Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are now in 'extreme fear' mode as they face increasing equity and bond losses. The US dollar is pushing even higher, and spreading financial problems out to emerging economies fiercely. The NZD has dived.
Tax cuts in the UK have crashed the British currency.
Commodity prices are wavering.
But amazingly, through all this turmoil that is compounding the pain from the Ukraine invasion, all EU countries and leaders remain united in facing up to the Russian threats and challenges - with the almost sole exception of Hungary. It seems they are united in taking the pain that will come with winter. Putin had been counting on a fracturing, but it isn't happening. Given the EU's penchant for disagreement and slights, it is an impressive demonstration of solidarity. But all this could also be threatened by the rise of fascist parties in Italy where there are elections this weekend.
First up, there were a couple of early PMIs out overnight. The American one reported that private sector output fell at softer pace as new orders returned to growth in September. Their factory sector expanded in September, but their services sector didn't even if the contraction was very minor.
Canada reported retail sales activity for July overnight and it wasn't positive with both month-on-month declines (their first in seven months) and year-on-year retreats.
In China, home loan interest rates have dropped to record-low levels in at least 80 major Chinese cities, as financial regulators endeavour to keep the property market afloat. In September, over 80% of 103 key cities surveyed show first home loan rates have fallen to 4.1%, while second home loan rates have fallen to 4.9%.
Singapore's annual inflation rose to 7.5% in August which was above the 7.2% expected by analysts, and above the 7.0% they had in July. Generally ASEAN inflation is something to keep an eye on, and the surging US dollar won't be helping. Malaysia's inflation is rising and is at 4.7%. Indonesia is also at 4.7%. Thailand is at 7.9%.
Taiwan's inflation rate is low (like China's) and currently running at 2.8%. But their retail sales activity expanded +12% from a year ago, and their industrial production is up at record levels.
The early Eurozone PMI for September reported a steeper downturn as price pressures intensified. Both their factory and service sectors are contracting this month, but the quantum is quite small at this stage. The negative impacts are strongest in Germany. The French activity is positive and helping to hold up the overall results.
Early Australian PMI indexes show their factory sector expanding at a good pace in September and faster than in August. But their services sector is not mirroring that, more or less marking time.
But much of Australia is exposed to mining, and commodity prices are retreating. Now credit rating firm Moody’s has changed its outlook for the global metals and mining Industry from stable to negative as a global economic slowdown continues to soften demand.
The UST 10yr yield starts today at 3.70% and unchanged from this time yesterday but at one point in between it got as high as 3.81%. But even at current levels it is still its highest since 2010. A week ago it was at 3.46% so it has risen +24 bps since. The UST 2-10 rate curve is more inverted at -41 bps. But their 1-5 curve is much less inverted at -17 bps. And their 30 day-10yr curve has flattened to +105 bps. The Australian ten year bond is higher, up +6 bps at 3.91%. The China Govt ten year bond is up +2 bps at 2.71%. And the New Zealand Govt ten year will start today at 4.16%, up +16 bps from this time yesterday.
At the end of trading yesterday local swap rates zoomed higher yet again.
In Wall Street's Friday trade the S&P500 fell another -2.0% as the re-rating continues for equities. That means it is down -4.4% for the week and -23% since the peak at the start of the year. The -1120 pts drop since that peak is its biggest fall in history, exceeding the -1077 pt drop at the start of the pandemic, and the -716 pt drop in the GFC. Overnight European markets all closed down another -2%. London is down -3.6% for the week, Frankfurt is down -3.2% for the week and Paris is down -4.4%. Yesterday Tokyo ended down -0.6% to be -2.6% lower for the week, Hong Kong closed down -1.2% and down -4.1% for the week, and Shanghai closed down -0.7% for a -1.1% weekly drop. The ASX200 was down -1.9% on Friday for a weekly retreat of -3.9%. The NZX50 wasn't immune ending down -0.7% for the day to retreat nearly -1.4% for the week. The NZX50 was the least-worst of all equity markets, a dubious distinction for investors.
The price of gold will open today at US$1642/oz. This is down -US$30 from this time yesterday.
And oil prices start today down a very sharp -US$4.50 USc from yesterday at just under US79/bbl in the US while the international Brent price is now just under US$84.50/bbl. These are eight month lows.
