Here's our summary of key economic events overnight that affect New Zealand, with news the giant US economy grew by +US$1.4 tln in 2023, shrugging off all recession predictions.
US initial jobless claims rose last week, and by more than expected, but were still at near the bottom of their ranges. There are now 2.06 mln people on these benefits, lower than last week but there were 1.86 mln on these same benefits a year ago. The seasonal retreat isn't as strong as last year, so the overall level is creeping up.
US durable goods orders came in in December less than expected and continuing their recent yoyo pattern. They were virtually unchanged in December 2023, after a +5.5% rise in November and missing market expectations of a +1.1% rise. Excluding aircraft, new orders increased +0.6%. Capital goods orders however were up a very strong +9.8% in December from a year ago, and holding November' very good level.
The big news however is that the US economy expanded at a +3.3% rate in Q4-2023, much better than forecasts of a +2% rise, and following a stellar +4.9% rate in Q3. Consumer spending on goods slowed while consumption of services rose faster. Also helping were a rise in exports. For all of 2023, the giant American economy rose +2.5% in real terms and generated US$27.9 tln in economic activity in the year, up an additional +US$1.4 tln or +5.8% more nominally, +2.5% in real terms. That is a larger expansion in volume terms than China's in the same period and is like adding two thirds of Australia over the past twelve months.
The current manufacturing sector isn't delivering its share of this expansion however. The Chicago Fed's National Activity Index fell slightly in December, after being downwardly revised slightly in November, indicating activity contracted during the last month of the year. All four broad categories of indicators decreased from November, and three of them made actually contracted.
And the Kansas City Fed manufacturing survey retreated rather sharply in January too.
US new home sales came in +4.4% higher in December than a year ago, and residential building consents were up +1.8% in the same month
China is going through a crisis of confidence, one triggered by tightening State control and lackluster economic performance. Their 'security' push to suppress news that isn't positive for the Party is corroding confidence inside and outside the country. It is particularly obvious in a transformed and chilled Hong Kong.
South Korea reported a GDP expansion of +2.2% in Q4-2023 over the same quarter a year ago. This was better than expected and the +1.4% rate in Q3-2023.
As expected, the ECB kept its hawkish hold position in the face of continuing inflation pressures, and it kept its quantitative tightening program. It claims credit for reducing inflation however due to its set of 2023 rate hikes.
Today is a public holiday in Australia, "Australian Day". (Monday is a public holiday in Auckland.)
Globally, container freight rates rose by another +5% last week as the latest supply chain pressures in the Red Sea (and the Panama drought) continue to bite. A feature of the latest changes is that trans-Pacific shipping rates are making a sharp catchup even though they are not directly involved. But still, there is no equivalent rise in rates for bulk cargoes.
The UST 10yr yield starts today at 4.14% and down -2 bps from this time yesterday. The key 2-10 yield curve is noticeably less inverted, now by -17 bps. Their 1-5 curve inversion is also less inverted, now by -73 bps. However their 3 mth-10yr curve inversion is unchanged at -122 bps. The Australian 10 year bond yield is now at 4.24% and down -1 bp from yesterday. The China 10 year bond rate is unchanged at 2.52%. The NZ Government 10 year bond rate is also unchanged at 4.79%.
Wall Street has opened its Thursday session with the S&P500 up +0.2%. Overnight European markets were all little-changed, up just +0.1%. Yesterday Tokyo ended also unchanged. But Hong Kong rose another impressive +2.0% on the stimulus talk and Shanghai gained an unusual (for them) +3.0%. Singapore fell -0.2%. The ASX200 ended its Thursday session virtually up +0.5% while the NZX50 ended up +0.3%.
The price of gold will start today up +US$2/oz from yesterday at just on US$2014/oz.
Oil prices are up another +US$1 at just over US$76.50/bbl in the US while the international Brent price is now just over US$81/bbl.
The Kiwi dollar starts today at 61.1 USc and unchanged from this time yesterday. Against the Aussie we are little-changed at 92.9 AUc. Against the euro we are marginally firmer at 56.4 euro cents. That all means our TWI-5 starts today just on 70.1 and essentially unchanged in a day.
The bitcoin price starts today a little lower. It is now at US$39,703 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been low to modest at just on +/- 1.0%.
