Here's our summary of key economic events overnight that affect New Zealand with news China is moving to protect its smaller exporters caught in a demand/cost downdraft.
But first we must note that the Thanksgiving holiday weekend is underway in the US and financial markets are all closed, and won't reopen until Tuesday, NZT. There are major retail activity implications over this period, but they won't reveal themselves until next week at the earliest.
In China, their exporters are facing severe pressures as order levels fall, supply chains remain congested and costs jump. Beijing is worried about how many of their smaller exporters will survive and is rushing in new support measures (WTO rules, be dammed).
And staying in China, the cost of lithium carbonate rose above ¥200,000/tonne for the first time yesterday, the essential element in most batteries these days. The lithium price has risen more than the bitcoin price over the past year.
In Japan, carmaker Nissan is shifting rapidly to EV production and expects to sell more electric vehicles that ICE ones within 100 months.
In Korea, their central bank raised its policy rate by +25 bps to 1.00% in an anticipated rise driven by higher-than-target inflation. More rises are on their way there, in 2022.
In Hong Kong, their exports rose +21% year-on-year and their imports rose +18% on the same basis, with exports rising faster than in September and import growth slowing faster than in September. But it is notable that October 2021 exports are only +9% higher than for October 2018. And imports are only +5% high on the same basis. Given current inflation, this points out how much Hong Kong has become a shadow of its former self.
Yesterday, the US Fed released the minutes of its early November meeting and they contained no surprises but they did raise their forecasts for inflation and make them a bit more realistic.
But ECB meeting minutes that were released overnight shows this central bank still committed to the idea that inflation is transitory. But they did give some very general signals that they will be tapering their QE support starting in 2022 sometime.
In Turkey, their currency is losing internal legitimacy. Households have rushed to switch their bank accounts to US dollars, moving almost US$1 bln last week alone. Now almost 60% of all Turkish bank accounts are denominated in foreign currencies.
Aussie spending on capital goods fell -2.2% in October, and within that, spending on equipment was down a rather sharp -4.1% and that was despite a rise in the mining sector. Mainly the whole decline was driven by a -15% plunge in equipment sales in NSW.
Container shipping costs didn't fall noticeably last week, especially out of China. The expected easing isn't really happening yet. The Baltic Dry index has stopped falling to, and is now back to June 2021 levels.
In Australia Delta cases in Victoria have risen sharply to 1254 cases reported there yesterday. There are now 10,216 active cases in the state - and there were another 5 deaths yesterday. In NSW there were another 276 new community cases reported yesterday, and a rise, with 2,667 active locally acquired cases, but they had zero deaths yesterday. Queensland is reporting zero new cases again. The ACT has 8 new cases. Overall in Australia, just under 86% of eligible Aussies are fully vaccinated, plus a bit over 6% have now had one shot so far.
The UST 10yr yield opens today at 1.65% and unchanged since this time yesterday. The US 2-10 rate curve starts today unchanged at +100 bps. Their 1-5 curve is also unchanged at +113 bps, while their 3m-10 year curve is still at +157 bps. The Australian Govt ten year benchmark rate is -1 bp lower at 1.86%. The China Govt ten year bond is unchanged at 2.91%. The New Zealand Govt ten year is up +1 bp at 2.53%.
In New York, Wall Street is closed for Thanksgiving. European markets all rose about +0.4%. Yesterday, Tokyo was closed down up +0.7%, Hong Kong was up +0.2% while Shanghai finished down -0.2%. The ASX200 rose a minor +0.1% while the NZX50 rose +0.2% yesterday.
The price of gold will start today unchanged at US$1790.
And oil prices are little-changed at just under US$78/bbl in the US, while the international Brent price is now just over US$81/bbl.
The Kiwi dollar opens today softer again at just under 68.6 USc and still its lowest since mid October. Against the Australian dollar we are soft at 95.4 AUc. Against the euro we are lower too at 61.2 euro cents. That means our TWI-5 starts today at 73.5 and also its lowest since mid October.
The bitcoin price is +4.3% higher since this time yesterday, up to US$59,053. Volatility over the past 24 hours has been moderate at just over +/-2.6%. India is about to ban almost all crypto activity in the country.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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61 Comments
I thought that would've been self explanatory. There's a level of vitriol and mania around those subjects that don't really have much place on a finance website.
Think most of us are bored of hearing from anti-vaxers, or those who think ousting the government is going to somehow make everything right as rain. Things have changed, the world is different, let's keep a clear head and knuckle down though it.
Well Covid has had undeniable impact on business & financials etc. So introduces comment in that regard of course. But you are right, comments soon become extremely subjective to self interest & opinion. Therefore the solution is obvious to let the column itself simply rest on its own contribution.
profile,
Right on cue. I might say that holding Kodak shares is a little like global warming denial-a hopeless exercise.