The Kiwi dollar will open today at just on 57.4 USc and more than -1 lower than this time yesterday. This is its lowest since briefly in the first few days of the first pandemic lockdown, and prior to that 13 years ago. Against the Australian dollar we are slightly firmer at just 88.1 AUc and still near its lowest in seven years. Against the euro we are little-changed at 59.3 euro cents. Against the yuan we are down to ¥4.1 and its lowest since2015 (except the pandemic) .That all means our TWI-5 starts today at 67.9, and down -50 bps in a day and also to seven year lows (also pandemic-excepted).
The bitcoin price is now at US$18,753 and down another -1.7% from this time yesterday. It has been under US$20,000 for six straight days now. A week ago it was at US$19,606. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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127 Comments
Like clockwork:
https://www.nzherald.co.nz/business/liam-dann-lower-kiwi-dollar-not-all…
"Ignore the fact literally everything in your life costs more, exports or something!"
"Enjoy $4 a tank" never seems to make it into these pieces for some reason. We let one single narrative about our FX rates dominate when it negatively affects 99% of the population.
Summary: Rapid dollar tightening continues to wreck currencies and economies around the world. Japan now intervening to go along with India. New Zealand shows it isn’t because of rate hikes. What about the “big” one, China? All the same problems and then some, only it takes a little bit of extra work to expose. When you do, nothing good.
The FX rate has surpassed where we were at in March 2020 when NZ and the world started pulling the shutters down and we had no idea what would happen. We live in interesting times (well, have for a while now).
Interesting to see the markets reaction to the UK conservatives tax policy that has striking similarities to what National propose.
Wonder if it is much to do with UK government debt is 96% of GDP v NZ at 33%
Yes Mr 7 houses sent a congratulatory tweet to Liz Truss stating that their Parties have many shared values.
National and the Conservatives are the anti-Robin hood parties. Stealing from the poor to give to the rich.
We had all better start investing in walls, automatic gates and German shepherds. Unequal societies are not good for anyone.
Under Ms Private Jet Ardern we're already putting up the security systems and anti ram raid bollards ... I think you'll find that the Robin Hood in reverse theory kicked off in 2017 after PJ got elected ...
I wonder whether this message and others about his scorn for the poor will be remembered in 12 months time. These have to be a vulnerability to their campaign running up to the next election. I must acknowledge my bias against National. They have been anti working class all my life which rankles me. Unfortunately the alternatives are pretty awful as well. I give a tick to Labour for having the courage (perhaps foolhardy) to attempt to tackle some systemic problems in our country. Infrastructure spending, 3 waters, interest deductibility and raising minimum wage among others. None of them popular but all necessary. I just wish they had the courage to implement a capital gains tax or land tax. Try to swing some of the unearned capital gains into spending that will materially improve the lot of our poor and struggling middle classes.
I now agree that we have to have capital gains taxes. Loading the tax burden onto wage earners is unfair. The right always talk about supporting hard working kiwis. People working 60 hour weeks on low wages are working bloody hard and getting nowhere, while the better off can leverage equity to create free money (well they could until Nov 2021) and National want to keep this system going.
National are currently incompetent and charmless. They have no new ideas and no charisma, and they still seem fixated on harassing the poor and rewarding the wealthy.
But they could still win, because of Labour's uselessness. I think there's a real chance that, as inflation continues to get worse and the economy declines, Labour keeps telling people "Oh, don't you worry about that" and trying to downplay economic problems that people are feeling in their everyday lives. It comes across as gaslighting, and I think it might cost them the next election, even though the National/ACT can't fix these problems either.
Funny how asset sales to the general public are bad, but Wellington asset-stripping Councils is apparently not called for what it is. Likewise Labour's attempt to remove Auckland's Port as part of a make-work scheme for Northland.
re: Three Waters: I think it's more accurate to say that water infrastructure is a liability than an asset. (Unless it's fully privatised, which is not what the public are demanding.)
Isn't that what Wayne Brown is campaigning on? And he's as right wing as they come.
The left want the Ak port to go to Mangere. An incredibly stupid and dangerous proposal.
Always wondered why they couldn’t build a shipping canal from the Hauraki Gulf to the Manakau? Could then have a safe entrance and use Onehunga as the port.