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36 Comments
Monday is a public holiday in Auckland
Not just Auckland. From far north to taupo and referred to as Auckland anniversary.
Nelson Anniversary Monday too
Those evil gardeners destroying our precious planet. Have they no shame?
"Results reveal that the carbon footprint of food from Urban Agriculture is six times greater than conventional agriculture (420 gCO2e versus 70 gCO2e per serving)."
https://www.nature.com/articles/s44284-023-00023-3
*this comment was funded by Big Glasshouse and Big Leveraging Circularity.
So The Good Life is not so good for the planet after all.....
Yep all started before recorded time didn’t it. Like when the first sod turned the first sod.
So growing me veges means I am a climate criminal ! Who knew.
I think the devil will be in the detail though. I suspect this is too generic and may be more about the size of the garden plot and what goes into it. If not, why then would large scale market gardeners be any different?
I'm going to call bullshit on that one. I used to pick strawberries, the "Dirt" was more like dust and unless it was pumped full of fertilizer every single year there was no crop. You cannot tell me that a home gardener who is possibly all organic and is using compost is way worse. Those same strawberry fields in Albany also were labelled toxic in the end and had to have soil removal when it finally turned into a housing estate.
Yeah a little misleading no doubt, it's hard to imagine anything that is airfreighted from another country having lower emissions than something grown locally. There appears to be a major impact of the infrastructure costs associated with urban agriculture in that study (63% of the carbon emissions), such as construction of raised beds and so on (plus an assumption that they will not last long).
There's probably an element of some gardeners having to buy topsoil for their house (e.g. some new builds) because the developers sell all the topsoil off when they build the house and leave a mere smattering of it on top of clay or rubble. But in general, yeah, seems misleading.
Headline: "US 10year treasury rose 1255 percent from trough to peak"
In reality the ten year treasury bills increased 4.6 percent as they went from .38 percent to 4.99 percent #misleading headline.
It's clearly talking about a percentage change. (y2-y1)/y1*100. Which equals 1213%.
Its not an actual headline. I did that in response to profile to illustrate that 6 times more can mean virtually anything depending on the starting base
I hit a paywall there but found a report on the paper here:
https://www.technologynetworks.com/applied-sciences/news/community-gard…
Looks like the main impact is 'infrastructure' and the recommendation is to use construction waste instead. My veggie garden is made from old concrete blocks for edging and old pavers for paths and I'm growing lots of tomatoes, so hopefully I'm somewhat better than the average.
Atlas sell crushed concrete 20mm drainage grade so no fines for $78 per cubic metre, its great for paths in vege garden, I put it over old tarps to stop weeds growing
"Most of the climate impacts at urban farms are driven by the materials used to construct them"
https://record.umich.edu/articles/study-examines-carbon-footprint-of-ur…
This study has "bollocks" stamped all over it.
"Individual gardens and urban farms are similar on average, but variation among urban farms leaves them statistically indistinguishable from conventional farms. In fact, most urban farms are carbon-competitive with conventional farms when one particularly carbon-intensive urban farm is excluded from the analysis."
Although further into the study it does cover the sources of Greenhouse gases, and offers suggestions for improvements, which is fair enough. Composting and using peat are two potential sources.
The real question? Is conventional food production sustainable and does it produce nutritious food?
https://www.ucsusa.org/resources/how-soil-erosion-threatens-food-and-fa…
https://www.scientificamerican.com/article/soil-depletion-and-nutrition…
The end of oil.
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://tupa.gtk.fi/raportti/arkisto/70_2019.pdf
OOPS! #Tesla sheds $85bn to drop below obesity drugmaker Lilly as weight-loss drug innovators have unseated electric carmakers. (via BBG) Link
I still remember when in a 2011 Bloomberg interview Musk was literally laughing at the very notion of Chinese car companies competing with Tesla. 13 years later, the same Musk: "Chinese car companies are the most competitive companies in the world... If no barriers are established, they will pretty much demolish most other car companies in the world. They are extremely good." https://asia.nikkei.com/Business/Autom Link
Hence the rush by the NACTF to put unjustifiably high RUCs on EVs/PHEVs to protect vested interests.
