Here's our summary of key economic events overnight that affect New Zealand, with news we seem to be "not far" from getting interest rate cuts from the central banks in the US and Europe - and perhaps an unusual hike from Japan.
Tomorrow we get the important February US non-farm payrolls report, and today there are more precursor updates.
The number of people claiming unemployment benefits for the first time in the US was 213,000 last week, slightly more than in the previous week. That is down from 238,000 new claims in the same week a year ago. All up, there are now just over 2.1 mln people claiming these benefits, a minor increase from a week ago and a year ago.
US-based employers announced plans to cut 84,638 jobs in February, the most in eleven months, compared to 82,307 in January, and 77,770 a year earlier. It is also the highest February total for the month since 2009. But it is still just a rounding error in the perspective of a 161.2 mln employed labour force.
American export values were little-changed in January, marginally more than in December but marginally less than in January 2023. Their goods and services deficit rose slightly in the month, but over the past year is a massive -17% lower than in the prior year. It has fallen from a manageable -3.5% of GDP to a much better -2.8% of GDP now. (The New Zealand goods and services trade deficit is -4.1% of our GDP.)
There was more Powell testimony to the US Congress today, this time to a Senate committee.
In the US, Google may have had its key AI code stolen and passed to China. And sadly, this case will reinforce nationality stereotyping that is growing in the US-vs-China rivalry.
In Japan, worker earnings rose by 2.0% in January from the same month a year ago, rising from a +1.0% gain in December and posting the highest reading in seven months. That is triggering talk that a central bank rate hike may be in the offing. It did that last seventeen years ago.
China's exports surged higher in the January-February period they report at the start of the year. This is not only good news for them, but it also indicates global demand is rising, and probably by more than we might otherwise have assumed. But we should probably also note it is off a quite low base in the same period in 2023. New Zealand received +7.7% more exports from them, but they bought -14.9% less from us in the period.
One consequence? China's FX reserves inched higher.
The Malaysian central bank kept its overnight policy rate at 3% in its latest monetary policy review.
As expected, the ECB kept its main policy rate unchanged at 4.5%, at its overnight review. And it is keeping up its quantitative tightening program at the same pace. But they lowered their inflation forecast, and their growth forecasts, and signaled that they might cut rates in July.
Meanwhile, German reported that factory orders fell worryingly sharply in January to be -12% lower than the same month a year ago.
In Australia, lending for housing fell more than expected in January, trimming their year-on-year rise to +8.5%. For owner-occupiers, the monthly drop was -4.6% taking the year-ago change to just +3.4%.
Global container freight rates fell another -6% last week but remain +82% higher than year ago levels. The pressures remain even if an easing trend is building. Freight rates for bulk cargoes are still rising however and are now +70% higher than year-ago levels.
The UST 10yr yield starts today at 4.12% and up +3 bps from yesterday. The key 2-10 yield curve inversion is marginally less at -41 bps. And their 1-5 curve inversion is little-changed at -85 bps. Their 3 mth-10yr curve inversion also little-changed at -126 bps. The Australian 10 year bond yield is now at 4.02% and up +3 bps. The China 10 year bond rate is now at 2.30%, up +1 bps but still near its all-time low. The NZ Government 10 year bond rate is unchanged at 4.73%.
Wall Street has opened its Thursday session with a +1.0% gain on the S&P500 and a new record high. Overnight European markets were up about +0.7% on average, except London which only gained +0.2%. Yesterday Tokyo ended down a sharp -1.2%. Hong Kong fell -1.3%. But Shanghai ended down only -0.4%. Singapore was down a minor -0.1%. The ASX200 ended its Thursday session up +0.4% while the NZX50 was up only +0.1%.
We should also note that the CBA market cap on the ASX has almost hit AU$200 bln, a record high (and NZ$214 bln). (CBA is ASB's owner and Australia's largest bank.) For reference, the total NZSX market cap was $163.8 bln yesterday (for all listed companies, not just the NZX50).
The price of gold will start today up another +US$11/oz at US$2156/oz and another new record high.
Oil prices are down -US$1 at just over US$78.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.
The Kiwi dollar starts today at just on 61.7 USc and another overnight gain of +¼c. Against the Aussie we are still at 93.3 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just on 70.5 and up about +10 bps.
The bitcoin price starts today at US$67,389 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.
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74 Comments
NZ Mainstream Media income in recent years - the taxpayer funded writing on the wall ?
https://www.kiwiblog.co.nz/2024/03/nz_media_income_over_time.html
I'm not sure what the point of your ... "response" is. Mine (& the link I provided) is that independent (of Govt funding) NZ mainstream media are unlikely to survive in the new media environment.
