Here's my summary of the key events overnight that affect New Zealand, with news China is rolling out some serious stimulus.
But first, dairy prices rose for the fifth time in the past seven bi-weekly auctions. They were up +3.4% this morning led by butter, cheese and skim-milk powder. WMP was the laggard. This latest rise was somewhat unexpected mainly because the signals are usually only about wholemilk powders. Although they will be welcome, they only take prices back to where they were in January and are still a long way from pulling the industry out of its funk.
Around the world, factory data indicated a steady state with manufacturing neither growing or contracting. In the US their latest factory data came in much better than expected in May. And this is despite surprisingly low car sales in the month although some of this was due to production delays.
There was confirmation of the better factory data from the US Federal Reserve this morning. They see tight labour markets and wages rising across the whole economy as a consequence.
Official factory data out in China was not very encouraging however although it was 'positive' for the third straight month after a long set of declines. Unofficial data for the same sector was negative. Meanwhile their service sector is still expanding at a respectable pace, despite signs of a slowdown.
China is rolling out some major stimulus to counter this slowing growth. It said it will 'invest' just over NZ$1 tln in transport infrastructure projects over the next three years. The plan includes 303 projects covering railways, highways, waterways, airports and urban rail transit. 131 projects are in 2016, 92 projects in 2017 and 80 projects in 2018.
Brazil is in tough times, unfortunate ahead of their showpiece Olympic Games. Their economy shrank by -4.7% in the first quarter of 2016 compared with the same period a year ago and that is now the fifth consecutive quarter of shrinkage. They are in a long recession. Brazil is the world's 9th largest economy.
In contrast, Australia's economy grew at a better-than-expected +3.1% year-on-year in the first quarter of 2016, boosted by exports and a rise in household spending. Australia is the world's 19th largest economy.
In New York the benchmark UST 10yr yield is basically unchanged at 1.84%.
The oil price is also basically unchanged today, although with a hint of upside, with both the US benchmark and the Brent benchmark now just under US$50/barrel.
The gold price is lower today, now at US$1,210/oz.
And finally, the NZ dollar will start today higher at 68.1 US¢, at 94 AU¢, and at 61 euro cents. The TWI-5 index is now at 72.2. Yesterday's good terms of trade data and a halo effect from the good Aussie GDP data are behind the rise. This mornings better-than-expected dairy auction hasn't hurt either.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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29 Comments
In the US their latest factory data came in much better than expected in May. And this is despite surprisingly low car sales in the month although some of this was due to production delays.
You might wish to focus elsewhere when leading the flock over the cliff.
Markit US Manufacturing PMI:
May data pointed to another loss of momentum across the U.S. manufacturing sector. New business growth eased to its weakest so far in 2016, which contributed to a decline in production volumes for the first time in over six-and-a-half years. Survey respondents noted that subdued client demand and heightened economic uncertainty had resulted in challenging trading conditions. Read more
I rate both the Fed's Beige Book surveys, and the ISM surveys as much better than Markit. Markit's US sample is much much smaller than the other two. Markit is useful in other markets, mainly because it has global reach. The comparatives on this basis can be interesting. But in the US I have my doubts about it. Besides in the US there are many surveys. Most give similar results. Markit often is the outlier.
Also, quoting uber-bear sites as evidence lacks realism. That's just bias-reinforcement.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.5 percent on June 1, down from 2.9 percent on May 31. After this morning's construction spending release from the U.S. Census Bureau and this morning's Manufacturing ISM Report On Business from the Institute for Supply Management, the forecast for real residential investment growth decreased from 7.9 percent to 4.2 percent, the forecast for real nonresidential structures investment growth decreased from -2.8 percent to -6.5 percent, and the forecast for real government spending growth decreased from 1.2 percent to 0.4 percent. Read more
The monthly, quarterly, and annual figures for various economic statistics are exactly that - statistics. They are almost all measurements not of actual changes in the economy but rather stochastically estimated variations around a benchmark. Those benchmarks are compiled from larger, higher population surveys than the individual "high frequency" data, with the Economic Census being the benchmark of benchmarks, so to speak.