Cost, many high bridges/tunnels required, a huge tidal flow. Whats magical about Onehunga? The list goes on and on....
The extra congestion on the southern motorway. Container vessels are hard to overtake.
https://en.m.wikipedia.org/wiki/Manchester_Ship_Canal
The Manchester ship canal is 36 Miles long. Tamaki River to the Manukau Inlet is only a couple of Ks. You would then have the port in the Manakau without having to cross the bar. I love a good canal. Let’s get dredging.
Correction ..did you mean turn to port?
"The left want the Ak port to go to Mangere"
What the actual f*** are you talking about? Who is this left you mention?
It's really dangerous to keep trying to divide issues into right and left. As people become more partisan to one side of the other they stop being able to properly asses whether their own side or the other's side policy is actually worthwhile. You can see it here with National supporters who defend Luxon's housing policies which will be a disaster for the economy and reverse the very same policies that National supporters were crying out for before Key came to power. You also see it in Labour supporters defending some of the worse Labour policies enacted over the last few years.
This is how you become the US. Extreme partisan view based on an imaginary right/left battle. It's shades of grey and people need to be capable of criticising their own parties and agreeing with the opposition's, it's the only way we get out of this mess and avoid going down the US/UK dual party disaster.
Rant over.
Yes because the poor have done so much better under a Labour government. The ability for them to reduce the numbers living in motels or on waiting lists to get into motels has been dramatic.
Is that due to govt., not enough private landlords, the free market, or the collective society?
Motels used to be a luxury, some would say the poor have got better than anytime in history and the motel owner is winning. Everyone's winning.
It will soon be six years of the worst PM and Government in NZ history. I can’t believe how bad they have been. Blind Freddie with a 501s sawn-off shotgun could have hit more targets than this lot have. Their incompetence has seen the nation start to hollow out. It’s becoming more of a nice place to retire rather than to build a future. As long as you don’t live too close to the poor they have served so badly.
Their incompetence has seen the nation start to hollow out. It’s becoming more of a nice place to retire rather than to build a future. As long as you don’t live too close to the poor they have served so badly.
Unfortunately, that's because they turned into National on propping up property prices, perpetuating the existing crisis. It's continued to make NZ a less attractive proposition for the young, hanging around to pay their landlords' taxpayer subsidies and then their universal pension benefits too.
It was always becoming a nice place to retire, the boomer policies have guaranteed that. 18 years ago we used say that New Zealand's slogan should be "NZ, a great place to curl up and die".
It's the angry old man rants that you spout on here that almost guarantees that this will continue to be the case until you all die off.
Not content with an inflation and energy crisis Truss and her merry band of Britannia Unchained ideologues add a currency and debt crisis to the mix.
I can only think the plan is disaster capitalism, destruction of the state and a great pile of cheap assets for private capital to feast on. I cannot see this ending well and as an ex-pat it makes me very, very sad.
Tories lost the plot long ago, but each PM (4 in 6 years, all from 1 party…) is worse than the last
Tax cuts in the UK have crashed the British currency.
There was a recent report by Goldman-Sachs that inflation would top 20% in the UK. They are in a tailspin economically and I can't see how they can pull out.
Having just returned from 7 weeks in the UK and I judge they can tailspin a while and still remain above NZ. A typical POM has more wealth than a kiwi, drive newer cars, have wider range of posher food in the supermarket.
You forgot cheaper power bills..on wait!
I didn't deny the tailspin. Direction is down and I never met anyone who liked the UK govt (and most of my friends are middle class). UK is going downwards but is NZ going up, down or flat?
Down as well.
How was sitting outside Harrods for 7 weeks begging for loose change ?
Bradford and Southport. Happy inhabitants but they were not generous. Fortunately beer was cheap.
Well a few ideas…1) bury the imperial pride and ask to rejoin EU…or at least common market and customs union if EU understandably refuse 2) give up on tax cuts that can’t be afforded and only benefit the rich 3) come up with a more equitable emergency energy policy that doesn’t rob the poor and give to the rich…tax windfall hydrocarbon energy profits that result simply from foreign war and distribute proceeds to those struggling to meet energy costs up 300%, 4) cut out government corruption, contracts for mates
It’s not difficult to come up with ideas that could make a huge difference to the vast majority of UK population
The united front in Europe… we shall see how strong it is when winter really bites!