I will reserve additional comment on how well & balanced NZ MSM have delivered on their "crucial role" in recent years.
Agree mainstream media are on the way out - just a reminder however that we need a strong media in current times -especially with this mob wreaking the country currently
The coalition Government has unveiled its plan to fast tracks consents for infrastructure and major projects, including marine exploration, and mining on conservation land.
The bill allows ministers to make decisions on which projects should get the go-ahead, by-passing councils, iwi and the Environment Court.
Do you really think Shane Jones gives a stuff about you - did you vote for this?
Looking through all these comments here's a few thoughts; BW you are correct on the 4th Estate - it is crucial, and your point at to its purpose is right on the nail. But the others are right too in that it seems to have lost sight of its purpose and role in disseminating information. IT Guy we do need a MSM, but I would suggest that the definition of what MSM is, is changing. And that is why a publically funded network is crucial. With private networks such as Foxy identifies CNN and Fox, bias creates too much of a filter. The mandate of the public funding should around balanced investigative reporting. There needs to be a source who we should be able to be fairly confident is not captured by conspiracies. The private networks can challenge that, but would to up hold the quality of the public network.
This is perhaps the most balanced & comprehensive analysis of a government policy failure I've seen in a long time from RNZ. It's a shame that its taken a year since their initial inquiry to see the light of day.
https://www.rnz.co.nz/news/national/511156/immigration-the-winners-lose…
Let's be real, most so-called journalists have an overinflated view of their own value and role in society. Largely gone are the days of real, heavy-hitting journalism - in-part because the business model is now fundamentally broken and also in-part because journalists seem to increasingly see their role as shaping the news and not just reporting on it. I don't watch much TV, probably due to my age, but on some occasions I recall seeing these absurd, self-aggrandizing ads for various journalists for whom its clear that they want to be the center of attention and everything else is secondary.
In part it is not their fault. The Internet/digital tech has made it so easy for "niche" news (such as this site) or echo-chamber type news to flourish. You don't need to watch the 6pm bulletin or 7pm investigative spot to stay informed. You can just find news that conforms with your existing world view ... and I guess why not when the once proud mainstream media is increasingly biased anyway?
The problem, of course, being that monetising given-away-for-free digital news content is not actually that easy and tends to require the use of clickbait, rage-bait and other junk content in order to get enough eyeballs to make money. So instead of proper journalism you get to learn about Taylor Swift's latest boyfriend or something like that.
FH - no, it's not weird. The ODT on Saturday, is more Real Estate than it is content.
Of course they need to pander to the sector.
And BOTH are parasitic; neither are - in physics terms - productive.
Most journalists think they 'earn a living'; so too do agents. Neither are correct; they gain socially-agreed proxy, with which they hope to buy parts of the planet. Journalism has failed to ascertain how long that process could continue, and it was the biggest failure they could have committed. In that, they reflected our societal falsehood.
Husband goes shopping for new car, something reliable and able to carry goods and family. Instead Salesperson gets a hold of him, husband blows the budget, buys something completely impractical. Duh.
Most people know you don't get the car salesman to make the final choice and neither should you listen to the dress seller to tell you the dress that's too big, fits perfectly. Other than in your weird world... and if labelling others who fulfill an impt role as unproductive then as a politician were you productive? There are lots of other middle men resellers you could target as unproductive rather than journos
by HouseMouse | 8th Mar 24, 9:47am
Did I blame them?
No
I said their reporting on housing is heavily biased.
But yes, I do partly blame them. Since they still have so much influence.
The press plays a crucial role in providing citizens with access to information about what is happening in government, as well as shining a light on corruption, abuse of power, and other forms of wrongdoing.
Yes, that is what is meant to happen. Yet, looking at our media. Most of them simply parrot whatever press release they were issued. They have clear and proven political bias and question accordingly. What questions they do ask are soundbite driven rather than anything the viewer wants/needs to know. Finally, any analysis is about as deep and insightful as a 5 year olds show and tell.
Watching our hapless fool reporters interview foreigners/covering overseas stories is just cringe and embarrasing.
My "official" news/information nearly all comes from overseas, with most of the unofficial stories (and often more accurate stories) coming from social media. This website is a notable exception, but I would add - much of the valuable info (and 100% of the garbage) comes from the comments, with the articles acting as a driver for the discussion, which I greatly appreciate.
The soundbite headlines seem to spin only to the positive about these rate cuts. Many inflationary signals are still way to high. And Powell says a lot about nothing specific again.
