Here's our summary of key economic events overnight that affect New Zealand with news the world wide surge in producer prices shows no sign of topping out.
But first in the US, initial jobless claims came in lower than expected for last week at +278,000 and that leaves 2.25 mln people on these benefits, also a sharp drop. This is the lowest since the start of the pandemic. The fall in California was notable. At this rate of fall, they could be under 2 mln by the end of the month, which would take it back to pre-pandemic levels.
US producer prices rose +8.6% in the year to September. It is probably little comfort that was lower than the expected +8.7% but it pushed higher than the +8.3% in August. (The month-on-month change is actually a nine month low.) A feature is the success that manufacturers have being able to pass these cost rises on to customers.
The US Budget Statement for September was due before we released this story, but it seems to have been delayed. We will update this item when it is released.
Consumer price inflation might be racing higher in many western countries, in response to rising demand and high commodity prices. But they certainly are not seeing that in China where the month inflation was zero in September and the annual change just +0.7%. The story is sharply different on the factory floor however. Chinese PPI rose +10.7% from a year ago, the highest jump since 1995. Month-on-month they rose +1.2% and that indicates the recent changes are running even faster.
More is coming. China’s authorities have decided to allow electricity prices to rise by as much as +20% compared with the current +10% cap, but rates for residential users will be kept unchanged. This will boost headline PPI by 2ppt in the near term and by the end of the year could reach +12% by some estimates. The effect on consumer prices will be much more modest, although they may reach +2% by the time this cost-cycle is done.
Inside China and little-reported there is a sinking housing market that now impacts tier 1 cities like Beijing and Shanghai. Prices are falling fast. Unsold units in their vastly overbuilt residential property sector are staggering, undermining the value of occupied units. Household wealth is about to be hit quite hard in China from this effect alone.
Of more immediate effect for consumers worldwide is that typhoon. It is notable that this wild weather is just adding to the supply chain problems that importers are suffering getting goods out of China.
Still, for the week prior, the cost of container freight out of China is still trending lower. The immediate problem is not the cost, it is the availability.
The Baltic Dry Index is also trending modestly lower now even if it remains still historically high.
And the cost of key minerals like copper , tin, lithium and zinc are showing no signs of reversing lower.
In Australia, consumer inflation expectations have slipped from a high +4.4% in September to +3.6% in October, according the Melbourne Institute survey.
Jobs and the participation rates both fell in Australia in September. But that was mainly because of a large drop in part-time employment. Full time jobs inched up.
And staying in Australia Delta cases in Victoria have risen to 2292 cases reported there yesterday, and that was far more than expected. Deaths were 11 yesterday. There are now 20,505 active cases in the state. In NSW there were another 406 new community cases reported yesterday with another 285 not assigned to known clusters. They now have 5,587 active locally acquired cases which is lower, but they had 6 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 58 new cases. Overall in Australia, more than 64% of eligible Aussies are fully vaccinated, plus 19% have now had one shot so far.
The UST 10yr yield opens today down another -3 bps at just under 1.52%. The US 2-10 rate curve is flatter at +116 bps. Their 1-5 curve is flatter too at +96 bps, while their 3m-10 year curve is flatter at +151 bps. The Australian Govt ten year benchmark rate is down -3 bps at 1.61%. The China Govt ten year bond is unchanged however at 2.98%. But the New Zealand Govt ten year is only -1 bps lower at 2.13%.
In equity trading, the S&P500 is up a strong +1.6% in afternoon trade in their Thursday session. Strong earnings reports are behind today's jump. Overnight European markets were all up by +1.4% except London which lagged with only a +0.9% rise. Yesterday, Tokyo ended with a +1.5% gain, Hong Kong was closed again, this time for a public holiday. Shanghai treaded water, down -0.1%. The ASX200 ended yesterday up +0.5% reversing the prior day's fall, and the NZX50 rose +0.2% again.
The price of gold has moved up another +US$3 to US$1797/oz.
And oil prices are 50 USc higher at just on US$80.50/bbl in the US although that is in the middle of quite volatile trading in between, while the international Brent price is now at US$83.50/bbl.