Nothing unjustifiable about it. Full EVs will pay the same RUCS that light diesels pay. If anything the petrol excise need to be increased to level things up until they transistion everyone to RUCs, then they can set the same RUC price for all light vehicles.
PHEVs is a bit of a mess, but that also becomes a none issue when petrol cars get RUCs, and the FED comes off petrol.
So why not do it once and do it properly, rather than rush through a silly stop-gap policy?
Silly policies is pretty much what NACTF will keep doing, cos real change is too hard. Currently their playbook is: Cancel everything the last guys did, even if it was good and fulfill promises to our special interest groups who obviously pay us money to write their policy (tobacco etc).
That won't change for a year or two, its what always happens when these clowns get in. The last clowns are ideologues hell bent on an archaic ideology so weren't much better.
Do you smoke.. obviously not. I dont but am happy to let others make their own choices, not be forced by the stupid policies of liebour and the left to find ciggies on the blackmarket
The Liebour policy would have been plain dangerous for small outlets
National have only had a couple of months. The other option was to extend the EV exemption, which wouldn't have been popular with their voter base (or anybody that thinks raod users should pay for the roads they use) And as I said, the RUC rate, which is what Chris is actually moaning about, was already in existence and has been since 2020, except for the temporary covid reductions. And if Chris bought an EV thinking it was a free ride forever, more fool him.
Musk has a reputation for being one of America's best innovators, which is how he got so far ahead. Now he's effectively saying he can't innovate any more to stay ahead?
Trade barriers are important to protect employment and national resilience, but Musk did export jobs overseas when he built factories in China. Perhaps he just needs to suck it up!
I dunno why everyone keeps repeating Musk saying something 10 years ago, its really weird. Yeah, 10 years ago Chinese EV manufacturers were shite. Now they are really good. That's what happens in capitalist systems. Musk was right then, he is right now. What's the big deal?
China is basically enabling undercut of the EV market by restricting supply of batteries and subsidising their own industries, which they have been doing for decades anyway in pretty much all their industries.
Such is the danger of shifting manufacturing to a country with no copyright law, your ideas and technology will get replicated and undercut eventually.
Was reading some interesting rants about Chinese cars from Kiwi mechanics online the other day. Chinese EVs look very nice on the outside, though.
(Not that Tesla cars have amazing quality)
Brent crude now up to $82.50 !! With U.S GDP smoking hot and the U.S government refusing to reign in spending, it going back to $100 again for both Brent and WTI. #inflation
Has no one else noticed this from Q4 GDP report? Annualized interest on the federal debt now exceeds $1 trillion and is projected to breach $3 trillion, annualized rate, by Q4 2030 - INSANE and UNSUSTAINABLE: Link
Tick tock, tick tock goes the timebomb that is the USA
Has no one else noticed this from Q4 GDP report? Annualized interest on the federal debt now exceeds $1 trillion and is projected to breach $3 trillion, annualized rate, by Q4 2030 - INSANE and UNSUSTAINABLE: Link
Nobody takes any notice of these things (just a small minority). Mention this at the water cooler and all you get are the wide-eyed stares. In the Nu Zillun context, they honestly believe it has nothing to do with us. That is because they cannot comprehend it.
Presidential election year in the US (plus 1/3 of the Senate and Congress). Biden's administration has encouraged growth and optimism, and provided stimulus. But US voters don't seem impressed. Why? Are the headline numbers actually hiding the fact the average Joe is seeing no benefit? Or that only certain sectors of the US economy are growing? (A small percentage of tech.) If the Biden guidance comes to an end, where then the US economy?
Recessions follow inverted rates. And it wouldn't be the first time a new administration has 'changed direction' and good progress stopped dead. If the orange narcissist returns to the Whitehouse we shouldn't worry too much as the public system in the US has lots of entrenched altruists that can control what he does. Alas, not what he says. And there are a lot of stoopid 'Mericans who hang on his every word. Interesting times.
Illegals
One of the problems in US of A is that news is generally all about US of A. Lots of people know BA about the rest of the world and think that it actually starts at New York and ends at LA with a holiday resort called Honolulu out in the Pacific.
So while they hear of a problem at the Southern border they often dont get any information about what happens to create the issue
Such ignorance is not just international either. The difference between say a New Englander & a New Mexican is vast.
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