Jerome Powell's words today -
"We believe that our policy rate is likely at its peak for this tightening cycle, if the economy evolves broadly as expected it will likely be appropriate dialling back policy restraint at some point this year. But the economic outlook is uncertain and ongoing progress toward our 2% inflation objective is not assured. Reducing policy restraint too soon or too much could result in a reversal of progress that we’ve seen in inflation and ultimately require even tighter policy to get inflation back to 2%. At the same time reducing policy restraint too late or too little could undually weaken economic activity and employment. In considering any adjustments to the target range for the policy rate we will carefully access the incoming data, evolving outlook and the balance of risks. The committee does not expect it will be appropriate to reduce the target rate until it has gained greater confidence that inflation is moving sustainably towards 2%. We remain committed to bringing inflation back down to our 2% goal and keeping longer term inflation expectations well anchored - restoring price stability is essential to set the stage for achieving maximum employment and prices over the longer run. To conclude, we understand that our actions affect communities, families and businesses across the country - everything we do is in service to our public mission. The federal reserve will do everything we can to achieve our maximum employment and price stability goals."
"Reducing policy restraint too soon or too much could result in a reversal of progress that we’ve seen in inflation and ultimately require even tighter policy to get inflation back to 2%. "
Key words - separated with an "or". I.e. 0.5% may be too much. But 0.25% may not be at this time.
While the danger (of doing what they usually do) are recognized:
"At the same time reducing policy restraint too late or too little could undually [sic] weaken economic activity and employment."
I feel sorry for them. They are trying to kick-start GROWTH, when well into the last-possible doubling-time. It's a physical and mathematical impossibility.
Not only that, but no move they make will have much effect, because the whole planet (of human activity) is running into the same Limits. So globalisation peaked back about 1995; real growth about 2008/18, the overrun is the debt overhang; the forward betting on 'more' which is increasingly unrealisable.
There has to be a reconciliation between that increasing debt, and that decreasing planet. Their approach is orders-of-magnitude short of assuaging that split, and there is no version which can alter the math.
How is the pew? Need patches on the trouser knees?
I understand where you're coming from but I think you're applying your own filters too much. Luxon has repeatedly stated he wants to get the economy going. This is a fair comment considering that it has essentially gone backwards since 1984. Thus in "getting the economy going" may in the beginning look like growth, in reality it will be re-establishing the fundamentals require to support and sustain a functioning economy into the future. I have repeatedly talked about 'national resilience', and what Luxon is trying to achieve would be required for that too. Where I think you are right is that Luxon appears to be still tied to the traditional economic model that is based on trade and growth, rather than a future focused vision of sustainability.
That vision would still appear to be of growth initially, but would seek to create sustainable employment, establish good living standards across the board, reduce reliance on imports and finally yes create products for international trade because we just wouldn't be able to manufacture all that we need. A part of the plan would also be one around population, where as I have indicated prior, a sustainable target needs to be identified and supported. After all population in and of itself is not an economic product.
Its about as useful as "Labour never achieved anything", "Labour were useless", etc. Now we are seeing that they did achieve quite a bit, and the new government are winding it all back to give property investors a tax cut.
There were a few policies I didn't like from Labour, but the majority they are removing were actually good policies IMO.
We have changed from a government who supposedly can't get anything done, to one that are literally taking us back in time!
Most of the coalition reforms are ideological as opposed to informed by research. The previous government was also quite prepared to interpret expert advice according to their own agenda. The reality of this moment is fewer resources for the majority while maintaining wealth and economic advantage for the entitled.
Happy Friday.
Another GP clinic closes. Slow hand claps for successive governments over the last 30 years and what they have done to this country. Hooton writes well over at the Herald on our decline, too.
https://www.nzherald.co.nz/nz/papamoa-pines-clinic-to-close-due-to-gp-s…
I am very concerned about NZers ability to access health and dental.
Providers are voting with their feet and leaving NZ, there is only one answer, more funding, perhaps rather than stupid $20 a week tax cuts?
I am a right voter, I see no point in tax cuts here when we need new ferries, kiwirail, education and health need funding now. Oh and water...
I voted right to get Liebour out not for tax cuts. Fix problems and you will get further terms NACT, blindly try to prove to me I am $20 a week better off, we want things fixed not a block of cheese budget
All parties come with a range of +/- policies that we may agree & disagree with. Unless blinkered tribal allegiance most people choose the least worse option.
