Here's our summary of key economic events overnight that affect New Zealand with news of underwhelming data in the top two global economies.
First, US industrial production fell in September from August in a retreat the market didn't see coming. But two events crimped the result; Hurricane Ida had an outsized impact, and the chip shortage curbed car making severely. As a result, American industrial production fell -1.3% when a +0.2% gain was expected. It is a miss markets have noticed but are largely ignoring. It is still ahead +4.6% year-on-year, which is strong for them.
In China, more evidence of a sharper slowdown than expected. The Chinese economy expanded at a +4.9% year-on-year pace in Q3 of 2021, and well below the +7.9% growth in Q2. It was also below market estimates of +5.2%. It was the slowest pace of expansion since Q3 2020, and is due to their electricity problems, widespread supply chain bottlenecks, a faltering property sector, and persistent Delta outbreaks.
And it seems likely that this is not yet at its lowest point.
But there were also improving signs in yesterday's data. Retail sales rose +4.4% in September from a year ago, better than the weak +2.5% gain in August. But they are still miles lower than the +8% expansion they had been regular pre-pandemic. Yes, they are recovering, but still quite crimped.
Electricity production fell in September from August, but it was +4.9% higher than a year ago and almost +11% more than in September 2019. Power woes may be getting the blame for China's slowdown but their problems run far deeper than this.
China's industrial production was another disappointment, continuing a slow but relentless atrophy since March with only a +3.1% year-on-year expansion and not enough to drive their economy or employment. Apart from the start of the pandemic, this is actually the smallest expansion in Chinese industrial production in almost 20 years.
We all know about China's problems with its property development sector, and the overhang of unsold housing units and ghost cities. Now these impacts are really biting with reports of steep -30% and -40% haircuts for homeowners and investors who need to sell existing properties. This comes at a time when Beijing is also pushing through steep property tax increases in the name of 'reform'.
All this is now in sharp contrast with the Indian economy that is back expanding sharply, now larger than pre-pandemic levels. RBI's Economic Activity Index indicates that real GDP grew by almost +10% in Q3 from a year ago (p144).
In Australia, Delta cases in Victoria have risen to 1903 cases reported there today, and more than expected. There are now 23,376 active cases in the state and there were six deaths yesterday. In NSW there were another 266 new community cases reported today with 4,490 active locally acquired cases which is lower, but they had another 5 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 17 new cases. Overall in Australia, more than 68% of eligible Aussies are fully vaccinated, plus 17% have now had one shot so far.
The UST 10yr yield opens today up +1 bp to be now at 1.58%. The US 2-10 rate curve is unchanged at +118 bps. Their 1-5 curve is steeper at +107 bps, while their 3m-10 year curve is steeper at +156 bps. The Australian Govt ten year benchmark rate is up an unusual +10 bps at 1.76%. The China Govt ten year bond is up an even more unusual +6 bps to 3.06% and its highest in 100 days. The New Zealand Govt ten year leaped by a spectacular +17 bps on the CPI results and is now at 2.35%.
These sharp rises probably mean both the NZD and the AUD are now somewhat undervalued.
Wall Street has opened its week with the S&P500 up a minor +0.2%. Overnight, European markets were all down by about -0.7%. Yesterday the very large Tokyo market well -0.2%. Hong Kong ended with a +0.3% gain, while Shanghai closed with a minor -0.1% retreat. The ASX200 ended its session with +0.3% gain. The NZX50 slipped -0.1%.
The price of gold has slipped by another -US$1 to US$1766/oz.
And oil prices are -50 USc softer at just on US$81.50/bbl in the US, while the international Brent price is now just under US$84/bbl.
The Kiwi dollar opens today at just on 70.8 USc and up marginally since this time yesterday. Against the Australian dollar we are now at 95.5 AUc. Against the euro we are still at 61 euro cents. That means our TWI-5 starts today at just on 74.5, and now well over the top of the 72-74 range of the past eleven months.
The bitcoin price has changed very little this time yesterday, still at US$61,752. Volatility over the past 24 hours has been high however at just over +/-3.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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51 Comments
I just want one question to be put to the Finance Minister, which is:
"Given the failure of the RBNZ in restraining house prices and now missing the PTA targets by an order of magnitude, at what point is RBNZ failing to meet its statutory obligations around financial stability and is it time for people to start falling on their swords?"
Are they still even thinking of house price rise as for Jacinda Arden like John Key - housing crisis is a Good crisis. Though bout are of the same opinion and said but Jacinda lied to get votes and power unlike John Key who always maintained that housing crisis is a Good crisis to have or was it Bill English.
