying this, while hoovering up more and getting governments to do their bidding to perpetuate it I find terrifying. Maybe smoking tobacco will help us reduce the population, and gain us the tax revenue to give to landlords, that has to be a win-win, right?
Oh, and voting in a leader who believes he is one of the Chosen Ones, is a pro-lifer, actively wants the next generations to smoke to fund his vicious policies, calls people bottom feeders, while exploiting and perpetuating the system that creates them for his own personal gain? That scares me more than a little.
On other matters though it was with interest (no pun intended) I listened to Luxon explain his intentions with respect to AUKUS. While generally I agree with him, I'm disappointed that he hasn't thought deeper into the nuclear free stance NZ holds. My perspective is not about a military position, but one simply of ensuring NZ has access to a reliable source of energy for the future and nuclear has to be top of the list here. Renewables are great but cannot be guaranteed to be 100% available when needed.
Where do NZ farmer exports to China fit in?
China needs food so there will likely be continuing demand. Bust ask yourself this; if the current tensions from China breakdown to a shooting war, will we really be able to stay neutral and/or will we still be able to export to China during that? I suggest that answer will be a resounding NO! However if China is faced by a united regional front against their actions it might just be enough to give them pause and pull back from an all out war. But I still think they are pushing hard to provoke their opponents into shooting first, and to what extent they are prepared to go to to achieve that is anyone's guess. They already forced a collision between their Coast Guard and a Philippine Navy ship in the South China Sea. They are dangerous and reckless.
Current-tech nuclear isn't a 'reliable source of energy'. It's an overseas-supply-dependent, never-sorted-its-disposal-properly, finitely-resourced option.
Direct solar capture is none of those; it is local, free, daily, permanent.
And yes, that defines one of the Limits we must live within.
Relativity PDK. It is relatively reliable and significantly so, but yes it too is from a finite source. But again the materials needed are relatively abundant, with sea water one of the biggest potential sources of uranium.
Besides as you so often point out, the resources required to get sufficient energy from the sun is still just too much for the EROEI.
Nuclear does electricity - and maybe local heat.
But electricity doesn't do electricity - you can't maintain a grid using grid-power (or at least, nobody has proven you can, ex fossil energy underwrite). Local low-tech solar capture, however, can be maintained - locally and indefinitely. Nuclear requires a national infrastructure, local solar doesn't. We're already too late for nuclear - we were probably too late to do Onslow.
The nuclear-free zone Act does not prohibit nuclear power plants, nuclear research facilities, the use of radioactive isotopes, or other land-based nuclear activities.[6] However, no such research facilities or power plants exist currently in New Zealand.
https://en.wikipedia.org/wiki/New_Zealand_nuclear-free_zone
Unless I am missing something the act only applies to nuclear weapons and nuclear powered ships, there was nothing specifically banning nuclear power.
The conflict lies here;"In 1984, Prime Minister David Lange banned nuclear-powered or nuclear-armed ships from using New Zealand ports or entering New Zealand waters. Under the New Zealand Nuclear Free Zone, Disarmament, and Arms Control Act 1987,[1][2] territorial sea, land and airspace of New Zealand became nuclear-free zones. This has since remained a part of New Zealand's foreign policy."
The use of the word "Nuclear Powered" has been consistently interpreted since then that nuclear power plants are not allowed in NZ and won't be tolerated. thus there isn't even a political discussion to consider them.
And with the whole country lying over an active geological fault line we're far from a safe location to put large nuclear power stations. (Mini nukes? Maybe. But they also carry many risks and hidden costs. The fire service would hate them.)
(And like our use of oil, once all the costs, including environment ones, are included its business case doesn't really stack up. If we decide to dump the waste inside our waters the maths would work out better. (lol) But then we'd run the risk of Godzilla turning up on our shores.)
If some of the plethora of new SMR designs get to market they could fit quite nicely, around the 400MW level. One or two of them could fit quite nicely - especially if the nuclear peaker designs work out, to complement our wind and solar.
The traditional nuclear plants are way too big for our market, you're right.
No idea, but I'd much rather live near a nuclear plant than Huntly. Coal is far more dangerous (and in fact releases more radioactivity into the vicinity than nuclear).