For eg, after 50 years of 90% Labour I decided to vote for the parties that promised to stop NZs pathway to a racist antidemocratic ethnostate. I never considered tax cuts.
pdk,
I have not replied to any of your posts for some years, but feel compelled to on this occasion. Your personal attack on Bill English(and i am not a National supporter, is below the belt. The fact that he chooses to have 6 children and can afford to do so, is his business and as you know very well, as a nation our birth rate at 1.60 is well below replacement rate. Without significant immigration, our population would fall and quickly.
I don't expect a response.
I find it hard to define myself as left or right as I can see so many crappy qualities on both sides. $20/week is margin of error stuff for me, and even a $200/week tax cut is worth less to me than knowing when my GP retires there's a good chance he'll be replaced by a competent young doctor who isn't biding their time in NZ until they qualify to jump the ditch.
I continue to be amazed by people here who have an expectation that the Govt will provide - an apparently everything for everybody.
No thought that maybe we should spend more time looking after ourselves
The cash fee to see a doctor is negligible -so that allows 25% of the population to go stuff themselves with junk food until they are now obese - it will be vet fees and dentists that need to be "free" next and probably in that order
Ditto road -complain about potholes then complain about increased excise tax
Dont feed your kids and the state will do it for you - and if you do feed them the state will still do it anyway
Dont save for retirement and the state will look after you from middle age on
and it goes on and on - Its a very long list of the abrogation of responsibility
Fortunately the current Govt agrees & acknowledges the problem - an essential first step to addressing it.
https://www.stuff.co.nz/nz-news/350197063/health-minister-says-gp-syste…
Inaction and Agenda 2030 immigration policies.
"Government refuses to train more doctors next year By Richard Harman - 22/09/2022
The Government has rejected a proposal from the country’s two medical schools to train more doctors next year. The schools have been asking for approval to increase places since National was in power before 2017. Both National and Labour have said no to the requests.
The whole issue originated in 2009 when the then National Government announced it would fund an additional 200 medical school places in Otago and Auckland. But it only ever got to 175. So, in 2017, when Labour was elected, the schools asked if they could have the missing 25 places approved; 18 for Auckland and seven for Otago. The Ardern Government refused.
Now, 13 years after National said we needed 200 more doctors each year, New Zealand, with 16,908 doctors, is around 1300 behind the number of doctors in the United Kingdom (based on doctor-to-population ratios). But currently, we graduate only 500 a year, and each year hundreds leave, including many of the overseas doctors who have come to New Zealand but never intended to stay for a long time. He said that we’re importing about 1.7 doctors for every one that we graduate. ”We know from data from the Medical Council that two years after being here, 60% of those overseas doctors have left,” said Bagg."
https://www.politik.co.nz/government-refuses-to-train-more-doctors-next-year/
China's PBoC has been buying gold officially for 16 consecutive months. Unofficially considerably larger volumes and also in terms of duration. Note how they are not buying an intelligence agency electronic creation with a backdoor. Security and counterparty risk matters to a prudent sovereign nation. It should also matter to retail investors too. Link
This seems to be increasingly making sense to people. The drain from west to east continues. Whether the breaking point for Western paper markets has been reached is still not clear. However we are the closest we have been in the last decade plus. If people had listened to us for the last decade it would have saved them alot of time and effort wasted on spurious claims made by people who were too often merely talking their own book. Link
Emergency housing review: now for the "deserving poor" ?
LINDSAY MITCHELL: Is real change on the cards? (bassettbrashandhide.com)
A consequence of the transfer of community earnings from labour to capital. 1% versus 99%.
This link was in one of the comments
https://sites.psu.edu/aspsy/2020/12/01/the-deserving-vs-the-undeserving…
That looks like a convenient excuse for disempowering individual agency & the point the opinion article was making "Every needy individual is a 'victim' of circumstances, never their own poor decision-making."
Historically, community's cannot afford to support long term & will not tolerate people who won't help themselves.
Communism has also failed everywhere it's been tried.
Business profits data yesterday made interesting reading. Demand has dropped for wholesale and retail (in particular). This has led to profit margins dropping back a bit, but they are only back to where they were pre-COVID. Wholesale is now back at 8% margin, retail at 6%. Construction is also interesting - order books emptying but margins remain rock solid.
So, why are we still seeing prices going up if demand is down? Because our businesses set prices based on cost + margin and they downsize their capacity rather than their prices when demand drops. This is exactly what you would expect in a low-competition environment - especially if you have real life experience of business rather than academic experience of economics.
As someone who costs projects, I would say that prices will go up a bit with labour costs (whatever happens), a lot more if imported materials tick up, and a hell of a lot more if developers / clients load contracts with penalty and 'must hold price for X months while we piss about' clauses. Working the other way, when interest rates come down in May, we might see a bit of relief.
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