With economic accounts reporting only variation, that leaves open any number of ways in which error might be introduced, as well as a great deal of time during which those errors might propagate. The last Economic Census was taken in 2012, but its results didn't start to find their way into the benchmark data flow until the middle of 2014 and really throughout 2015. Unlike prior editions, the 2012 update is proving to be absolutely stunning. Read More and more
That's a final warning Stephen, D Chaston will decide when Markit data can be used ,and from which country , although he is happy to use it within the very same post. In future quote the Markit data from an uber bull site only, regardless that the data will remain the same, if taken from a uber bear site. In my humble opinion the fed beige book is a little stale by the time it gets released .
June is shaping up to be an interesting time to live in. What with the Federal Reserve planning another interest rate hike, despite the uncertain effect this might have on the extra $100+ trillion debt the world has created in the last 16 years. Plus we have the RBNZ looking at another cut and the glorious spectacle of the Brexit vote. Not to mention the sudden horror that is spreading across Europe that the Brits might actually locate their lost cajones and realise the issue is sovereignty not economics. It seems Donald Tusk has broken ranks and finally admitted that LoopyEuroland's problems are largely of their own making. Tsk, tsk, naughty Donald.
http://www.telegraph.co.uk/business/2016/05/31/tusk-blames-utopian-eu-e…
http://arpinvestments.profundcom.net/dms/download/6591648927728_The_Abs…
What with the Federal Reserve planning another interest rate hike, despite the uncertain effect this might have on the extra $100+ trillion debt the world has created in the last 16 years.
An imposing US Treasury spread segment of that quoted debt expansion is certain that future economic growth is not a certainty. Read more
Economics for Hydrogen fuelled electric vehicles are getting more interesting and remains the only truly green solution. Toyota are spending billions on it being the future.
http://www.forbes.com/sites/lauriewinkless/2016/06/01/are-hydrogen-fuel…
The mainstream media is full of narratives founded on delusions, misinformation and disinformation because most journalist and most readers are scientifically illiterate. .
There will NEVER be a hydrogen economy because it takes more energy to make hydrogen than is released when it is utilised, and there are no sources of hydrogen (well not on Earth); all hydrogen ever used since hydrogen was discovered has been made via chemically inefficient processes..
The other major 'problems' with hydrogen are that, being by far the tiniest molecule, hydrogen cannot be liquefied at feasible temperatures and escapes past valves faster than any other substance. Also because if its low energy density, it cannot be efficiently transported..
Remember George Bush asserting in 2003 that the hydrogen economy would be up and running 'soon': yet another lie, like the lies about Iraq, the ies about the US economy and the lies about the environment.
'To liquefy it, it must be refrigerated down to a temperature of 20 K (20 degrees above absolute zero, or -253 degrees Celsius). At these temperatures, the fundamental laws of thermodynamics make refrigerators extremely inefficient. As a result, about 40 percent of the energy in the hydrogen must be spent to liquefy it. This reduces the actual net energy content of our product fuel to 792 kilocalories. In addition, because it is a cryogenic liquid, still more energy could be expected to be lost as the hydrogen boils away during transport and storage.
As an alternative, one could use high pressure pumps to compress the hydrogen as gas instead of liquefying it for transport. This would only require wasting about 20 percent of the energy in the hydrogen. The problem is that safety-approved, steel compressed-gas tanks capable of storing hydrogen at 5,000 psi weigh approximately 65 times as much as the hydrogen they can contain. So to transport 200 kilograms of compressed hydrogen, roughly equal in energy content to just 200 gallons of gasoline, would require a truck capable of hauling a 13-ton load.'
http://www.thenewatlantis.com/publications/the-hydrogen-hoax
None of the above will prevent 'snouts from feeding from the hydrogen trough', of course.
Meanwhile, in the fossil-fuel-dependent real world every significant factor gets worse by the day or is made worse by industrious indusrial humans:
http://www.theguardian.com/environment/2016/jun/01/alaska-wildfires-cli…
No wonder atmospheric CO2 is at a record high concentration and rising at an increasing rate. Next year the predicament will be a lot worse. And hydrogen cars wont fix it. In fact hydrogen cars will make it worse faster.
In Germany they use the surplus wind energy to produce hydrogen which is then stored in the utility gas network and then used in periods of peak demand. Hydrogen grid balancing is a neat solution to energy which would otherwise be lost. Obviously this is only required when the solar and wind generation gets to a certain percentage of total energy generation. This is typically around 25%. It's quite a big issue in Germany, Denmark and the UK.
