US inflation rises, real earnings don't; US Federal budget deficit jumps; China ends 2019 with rising exports; Blackrock gets active on climate change; UST 10yr yield at 1.83%; oil unchanged and gold lower; NZ$1 = 66.1 USc; TWI-5 = 71.2

US inflation rises, real earnings don't; US Federal budget deficit jumps; China ends 2019 with rising exports; Blackrock gets active on climate change; UST 10yr yield at 1.83%; oil unchanged and gold lower; NZ$1 = 66.1 USc; TWI-5 = 71.2

Here's our summary of key economic events overnight that affect New Zealand, with news China's trade rose at the end of 2019 and America's budget deficits hit new record highs.

But first in the US, inflation as measured by their CPI rose to +2.3% pa in December, a little higher than November but not quite the rise expected. It was boosted by medical care, rent and fuel prices, restrained by clothing and food prices.

It was a rise that is faster than wages, so real average weekly earnings fell from November. It was a sharp monthly fall that wiped out all their annual gain.

And the dust is settling on American holiday retail sales data - and it's not positive. It was a weak result with most retailers posting lackluster results.

The US has removed China from its designation as a "currency manipulator". Putting it on there was just a political step in the first place. The same notice taking it off is as well, but the notice fingers a range of US allies under threat of a similar designation: Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Switzerland, and Vietnam. No country with a strong-man dictatorship is on the list.

The December update to the US Federal fiscal position sees it worsening sharply. The calendar 2019 deficit was US$1.02 tln, all of it "borrowed from the public" and more than 70% higher for this Republican Administration than the previous Democrat one. The 2019 deficit was -4.7% of US GDP. In 2016 the same deficit was -3.1% of GDP. Watch out when it hits -5% which looks like will happen in June 2020 and reach -5.3% by the end of 2020.

China posted a +US$422 bln trade surplus in 2019 as exports jumped in December. Goods exports rose +7.6% from the same month a year earlier to US$238 bln, ending four straight months of contraction. The December growth rate was the highest since March. Imports also rose sharply, rebounding from tame levels, although some of that 'growth' will have been price related rather than rising volumes. China's trade with the US has been declining, and trade with ASEAN nations is now their number one source. But despite lower China-US trade, it ended the year with more than 70% of its overall surplus the result of that bilateral trade.

In the investing world, the world’s largest asset manager - Blackrock - controlling and voting on almost US$7 tln in investments, has fundamentally shifted its investing policy. It will take a tougher stance against corporations that aren’t providing a full accounting of environmental risks. One early target is Australian thermal coal, and it will offload AU$½ bln in such shares. Although others will no doubt buy, it does signal that fossil-fuel capital will become much more costly, just at a time when demand and returns are under threat.

The UST 10yr yield is now down to 1.83% retracing -1 bp overnight. And their 2-10 curve is narrower at +24 bps. Their 1-5 curve is narrower at +9 bps. And their 3m-10yr curve is down to +29 bps. The Aussie Govt 10yr is at 1.22% and down -2 bps. The China Govt 10yr is unchanged at 3.15%. But the NZ Govt 10 yr is up +4 bps this morning, now at 1.52%.

Gold will start today lower again, down another -US$8 at US$1,543/oz.

US oil prices are unchanged today now just under US$58.50/bbl and the Brent benchmark is at US$64.50/bbl.

The Kiwi dollar is soft as well at 66.1 USc. On the cross rates we are lower at 95.8 AUc. Against the euro we have slipped to 59.4 euro cents. That puts our TWI-5 at 71.2.

Meanwhile, bitcoin is sharply higher from this time yesterday at US$8,707, a rather remarkable +7.5% leap in just 24 hours. Bitcoin miners are approaching new reductions in supply. The bitcoin rate is charted in the exchange rate set below.

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61 Comments

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Reminds me of the time the America's Cup Police boats turned up with pontoons that were made of material that would not pass survey, and work in the fuel tanks had not been cleaned so slivers of aluminium cut their way through the fuel system all the way to diaphrams in the carburettors on the outboards (six on the 225hp V6's). From memory Sensation Yachts changed hands and a bit of cost cutting went on.

The US position with its Federal deficit is an interesting one - "$1.02 trillion, all of it borrowed from the public"

Some questions;
For the same period how much of previous borrowings matured and had to be paid back? And was it actually paid?
What percentage of their total tax take is $1.02 trillion? (or at what level will the borrowing have to be to equal the tax take?)
What is the maturing date for those borrowings?
At what level does that ponzi collapse?

