Here's our summary of key economic events over the holiday period that affect New Zealand, with another quick news wrap-up so you can get back to 'time-off'.
But first, yet again the giant US labour market has impressed with more job gains that expected. The headline expansion was +216,000 when a gain of about +170,000 was anticipated. This is the employer payroll data. They also survey households and that reported a fall, something unusual in the November to December period. For the full year, payrolls rose +2.7 mln, whereas the household survey reported a gain in employment of +1.9 mln for the year. It seems workers are shifting out of self-employment onto employer payrolls.
Average weekly earnings rose +3.8% for the year in this survey, enough to best inflation but not by much. But the pace slowed in December from November, so this is one to watch.
Meanwhile, the ISM services PMI delivered only a minor expansion in December, although new order growth was good.
And American factory order growth recorded its best rise in three years, a +2.6% expansion pace in November from October, and +3.3% year-on-year.
Overall today's data probably pushes back when the US Fed will feel a need to start trimming rates. The current sanguine situation may well have them keep current levels for some time. This is not the scenario that bond markets have assumed.
Canada disappointed in its labour market change in December, with virtually no change from November when a +13,500 rise was expected and after a +24,500 rise in November. Worse, full-time employment fell -24,000 jobs and part-time employment rose +24,000 jobs. They will be quite disappointed in this.
Japanese consumer sentiment rose in December and to its best level in two years.
Singapore retail sales made some sort of recovery in November after falling in October. They are now +2.5% higher than in November 2022.
Yesterday (Friday), a Beijing court placed Zhongzhi Enterprise Group (ZEG) into bankruptcy. It has been a major player in their US$3 tlm shadow banking sector and has lent billions to real estate firms. Zhongzhi has US$64 bln in debt and now far more than its fast-depreciating property loan base. It will not end well for its managers (some of whom have skipped town).
And they may be joined by some carmakers in 2024. Bloomberg is reporting that only four of the 13 brands that have disclosed annual sales figures accomplished their 2023 targets, with many missing by a wide margin. A consolidation is due, but those that aren't picked up, it could be a messy end.
European inflation seems sticky above levels they want to see, according to the December data. While lower energy costs are certainly helping, food costs are not. Their +6.9% pa rise in food costs and -11.9% fall in energy costs balanced out to a +2.9% rise in overall inflation in December, up from +2.4% in November. In Germany, inflation is running at 3.7%.
A sharper than expected pullback in November German retail sales won't hep either as those price pressure mount.
The UST 10yr yield starts today at 4.03% and up +2 bps from this time yesterday. The key 2-10 yield curve is now less inverted, by -35 bps. Their 1-5 curve inversion is also less inverted, now by -83 bps. And their 3 mth-10yr curve inversion is little-changed, now by -136 bps. The Australian 10 year bond yield is now at 4.15% and +6 bps higher. The China 10 year bond rate is now at 2.57% and down -1 bp and back down to levels we last say in August and prior to that in the pandemic. And the NZ Government 10 year bond rate is +6 bps higher at 4.66%.
Wall Street has started today up +0.2% in Friday trade on the S&P500. But if it holds this, it will be down -1% for the shortened week. Overnight European markets all fell about -0.4%. Yesterday Tokyo ended up +0.3% to end its week down -0.5%. Hong Kong fell -0.7% to be -3.2% for the week. Shanghai fell -0.9% and ended its week down -1.5%. On the other hand, the ASX200 was little-changed yesterday but was -1.6% lower for the short week. The NZX50 got off lightly in the circumstances; it was little-changed yesterday, and also little-changed for the week.
The price of gold will start today down -US$2/oz at just on US$2041/oz.
Oil prices are +US$1 higher at just under US$73.50/bbl in the US. The international Brent price is now just over US$78.50/bbl.
The Kiwi dollar starts today at 62.4 USc and +20 bps higher than this time yesterday. Against the Aussie we are holding higher at 93 AUc. Against the euro we are firmer at 57 euro cents. That all means our TWI-5 starts today just on 70.8 and up +20 bps.
The bitcoin price starts today lower, slipping to US$43,436 and a retreat of -1.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.4%.
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42 Comments
Overall today's data probably pushes back when the US Fed will feel a need to start trimming rates. The current sanguine situation may well have them keep current levels for some time. This is not the scenario that bond markets have assumed
...the jobs print from 10 of the past 11 months has been revised lower!
Record 1.5 Million Crash In Full-Time Jobs, Multiple Jobholders Soar To Record
The little understood, but yet predictable side effect of 2013 Obamacare is that it condemned millions of under the Median US workers to part time jobs-juggling shifts like a bus driver. Reason: Employers over a certain size were mandated to provide Health Insurance coverage to employees who clock over 30 hours per week. That benefit alone would equal nearly a weeks extra wages for the employer if they hired them full time . Thus low wage workers now have subsidized coverage paid for by taxpayers. Those above the Median Income level with Health care insurance saw their premiums explode to cover all those with pre-existing conditions.
They could have a public / private system like here. The average yank dies 3.5 years earlier than the average kiwi which is embarrassing considering their significant wealth advantage.
See here for total health expenditure vs life expectancy chart - the US is literally off the chart! https://en.m.wikipedia.org/wiki/List_of_countries_by_total_health_expen…
My experience with Pubic /Private is the public gets long waiting lists, and the private is affordable for only the upper class, and not the middle class as is the case in the US. All teachers, police, fire, teamsters, etc are covered by private insurance. They don't know what the word "waiting list" means. As to death rates I'm sure the 120,000 dying annually from Fentanyl is not helping. We are in a Lucky country that has 1400 miles of distance from nearest land mass, as opposed to 1400 miles of border with Mexico.
