Here's our summary of key economic events overnight that affect New Zealand with news its all about the 'debasement trade" today - Trump debasing US public policy resulting in a rush to gold, a jump in US Treasury yields, and a fall in the greenback. Equities and cryptos are falling.
In the US overnight, there was another good rise mortgage applications, largely on the back of a rush of refinance activity as 30 year mortgage rates eased.
However December data for pending home sales took an unusually large dip from November to be -3.0% lower than year ago levels.
In Canada, producer prices actually fell in December, unexpected because a small rise was anticipated. That puts them +4.9% higher than year ago levels, the slowest rise since August.
In Indonesia, they reviewed their policy rate overnight, leaving it at 4.75% as expected.
In Europe, the European Parliament has suspended the approval of a key US trade deal agreed in July in protest at Trump's demand to take over Greenland. Both Trump and some of his cabinet are at Davos, and in full arrogant insult mode.
In Australia, the Westpac–Melbourne Institute Leading Economic Index inched up 0.1% in December from November to +0.42%, following the no-change in the previous month. The recent uptick is led by commodities and an improved homebuilding outlook. But the December rise was less than expected. A year ago its was +0.25%, so nearly a doubling since that tame benchmark.
We should perhaps also note that cocoa prices have fallen sharply today, back to US$4400/tonne and the same level as two years ago. You may recall they reached US$12,250/tonne in April 2024 at the height of its surge.
The UST 10yr yield is now just on 4.28%, unchanged from this time yesterday. The key 2-10 yield curve is now at +69 bps. Their 1-5 curve is now at +31 bps and the 3 mth-10yr curve is now at +60 bps. The China 10 year bond rate is unchanged at 1.82%. The Japanese 10 year bond yield is back down -5 bps at 2.30%. The Australian 10 year bond yield starts today at 4.76%, down -2 bps from yesterday. The NZ Government 10 year bond rate starts today at 4.59%, up +4 bps from yesterday.
Wall Street is in its Wednesday session with the S&P500 recovering +0.3% but the earlier much larger recovery gains (over +1%) seem to be fading. The S&P500 has fallen a net -1.8% in the past two days, so far. It's the same for the Nasdaq which is now back with a small loss today, down -2.2% for the same two days. Overnight European markets were mixed between Paris's tiny +0.1% rise and Frankfurt's -0.5% dip. Yesterday Tokyo closed down -0.4%. Hong Kong was up +0.4%. Shanghai was up a minor +0.1%. Singapore fell -0.4%. The ASX200 also fell -0.4%. And the NZX50 ended down a sharpish -1.2% and the worst of the markets we follow.
The price of gold will start today at US$4843/oz, and up another +US$93 from yesterday and a new record again. Silver is lower at US$93.50/oz and off its record high.
American oil prices are up a bit more than +50 USc from yesterday at just on US$60.50/bbl, while the international Brent price is unchanged at just under US$65/bbl.
The Kiwi dollar is holding from yesterday, still at just under 58.5 USc. Against the Aussie we are down -30 bps at 86.4 AUc. Against the euro we are up +20 bps at just on 50 euro cents. That all means our TWI-5 starts today just on 62.5, and unchanged from yesterday and still its highest since early October.
The bitcoin price starts today at US$87,927 and down -2.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.4%. And we perhaps should note that the $TRUMP memecoin has plunged more than -90% from its peak a year ago, burning its adherents bigtime.
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38 Comments
As predicted Trump and his sycophants are entirely ignorant of the effect they are having and will be fully unable to prevent the world turning their back on the US. Macron's indication of stopping US access to European markets is taking shape.
Trump's entire business MO of going in hard at the beginning (bullying) is coming back to bite him. The TACO phrase has clued in the world to methods of dealing with him. The cost to the US will be huge.
If he tries to put off the elections due to some manufactured excuse, will the people stand by and let it happen?
It would be fascinating to take a time machine back to 1930s Germany or Italy and compare.
We must also remember that while Trump is the face of this he could not operate without the substantial facilitation that exists and will not disappear when he departs.
President Lincoln’s quote ended on the note that you can’t fool all the people all the time. President Trump though twice. Has fooled a lot of the people a lot of the time. Don’t think anyone else could carry that. As well, in comparative form to Adolf’s immediate underlings at the time you mention, the Republican Party is a barrel load of seething ambitions and feuds and it is, in similar fashion to back then, only the form of the top dog sitting on the lid, that keeps all that from breaking out. After effusively promising the American people he would make them better off, indications are emerging, the rural sector for instance, that Trump is achieving the opposite. That is where the fooling will grind to a halt, the figurative worm will turn en masse. The mid terms are therefore going to be the great telling point.