This ponzi has to collapse once (economy cycle) but is quite a while as reserve banks will not go out without fighting / experiencing zero interest and than negative interest scenario, so may delay by few years and as the saying goes bigger the bubble BIGGER the burst.

House price may not stretch from here as affordability will restrict but stock market with cheap / free money will be on roll like 2019 unless something drastic happen which acts as a catalyst and despite the best effort inevitable happens sooner.

Negative interest? Who would pay to lend money to the Government? Why, what's in it for the lender?

You lend at negative rates hoping the rates go more negative and your "investment" increases in value. I think it will not work in the long run as people expect a real return for their risk and the large pension systems in the world NEED high return to say viable.

Side note, negative mortgage rates can help keep the debt fueled system afloat. https://www.cnbc.com/2019/08/12/danish-bank-is-offering-10-year-mortgage...

I'm not sure I understand this. "hoping the rates go more negative and your "investment" increases in value" does this mean you're banking on capital gain? A core principle behind lending is to generate a return, this means a positive interest rate. Putting money into the system to keep the money go -round going helps who, other than staving off a collapse?

Who gets the negative interest is my question? The govt (then it's a tax), if the bank, then it's bordering on theft.

Pension funds looking for low risk wealth preservation? Losing a little is better than losing a lot.

The terms of some funds require a certain percentage of investments be government bonds even if they are negative yield.

https://www.marketwatch.com/story/here-are-four-reasons-why-investors-bu...

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Of food miles and primary schools. Can someone send to James, Jacinda and Chris? "The original report compared the energy used and CO2 emissions between NZ and UK Dairy production. This found that the UK uses twice as much energy per tonne of milk solids produced than NZ, even including the energy associated with transport from NZ to the UK. This reflects the less intensive production system in NZ than the UK, with lower inputs including energy."
Comparative Energy and Greenhouse Gas Emissions of New Zealand’s and the UK's Dairy Industry
https://researcharchive.lincoln.ac.nz/bitstream/handle/10182/144/aeru_rr...

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Green Movement: Facts not wanted here. Peddle your balance. reason and truth elsewhere. Eg see plastic bags ban, GM ban, rejection of nuclear power....

Like we found last night, Beef & Lamb nz are very unhappy that the new syllabus message includes, "eat less meat and dairy".

https://www.recipes-news.co.nz/news/2020/1/14/climate-change-teaching-re...

And vegetable advice (meat less meals) is a USA web site.

Another puzzling recommendation in Climate Change: Prepare Today, Live Well Tomorrow is to go to ohmyveggies.com for meat-free recipe ideas. Beef + Lamb New Zealand fully supports increasing fruit and vegetable consumption, but questions why children are directed to a USA-based vegetarian website rather than using Kiwi organisations like 5+ A Day or vegetables.co.nz that could provide local, seasonal advice to New Zealanders.

A balanced diet for young is very important for brain development. Some regard pasture feed meat, milk & cheese as superfoods.

If it follows the usual urban Green agenda it will be very keen on vegan diets but no mention of cancelling the typical school trip to Europe that involves flying 200 people to the other side of the world for 2 weeks of entertainment.

Take a look.

Children encouraged to be climate change agents, climate ambassadors.
Donald Trump gets a mention too.

https://nzcurriculum.tki.org.nz/Curriculum-resources/Education-for-susta...

Due to the impacts of climate change, there is increased likelihood of climate related disasters
such as fires and flooding. Resources are available for parents and teachers that cover preparing for, and responding to, climate change traumatic events.
It is recommended that you equip yourself with this knowledge and have plans in place for these types of events.
Preparation,at the developmentally appropriate level, has been shown to have a positive impact on children’s coping after such events.

Here is the part thats left Beef & Lamb nz unhappy
Eat less meat & dairy products
Red meat and dairy production results in significantly more greenhouse gas
emissions than the production of chicken meat, fruit, vegetables and cereals.
It also requires substantially more water. Around 30% of the world’s land area
is used for livestock production, and it is one of the key reasons for cutting
down forests.
Actions you can take
• Cut down on meat. Eat more fruit and vegetables instead - this has many health
benefits, such as reducing the risk of heart disease.
• Try having a meatless day each week. The Meatless Monday website has great
recipes to get you started.
• Give it a go! Try out these meatless recipes at Oh my veggies!

