Here's our summary of key economic events overnight that affect New Zealand, with news that with a few notable exceptions, commodity prices are soft across the board.
The overnight dairy auction brought a -2.3% retreat, principally because the powder prices fell. WMP was down -2.8% and SMP was down -5.2%. However cheese was up +4.0%, that only ingredient to show a gain. The overall decline was the first in the first of the year and the only significant one in the past 15 events. Last week's GDT Pulse event's retreat signaled that this correction was on the cards. One retreat in 15 isn't significant however at this point and it is unlikely it will cause any analyst to change their forecast payout levels.
Last week's retail sales in the US rose +3.0% from the same week a year ago, on a same-store basis, just enough to stay ahead of inflation. The American middle class is still creating the core consumer demand that essentially powers the global economy.
But the same was not true for factory orders in January, which were down -1.6% on that same basis. From December they fell at a sharper pace.
However, the American services sector was still expanding in February, even if it was marginally back off the fast pace in January. And this expansion was confirmed in a separate internationally-benchmarked services survey.
And their logistics industry is expanding faster too, indicative of rising commercial demand in February.
Encouragingly, American vehicle sales rose to a 15.8 mln annualised rate in February, an almost +6% gain on January's rate. And that puts them above the recent long run average.
A major set-piece meeting of the People Congress in Beijing has seen them set an "about +5%" growth target for 2024. But even the Premier who delivered the target acknowledged it will be a reach. But analysts see it as a "target without a Plan". Without such a plan, there is unlikely to be any support for global commodity prices. The sharp retreat of foreign investment is drawing calls for 'action' to reverse the slide.
Lower energy costs (and energy intensity) are still driving down EU producer prices. Industrial producer prices in the Euro Area decreased by -8.6% year-on-year in January, but that was a moderation from a revised -10.7% drop recorded in the preceding month.
Australia delivered a bumper current account surplus in Q4-2023 or +AU$11.8 bln, much more than was expected. This was their best 2023 quarter, taking the annual current account surplus to +AU$31.9 bln. That probably means their Q4-2023 GDP activity will be positive too, helped by a slump in imports and less Aussies making overseas trips. Australian Q4 GDP results will be released later today.
And staying in Australia, their competition authorities have decided not to appeal their loss in the case that overturned their block on the ANZ-Suncorp banking acquisition.
January air cargo data was released overnight and it pointed to rising demand and a strong start to 2024. International cargo demand was +20% higher than year ago levels, even better in the Asia/Pacific region.
The UST 10yr yield starts today at 4.15% and down -8 bps from yesterday. The key 2-10 yield curve inversion is marginally deeper at -41 bps. And their 1-5 curve inversion is deeper at -82 bps. Their 3 mth-10yr curve inversion more at -123 bps. The Australian 10 year bond yield is now at 4.10% and down -3 bps. The China 10 year bond rate is now just under 2.35%, and a new all-time low. The NZ Government 10 year bond rate is unchanged at 4.81%.
Wall Street has opened its Tuesday session with a -0.8% drop on the S&P500. Overnight European markets were mixed and bookended by Paris's -0.3% fall and London's +0.1% rise. Yesterday Tokyo ended unchanged but still at its new all-time high. Hong Kong dived -2.6%. Shanghai ended up +0.3%. Singapore was down another -0.5%. The ASX200 ended its Tuesday session down another -0.1% but the NZX50 was up +0.3%.
The price of gold will start today up +US$9/oz at US$2126/oz. That is another new record high.
Oil prices are down -50 USc at just over US$78/bbl in the US while the international Brent price is now just over US$82/bbl.
The Kiwi dollar starts today at just on 60.9 USc again, marginally softer. Against the Aussie we are holding at 93.6 AUc. Against the euro we have eased fractionally to 56.1 euro cents. That all means our TWI-5 starts today at just on 70.2 and down another -10 bps.
The bitcoin price starts today at US$65,430 and down -2.8% from this time yesterday. At one point it did hit a record high in the past 24 hours but has backed off since. Volatility over the past 24 hours has been high at +/- 3.4%.
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39 Comments
On that subject, I put up the Mora interview of this fellow, to no bites. But, having read the full Rand report, I think it's worth putting up as a direct link.
https://www.rand.org/pubs/research_reports/RRA1887-1.html
There are a lot of folk who avoid reading/learning that which might invalidate their chosen goals, but it's a truth that we're better off confronting the truth...
Unless its house prices, inflation or immigration, you're not likely going to attract many eyeballs.
I'd felt the West might have 2-3 more can kicks left. This may have underestimated the speed other global players were are synchronized with might deteriorate.