They will hold strong.
say what you like about The West, but we certainly still have some principles.
We hope so… but nothing does more damage to a democratic government than dire economic conditions for its people. They’ll have to get the propaganda machine primed me thinks
What principles are those besides hypocrisy?
Europe? They seem to unite and resist against invading dictators.
You mean Italy who allied with the Nazis? Or Poland, whose cultural elites collaborated with the Nazis? Or France, that capitulated and collaborated? Or are you talking about Hungary, Romania, Bulgaria, Slovakia, and Croatia who allied themselves with the Nazis when they thought the Nazis would win?
The appeasers held sway for a while eh. We certainly saw some Putin sympathisers on this site too.
There’s still several Putin sympathisers here, Audaxes is one of the most prominent
Yes, I am calling you out Audaxes.
What is this personal crap doing here?
I enjoy Audaxes posts ... I don't recall anything about Putin ...
Thats not a surprise..
Why is it personal calling out someone who continuously posts pro-Putin material?
It is not.
Because there is very poor moderation here and personal abuse is tolerated unless its aimed at people in high places that is.
Why in hell is calling someone out, correctly, a Putin sympathiser ‘personal abuse’????
He repeatedly posts articles supportive of Putin and The CCP. Some of it is blatant propaganda and I am surprised it is not edited.
Precisely my point.
when shite hits the fan more often than not it’s every one for themselves
This is actually a common misconception. When the shite hits the fan human's natural instinct is towards empathy and helping each other. This is backed up by research in real life responses to disasters across the globe. You have to put some pretty strong social constructs to make people go against this natural instinct.
Prof Robert Patman has described Putin as " dead man walking " ... within Russia the voices of dissent have just begun ....the united Europe will win eventually , but at some cost to them : that is principled actions .
Europe which participated in the US illegal invasion and occupation of Iraq? Europe which participated in the US destruction of the Libyan state resulting in the theft of its wealth and the emergence of slave markets? The Europe that colludes with the illegal war on Syria, arming of al Qaeda and the theft of Syria’s oil by the US? The same Europe that remains quiet as the UK tortures Assange on the behalf of the US for the crime of revealing its war crimes against humanity. The Europe that aided US rendition of innocent people to CIA torture sites and says nothing about Guantánamo , which is on illegally occupied foreign land, where innocent people are tortured. The same Europe that supports the ethnic cleansing of Palestine?
When the US has been doing what Russia has done, it never threatens the imaginary world order. Yeah, very principled indeed.
Let me know when the US steamrolls Canada or Mexico on the flimsy ironic pre-text of facism. Until then you can keep pretending this somehow excuses what Russia has done by working up a froth over US foreign policy that we're all perfectly well aware of. That stuff was bad before Putin invaded and guess what - it doesn't make it any less of a shitty thing to do.
@GV: In case you didn't know, the US literally stole a huge chunk of Mexico in the 19th c. It's called Texas.
I did in fact know that, I'm just not sure the 19th Century has much relevance to modern geopolitics or what we understand nation states and sovereignty to be in 2022.
Yeah the world sucks and hypocrisy is rife, big whoop. That’s never going to change anywhere.
I still prefer countries where you don’t get thrown out of windows or sent to the frontlines if you dissent against a government. That’s just me though.
Yeah we've got it great here when dissent is only punished with classic music and sprinkler systems.
... " bad music " ... Bazza Manilow ? ... c'mon , they're classics ...
My bad Gummy. Fixed it for ya :)
Impressive. The full straw man argument in one post. No comments about Grozny, Russians barrel bombing children in Syria to keep their self entitled murdering mate in his palace, Wagner in Libya, stealing land off Georgia, and now going full Nazi in Ukraine, while little Vlad throws his toys out of the cot and threatens global extinction of Homo sapiens? No hypocrisy there. :-)
I hope I'm wrong...but I'm betting that Germany will fold like a cheap suit when their voters start freezing to death. Without Germany there is no NATO.
You only have to look back to late 1938 early 1939 to see what principles the West, in this case a few countries in Europe had then. Or maybe it wasn't classified as the West then
Gas storage reservoirs in most European countries are 90% full, they have plenty to get through winter. UK, not so much.