The Kiwi dollar opens today nearly +¾c firmer at just under 70.3 USc. Against the Australian dollar we are firmer too at 94.8 AUc. Against the euro we up +½c at 60.6 euro cents. That means our TWI-5 starts today at just on 73.9, and suddenly back near the top of the 72-74 range of the past eleven months.
The bitcoin price has risen +0.5% today from this time yesterday to be now at US$57,257. Volatility over the past 24 hours has been modest at just over +/-1.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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76 Comments
...there is a sinking housing market that now impacts tier 1 cities like Beijing and Shanghai. Prices are falling fast. Unsold units in their vastly overbuilt residential property sector are staggering, undermining the value of occupied units. Household wealth is about to be hit quite hard in China from this effect alone.
They should open China up to immigration, worked for New Zealand to preserve the froth.
Edit to add: In some cities local authorities ban real-estate companies from selling at under a set nominal rate, to prevent off-loading, so this has the potential to accelerate very rapidly as housing markets effectively lock up and drag real-estate companies into insolvency.
Australian miners will be happy:
- Copper up, largest of several mines at Olympic Dam, SA.
- Tin up, Renison Bell in Tassie the biggest underground Sn operation in the world.
- Zinc up, Mount Ida QLD the largest of several
- Lithium up, Greenbushes and Ravensthorpe in WA supplying close to half world demand.
- Not to forget Fe, price embiggenating by the week.
- Or U, essential for France, Finland and other enlightened EU countries.
All essential for our Bright Lectric Future.
Oh, late edit, I forgot the 'umble C. Both China and Oz have well over half their electrons moved by burning the stuff.
donny11 - all things are interconnected.
This is exactly what happened in the run up to 2008 - massive rises in scrap/resource prices (remember the piles of scrap as everyone cleared out their cellars and the stuff under the trees?
There is no 'safe protection where we are going - but a lot of folk will choose to do no homework, stay blind, and blame the likes of Governments. Nobody is 'to blame' here; the system is the problem.
Chairman Xi has reacted with glee : 'cos they've got iron ore , chromium , lithium and copper .... bauxite , zinc , rare earths & sulfur .... mercury , uranium , gold and lead ...
.... and , the Americans scarpered .... tails between their star spangled legs .... ha ha haaaaaa !
For those that do not know, China has a significant amount of the worlds rare earth minerals sitting right under their feet without even needing to leave home. This couple with their influence around the world you can see the new wars could be a battle for these rather than the old battle for oil that is running out anyway.
EVs are a miners godsend - unless you are a Congo kid..
https://www.nhm.ac.uk/press-office/press-releases/leading-scientists-se…
Yeah.
Professor Adrian Boyce, Professor of Applied Geology at The Scottish Universities Environmental Research Centre
Paul Lusty, Team Leader for Ore Deposits and Commodities at British Geological Survey
Dr Bramley Murton, Associate Head of Marine Geosciences at the National Oceanography Centre
Dr Jonathan Naden, Science Coordination Team Lead of NERC SoS MinErals Programme, British Geological Society
Professor Stephen Roberts, Professor of Geology, School of Ocean and Earth Science, University of Southampton
Associate Professor Dan Smith, Applied and Environmental Geology, University of Leicester
Professor Frances Wall, Professor of Applied Mineralogy at Camborne School of Mines, University of Exeter
Too expensive - therein lies the rub. 'If batteries are to be made without cobalt, researchers will face an unintended consequence. The metal is the main factor that makes recycling batteries economical, because other materials, especially lithium, are currently cheaper to mine than to recycle.'
.. perhaps , we owe the Covid-19 border breakers a big vote of thanks ... somehow , Delta is running rampant , as it always was going to , eventually ... rendering the governments " elimination " strategy useless .... and any % jabbed figures of no consequence ....
Bloomfield said that just 4 % of known Covid-19 cases are double jabbed folks .... therein lies the truth , C19 is a virus of the unvaccinated ...
.... thankyou Mongrel Mob prostitutes for spreading the virus as fast as you took Hipkins advice and spread the legs .... the country will open for business because of your grand gesture : giving this government the middle finger...