Generating hydrogen by electrolysis requires rectification of AC to DC, with the inevitable energy loss, plus the energy loss inherent in electrolysis....arguably around 5% total; the conversion of the chemical energy in the hydrogen to electricity is about 80% efficient , which is not particularly bad compared the efficiency of power stations, electricity grids and cars etc.
However, making hydrogen and storing it at low pressure as a form of national 'battery' is a far cry from running cars on hydrogen.
For what it's worth, Germany, supposedly the most advance nation in the field, is managing to generate about 1/8th its energy requirements via ' renewables'
https://en.wikipedia.org/wiki/Renewable_energy_in_Germany
.
with most of its energy being derived from coal, imported [Russian] gas and imported oil.
Germany will struggle to significantly increase the 'renewable' proportion before the global financial system and the global environment collapse.
America's continued 'poking of the Russian bear' will bring it all down very quickly, of course.
I've gotten tired of hydrogen propaganda. I'm happy to see the responses are based on the reality of chemistry. Hydrogen is a terrible energy storage medium for cars, it just takes up too much space for the energy you get.
If only there was more science and engineering with respect to being green.
That's the whole problem isn't it. If the $1.5 trilllion climate change change gravy train was spent on science and engineering rather than mothballed Oz desal plants, off shore wind farms and their back up capacity etc. etc. then the world would be far better off. Sanitation, education and vaccination resources diverted from lifti g people out if misery to trying to "change" a climate that changes naturally anyway. Paris promises equate to 0.17 degree reduction by 2100. What a sad joke.
The time for a change in direction was in the 1950s to 1970s, when all the significant factors had been clearly identified and it was abundantly clear what kind of predicament humanity would find itself in if fossil fuel consumption was allowed to continue.
Bankers would allow no interference with their 'infinite growth on a finite planet' Ponzi schemes and promoted phony economic theories based on 'no limits'. Hence the shocking mess we are in now.
'Paris promises equate to 0.17 degree reduction by 2100. What a sad joke.'
Paris promises equate to a 3oC to 8oC increase in average global temperature by 2050. What a sick joke.
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1970's those were the days... population bombs, the UK gone by 2000, acid rain, desertification, global cooling, oil running out. Great time to be a doomster.
3-8 degrees by 2050. Dream on. Satellite observations since 1978 are only running at 0.12 degrees per decade, even with the current El Nino thrown in. 0.12 lower even than the 0.15/dec 1910-1940 warming period achieved with a fraction of the anthro CO2... bask in that inter glacial warming.
As discussed many times, your constant referral to outdated or irrelevant data, combined with stuff you make up has become utterly tiresome.
In the real world of now:
'Last month was the hottest April on record globally – and the seventh month in a row to have broken global temperature records
.....Figures released by Nasa over the weekend show the global temperature of land and sea was 1.11C warmer in April than the average temperature for April during the period 1951-1980.'
.http://www.theguardian.com/environment/2016/may/16/april-third-month-in…
Bearing in mind that the Earth has only two stable temperature states, referred to as 'cold Earth' and 'hot Earth', and bearing in mind positive feedbacks that reinforce one another have been triggered making the overheating we are now witnessing non-linear, we (or our descendants) will be lucky if the temperature rises by only 3 to 8oC by mid century.
Indeed, factoring in the loss of Global Dimming which is currently keeping the Earth about 1oC lower than current CO2 levels indicate, an increase to 3oC above the long-term average by 2030 is highly likely.
Here is another report from one of the 'idiot' scientists you cannot abide pointing out truth you detest so much:
'Readings of atmospheric carbon dioxide (CO²) will hit 400 parts per million at the Baring Head Clean Air Monitoring Station on Wellington's south coast within weeks, Dr James Renwick predicted. He is a professor of physical geography at Victoria University and was a lead author on the fifth assessment report of the Intergovernmental Panel of Climate Change (IPCC) .