Assuming there are unencumbered elections going forward, the worm may well turn....how confident can we be that will occur? Not very I would suggest. Remember there is approaching 300 Rep. members of Congress/Senate that appear to concur, nevermind the voting public.
Meanwhile his backers have increased their hold on various institutions and gathered even more wherewithal to their cause.
Great comments both.
Macron was ahead of Carney, states=person-wise.
The Age of Abundance is Over... So How do We Prepare?
And there are a few subtle levels to all this: Trump's Elite cannot survive without a massed-churn 'economy'. That, in turn, cannot survive without forward material (not monetary) underwrite. Trump has somehow understood that real resources are the real wealth and is eyeing-off any and everything. As has to happen soon, if you're growing exponentially, plus increasingly parrying entropy (decay).
Carney didn't address Macon's point - but the rest of his speech was magisterial. We need to be careful not to diss the content (of any speech/statement) because of the past history of the speaker. Churchill was no saint...
Seems to me there's a trend towards Europe, Canada, NZ becoming a compatible bloc. Australia will have trouble coming out from under the US petticoat (it was always closer kulturally) and the UK isn't guaranteed; depends on whether their Elite outflank the rabble or not.
I'm picking the US will dump (assasinate?) Trump, but that that won't solve their predicament one jot.
Seems to me there's a trend towards Europe, Canada, NZ becoming a compatible bloc. Australia will have trouble coming out from under the US petticoat (it was always closer kulturally) and the UK isn't guaranteed; depends on whether their Elite outflank the rabble or not
More importantly Power, in this new world order, how does Aotearoa and the 'middle nations' explain to the Global South and China that we knew the international rules-based order was a fraud all along but we didn't say anything because we directly benefitted from being part of the Anglosphere's involvement and leverage of the power structures?
Those nations have every right to not take anything we say seriously and to highlight the hypocrisy of Western nations keeping their mouths shut when the rules-based order works in their favor but squealing at the injustice when it doesn't.
As for Carney, few are taking him to task after a career of financially benefitting from the power imbalance - a career partly spent at the Vampire Squid where he was able to enrich himself on the back of power imbalances and privileges granted by the rules-based order. Then graduating to the Banks of England / Canada where once again the hegemony set the stage for him to shine. But somehow I doubt that Carney will relinquish his vast wealth in the spirit of fairness and for past injustices. In fact, it wouldn't be any surprise if Carney's wealth is stored in U.S. assets like equities or even in tax havens that the Western ruling elite have established for their own purposes.
Seems to me there's a trend towards Europe, Canada, NZ becoming a compatible bloc. Australia will have trouble coming out from under the US petticoat (it was always closer kulturally) and the UK isn't guaranteed;
If you take a look at the adoption of NBA player shirts and franchise caps worn by Aotearoans, I don't think we are that much culturally distant from the U.S. than Aussies are.
Key difference of course is that Hitler was popular. Trump is deeply unpopular with most of the electorate.
That would be how he got elected. Twice.
Beware confirmation bias.
Admittedly, the light may be dawning - but polarisation is strong in that Shire...
That is why a time machine would be useful....we dont know how popular Hitler was on the ground. You say Trump is deeply unpopular in the US, but he achieved the nomination and a majority vote a year ago even after 4 years of exposure, nevermind his previous history on display for all to see.
I would suggest there is one key difference that perhaps may work in the worlds favour....Trump is decades older than Hitler or Mussolini were at the time.
The irony here is strange considering that we and the other Western nations are clamoring to strengthen our partnerships and relationships with China - and in some ways bowing to the authoritarianism in the Chinese system. If we are now committing to the Chinese globalist machine as loyal partners, we have to accept that they wear the pants.
"Europe holds the trump card as the US faces a mountain of debt"
https://www.abc.net.au/news/2026-01-22/trump-us-debt-carney-davos-fract…
Trump goon blasted with heckles and jeers as his Davos event goes off the rails
French President Emmanuel Macron has led the charge against Trump’s rhetoric. He took the stage at the World Economic Forum on Tuesday sporting Top Gun-style sunglasses and delivered a sharp rebuke.