The "Vaccine" if you want to call it that because its not technically only helps in the short term
Highly Vaccinated Israel Is Seeing A Dramatic Surge In New Cases : Goats and Soda : NPR
Try others, Singapore, Gibraltar and many other Highly Vaccinated countries.
Don't lose your natural immunity getting too many jabs
Not so fast regarding Israel
At least 12 days after the booster dose, the rate of confirmed infection was lower in the booster group than in the nonbooster group by a factor of 11.3 (95% confidence interval [CI], 10.4 to 12.3); the rate of severe illness was lower by a factor of 19.5 (95% CI, 12.9 to 29.5). “
Gibraltar is not even a country and their impressive vaccination rate of 119% does not mean that all are vaccinated - their denominator is residents but their numerator is all people including temporary workers and visitors (who greatly outnumber the 33,000 residents)
You know the process, setting up a field hospital will require first getting a working group to look into the idea setting up a field hospital. If approved You will also have consenting issues. I am sure Auckland council won't like a structure being erecting without 12 months & 30 different departments having some sort of pointless input. Easier just to throw up a tent.
Yes there is a requirement to triage all patients and determine if they will go through the COVID positive pathway or non-COVID pathway. This allows the hospitals to reduce cross-contamination of patients and staff. People with COVID may need to be in hospital for reasons other than COVID symptoms, like surgery or cardiac care.
There will be a plan to switch one of the main hospitals to a COVID hospital in Auckland once it gets more endemic. you will get tested at the door and if you are covid positive you will be transferred to the COVID hospital.
Symptomatic COVID patients are only in hospital if they need to be, i.e. other issues or if they need oxygen support. Anyone else that is symptomatic is being managed at places like Jet Park. This will change in the next couple of weeks once it gets further out of hand and then it is all on...
middlemore has made mistake after mistake, you would hope they learn from them BUT do they, how many times has a case been discovered there after the second visit or third visit even though they now have anitgen tests ( they are not using them at the door to ED)
i am looking forward to see how the 25 private companies handle testing employees and processes they put in place, these guys will do what it takes to keep running the business and can not afford to stand down 30 people every time they make a mistake
Covid-19: Rapid antigen testing green-lit for some core businesses | Stuff.co.nz
Its everywhere. Meanwhile every contractor that works on a school now has to be both double vaxed produce a negitive test prior to commencing works. Both the guys in my company who do our school work are refusing the test as if they are positive both them and there families will be hauled off to MIQ prison. They are both double vaxed though. I don't blame them TBH. Anyway we are busy so I'll just dump the client. Expect our schools and presumably hospitals to develop some maintenance issues!
This idea of sending people to coronavirus jail anytime there is a remote contact cannot continue it's ridiculous. The same goes for widespread community testing, in fact there is very little reason to test at all anymore.
Now the government have effectively given up on elimination, it is now the job of medical people, and what is of interest now is hospitalisation numbers, case numbers are immaterial we can now simply assume everybody is a possible contact, we can now assume that everybody is infectious.
We can also get rid of miq it does not make any sense trying to stop infected people coming into an infected country with an infected population.
Now we must shift to a public health campaign we now should be promoting public hygiene, vaccination, and that it!
All the other measures, testing, isolation, and quarantine are now obsolete and must be removed to prevent them becoming a stablished as losses of freedom!
Agreed. I mean once the "elimination strategy" is officially dropped, there is no reasonable justification for a hard closed border, MIQ or even widespread testing of the healthy, vaccinated members of society. It is all about the healthcare system being able to manage the outbreak and any restrictions should serve the purpose of specifically preventing this healthcare system from being overwhelmed.
It's stopped already. A friend of the missus has it along with about 10 members of her family. Son is a gang member who visited his mother, sister, brother, their spouses and now we have a cluster of at least 17 including the ECE teacher. These clowns were ignoring Level 4 and 3 restrictions having family gatherings. Now all isolating (yeah right) at home as no MIQ spots. Also don't need to go into MIQ if (1) you have a pet no one can feed remotely (2) Your doctor says you have mental health issues. The son with the mental health problems has 24 hour security guard posted and a portaloo dropped off in the front yard.