RBNZ has allowed ( may be willingly) to be put in a situation where market will always dictate them ( blackmail) to continue with money printing and they will willingly oblige as have reached a point where has no choice but to support the ponzi.
Looks like the school year is toast in Auckland. If the kids go back it won't be until week 4 of term 4 now. You never get anything done in the last 2 weeks as school's tend to go into X-mas mode. Term 4 is 9 weeks so assuming they do go back kids will only get about 4 weeks of proper schooling. Assuming they go back that is.
In effect kids in Auckland Schools will go without education from August 2021 through to February 2022.
What is the science with this sort of gap in schooling? Will this cause irrepairable damage to the education of these children? Why are these questions not being addressed by the government? Where are all the experts on this issue? Why isn't the media getting opinions from these experts?
What a shambles this current government is.
I'm hoping this will finally get NZ universities off the "we only teach undergraduate classes in person, and during business hours, and you must come into the city centre to do it" mentality. Other countries offer online/night classes at an undergraduate level, that's not something we've ever really gotten our heads around. Yes, for post-grad or MBA study, but for proper meaty degrees, the in-person learning experience is still the default way of doing things.
agreed but not usually for under 16 year olds...a home environment is not a teaching environment, some home environments are overcrowded, damp and not pleasant at all. Not everyone has a 4 bed, office, 2 bathroom house. i really feel for those kids and parents trying to teach at home, the government has not recognized this at all. (their heads are in the sand)
Children under 12 can't be taught online they lack the concentration level's. Further a lot of households don't even have the devices to learn on or the space in there house at which to learn. If you are one of 4 kids in a 80sqm home in south auckland you don't stand a chance.
If you think the average Auckland kid is getting a good education at the moment you clearly drank the cool aid.
Children under 12 can't be taught online they lack the concentration level's.??? Can you back that up donny boy? I suspect its your age showing.
While young people are "undoubtedly capable of long periods of concentration", those who spend a lot of time alone using technology "tend to have less in the way of communication skills, self-awareness and emotional intelligence." She adds: "That's not because they don't have the capabilities. But because they are spending so much time communicating remotely with people rather than face-to-face, when they come into situations where they have to work with others, they appear not to concentrate on people."
More research is needed on the links between technology and learning. Ultimately, says José Picardo, head of modern foreign languages at Nottingham High School and an adviser on using emerging technologies in the classroom, the way children consume information has changed and teaching needs to catch up much more quickly. "There are a lot more input sources for children. They can get their information from a variety of places these days, and then we expect them to come to school and enter an alternative reality in which none of things they're accustomed to using actually exist. There is a disconnect between their expectations and what they actually get. And then we blame them for not being engaged."
I stand by my point the quality of online learning in schools in "poorer areas" is abysmal. We are failing these young kiwi's by assuming that the online alternative is adequate when it isn't. That study above assumes that a young person will have the means of communication & the space in which to undertake online learning. This isn't the case with kids from poorer neighbourhoods.
Those who are interested.......and
have access to the technology,
have a quiet space at home where they can engage
have the aptitude to engage in their learning in an online world and don't need hands on, more support
etc
etc
I'm sure there's a plan for closing this part of the inequity gap down the line
Probably a good University I think?
Browse the latest free online courses from Harvard University, including "CS50's Introduction to Game Development" and "CS50's Web Programming with Python .
The media aren't asking the hard questions, and the media were educated pre-Covid.
So I wouldn't worry. Our societal narrative was already based on a falsehood; the young of today are going to inherit a very different world. Economics knowledge will be irrelevant; the ability to swing a hammer or wield a hand-held shovel, will be in demand. As will leadership qualities, because life will be incredibly local.
Churning out bricks in the wall was only valid while there was still a wall.....
"As will leadership qualities" Therein lies the problem PDK and is easily seen today. So many managers couldn't lead their way out of a paper bag with the end open. they'd just try to whip their people into compliance. They cannot build consensus, or cohesive teams. Especially prevalent in Government Departments where politics dominate, but a lot of commercial companies have the problem too. True leadership is quite rare. Some provide glimpses of it but struggle to maintain it, others walk it easily, most just have no idea at all. My observations suggests that leadership ability is inversely proportional to ego.
A recent observation of an unfolding event suggests that managers who lack leadership ability, but who have a subordinate with significant ability, see that subordinate as a threat and the work to undermine them to the point where they can be got rid of. Seen it before, seeing it again. Sad really.
