US sentiment rises; US housing starts sink, rise in Canada; China FDI stunted; India battles big deficits and infrastructure needs; UST 10yr 3.89%; gold hits ATH while oil turns lower; NZ$1 = 60.5 USc; TWI-5 = 68.8

Housing affordability: The income Kiwi families need to comfortably buy a new house

https://www.nzherald.co.nz/nz/housing-affordability-the-income-kiwi-fam…

Aucklanders would need to earn almost $300,000 a year - or twice the city’s typical household income - to comfortably afford to buy a median-priced home.

That’s according to a new Herald analysis finding home buyers typically paid $1.02m for houses in the three months to June this year.

If those home owners had a 20% deposit saved and secured a typical one-year fixed interest rate deal in June of 7.06%, they would then be facing $82,000 in mortgage payments over the coming year.

That’s equivalent to a typical city family handing 61% of their household income ($134,000) over to the banks.

to the moon, I guess if one of the family looses their job they could still afford it as long as they cut off the power, cancel kiwisaver, do not eat or have to pay any other bills.

The price of gold will start today up +US$53 from yesterday at US$2507/oz and a new all-time record high. A week ago this price was US$2427 so a +3.3% rise since then.

Well, you have for the last 2,000 years, nations all agreeing that gold is something you’re willing to take because gold isn’t purely an asset. It doesn’t have a debt associated with it. If you hold a dollar, you’ve made a loan to the United States Treasury that spends it on military. If you hold gold, there’s no liability to it.

Now, in 1973 or 74, Herman Kahn and I went to the Treasury Department in Washington, and Herman made a map of the world. And the map had two sets of countries. One where the countries that believed in gold, and they’re pretty much all of Eurasia today. They’re the global south countries. They’re the global majority countries.

Then who are the people that didn’t believe in gold, that believed in government money? Well, they were the NATO countries.

They were the Protestant countries of Western Europe and the English-speaking countries. These were the countries that had faith in government, and the rest of the world did not have the faith in government, especially NATO governments that were running the international monetary system.

My argument was that gold is a peaceful metal, because if you had to settle in payments in gold after 1971, when President Nixon took America off gold, then every year that you continued to fight in Southeast Asia, every year that you continued to spend militarily abroad, America would lose the gold cover for the dollar.

America would lose the gold, and the military spending would drain the country of gold, and it would have nothing left at all. I think that would have been a wonderful alternative. I would have preferred that the gold exchange standard was kept precisely because it would have limited America’s capacity to run up the debt and the Treasury Bill standard.

That’s what my book Superimperialism was all about, explaining just exactly that, how America had used gold to control the world when it had 75 percent of it by 1950. Once it began to lose gold, it perceived that it was losing its military power and its diplomatic power. So that is the great benefit of gold, to limit any country’s ability to run a military deficit that would force any country off gold, as has happened again and again in history.

So I certainly think gold is important as a constraint. That doesn’t mean that gold runs the world. That was the question. Did gold run the world? No. The way that governments treat gold is what runs the world.

When America treated gold as something that other countries shouldn’t buy, you should only make your loans to the U.S. Defense Department and the Treasury. That was one way of treating it.

Now we’re seeing a different way of treating it, as an alternative to the dollar, so that they can simply hold an asset that is not a loan to the United States. Link

Where's the rain, was meant to start overnight. I think there is snow forecast for lower SI

Oil prices are almost -US$2 softer at just on US$75.50/bbl in the US while the international Brent price is now just on US$79/bbl. They are little-changed from week-ago levels of US$76 and US$79 respectively.

What sanctions? It's hilarious: The world’s biggest oilfield services company is expanding in Russia following the exit of its main western rivals since Moscow’s full-scale invasion of Ukraine. SLB, the Houston-based company formerly known as Schlumberger, has signed new contracts and recruited hundreds of staff in the country even after its two largest US rivals Baker Hughes and Halliburton both sold their Russian businesses to local managers in 2022.  Link

See the $nz is dropping on the ocr shift.

Has a 90s feel to me. 

"The developer of the properties, Manpreet Singh said the $1 reserve auction was a way to help shift the last remaining homes in the development..... He had sold four, for between $845,000 and $895,000, but interest had dried up... However, he had noticed an upwards swing in buyer sentiment and wanted to capitalise on the good news. “We want to test the market, whatever the market tells us, we are happy to take that.”

Cool!

But what happens to the resale value of those that sold for $895k? Whatever price the new listings go for will be the value the lenders use as the basis for any future lending. Let's say they go for $725k. The lucky owner of the original purchase has probably just seen their deposit go up in revaluation flames.

Mastercard laying off people while its at its most profitable ever is also happening currently in NZ.  We have been working with a couple of verrrrryyy wealthy customers whose profits have recently boomed (core NZ infra and financial services) and they are laying off staff and stopping important projects for future proofing their systems. Corporate social responsibility thrown out the window?

I reckon there's a lot of disgruntled posters here who expected rates to stay the same, or even go up.

They got it 100% wrong when interest rates went down.

I'm certainly not a financial advisor, but I'm betting property's going to start moving up again, so if you're interested, now's the time to drive a hard bargain and stake your claim.

There's a proviso...as always, some areas are going to do better than others. Spring is just around the corner.