If one were to replace Huntly then somewhere nearby would make sense, plenty of cooling water (not sure what the needs are for modern SMRs?) and existing electrical infrastructure, near to demand.
some of the newer technology versions are really very safe. They make the Chernoble type meltdown and Fukushima type leaks extremely unlikely if not impossible.
I note concerns re earthquakes, but the technology to properly contain nuclear reactors has existed for decades. The US Navy has been using it on their ships and have never had a major nuke accident. There has been a minor one of primary coolant leak on the USS Guardfish, but the new designs would make that type of failure remote if not impossible (cooled by other means).
Spot on. When in NZ going to get over its anti nuclear funk? Renewables are too unreliable to provide 100% supply to the grid. Nuclear can fill the renewables gap with negligible carbon emissions and modern plant have minimal waste. Nuclear is commercially competitive against renewables yet so no rush, but come 2050 I think nuclear will have it's place.
Small modular plants made on scale rather than way to expensive one off designs is what is coming .
Small nuclear power reactors - World Nuclear Association (world-nuclear.org)
And think of this as a way of delivery -
Russian floating nuclear power plant set for first refuel (power-technology.com)
> Small modular plants made on scale rather than way to expensive one off designs is what is coming
You're dreaming mate. https://en.wikipedia.org/wiki/Small_modular_reactor#Economics
Recall the recent US NuScale SMR got canned because the electricity it generated cost so much that no one wanted to buy it.
https://www.wired.com/story/first-small-scale-nuclear-plant-us-nuscale-…
PARIS, Dec 15 (Reuters) - Global coal use is expected to reach a record high in 2023 as demand in emerging and developing economies remains strong, the International Energy Agency (IEA) said in a report on Friday.
Demand for coal is seen rising 1.4% in 2023, surpassing 8.5 billion metric tons for the first time as usage in India is expected to grow 8% and that in China is seen up 5% due to rising electricity demand and weak hydropower output, the IEA said.
Zwifter when you are running a coal fired power plant to charge your EV there is no carbon saving - maybe cleaner air as the pollution has been shifted to some other neighbourhood - often out into the country where the poor people live (so it doesnt matter to the rich who made the rules)
Paid climate change denier playbook Stage 4, deny we can fix it (subset 4.b others are way worse than us so why should we do anything about it?).
Late surge in the comments section, looks like Profile is looking for Christmas bonus from his paymasters.
https://theconversation.com/the-five-corrupt-pillars-of-climate-change-…
www.theguardian.com/environment/climate-consensus-97-per-cent/2013/sep/…
Classic Guardian. Put up a series of unverifiable opinions as facts, to shoot down a different set of unverifiable opinions. About as sensible as the Pressbuttons fighting the Catlicks in a small suburb of Belfast. And for a very similar reason. My version of religion is better than your version.
That first link indicates the big oil spend around $200 million a year to control climate change response. referring to my comment above, if we could get someone or group to spend $200 million + to publicly lobby and debate the facts about climate change, and what is required in response - what would the ensuing conversations look like?
What a load of bullshit. It is truly bizarre that you actually think "Big Oil' would pay for someone to comment on an obscure financial website on the arse end of the planet. If you really think that is true ask DC to have me removed from the site. I guess you had better have the Reuters journalist shut down too for publishing coal consumption statistics.
That Chinese property developer, China Aoyuan Group, that filed for bankruptcy protection is owned by a company called "Ace Rise Profits Limited" which is registered in the British Virgin Islands (a territory considered to be a tax haven by the G20 and others).
Reeks of quality. ;-)
I still can't believe the nano budget yesterday.
Hey look, we don't have a plan, never did, so I'll make another dick joke (definitely planned) as people will focus on that and let's all move on people.
Also, just quietly I'll cut a shedload of funding for transport projects at the same time just before Xmas so hopefully people would have forgotten in the new year, nothing to see hear.
As far as I can see the subatomic budget was just a ploy to cut as much as possible before Xmas and offer no more information on what the actual plan is.
The transparency of this government is truly abysmal.