Depends what you mean by "plenty". If the spigots are turned off (and they almost certainly will be) they will have to choose between powering industry and heating homes. I don't envy them that choice - either way it leads to a very bad place.
It gives them time to set up alternatives, shipping in LNG for instance.
PM Truss has reversed Boris Johnson's anti-fracking legislation ... but , it is too late ... it will take years to tap into that phenomenal natural gas reservoir under Yorkshire ... estimates are that it could power the UK for 200 years ...
Former head of Caudrilla (fracking company) says fracking isn't worth it in the UK... https://www.theguardian.com/environment/2022/sep/21/fracking-wont-work-uk-founder-chris-cornelius-cuadrilla
The locals freaked out over a 1.5 magnitude tremor caused by trial fracking .... 1.5 !!!! .... wusses ...
To be fair, their houses are not designed for any sort of shaking at all. Brickwork doesn't do so well in earthquakes. I work with a Chilean and she laughs at us for freaking out about magnitude 6s...
The US burnt through $billions without the industry making a dollar. But this time will be different, right?
GBH - sounds like the kind of comment Brownlee used to make about Southland lignite.
Reference(s) please.
Hint - spruikers ain't referees.
Always appreciate your stirling work David, even if there’s plenty I disagree with.
We shouldn’t be surprised at all by any of this carnage should we?
I am a vocal critic of property spruikers such as TA but how about some of the Funds Managers? If not talking equities up, certainly not talking them down.
"Global market storm intensifies, little spared"
Not to worry, worst is over in NZ housing market as spring sets in and NZ Economy (Housing Market) is about to defy everything / news / data and is in for another round of rally so hurry....kick in your FOMO and.....though.....
Seriously anyone who does not accept that it will get worse before getting better is either a genius or a fool - you decide.
A car I bought this week at auction on Thursday now costs $1,000 more than when I bought it. It's costing me $2.5K more than it would have two weeks ago. God knows how much more it will be when I pay the invoice on Monday.
There is an absolutely enormous wave of imported inflation about to hit us. Remember how RBNZ dropped LVRs without warning when they thought they might be a problem? This tsunami is heading for us, the wave is registering on the charts and yet we're just sitting here, doing nothing about it.
Everything in NZ is imported and NZ$ has fallen appox 15% since March and cost of borrowing has also gone up by substantially along with the feeling of being very rich is being eroded by falling house price,which is bound to effect purchasing going forward and still no end in sight.
Election coming next year where the situation will be worse than today and will not be surprised if politicians to win votes will go all out by throwing lollies against the demand of economy to get power.
As of today,situation is bad on paper and will actually feel the pinch from heron and agree that it will get much much difficult before getting better.
BBBBaby You Aint Seen NNNNothing Yet.Bachman Turner Overdrive
100% sales hit rate in the mighty Waikato this week - boom times, the stats don't lie!
https://www.interest.co.nz/property/117751/more-properties-offer-more-s…
I tip my hat to the Europeans for their intestinal fortitude. They have respect for their recent ancestors who suffered enormously with the last dictator to threaten Europe. Namely Adolf Hitler. These ancestors would be proud of them. Kia kaha.
But apparently The West is hypocritical.
Which I agree with to an extent.
But humans are hypocritical. And in the scheme of things I think The West is pretty principled.
Better to do the right thing once and the wrong thing once than insist on doing the wrong thing every time.
It's bizarre how many people think stupidities like the Iraq War justify an unprovoked invasion by Russia. 'Two wrongs make a right' is strangely persuasive to some.
Exactly.
You're forgetting the privation that led to a bunch of autocratic leaders being ushered into power in the early 20th century. Being "principled" will lead to exactly those conditions again, and (as humans are wont to do) history will repeat.
Plus the attack on the Ukraine was hardly unprovoked. We (the western nations) disagree with Russia on whether it was a reasonable reaction to the provocation, but to claim it was unprovoked is tendentious at best.
Provocation? So you are saying Ukraine doesn't have any rights to self determination? What is Russia's entitlement to butcher their way through Ukraine. Please do extrapolate on the nature of this "provocation"?
Clearly Palmtree if you know much about the causes you can tell us the story of the Donetsk and Luhansk Republics. Say since 2014. Can you?