" This new assessment shows that glaciers alone lost more than 9,000 billion tons of ice between 1961/62 and 2015/16, raising water levels by 27 millimetres. This global glacier mass loss corresponds to an ice cube with the area of Germany and a thickness of 30 metres"
This short quote is taken from a report by the World Glacier Monitoring Service. It makes interesting though somewhat sobering reading.
Another source of good quality information is BEST-Berkeley Earth Surface Temperature project. What makes this a particularly good source is that it was started by Prof. Richard Muller and some colleagues with the express intention of proving global warming wrong. Then, he was part-funded by the Koch brothers. What they did was to gather and analyse over 14 million land temperature observations from over 44,000 sites globally. previous studies had used only 1/5th as many weather station records. Their study also took into account solar and volcanic activity over the period. Let me quote him; "We were not expecting this, but as scientists it is our duty to let the evidence change our minds'. he also said "Moreover, it appears likely that essentially all this increase results from the human emission of greenhouse gases". They no longer receive funding from the Koch brothers!
Peddling the argument that owner occupiers are better off because they don't pay rent is BS misinformation that is so wrong everyone should be jumping all over you for even trying it. And your "returns" only count when they are turned into cash to do something with or sit in a bank account, otherwise they are meaningless, paper figures that provide nothing of benefit to anyone.
And your "returns" only count when they are turned into cash to do something with or sit in a bank account, otherwise they are meaningless, paper figures that provide nothing of benefit to anyone.
One can capitalise the unrealised gain to buy another leveraged asset which the bank will add to it's collateral claim, but I for one hardly need the hassle of tenants or debt payments. I find sovereign bonds lying quietly in a repository, which never call or default, much more satisfactory.
India is about to ban almost all crypto activity in the country, and introduce its own CBDC. Good luck with that..
Yes it is fascinating to observe, that as Governments implement policies that are either economic or downstream that have a negative impact on ordinary people, the observed resistance is efforts to move outside of mainstream economic structures. Those policies either overtly or covertly, are generally used to preserve and entrench power and privilege, making it easier for wealthy to further grow their wealth, but make it harder for for ordinary people to get out from under their yokes. Now when Governments have realised they are at risk of losing that control, they are moving to counter it. But they just don't get it, and are resistant to the fact that they have a duty of care to ALL of their people not just the rich and powerful. Indeed more likely to ALL of their people EXCEPT and despite the rich and powerful.
Many had commented that though Mr Orr does not want to raise OCR but as been pressurised and forced will do by minimum 0.25% and all discussion about 0.5% or 0.25% by so called experts is as have to discuss something to keep their kitchen running.
Human behaviour, Biased vested interest, thinking.... play a major role than fundamental and economy otherwise why do data pointing towards ponzi is ignored or given benefit of doubts and anything that suggests that ponzi may stop is grabbed by government and RBNZ to promptly act upon, following the policy of LEAST REGRET
Don't spread misinformation and make things up please, RBNZ never stated "RBNZ will raise by no more than 25bps per meeting through this tightening cycle". Here was part of the record of the monetary policy commitee meeting by interest.co.nz:
Weighing these factors, the Committee assessed risks to their price stability and maximum sustainable employment objectives as being broadly balanced over the medium term. The Committee judged that considered steps in the OCR were the most appropriate way to continue reducing monetary stimulus for now.
RBNZ simply can't make a commitment like that rates will be raised by no more than 25bps per meeting.
Australia’s housing boom one of the biggest in 140 years
Which references the Big Bust of 1890. It took decades and severe financial hardships to recover from that event. The catalyst commodity might have been different back then, but the process of currency devaluation in favour of asset accumulation, and subsequent bust, triggered the social pain that followed. Looks like we may have chosen to ignore our history lessons.....
In Turkey, their currency is losing internal legitimacy. Households have rushed to switch their bank accounts to US dollars, moving almost US$1 bln last week alone. Now almost 60% of all Turkish bank accounts are denominated in foreign currencies.
How do the relevant Turks not face the risk of confiscation of deposits by foreign authorities?
It's the only way to protect yourself in some of these countries. Especially with an authoritarian government.
Is anyone going to be surprised when those Turkish households who have converted their bank accounts to USD, get a 'haircut' or are seized / banned by the state?
Meanwhile if you brought BTC...
Bailins are inevitable.
Great article from October last year, even more relevant now: As Bitcoin’s Price Hits a New All Time High, What Happens Next? | by Jason Deane | Original Crypto Guy | Medium
Humiliation is about to descend upon the citizens of Britain.
Priti Patel has quietly been stuffing even more punitive anti-protest powers into the policing bill
It is, without hyperbole or caveat, a piece of law which would sit more easily in a dictatorship than a democracy
I thought they had those powers already. When I was a teenager in Northern England in the 1990s we would be regularly stopped and searched by police. They would drive past in their vans and then do a quick reverse. You were put up against the van for a quick pat down. We got used to it, just be polite and they moved on. There were a lot of car stereos being stolen at the time so if you were of a certain age and out after dark you were a suspect.
from the linked article:
"The first mechanism is stop and search. Under the Police and Criminal Evidence Act 1984, police can use this power if they have “reasonable grounds for suspecting” someone is carrying certain items or something which could be used to violate certain laws, like burglary or theft. Patel is massively expanding the kinds of laws which might be included.