“Let’s not be divided, let’s not accept the global order which will be decided by those who claim to have the bigger voice, or the bigger teeth, or the bigger... I don’t know,” Macron, 48, said.
“Let’s be coordinated. Let’s not waste time with crazy ideas.”
Macron also took a swipe at the “bullies” on the world stage. “We do prefer respect to bullies. We do prefer science to politicism. And we prefer the rule of law to brutality,” he said.
It's coming...
"It 's coming..." and yet the fantasy that NATO (or any other agreement) still exists persists.
A day of reckoning for the European segment then taking the form of a large and persistent bogeyman that has been on their north east border since 1918. Twice America has ventured across the Atlantic to sort out world wars started by the Europeans amongst themselves. That was accompanied by billions of American dollars and thousands of young American lives that did not come back. Post WW2 the generosity of the Marshall plan catalysed the reconstruction of Europe. It is long overdue for the European nations to finally just stand up for themselves but it seems that they are still incapable of even providing for their own internal security and that is exactly where Trump has got them.
Europes ability to defend itself is the consequence of US design since the end of WW2
Exactly, the US has created the Euro weakness by insisting that they are in control and denying other countries the right to weponise.
Germany, Poland and Sweden could build a nuclear arsenal very quickly, lets see what happens.
Yes,
And there is where Trump (like Reagan) breaks with US foreign policy establishmentarians.
Where do you think the US growth came from?
They have done very nicely out of the hegemony they designed.
You need to remember that America was popularly isolationist prior to both WWs before intervening and then ask yourself what Europe would be like if they hadn’t, and nor provided the Marshall plan. Up until WW1 America had not been a so called world power although the false flag war against Spain was certainly a turning point. Ample growth had been generated from their own vast internal resources and then about this time the realisation and exploitation of the value of oil brought about the dawn what I like to refer to as the Oil Age.
https://www.bing.com/videos/riverview/relatedvideo?q=US+Energy+Secretar…
And according to the US Energy Secretary-just two weeks ago-the Oil Age is not over yet, and can't be or the World stops working.
True
What is playing out is in alignment with the concepts/theory from ‘The 4th Turning’ and Dalio’s book ‘The Changing World Order’.
Two great reads if you want to make sense of what is unfolding currently.
People seem to think it’s the end of the world, but it isn’t. These events have happened throughout history, regularly, and stability is again restored but it looks different to what was before.
It is only painful for those who cling to the past, thinking that the world is always ‘nice and stable’. It isn’t and countries use economic and military force to maintain the status quo or for change depending upon how the conditions are benefiting or impacting their nations.
It doesn’t seem entirely crazy to me what various leaders are doing if you’ve read enough history. Unless you believe that what happened from 1945 - now was going to last forever!! Which means you haven’t read enough history!!!
Hate Trump as much as you like - he’s just a product of his life experiences, as was Stalin, as was Mao, as was Hitler as is Putin. As are the leaders of the other nations who have allowed the geopolitical and economic environment to degrade to this level of dysfunction over years/decades. It’s happens every 80-100 years. I’ve been saying on here for sometime that it is due as we are 80 years from 1945 when the last order was established. Over time, that order becomes disorder (as people who didn’t have to fight or sacrifice to create the existing order take it for granted and/or abuse the conditions for their own gain) and then we have to fight to see what the new order looks like.
Aye how great is America that it could overturn in 75 or so years all that European history, strength and independence if those relative nations were resistant to the American proposals.
Not sure I understand the point you are trying to make.
Apologies for any confusion but I was actually trying to continue the thread of my earlier post 10.42. But to put it another way, if the Europeans didn’t want all the American assistance they could have said stop couldn’t they. Some posts here are suggestive of it all being hoisted onto unwilling recipients.
"People seem to think it’s the end of the world, but it isn’t. "
But it is the end of the world as we know it.
I think the hardest thing to get the head around is the loss of tech/knowledge. There has been a large number of civilisations throughout history that have disappeared and taken their knowledge with them. How many times have academics stood at the remnants of a civilisation scratching their collective heads. Why would it be different this time?
Because boomer and gen x decided they wanted to offshore all manufacturing and production to Asia in order to create great wealth for themselves by destroying jobs and opportunities domestically for the generations below them, while creating great financial wealth for themselves. It’s what happened when boomer and gen x took over the management of western companies in the 1990s - now. And now we have waking up to that fact it wasn’t a great idea in the long run.