Idiots at the helm e.g. name the hookers in Blenheim who tested negative but name suppression for the wandering Northland hookers who tested positive. Where's the logic in that?
Exactly. One rule for gang associates. Another for immigrants. Quick to publish/broadcast faces and full names of the ladies of Asian appearance. Why not publish the faces of the gang associates so that Northlanders could possibly identify their movements on their working holiday?
It would appear the message is being spread:
https://www.newsroom.co.nz/the-energy-dilemma-of-eating?
Compare that to the wittering blame-pointing upthread.
If we consider the EROI of our broader food production systems, accounting for everything associated with getting food from seed to plate, the net energy deficit gets worse. Currently the EROI for the entire US food production system is a measly 0.12 and if we account for food waste (approximately 40 percent) it drops to about 0.08.
That is, for every calorie eaten a whopping 14 calories of fossil fuel energy was used. The overall EROI for the New Zealand food production system is unknown, but our food waste is on the order of 25 to 30 percent representing a massive loss of resources and energy.
I'm surprising to see MSM actually publishing stuff like this.
BlackRock’s revenues hit record high but assets stall shy of $10tn
Chief executive says assets under management held back by strong dollar
A status-quo-demanding society will vote for a status-quo government. MMP is even more representative of society, than FPP was - so of couse it better reflects what society thinks.
Which reflects what it is told.
Which is why I chose to hassle the MSM about what it peddles/regurgitates. Newsroom seem to be the thin end of allowing the narrative to include the bigger forward issues, and to be fair Interest.co.nz have allowed the discussion to evolve too.
For instance MBIE have been challenged re their energy accounting - but chose to stonewall (I call it 'chose to cling to a falsehood'). Reportage of that, thus far? Nil. The same effect from the MSM, reader/listener-wise, as proactively bulls------g. Read that link I put up upthread - Hooten's wee diatribe is orders of magnitude less important.
Steve St. Angelo: The World is Heading for an Energy Cliff - YouTube
Warning: Listening to this is not good for the health. I did not realise the time frame was so short.
Yeah, thanks a lot, buddy, for posting that on a Friday. I'm sitting here now at the bottom of my own energy cliff.
I like how he articulates the potential solution (from 44:09) of managed de-growth (after a period of everybody panicking), and that of course this is not going to happen before we go off the cliff.
As I watched I kept thinking the only solution is a 90% population drop and medieval villages for the survivors.
I'm not convinced he establishes causality. He spends most of it on the details of the implementation rather than the actual voting system its self. It's the implementation that favours the main parties converging on the centre. Hypothetically imagine if the 5% threshold was removed and National found its self up competing with one of these conservative parties that have failed to reach it (yes they have some low quality candidates but so have national) you could take another few percent off their polling.
Look overseas and you will find a similar decay in leadership and ideas without MMP.
Sigh - can we raise the level of conversation please?
Humanity is facing a near-term issue; carry on and collapse, carry on and fry, or back off to some level genuinely describable as 'sustainable'.
All else being unsustainable, by default definition.
Socialism wasn't the biggest problem on the Titanic, either. Although I'll bet there were folk making insinuations that the collision was their fault.....
The reality is there is only one "Final Solution". We must reduce the amount of humans.
Something the entire Green movement (including yourself) skirt around, or mention only in passing. I am yet to see anyone come with a plausible plan other than "Ban carbon emmissions" which has to be the most pointless statement ever.
Most of the so called Elite Greens (and I include the noisiest and least useful G Thunberg in this), are flying more and using more carbon than most average people. If they were all actually concerned they should just stop breeding.
Shaw can't appear to use Zoom, so will fly with an entourage to meet with all the other global elite at a conference, where they will prattle on about carbon, some will even pay Air NZ an extra dollar or two to ensure a destructive weed is planted in NZ. They will then come back, and continue their energy hungry ways. All the while spouting off about how everyone else needs to do more.
Time for the entire green movement to put up or shut up.
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