Now police can deploy stop and search to avoid “serious disruption” or a “public nuisance”. They can be initiated “whether or not the constable has any grounds for suspecting that the person… is carrying a prohibited object”. "
"n Turkey, their currency is losing internal legitimacy. Households have rushed to switch their bank accounts to US dollars, moving almost US$1 bln last week alone. Now almost 60% of all Turkish bank accounts are denominated in foreign currencies."
Not into Bitcoin then....which is measured in USD in any case.
When is 'money' not?
1 BTC is 1 BTC
Please read this great article about inflation and BItcoin written at the end of last year. Very eye opening about the 1.1+ billion people living under high inflation.
https://twitter.com/SDWouters/status/1463523221937004545?s=20 Map of all the countries with high inflation currently.
Nov 2020
I BTC = 153,027 Lira or 18778 USD (ratio 8.15)
Nov 2021
1 BTC = 712,287 Lira or 59030 USD (ratio 12.06)
Nov 2020 Lira USD ratio 8.15
Nov 2021 Lira USD ratio 12.01
https://www.xe.com/currencycharts/?from=XBT&to=TRY
Their currency was always worthless. Back in 1990 on the tour bus we were told to spend it all before leaving the country, nobody would give you your money back exchanging it outside of Turkey. It was one of the most interesting countries on the tour because it was so different but a place to visit and not live
I have a mate who went to Turkey in the 90s with 3 friends. They were warned to watch out for thieves, so one night they slept outside, one against each of the 4 wheels of their car. In the morning it was on blocks.
They then trudged to the local garage, discovered their wheels there, bought them back and went on their way.
Not a place I would even want to visit.
And staying in China, the cost of lithium carbonate rose above ¥200,000/tonne for the first time yesterday, the essential element in most batteries these days. The lithium price has risen more than the bitcoin price over the past year.
‘Battery arms race’: how China has monopolised the electric vehicle industry
Chinese companies dominate mining, battery and manufacturing sectors, and amid human rights concerns, Europe and the US are struggling to keep pace
Kiwi $ at 68.6 and falling --- wont take long even at that rate for inflation to push well past 5% and probably a lot higher as already stretched businesses have no choice but to pass on the extra costs - even just the fuel and transport ones --- lots of pain ahead next year
Leading to nationalization of everything.... we are on our way....
When you can't pay the power bill, ain't no market ... no one wants these customers
https://consciousnessofsheep.co.uk/2021/11/24/in-brief-depression-overl…
Not being able to pay the power bill is the result of capitalism. Nationalisation would be the counter. A national party Government privatised NZs electricity system, promising cheaper power prices. It never happened, prices only ever increased as greed over rode common sense. Electricity should be considered an essential and restricted in how much it costs to consumers. The benefits would be huge.
When I was young being unable to pay the power bill was state socialism in England.
When you say 'restricted' I assume you mean put really high so as to reduce consumption and meet NZ's climate change emission targets.
If there is no competition then nationalisation makes sense - that applies to the network - more than one set of pylons and cables makes little sense and only a nationalised business will invest in adequate resilience. If there are alternate suppliers: gas, coal, thermal, wind, hydro and my solar panels then a well-regulated capitalism may be acceptable.
And a sharp rise in unemployment as consumers stop consuming, and staff are no longer needed to staff the emptying stores?
Then what? Oh, I know! Drop Interest Rates to alleviate the household cashflow issues. Problem solved.
If the RBNZ hasn't reigned in bank lending by then (NB: It won't have. It will still be Consulting), we are in for an interesting time. How we encouraged ourselves to be painted into this self-destructive corner is beyond me.
i dont see the rise in unemployment -- simply because we usually have 100,000 - to 120,000 backpacker / holiday work visa holders in teh country who fill a lot of vacancies --- teh economic miracle that Labour describes re unemployment levels -- is in reality - NZ's filling 20-30000 of these jobs normally filled by tourists -- there are still thousands of vacancies across nearly every industry -- so before we see a rise in unemployment -- we will need to see a significant drop in vacancies --- I agree re drop in consumption, drop in retail, drop in disposable incomes -- i just see so many vacancies - that it wont feed into unemployment for a long time
But first we must note that the Thanksgiving holiday weekend is underway in the US and financial markets are all closed, and won't reopen until Tuesday, NZT.\
https://www.stuff.co.nz/business/127004489/electric-is-the-future-kiwi-…
“Electric is an exciting development,” said Peter Busfield, the executive director of the Marine Industry Association.
“As exciting as moving from black-and-white to colour television - after one’s got it, everyone else will want it.”
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