In the more prosperous states most do have Private Insurance and few take the chance to have no Health Insurance--usually healthy young adults over 26 and no longer under their parents coverage:
Distribution of Minnesota Population by Primary Source of Insurance Coverage, 2021
This chart depicts the distribution of Minnesota population by primary source of insurance coverage. Total population is 5.7 million.
- Private Health Insurance=57.2%
- Medicare=18.7%
- Medical Assistance and Minnesota Care=18.9%
- Uninsured=4.0%
- TRICARE=1.1%
- Sources: MDH Health Economics Program; U.S. Census Bureau, Annual Estimates of the Resident Population for Counties in Minnesota: April 1, 2020 to July 1, 2021, (CO-EST2021-POP-27).
The little understood, but yet predictable side effect of 2013 Obamacare is that it condemned millions of under the Median US workers to part time jobs-juggling shifts like a bus driver. Reason: Employers over a certain size were mandated to provide Health Insurance coverage to employees who clock over 30 hours per week. That benefit alone would equal nearly a weeks extra wages for the employer if they hired them full time . Thus low wage workers now have subsidized coverage paid for by taxpayers. Those above the Median Income level with Health care insurance saw their premiums explode to cover all those with pre-existing conditions.
More MSM nonsense:
Investors Are Rushing to Cash at Record Pace in First Week, BofA Says
If potential buyers become more eager to buy, and existing holders become more reluctant to sell, the price will rise. Conversely, if existing holders become more eager to sell, and potential buyers become more reluctant to absorb the shares, the price will drop. With every transaction, regardless of whether the price goes up or down, dollars that were held by the buyer are now held by the seller. Shares that were held by the seller are now held by the buyer. Not a single dollar has gone “into” or come “out of” the market. There’s just as much “cash on the sidelines” after the transaction as there was before – because every security created by an issuer (whether it’s a share of stock or a dollar of base money) has to be held by someone, at every point in time, until it’s retired. In the meantime, the stuff just changes hands. Link
Bringing multiple immigrants for every baby born isn't immigration it is population replacement.
"Overall, annual migrant arrivals in the year ending 31 August 2023 reached an all-time high of 225,400."
https://www.rnz.co.nz/news/indonz/501450/asians-largest-contributor-to-…
"In the year ended September 2023 compared with the year ended September 2022:
- there were 56,943 live births registered, down from 58,749"
Immigration is harmful to all, except in maybe the immigrant, if it increases population. Of course someone will make money, but overall the decline in the quality of the ecosystem we inhabit makes the concept of deliberate population growth dated and stupid! Japan needs to let their population decline by about 90% to live within it's ecological boundries with any permanacy.
Jesper Koll says Japan will become an immigration powerhouse. Before the pandemic, the country was on track to accept about 150,000 new non-Japanese employees per year. This more than doubled to almost 350,000 in the first half of 2023. There are now approximately 3.2 million non-Japanese residents of Japan, up from barely half a million 30 years ago. Visa and permanent-residency requirements continue to ease. Most importantly, the biggest obstacle to employing non-Japanese talent—seniority-based rather than merit-based compensation—is beginning to change. All said, it is now perfectly reasonable to expect that about 10 percent of employees will be non-Japanese by 2030. That’s more than double the current rate of just below four percent.
"Most importantly, the biggest obstacle to employing non-Japanese talent—seniority-based rather than merit-based compensation—is beginning to change."
after nearly 30 years of visiting for both business & pleasure, other obstacles I've seen in japanese culture are institutionalised protection networks within business/Govt , casual racism & misogyny, aggravated by hostage justice (eg Ghosn).
Opinion pieces:
Interesting interview in French magazine Le Point of Emmanuel Todd, one of the last great French intellectual, over his latest book "The Defeat of the West" (and actually what he says will be the last book he'll ever write). Todd is particularly renowned for having been one of the first Western intellectuals to predict the fall of the Soviet Union in his 1976 book "The Final Fall". Here in "The Defeat of the West" he argues, as the title suggests, that the West - led by the U.S. - has essentially collapsed. In the interview he goes over 2 "levels" of this defeat: Link
The west would harm itself with rash seizures of frozen Russian assets
A watertight legal basis for confiscations is lacking because the US and its allies are not openly at war with Moscow
https://edition.cnn.com/2024/01/05/business/chinese-shadow-bank-zhongzh…
“China’s $3 trillion shadow banking sector — roughly the size of the French economy”
"It seems workers are shifting out of self-employment onto employer payrolls."
Yup. Nailed it. The 'gig economy' was employer marketing to get labor on fix prices that when converted into an hourly rate was actually quite low. i.e. "This bit of work we estimate will take 10 hours and we'll pay you $100 per hour for it." What actually happened is the workers took 30 hours to complete the job before they'd get paid.
I just randomly looked up GDP per capita and was very surprised. Supposedly ours is better than UK, France, Italy, Japan, and Europe. https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_…
We are 21st in the world and a lot of those ahead of us are tax havens or rich hideaways.
Recent real GDP per capita growth for NZ, Aussie, Canada is negative and dreadful overall. Zooming out, NZ is one of the worst among developed countries. Even basket case Japan is performing far better than NZ.
https://croakingcassandra.com/2020/10/22/coda/
If the ponzi goes, NZ GDP will be toast as consumption gets whacked.
Recently yes, but we must have had some amazing growth prior.
Are you so sure? I don't have time-series data on real GDP growth per capita in NZ. But I don't think it's as spectacular as you may think. Remember, GDP growth is primarily driven by consumption in NZ, not necessarily value-added productive output.
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