Here's our summary of key economic events over the holiday weekend that affect New Zealand, with another quick news wrap-up so you can get back to 'time-off'.
American retail is still rising at an increasing rate, up +5.9% last week on a bricks & mortar same store basis. The gains above inflation are mounting, with Q4-2023 putting in an impressive performance and this latest data for the first full week of January continuing that trend.
It looks like the American economy will post another solid expansion in Q4-2023.
Meanwhile the consumer debt data we were awaiting yesterday has been released, and it expanded far more than we were expecting, driven in large part by "a big jump" in the use of credit cards. To be fair the "big jump" is only the seasonally adjusted change from October; year on year it is +9.5% higher and that is its slowest gain in 22 months. The dollar rise actually isn't anything special either with single month rises in 2022 and 2021 outshining November 2023. There is actually a slowing in credit card debt rises, not the quickening that some 'analysts' jumped to when they saw the s.a. result.
The US logistics managers index (LMI) rose into expansion in December, led by better warehousing utilisation and prices and rising transport utilisation.
But both US exports and imports fell in November (goods and services), with imports falling a bit more so narrowing their trade deficit situation and an improvement that has been evident all year.
Canadian goods exports slipped -0.6% in December from November to be +3% higher than a year ago, ending a strong run of monthly rises starting mid-2023. Their exports to the US and China held up, but to other countries - mostly the EU - were almost -5% lower in the month.
Taiwanese goods exports soared almost +12% in December from the same month a year ago, driven by good demand for its electronics of course. That was a sharp gain from November’s 3.8% rise and well above market expectations of a 5% increase. It is their largest growth since July 2022.
Australia posted good retail sales data for November yesterday. Retail sales in Australia rose by +2.2% from the same month a year ago and although this exceeded market estimates it is still undershooting inflation. Despite that, it was the strongest pace in retail trade since November 2021, boosted by Black Friday events.
Overall Australian building consent levels came in at modest levels in November but were still better than expected. But house building is a real drag; it is the multi-unit projects that are still being consented quickly. Year on year, overall consents were down -4.6% from the same month in 2022. Houses were down -6.2% on that same basis, but multi-units were up +0.8%. Month on month, multi units were up +6.7%. It is not a happy time for Aussie housebuilders, but ok for the big apartment builders.
Elsewhere in Australia, their resources industry it taking some lumps. Plant closures at both aluminium and nickel refineries have been announced and it just seems a matter of time before lithium miners will retrench too. But at least the iron ore price is holding.
On their domestic front, their peak financial complaints system said they feel overwhelmed by the current levels, with more than 100,000 complaints received in 2023, up +23% from 2022. Compensation they awarded exceeded AU$300 mln, up +38%.
Globally, food prices eased substantially in 2023, and ended with dairy prices rising and meat prices falling. Global food security wasn't as stressed in 2023 as many were expecting.
And staying global, the World Bank says the global economy is set to grow at its slowest pace since the pandemic, up just +2.4% in 2024. They said higher interest rates were a major factor in stunting expansion and that trade and investment would continue to be stifled by wars. At +2.4% it would be the weakest since the GFC (pandemic excepted). They also said that the good expansion in the US meant that 2023 expanded +2.6% globally.
The UST 10yr yield starts today at 4.01% and up +3 bps from this time yesterday. The key 2-10 yield curve is marginally more inverted, now by -36 bps. Their 1-5 curve inversion is marginally less inverted, now by -87 bps. And their 3 mth-10yr curve inversion is also less inverted, now by -138 bps. The Australian 10 year bond yield is now at 4.10% and unchanged. The China 10 year bond rate is now at 2.55% and down -2 bps. That matches its pandemic low, and also matches the prior low in 2002. And the NZ Government 10 year bond rate is -3 bps lower at 4.68%.
Wall Street has started its Tuesday session with the S&P500 down a minor -0.1%. Overnight, European markets were all down about -0.2%. Yesterday Tokyo ended its Tuesday session up an impressive +1.2%. But Hong Kong was down -0.2% and Shanghai up +0.2%. Singapore ended its Tuesday session up +0.3%. The ASX200 ended up +0.9% and the NZX50 matched that with its own +0.9% gain.
The price of gold will start today down -US$3/oz at just on US$2030/oz.
Oil prices have recovered from yesterday's drop, up +US$2.50 at just over US$72.50/bbl in the US. The international Brent price is now just under US$77.50/bbl.
The Kiwi dollar starts today at 62.4 USc and marginally softer from yesterday. Against the Aussie we are up at 93.3 AUc. Against the euro we are firmer too at 57.1 euro cents. That all means our TWI-5 starts today just under 70.9 and marginally firmer from this time yesterday.
The bitcoin price starts today much higher, rising to US$46,831 and a jump of +4.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.