Although my post was more alluding to the COVID era economics many nations suffered, that we avoided/deferred.
2 or 3 more kicks left?
Youre an optimist.
Increasingly the declining "wealth" in the form of income streams are being hoovered up by fewer and fewer participants in the great global ponzi.
Eventually there will be mass unrest ... unless the masses can be convinced to take their new medicine.
Which covid showed they could.
I didn't say the kicks would be overly lucrative for most. As actual value generated declines, the kicks will have diminishing returns. They'll include government spending also, giving short bursts of economic growth.
As for the mass unrest, most likely most people everywhere will just suffer their lot. Especially if they're drip feed little goodies. Maybe a nice little UBI.
Just drop interest rates from their current elevated levels and she'll be right. Yes I know they aren't high by past standards but they're having a strong negative effect. Genuine Fhb cannot get a home
In the sixties the govt helped young couples into their homes and thats provided decades of spin off. Something has to change soon
yip
30 odd years old
good album
https://stoplovingeverything.com/2016/09/16/30-years-of-david-davids-bo…
and for those hapless FHBs that loaded up on cheap debt :
"It's a RatTrap Judy, and we've been caught!" The Boomtown Rats
https://open.spotify.com/track/1id02aKCKGGxZnwjwrR5Ij?si=ead9ba0d73314b…
I listened to the rnz section you posted last night. Very valid points, and well worth the listen for most readers here. But you’re also right in what you said about your views in the 80s that things were not sustainable then; the system will just try to roll on and push through until it breaks.
"It's sad watching across the world, people from the developing or third world fleeing their countries from the economic downturns they've had, that we're about to"
They mostly flee to first world countries, but if people in first world countries are about to face the same fate, where are they going to flee to?
There's nothing like starting with a personal bias a mile wide, eh?
It's not the UN - it's us. We, via the World Bank, IMF and other repressive vehicles, extract from those people to support our - temporary - level of consumption.
And in answer to Yvill's question; It's like migrating to the upper deck of the Titanic - a temporary 'save'.
He, of course, would use that to argue that the sinking isn't happening....
Are these people fleeing economic downturn or the corrupt, incompetent, self serving crazies running their countries - usually the latter.
Fleeing the type of politician who likes to crack down on their poor while feeling very entitled themselves to taxpayers' money (and/or on behalf of their donors)... and finding themselves in New Zealand, facing a milquetoast version of the same.
I'd love to sell some crypto. I nearly sold 6 months ago but couldn't work out how to.. so I left it in my wallet. Now I've fluked my way into a nice pot of Eth.. what service do you use to sell with? I obviously want to keep the IRD happy, but minimize the outrageous crypto 'fees'.
The Crypto Frankometer says sell, sell, sell. Don’t let the greed get you. I’m out. Time to go fishing.
Yes. Control your emotions and temptations. As Yoda once said, "Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering."
But the same was not true for factory orders in January, which were down -1.6% on that same basis. From December they fell at a sharper pace.
Finally, it's that same old issue again... downward revisions!! In the last 21 months, US factory orders have been downwardly revised 16 times... Link
America’s economic security doctrine has taken on a darker hue
Washington seeks to defend the rules-based order with unruly, self-interested interventions
Apple's China sales - largest smartphone market in world - for the first 6 weeks of 2024 have tanked 24% compared to same time period in 2023.
Apple's market share is collapsing while Huawei sales up 64% (market share nearly doubled).
https://www.wsj.com/world/china/apples-iphone-sales-in-china-fall-as-hu…
YTD Tesla is down in China as well and market cap has been smacked accordingly. Also noted that some far left eco warrior types have set fire to some power infrastructure that has taken down the German Tesla Gigafactory. Elon is less than impressed and has called them idiots for targeting a BEV producer vs an ICE producer in the name of saving the planet.
NZ car sales are now a BEV shambles. Between New/Used first registrations only 2.3% of sales YTD are BEV.
Another lesson of the failure of rent controls (as if we needed a reminder)
https://www.telegraph.co.uk/money/property/argentina-chainsaw-man-javie…
I'd like to see better analysis than the Torygraph quoting the Cato institute on a basket case volatile economy like Argentina. I'm open to the possibility that there may be unintended consequences but would prefer to see analysis on a more stable market and economy.
Even dripping wet lefties like NPR don't promote rent control.
https://www.npr.org/2023/05/02/1173398485/research-finds-rent-control-r…
"Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals' migration, we find rent control limits renters' mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law."
Facebook and other Meta products had a massive outage for several hours over night.
https://x.com/KobeissiLetter/status/1765058446339056119?s=20
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