I'm backing that the kids will be smart enough.

Are facts wanted here? Hopefully...but we'll see...

The plastic bag ban was actually useful, as it turns out. According to Sustainable Coastlines they've seen a good reduction in the sea life killed by plastic bags since this ban was put in place. Plastic bags had the unfortunate tendency to resemble jellyfish, and were found inside a significant amount of dead animals washed up.

Sustainable Coastlines have been doing a great job actually putting in place measurement of rubbish in New Zealand waters and coasts, where it comes from and the effects it has.

“Single-use plastic bags are a poster child for the issue of plastics in our environment,” says Howitt. “Plastic bags are one of the worst offenders found during beach clean-ups, making up over 7% of the litter we collect from coastlines.”

Who's ignoring facts? 1 meltdown roughly every 10 years. Not to mention that even on a good day the reactors leak tritium which causes leukemia. But something always goes wrong, and entropy wins. Problem is that once that genie's out of the bottle the land is ruined forever. History also shows that when the inevitable happens the public is always lied to. The IAEA always advocates nuclear power and downplays human health impact. I don't know how anyone could advocate Nuclear power. Regarding plastic bags - they've been banned in Germany for decades. NZ is way behind the times. Heard of micro plastics? We always need to assess and reassess the risks to human health and the environment. What would be regarded as horrific these days was commonplace yesteryear. Organo-lead in petrol for instance or having chloro benzo dioxins in herbicides. We know better now.

Probably more basic ignorance than willfully ignoring facts. "Using historical production data, we calculate that global nuclear power has prevented an average of 1.84 million air pollution-related deaths and 64 gigatonnes of CO2-equivalent (GtCO2-eq) greenhouse gas (GHG) emissions that would have resulted from fossil fuel burning. On the basis of global projection data that take into account the effects of the Fukushima accident, we find that nuclear power could additionally prevent an average of 420,000-7.04 million deaths and 80-240 GtCO2-eq emissions due to fossil fuels by midcentury, depending on which fuel it replaces. By contrast, we assess that large-scale expansion of unconstrained natural gas use would not mitigate the climate problem and would cause far more deaths than expansion of nuclear power."
https://pubs.giss.nasa.gov/abs/kh05000e.html

The Lancet on the subject. "Comparison of different forms of commercial power generation by use of the fuel cycle methods developed in European studies shows the health burdens to be greatest for power stations that most pollute outdoor air (those based on lignite, coal, and oil). The health burdens are appreciably smaller for generation from natural gas, and lower still for nuclear power. This same ranking also applies in terms of greenhouse-gas emissions and thus, potentially, to long-term health, social, and economic effects arising from climate change."
https://www.thelancet.com/article/S0140-6736(07)61253-7/fulltext

Did you know the IAEA has veto power over anything the WHO publishes. You're comparing upper estimates of CO2 damage to lower estimates of radiation health impact. Even when something nuclear-critical slips though the cracks it gets condemned, discredited, and memory-holed. Good example is the Russian scientist publication "Chernobyl: consequences of a catastrophe" (from memory the death toll from Chernobyl was over 800,000). Thank goodness New Zealand has abundant renewable energy.

Yes, but what is the the transport profile of their (limited) exports

Maybe you didn't comprehend, but the story was about telling NZ children/families to avoid food thats been flown in from halfway round the world. So the exact opposite of what you are rambling on about like a good little bot.

I wondered whether it was a bot, myself. It morphs more in mimicry than in substance, and still stuffs up its linguistics summat shockin.

"Bot"

You keep using that word, but I'm not sure you know what it means. Did you discover the internet yesterday?

No, i don't use that word a lot, only to describe our residient breitbart bot. And no, i've been using the internet since before the internet was really a thing. I cut my teeth on the internet at 1200bps.

I note you had nothing to say about the substance of the post, nothing but ad-hom noise.

I think the meme you're looking for is NPC. If you cut your teeth with 1200 bps you'd know what a bot is.

Ironic, you complaining about ad hominems...

ARPANET

Jacinda is planning to spend $5 Trillion to achieve what Germany couldn't. This would exclude the subsequent increased cost of electricity. From the most read article on Quillette last year.
"Germany’s carbon emissions have been flat since 2009, despite an investment of $580 billion by 2025 in a renewables-heavy electrical grid, a 50 percent rise in electricity cost."

https://quillette.com/2019/02/27/why-renewables-cant-save-the-planet/

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The point is power and control. Mencken put it best - “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by an endless series of hobgoblins, most of them imaginary.”
We used to sacrifice virgins to change the weather - now we just sacrifice Greta.