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39 Comments
Good Morning from #Germany where industry shrinks for 6th month in Nov as recession looms. Industrial production declined 0.7%, defying economists who’d predicted a 0.3% increase. German GDP probably contracted in Q4 2023. https://bloomberg.com/news/articles/ Link
How is this not setting alarm bells ringing? Bank borrowing by the Eurozone's households and businesses came to a halt in 2023. Loan demand has cratered worse than in EZ crisis. https://ecb.europa.eu/pub/pdf/fsr/ec Link
A rare excellent article on banking in Europe and the false ECB/EU claim that Europe has too many banks - @GIS_Reports Link
And staying global, the World Bank says the global economy is set to grow at its slowest pace since the pandemic, up just +2.4% in 2024.
"food prices eased" the link above. Could someone please explain the Russo-Ukraine war, climate change and food prices easing?
I was under the impression that with abnormal droughts and abnormal flooding there would be a reduction in crops which would lead to prices increasing.
Well, there was severe disruption through COVID and into the first year of the unjustified Russian invasion of it's soveign neighbour. Those factors have disipated. Climate? There have been several severe events that have destroyed crop production, but where crops aren't affected crop yields have been excellent. Focusing on crop production for my locale, conditions this season are perfect for high yields and look to remain so through harvest.
https://www.dw.com/en/floods-in-germany-desperate-farmers-fight-to-save…
I’m working with Dirk Bezemer and others on an article where we calculate how much of the GNP, the reported product, is actually overhead. In other words, what is Gross Domestic Product (GDP) without the FIRE sector (finance, insurance and real estate)? A strict classical economist would say, let’s take out the monopolist rent. How much of American industry’s reported profits, e.g., in healthcare, are really monopoly rent? The idea of industrial development today is to carve out a monopoly where there’s no competition and get super profits. This is a concept that has been dropped, really, ever since World War One, about a century ago. There’s no distinction between productive and unproductive labor, between wealth and overhead. John Bates Clark said that if somebody’s wealthy, they earned the wealth; there’s no such thing as unearned wealth. Today wealth is mainly achieved by asset-price inflation; by capital gains. You won’t find a single wealthy family that made money simply by saving up what they earned. They make money by increasing the price of their stocks and bonds and real estate holdings, not by saving up their earnings. Yet, capital gains, i.e., asset-price inflation, are left out of the statistics of almost every country. So it is very hard to explain how wealth is achieved, and yet that was the purpose of economics in the 19th century and centuries before. But suddenly the idea of wealth has been suppressed as sex was in the day of Sigmund Freud Link
https://www.reuters.com/technology/us-sec-has-not-approved-bitcoin-etfs…
Nothing says "safe", "reputable" & "definitely not artificially manipulated" like an official SEC account getting hijacked to artificially manipulate bitcoins price so someone can make a quick buck.
As they say "you couldn't make this sh*t up".
Not sure how the SEC thinks it can protect consumers and investors when it can't even protect a twitter account (if it were actually hacked),
Securities lawyers on Fox said the SEC will have to investigate itself for market manipulation.
Has anybody seem my mouse?
"Lab leaks and accidents up 50pc as fears grow dangerous viruses and bacteria could escape
156 reports have emerged of ‘mishaps’ involving bugs since outbreak of Covid, suspected to have originated in a Chinese lab"
https://www.telegraph.co.uk/news/2024/01/06/lab-leaks-accidents-pandemi…
Learn about natural selection chap.
"...The way medical scientists talk about evolution is sometimes alarmingly naive, as if random mutation is what drives it. No, no, a thousand times no: it’s selection. For example, I took a train this week, putting me at risk of catching Covid from a fellow passenger. But if two other people had been planning to travel on the same train, one with mild omicron and the other with severe delta, the latter would have been more likely to change their mind and stay home because of feeling unwell. That’s selection. The fiercest enemy of a virus is another virus. Omicron ousted delta at least partly because people with mild symptoms were more likely to go to work or parties (or not notice they were ill) than people with severe ones.
...Yet here surely there is a worrying lesson about the past two years. In the weird world of lockdown, severe strains of Covid were favoured by selection. If you tested positive but felt fine you were told to stay at home. If you fell badly sick you went to hospital, where you gave your illness to healthcare workers and other patients. So mutants that were more infectious, such as alpha and delta, paid no penalty for being just as virulent, maybe more so. The natural evolution of Covid into just another mild cold was therefore possibly delayed by at least a year."
Don't panic Mr Mannering - apparently we are back on track..and the new Government back hard a t work with repealing everything ever passed by the previous Labour Government.
Christopher Luxon please stand up?
If the new Prime Minister holds fast to the environmental and social values he articulated as chief of Air NZ, his legacy will be worth celebrating. Unfortunately, we’re not seeing many of those values in the Government’s 100-day plan.
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