NZ voted for tax cuts because we were told they were affordable. Now we find out they are only affordable if they cut almost everything. We get $20 a week now but in 10 years we’ll have a million more people and just a few new congested roads. Fine for those with a limited lifespan, pretty bad for our children. Did anyone really believe $10 billion in tax cuts could be done for free?
I wonder how many would have voted National if they had been honest and said:
We're going to support the roading lobby and kill public transport and rail, make sure Big Tobacco is well looked after and roll back our climate change commitments. Not many if any.
I see Luxon is bringing his corporate values (it's not lying if you make a profit for your paymasters) to how the country is run.
Maybe you're right on the roads part especially as Labour was just as bad on roads.
I think the cigarette thing would have swayed many voters. It's almost unanimously opposed which is why they didn't mention it in the lead up to the election but are getting in super quick to get the changes through under urgency and without a regulatory impact statement. They know they would never win the argument with the public. Bishop tried when he was paid as a Big Tobacco lobbyist and failed. For a party that campaigned on transparency they sure are cagey about facts.
Since when did prohibition of anything solve the problem?
Perhaps we ban alcohol - the worst drug of them all and we legalise, glamorise it, joke about it, denigrate people who wont take, excuse people who rape, assault and create mayhem whilst medicated out of their minds on it - and hardly batter an eye lid!
So much political BS and hypocrisy surrounding this smoking call.
Pumped up on mass hysteria.
It's a bad policy, you know, I know it, New Zealand knows it.
If National had been confident making the case they would have done it during the election.
They weren't, they knew they couldn't make the case but Chris Bishop has to pay back his old bosses and National have to pay back their Big Tobacco paymasters.
How to attract high quality immigrants
https://www.nzherald.co.nz/business/fired-yesterday-750-filipino-worker…
Oh dear,
The rabid anti-Maori brigade will not be happy their NACT saviours are also funding 'racist' policy. (For the sake of clarity I think this is a good initiative and commend the govt for funding it, evidence based policy trumps misplaced-perceptions of racism).
https://i.stuff.co.nz/national/politics/301030470/nz-politics-live-govt…
It's still a racist policy. Are National not capable of writing policy that targets all those in need? It's on their website?
National will deliver health based on need first. We will dissolve the Māori Health Authority and have a strong Māori health directorate inside the Ministry of Health. More bureaucracy is not the answer to New Zealanders falling health outcomes. We need clear targets, to boost up the frontline and real leadership – that is what a National government will deliver.”
https://www.national.org.nz/damning_maori_health_authority_report_relea…
It may not be anti Māori or racist to say, but it sure is ignorant.
We are all, as a society, advantaged by the imms schedule and specifically herd immunity against some pretty horrific illness. So if there is a segment of society whereby those vaccine rates are falling, then it is a social responsibility to ensure those children are receiving the best prevention they can possibly get. It's purely statistical.
We as a society have decided that we do not want those illnesses spreading, so we as a society are responsible for making sure they don't - and what price would you put on that? $50m? I'd say that's hardly enough to provide the education, service and most importantly the trust in our healthcare system that these vaccines are to protect not only these children (who do not get to choose their parents) but also to protect you.
There are already services which focus on this, specifically on Māori, and you should be more than grateful for their existence and for your own health.
https://youtu.be/WF6LbwHO1S8?si=YRoC2G8sPzjODB-C
First reading for repeal of the crazy NBA act, under urgency so that the govt can meet its targets. Cindy is rolling in her grave
Targets?
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
They wouldn't know a target if they fell over one. And they're backed by nutters who think you can 'get by without an environment'.
Try not breathing, not eating....
The joke, though, is deeper than that; globally, humanity is overshot (that's not a financial statement, or issue, indeed finance is irrelevant to that statement). These folk are doomed to be on the back foot, retreating. And no point in blaming the last Government (they were just about as silly - still promoting growth) - this lot are going to bring it all on themselves.
Ultimately, no city of over 1 million, existed ex fossil energy. And we're half-way through that - the best half is gone. So neither approach is valid - both are creating 'assets' which will be stranded, well before their life is over. The Exodus - from cities to food-producing land - will be the biggest, fastest shift humanity has ever seen; a reversal of 200 years flow, in maybe 20.
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