The last time CO² levels were at 400ppm, about 3 million years ago, earth temperatures were 2-3 degrees Celsius higher and sea levels were about 20 metres higher, Renwick told an AntarcticaNZ conference on the weekend.'
http://www.stuff.co.nz/national/80291984/climate-change-nz-to-pass-impo…
Never mind the Southern Hemisphere 400 ppm CO2 referred to in the article, we will break through 450 ppm globally well before 2030.
http://www.esrl.noaa.gov/gmd/ccgg/trends/global.html#global_growth
Meanwhile, the unprecedented meltdown of the Arctic you insist is not happening continues, with current ice cover about 1.5 million km2 below the 1981-2010 average.
http://nsidc.org/arcticseaicenews/charctic-interactive-sea-ice-graph/
Oh yawn. You don't address the fact it warmed faster 1910-1940 than it did '78-16. You rabbit on about Arctic sea ice but ignore the inconvenient fact that Artic sea ice volume is greater now than 2012 or that the Greenland ice sheet is above its 1990-2010 average.
I love how your Guardian hand wring picks a 1951-1980 comparison - the flattest piece of "warming" on their chart - a period that coincided with the global cooling scare. A period that saw antro CO2 take off post WW2 but global temps didn't budge for decades. Note the temp was the same in 1945 as it was in 1980 - a period that saw 25 of the 59 ppm post industrial antro CO2 added. That is some lousy correlation. The Guardian really should get Michael Mann on the job and do a "Nature trick" to fix up that lack of warming if they are trying to correlate with CO2. If I was bigging it up at the Guardian I would quietly ignore the 1951-1980 period if they are trying to scare people. Just like they ignore 1910-1940... nothing worse than data blowing holes in a theory is there?
Oh I see Arctic mean temps are bang on their 1958-2016 average. How boring.
http://ocean.dmi.dk/arctic/plots/meanTarchive/meanT_2016.png
No wonder the Greenland ice sheet refuses to budge:
http://www.dmi.dk/uploads/tx_dmidatastore/webservice/b/m/s/d/e/accumula…
Arctic sea ice volume
http://ocean.dmi.dk/arctic/icethickness/images/FullSize_CICE_combine_th…
Interesting data out of CERN currently on pre industrial cloud cover and aerosols.. Perhaps that will help explain the lousy CO2 temp correlation. Clouds the elephant in the room of greenhouse gases but still poorly understood. Lucky there are some scientists out there who don't believe in settled science.
"Atmospheric aerosols and their effect on clouds are thought to be important for anthropogenic radiative forcing of the climate, yet remain poorly understood1. Globally, around half of cloud condensation nuclei originate from nucleation of atmospheric vapours2. It is thought that sulfuric acid is essential to initiate most particle formation in the atmosphere3, 4, and that ions have a relatively minor role.
...Ion-induced nucleation of pure biogenic particles may have important consequences for pristine climates because it provides a mechanism by which nature produces particles without pollution. This could raise the baseline aerosol state of the pristine pre-industrial atmosphere and so could reduce the estimated anthropogenic radiative forcing from increased aerosol-cloud albedo over the industrial period."
http://www.nature.com/nature/journal/v533/n7604/full/nature17953.html
Truly amazing, profile. You are presented with a hockey stick
https://twitter.com/rahmstorf/status/731840429352730625/photo/1?ref_src…
and manage to cherry-pick an unusually cold year (1910) and an unusually warm year (1940), do the subtraction and get about 0.8oC.
You then claim that about 0.8oC is faster warming than occurred between 1963 and 2016, even though the difference between the latter pair is about 1.4oC, nearly twice as much.
I can cherry-pick too. Let's look at 2014 to 2016, a difference of about 0.6oC in just 2 years! On the basis of cherry-picking results to suit arguments we could then multiply the 0.6oC difference over 2 years and say that we can expect 6oC of warming over 20 years.
You theoretical physics experiment at CERN may or may not have some bearing when it comes to the real world. However, it is important to note that immediately after 9/11 grounding of aircraft across America the skies cleared and insolation surged dramatically, pushing up temperatures immediately.
It's going to be a very 'interesting' Northern Hemisphere summer, with trillions of extra Watts being absorbed by over 1 million km2 of extra open water in the Arctic, and methane clathrates being destabilised by increased temperature.
Truthie I can't believe how light weight you are becoming - "let's pick 2014 and 2016" - oh lord even a child knows 2014 was not an el Nino and 15/16 was. Yes it is warmer in El Nino years, thanks for that. Weather.