Maybe that's what Jacinda (and other ploticians) are for? The ritual sacrifice of those silly enuff to think that "if only they were in charge", then things would be different. Maybe the election is our modern sacrificial rite, it does seem you vote against the party you most dislike at the time.

Slow clap

Some sacrifice. Greta has been a massive winner from her insertion into recent doomster propaganda programs, she has fame, riches and pick of any educational opportunities she wants, she can retire at any point now and do anything she wants for the rest of her life. Well done to her and her handlers, Selling the scare pays.

Geez you make me laugh - "handlers" what riches are you talking about? Maybe she is just concerned for the future of the planet and humans who are yet to be born (and wipe your chin as you get older), not a hard one to get around?
Would like you to sail the Atlantic first in something under 40ft then come back and peddle you're ranty like thoughts - doubt you would have the balls frankly.

Foyle - if you start from a false premise (almost certainly you will have a vested interest, or your peer group will have a vested interest, which drove your false premise in the first place) you tend to get further adrift from the truth as you build. It tends to get obvious from the outside, fairly soon. She wasn't looking for, and her parents don't need, fame or fortune. Shes' just a focused, honest, well-researched individual, and it speaks volumes about the stature of those who have to attack her, that they attack the messenger.

At board-room level, the attackers will be scared. At paid-shrill level, they may well just be prostituting themselves. At local level, they'll usually be those with offending activities (like farming) who have a strong urge to deny. I start with wondering which category they belong to, every time I read their stuff.

Here's Greta "You don't listen to the science because you are only interested in solutions that will enable you to carry on like before. Like now. And those answers don't exist any more. Because you did not act in time".

Which kind of puts the Lomborg-faithful in context too.......... an excuse not to act, yet.

Must be hard trying to assimilate your take, with the long-predicted events across the ditch. Remember that one long-time commenter here, sold up in Melbourne and shifted here for Climate Change reasons. I suspect he's feeling smug, I just see him as an 'early adopter'. Laggards? They're at the other end.....

Depressing.
Perhaps reinforces that focus should be on adaptation/mitigation...

The point is we will be viewed as hypocrites when we confront eco-terrorist states and facilities with our pretend armies and air force - lol

I find James Shaw impressive or at least impressive in the company he keeps. Reading a Stuff article about proposed carbon credits I sent him a very short email referencing the article and only asking: " does this include foreign air travel and shipping both cruise liners and freight?"
After 4 weeks a reply from his 'Private Secretary, Climate Change, Office of Hon James Shaw' saying they have referred my question to the Ministry of the Environment. What hope do we have if a competant motivated minister has support staff who are unable to answer such a simple question?

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Ooh, naughty, that question, intelligently and honestly answered, would call into question the #1 'export' - tourism, on which so very many minimum-wage Green jobs depend, from the humble barista to the earnest baggage carriers on the bike trails. Not to mention the plethora of Palm Readings, Native Flora-based Hand Creams and other potions and little Jars of Hopium, to be found wherever the tourons are likely to pause in their Loop.....

Just 30 min ago received an answer from Min of Environment. Answer is no but they did say ""the recently appointed Climate Change Commission to review the inclusion of emissions from international shipping and aviation within the 2050 target no later than 31 December 2024"" and ""New Zealand has announced its intention to voluntarily join the international Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) when it comes into effect in 2021""
Because of geography this is a serious matter for remote island nations such as NZ. We are ducking a serious issue and it makes me wonder if our govt is seriously trying to reduce emissions or just trying to look good. It would make sense to anticipate future inclusion and stop funding our current tourism campaigns.

The removal of the currency manipulator accusation suggests something more substantial may have been agreed between the US and China. So far it sounds like a lot of hot air, with China agreeing to buy some cheap soy beans to feed their pigs with, instead of paying more for Brasilian soy beans. I guess that's the smoke and mirrors, with the important bit kept secret.

Have the US team extracted something similar to the Plaza accord? Whereby the US can devalue the USD and China will not complain.

Looks like most of the bleaters are out in force. Missing one, so far. Musta been a hard night in Golden Bay.

Those who would obfuscate, twist, or outright falsify climate science, are on a hiding to nothing. The average punter has listened to their kind, listened to the scientists (and to Greta repeating the science) then saw what happened to Australia. As predicted. And come to their own conclusions. Hence Blackrock, who will have read the tea-leaves.

https://theconversation.com/its-30-years-since-scientists-first-warned-o...