:), :0,:) All of them really. JA looked really good in the beginning but is looking very tattered now. Collins (I refuse to use JC, lest someone gets confused) never had it. Politicians in general. It is an interesting aspect though as most use weight of personality, and politics to get ahead rather than weight of argument and rationale. Winnie used weight of argument and rationale more than most but even he looked a little grasping at times. Despite that i hope he come back, our political scene needs people like him. What would be worrying is who would ride his coat tails?
Weight of personality & argument. Yes we are lacking that in parliamentary opposition markedly. Undoubtedly a Muldoon or Lange would have shredded this government by now, perhaps Holyoake & Kirk too. Nothing much like that since though, although in a more modern sense Key had his moments. The first PM I met was as a youth when Sydney Holland called at home to talk to my father about enlisting ex WW2 officers to supplement the troops against the wharfie strike etc. What I remember about him most, was that he forgot to take off his hat, and my father was too polite to suggest he should do so. Different times indeed.
Not ideal times for thousands of Auckland households. Locked in your house, ability to earn income either reduced or curtailed and inflation at the door like a wolf on the fold. So much for the fuzzy, kind, huggy empathetic government that beamed itself in 2017 and on.
The South Island has been Covid-19 free for 350 days ... last case , November 3 2020 ...
... and yet , we're stuck on Level 2 point something .... masks .... QR check ins ... A&P Show cancelled again ....
I'd rather have " Covid by Christmas " if it meant getting our lives back on track , and if it stopped the infernal 1 pm sermons from a giggly gushing Jacinda ...
dont worry you will get your wish granted , covid will come to the south island the auckland border is still get aroundable, there are a couple of back roads that are only driven up and down a couple of times by police, and i agree the south island should be in a level 1.5 no reason at this stage for them to be in level 2
Looks like Aucklanders are going to need two jabs, a vaccine passport, a negative test, a signed note from their mums, four calling birds, three french hens, two turtle doves and a partridge in pear tree (Aha!) if they want to go out of Auckland over Xmas/NYE.
The sundries are easily acquired, but getting a negative test in the lead up to New Years means a negative test between Xmas and New Years, when many health clinics run skeleton staff (and bloody well deserve some time off after this year) and when every man and his dog is likely trying to get one.
If this is the best we can hope for, and even this is still just a possibility, not confirmed, then it's starting to sound a lot like we will have Covid for Christmas. Now where have I heard that before?
Here's a question for the Aucklanders who monitor this site; with COVID rampant in the community there, if you see someone breaching the rule (level 3 or Level 4) do you either have a word to them or call the Police or both?
There are a lot of complaints about being over the lockdowns, and while I get it, I'm less convinced people are prepared to dob those in who they see breaking the rules. time to own the problem?
police are not doing jack, they won't name the Northland Thelma and Louise hookers let alone charge them.
Labour needs to own the problem it caused by making NZs biggest city the MIQ capital. How stupid was that? MIQ should've been in Invercargill or great barrier (escape from New York anyone).
Aucklanders have had enough. There has been plenty of time for NZers to vaccinate. Too bad for those that have not. Time to open up now.
Hey guys I whipped up a spread sheet to see what the best deal is depending on what you think the interest rates will be for the next 3 years. Makes some basic assumptions like paying the same amount of principle each year. But its quite interesting to see what the 1 year rates have to be for the 2 year term or a three year term to be the best option.
https://docs.google.com/spreadsheets/d/1xyN8stTcpPxEVEaXHKggCbC9onXw2bl…
Comments welcome, I was rather sleep deprived haha
You can use the PMT formulas to work out the repayments for a loan given term, principal and interest rate. Adjust term and interest rate as required for payment frequency. There are also the IPMT and PPMT formulas for calculating the interest and principal portions of the repayment, same arguments as the PMT formula but also require period of the repayment (principal repayments increase over time).
We all know about China's problems with its property development sector, and the overhang of unsold housing units and ghost cities. Now these impacts are really biting with reports of steep -30% and -40% haircuts for homeowners and investors who need to sell existing properties. This comes at a time when Beijing is also pushing through steep property tax increases in the name of 'reform'.
From Michael Hudson :
I and others have urged a policy of land taxation in order to collect the land’s rising site value, so that it will not be pledged to banks for mortgage credit to further inflate china’s housing price
First, US industrial production fell September from August in a retreat the market didn't see coming. But two events crimped the result; Hurricane Ida had an outsized impact, and the chip shortage curbed car making severely. As a result, American industrial production fell -1.3% when a +0.2% gain was expected.
The economic situation in 2021 is exceptional, however, since unprecedented direct government intervention in the labor market through furlough-type arrangements has enabled employment rates to recover quickly from the huge downturn in 2020. However, downward movements in consumer expectations in the last six months suggest the economy in the United States is entering recession now. - Link
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