Leave Gen X out of it. This is a Boomer thing fed by the increase of neoliberalism in the 1980s.
Here's a few words thanks to AI and attributed to Robert J Rhee of Stanford Law School: https://law.stanford.edu/wp-content/uploads/2023/04/SJLBF_28-1_05_Rhee…
Boomers doing their thing.
"and I feel fine" REM
World as you know it based upon your own recency and confirmation bias. Ie your own life experience, born into a western nation at the right time just after winning WW2.
Which is quite a stroke of luck and with it great opportunity but most probably taken for granted. Which is why that stability seems to fall apart after a few generations eg that 80-100 year cycle because the stability is taken for granted - forgetting the sacrifices that were made to create it. And nobody willing to sacrifice for the greater good to ensure the stability remains. It is cyclical - greatest generation remembered for the sacrifices they made to create the order we lived in 1945 - now. Boomer and below take that stability for granted as it is all they have known and think they themselves don’t have to do anything to ensure it continues (because that was their parents role and children almost always rebel against their parents and do the opposite). We see this right across western society as everything fell apart the last 20-30 years. Greatest gent leave the workforce 1980 - now and die, and as this happen, simultaneously, everything becomes more manic as boomer and gen x took over. (They made themselves financially very well off though through self interested policies and behaviours ie the opposite of their parents).
Until the turning happens (now) where millennials and younger generations realise boomers and Genx have no answers to the problems we face - because if they had them, they would be implementing those solutions. They would be creating stability and order here and now while in their peak years of control and power - but they are not. They have been and are still doing the opposite. Look around us.
People seem to think it’s the end of the world, but it isn’t. These events have happened throughout history, regularly, and stability is again restored but it looks different to what was before.
Yes indeed. But how seriously has Aotearoa accepted and prepared for these changes? What will our education, economy look like for example? Given it factors so largely in our economy, culture and society, what will do if the Ponzi ceases to exist? Because if you think about it, our whole monetary system is based around it - new money supply is created from base into broad money. You're talking about the wholesale dismantling, restructuring of organizations like central and commercial banks. And to be replaced by what?
Will we become some kind of socialist commune working together for the greater good? It might be something to consider.
"Will we become some kind of socialist commune working together for the greater good? It might be something to consider. "
Are there any successful examples of such countries in recorded history?
I don't know about "Aotearoa" however I'd expect New Zealand Kiwis to muddle through somehow. There's some advantages to being a small village at the end of the world.
I don't know about "Aotearoa" however I'd expect New Zealand Kiwis to muddle through somehow. There's some advantages to being a small village at the end of the world.
LOL. So the world on the cusp of great change, but Aotearoa gets to keep its status quo.
Your idea might make more sense for Pitcairn Island.
The 4th Turning suggests the future post 2030 will return to be a more conservative and civil minded society led by the millennial generation - like their greatest generation grandparents. Ie each generation commonly opposes the traits of their own parents. Boomers and Genx ie those in the 45 - 75 age bracket have spent the past 60 years creating the current conditions by rebelling against their more conservative and civil minded silent and greatest generation parents (self good is better than civil good - liberal freedoms for the individual over conservative values that benefit the greater good).
Central banks and governments will learn that you can’t create prosperity by digitally creating money into existence. You actually have to create a product or service that benefits others for a society to prosper. This may see a return of domestic production instead of the use of cheap foreign labour - ie undoing the globalisation of the last 30 years. This in turn may require higher interest rates to tame inflation (due to wage costs driving upon consumer prices) and see asset prices moderate to more historically accepted valuations under higher discount rates. Basically the undoing of 30 years of rigging everything to benefit asset owners over production/wages. Eg what has been making the wealth gap worse, making rich richer and poor poorer.
as people who didn’t have to fight or sacrifice to create the existing order take it for granted and/or abuse the conditions for their own gain
That resonated. In many contexts.
Steve Keen is calling the end of the US global monetary system and outlines an alternative.
This proposal is a slightly modified version of the system Keynes proposed at Bretton Woods (Keynes 1943). Keynes had hoped that the goodwill of Allied governments, after the horrors of the Great Depression and World War II, would lead them to accepting a system with a truly multilateral world order, rather than one dominated by the Empire of its day. Instead, he lost the argument to the shortsighted arrogance of the American delegation.
If China is emerging as the new empire, I think Steve's ideas are too Western-centric.
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