And now, rightly, they don't trust their fossil energy-industry-supported, fossil-industry-supporting leaders. Hence, probably, the stridency hereabouts.

The joke on all of us, is that there is 250 trillion owed globally, and the repayment has to be made using energy to do the producing. -Not only won't renewables do it, the remaining fossil energy won't either; even as we fry trying and even as we take on even more debt, even more unrepayably. This is a problem with no good solution, but a couple of guaranteed outcomes; a financial implosion and an overheated, resource-depleted, overpopulated planet.

Well done capitalism Excellent job. Pay yourself a bonus, why don't you.

By no means is predicting the end of days new. You lot aren't the first and won't be the last.

We mostly stay silent and win at the ballot box, but it's gotten so hysterical now people are even speaking up, finally.

In existential terms, democracy requires over 50% of the voters to be informed.

That is why the noisy little fellows hereabouts; needing to misinform and to denigrate.

But democracy in reality, is short-term hip-pocket voting, a long way adrift from addressing the unfolding Limits to Growth. Where you make a mistake, is in thinking linearly, rather than exponentially. Your thinking is by far the most common style, but it is incapable of dealing with exponential change, and usually incapable of integrating topics (tends to be one at a time). The problem we have is interconnected and systemic. Do yourself a quiet favour; put some time aside and watch this:

https://www.youtube.com/watch?v=kz9wjJjmkmc

Then come back and we'll see if you still make your 'first/last' linear comments. I'll be genuinely interested in your comments

"In existential terms, democracy requires over 50% of the voters to be informed."

The mask slips every so often. Let me rewrite this for you.

"At least fifty percent of the electorate must agree with me otherwise democracy doesn't work."

... the " end of days " has been predicted every day for the past 200 years ... 2000 years if you're of a biblical bent .... and , still it hasn't happened...

Mankind has proven resilient , adaptable ... people worldwide are richer , healthier and happier than ever before ...

... perhaps ... the solutions to the "end of days " Mr PDK and his ilk promote ... antihumanism , etc ... those solutions are in themselves the " end of days " ...

Perhaps these dire predictions are merely for the end of the “happy” days? Could it then be a portent that the world would be a happier place if everybody is equally unhappy? Just asking.

they aren't predictions - they are mathematical certainties - not sure how people can't see it? confused I guess

Predictions. Predilections. On today’s contributions here, you would have to call it a draw wouldn’t you. That is of course if one does not believe oneself , to be infallible.

More Australia newspaper bush fire reporting.
1939.

https://youtu.be/srG7Hy8ySI4

What text of the newspaper articles are you replying to?

Willis Eschenbach, a seafaring type from way back, neatly demolishes the latest 'Oceans are Gonna Boil' nonsense. The Argo float network is accurate to perhaps 0.1 degrees centigrade, covers less than 1/3rd of the ocean and then only to 2000 metres, and was established only in 2005. So it's a bit of a stretch to claim 0.003 degrees warming and extrapolate that to the entire planet. Sadly, a common enough deception, which simply reinforces the common distrust of science and 'scientists'.

That is the way it is. For every professional’s, engineer, economist, lawyer, doctor, scientist, surveyor even, opinion there will be another opposing. Just need to read some high court transcripts to get a handle on that.

2020 has rapidly descended into the year of doomsterising

... doomsterisers rule ...

And now the Dept of Education has got on board with indoctrinating the kids : the Baby Doomers generation ....

Another great doubling down on predictions and rhetoric is what I foresee...
The thing with alarmism is that it feeds upon itself. An arms race of rhetoric, if you will. In order to reestablish credibility and relevance, ever more alarmism is required.

Add to that, unfortunately, there is money to be made. A prophet and disciples can drum up quite an audience of the donating ilk. Would anybody dare nominate ex VPOTUS Gore as a contender?

Yep, presents as a psychosis.
Credibility & relevance long gone.
Each element of rhetoric rage rocketed forth, releases a dopamine hit driving animal like instincts, to further forward.

Must be a nightmare to live with.

... and the media are having a feeding frenzy ... briefly sidelined by the internet .... climate change hysteria has breathed new life into them ... they're going gangbusters with this ... forget science , facts , or rational thinking ...

Which media..Rupurts? forget science , facts , or rational thinking ...

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