Pretty principled isn't the same as having good principles or even being aware of them.
I don't consider The West any better. But it's easier to throw stones, call the kettle black and not dare to look in the mirror, let alone change behaviours.
Stalin was the last dictator threatening Europe. He out lived Hitler. Killed more of his own people too.
He didn't win over Europe either.
If you've not seen it , I can recommend the movie " the Death of Stalin " .... hilarious ... his doctors were so freaked out about the repercussions of telling him the true state of his health , that he died whilst they differed around ... brilliant ...
100%. Going to be very tough in Europe this winter due to taking a stand against aggressive dictator. Hope the solidarity holds but don’t envy choice of heat or economy in a cold winter
This is it. Do not underestimate the stoicism.
Stock up big time now folks;
https://metro.co.uk/2011/06/20/price-of-baked-beans-and-other-commodities-set-to-go-up-51772/
Countdown's 420 g tins of baked beans are just 80 cents here .... that's a good run for your money .... processed in Italy , from North American beans : Yummo !
Wouldn't know I splash out on what I consider the best and that's Oak. Watties are ok but they are made for kids, just to sweet. $1.40 a tin on special at Countdown this week bought 6 cans.
Fascinating. The price of baked beans....
Raises the question about the best anti-inflation purchases.
My picks:
Whiteware possibly because your existing ones will fail sooner or later.
Cars/ bikes if your current ones are getting tired ie Means of transport. But make them economical. And don't trow out your existing one until repairs get real expensive.
House/ car maintenance. Keep up with that or do it yourself. Labour costs continue upwards.
Sports equipment. eg Small yacht. Exercycle. Health should be everyones no. 2 priority after family.
Definitely not house buying because that is going the other way.
I bought a set of car tyres (on special under half price) today that I won't need till next year...
... that's a very good start ... when are you planning to buy the rest of the car ? ...
He's saving up for a radio now.
My picks (in addition to baked beans, of course!):
Sardines.
Bic Lighters.
Flashlights, batteries and candles.
Tampons :-).
... whisky ... you're gonna need a barrel of high alcohol fire water to getcha through the long nights , hunkered down in the antinflationary bunker ...
More nutrition in wine:
What Other Nutrients Can be Found in Wine?
Fluoride
40% of recommended daily intake – Prevents tooth decay when used topically.
Manganese
10% – Antioxidant beneficial to brain, liver and nervous system.
Potassium
5% – Helps keep your heart beating.
Iron
4% – Delivers oxygen to your body.
Vitamin B6
4% – Helps access energy in your the body.
Vitamin B2
3% – aka Riboflavin. Antioxidant that aids in oxygen delivery in the body.
Phosphorus
3% – Strengthens bones, regulates hormones, and aids in digestion.
Choline
2% – Helps in memory and liver function.
So the brown paper bag winos must actually be really healthy!
You left out alcohol? here is strong evidence that drinking alcohol increases people's risk of cancers of the female breast, liver, mouth, throat (pharynx and larynx), oesophagus and bowel. Heavy drinking may also increase people's risk of stomach cancer.
Chucky III can probably recommend some environmentally friendly brands for that last item. By Royal appointment etc....
Probably quite relevant actually, plenty of people are going to be living exclusively on them in 2023 if things keep heading they way they are.
Oh you may scoff, but if the price of baked beans spikes people like me will go straight to food rioting. Knee-jerk.
Heinz make the best baked beans. Those little Weight Watchers cans are the perfect portion size...if you really have to eat them.
Being English I thought the Heinz beans would be great. I mean their Ketchup tomato sauce is simply the best but I'm sorry their baked beans are rubbish.
... try adding a half teaspoon of a good Indian curry powder , Mrs Roger's is OK ... stir that in ... jazzes up a boring tin of beans quite nicely .... plus , a pinch of salt ...
A good squirt of HP sauce is good too!
UK recipe is different I think. Heinz BB are too sweet here. Same as curries..
https://www.heinz.com.au/beanz/product/9300657009885/heinz-english-recipe-baked-beans-420g
Baked beans with sugar is just sad. Why do they do it?
That's a 2011 article?
But amazingly, through all this turmoil that is compounding the pain from the Ukraine invasion, all EU countries and leaders remain united in facing up to the Russian threats and challenges - with the almost sole exception of Hungary. It seems they are united in taking the pain that will come with winter.
The main pain is the failout from ultra financialisation.
Good Morning from #Germany, where majority of listed comps are owned by foreigners. Less than 30% of Dax 40 shares belong to German investors, meaning only €18bn of the €54bn in dividends distributed remains in the country. Vonovia, Deutsche Börse, MTU 80% owned by foreigners. Link
This chart highlights that the housing boom in Germany is over. The real estate lender Hypoport shares plunge as much as 34%, most ever, after the group suspended its forecast for the full year, saying residential mortgage finance customers are holding back on property purchases. Link
You have got to laugh:
US Is Inflating Its Debt Away After Unprecedented Spending Binge
When measured against the economy, America’s debt is set to post the biggest drop in at least two decades.
If J Powell were to come out next week and make even a mildly dovish statement, everyone would immediately pile back into shitcoins and Tesla and the S&P would hit an all-time high. Inflation would continue to rise at a pace that threatens the political stability of every nation on Earth.
There will be strong pressure, from both the financial elite and, bizarrely, from the Left, to put more money back into the slot machine so we can feel good again. It's completely unmoored from physical reality. The idea that we all deserved massive gains on our properties and retirement portfolios, that we could collectively cash out those giant gains while nothing in the real world increased in productivity to match, was always stupid. The choice is whether to let those assets fall and destroy the wealth effect, or whether to rob the entire population via inflation to protect asset-holders.
I don't think the RBNZ has much room to move at all. From this point on, they will be firefighting to keep the NZD at some level of relative strength. The rest of Orr's tenure will be waking up each morning desperately hoping the USD has fallen overnight and allowed us some relief.
“TRICHET. Broadly based second-round effects stemming from the impact of higher energy and food prices on price and wage-setting behaviour must be avoided. In this context, the Governing Council is concerned about the existence of schemes in which nominal wages are indexed to consumer prices.”
To interrupt that cycle, mainstream theory posits a committed course of “tightening”, whatever that means. While the concept may seem straightforward, and should be, it is not. In this post-modern method of central banking, tightening is deemed to be whatever the tighteners say it is. Could be rate hikes, might be some other policy change, even just using the word in the right way at the right time is thought to be enough (moral suasion).
Thus, no one ever demands a complete answer to the only question which matters: is there too much money? Policymakers can’t say. This does not prevent them from replying in part on occasion. June 2008 just so happened to be one of them. Link
Went to the Post Shop last week to mail off a couple of TradeMe sales in the good old $5.40 Postbags. Only now the same bag costs me $8.10. That's a healthy dose of inflation right there in one week and Government issued.
Yep bigger items are no longer postie delivered they are now automatically courier as well so in some instances the cost has doubled.
Here we go…
NZ house prices will get back to all time high around the year 2050. But it will take a bit of luck from here as the incoming deflationary bust will be something that only the silent generation have experienced in a western society. If you think this is over the top, Japan 31 years on is not even close to all time highs on property. https://fred.stlouisfed.org/series/QJPN628BIS
From Deutsche Bank this morning in response to the UK Budget announcements:
The policy response required to what is going on is clear: a large, inter-meeting rate hike from the Bank of England as soon as next week to regain credibility with the market. And, a strong signal that it is willing to do “whatever it takes” to bring inflation down quickly and real yield in to positive territory.
Isn't history spooky...
Black Wednesday (or the 1992 Sterling crisis) occurred on 16 September 1992. At 10:30 am on 16 September, the British government announced an increase in the base interest rate, from an already high 10%, to 12% to tempt speculators to buy pounds. Despite this and a promise later the same day to raise base rates again to 15%, dealers kept selling pounds...
September is often a crap month
July too ... and April ... March sucks , definitely... plus December & May ... February ... October , blahhhh .... June & November ... and January , ooooooh , don't get me started on January , just horrendous ... August ...yep , that's a crap month too ...
Quite right.
Yet here we are; September, again (next turning point 5th February 23,?). Coming out of an unreal decade or more of "0%" interest rates, and about to head into....well, who knows what. But whatever it is, the misguided era of 0% isn't unlikely to be it. (NB: Lehman's as on a Sunday as well)
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