La Nina years cherry picks perhaps? Like in 98-2000 the average temp dropped by 0.8 as La Nina kicked on or since this February the global sat average has dropped 0.28 degrees in just a few months.
The 78-16 sat average is sitting on 0.12 degrees per decade. Bigging up el Ninos isn't going to change that.
How does that 0.12 warming rate compare to other eras with a lot less CO2 - say, 1910 to 1940, when CO2 was 300 - 310 ppm?
And as for why the 1910-1940 range? Phil Jones Director of UEA CRU, and big swinging dick in the climate change movement - until his emails got leaked, highlighted that period. I presume Phil and Roger picked 1940 because it was a period of significant warming in between eras like 1945 to 1980 where, even your chart shows, nothing happened. Would have been good of Phil to to note that the ppm CO2 at the different time periods was vastly different but I guess that didn't fit the narrative.
"Do you agree that according to the global temperature record used by the IPCC, the rates of global warming from 1860-1880, 1910-1940 and 1975-1998 were identical?
Temperature data for the period 1860-1880 are more uncertain, because of sparser coverage, than for later periods in the 20th Century. The 1860-1880 period (0.16/dec) is also only 21 years in length. As for the two periods 1910-40 (0.15/dec) and 1975-1998 (0.16/dec) the warming rates are not statistically significantly different.
So, in answer to the question, the warming rates for all 4 periods are similar and not statistically significantly different from each other. "
So 1860-1880 at 0.16 and 1910 to 1950 at 0.15 were warming faster than satellite era '78-16. Shouldn't really be possible given all the CO2 about these days.
I note you are not going Greenland ice sheet mass or current Arctic temps? Such inconvenient non narrative fitting facts...
Interesting chart that Arctic temp one. I see the Arctic temp was swinging around wildly in the winters of '58 and '76, much more so than it was in '16. Got way hotter in the winter of 1976 than 2016 too. I wonder how people coped back then? I spose they wrung their hands - but only to keep warm.
http://ocean.dmi.dk/arctic/meant80n.uk.php
http://news.bbc.co.uk/2/hi/8511670.stm
Weather. What occurs over short periods of time (days or weeks).
Climate: What occurs over longer periods of time.(years or decades)
Climate change: When climate does not remain constant from one decade to another..
Abrupt Climate Change: when climate changes extraordinarily rapidly.
Mass Extinction Event; A period when climate changes so rapidly organisms can neither adapt nor evolve quickly enough and die out.
The current rate of disruption of the atmosphere and oceans by industrial humans exceeds all previous Great Extinction Events, including the Permian, which wiped out 95% of life on Earth..
"Today’s rate of increase is more than 100 times faster than the increase that occurred when the last ice age ended."
https://www.co2.earth/co2-acceleration
Presumably you philosophy is to keep ignoring the science, keep obfuscating the debate and keep churning out irrelevant and redundant 'information' until you can't. I suspect that point will be reached around mid-September 2016.
61. The abstract of a paper published in the 14 March 2016 issue of Nature Geoscience includes these telling lines: “Ice wedges are common features of the subsurface in permafrost regions. They develop by repeated frost cracking and ice vein growth over hundreds to thousands of years. … We find that melting at the tops of ice wedges over recent decades and subsequent decimetre-scale ground subsidence is a widespread Arctic phenomenon. Although permafrost temperatures have been increasing gradually, we find that ice-wedge degradation is occurring on sub-decadal timescales. … We predict that ice-wedge degradation and the hydrological changes associated with the resulting differential ground subsidence will expand and amplify in rapidly warming permafrost regions.”
http://guymcpherson.com/climate-chaos/self-reinforcing-feedback-loops-2/
A cut and paste light weight.
"Although permafrost temperatures have been increasing gradually, we find that ice-wedge degradation is occurring on sub-decadal timescales."
Click on this link.
http://ocean.dmi.dk/arctic/meant80n.uk.php
Note summer temps 1958 and summer temps 2015. Both a touch under 275K. That is some Arctic warming. Not wonder the greenland ice sheet doesn't budge.
You seem to have a complete lack of understanding of basic physics, profile..
When ice at 0oC melts due to absorbing the latent heat of phase change it results in water at 0oC.
As long as there is appreciable ice around the temperature does not go up!
Hence the extreme danger of rapidly vanishing ice in the Arctic Sea, because when the ice has melted - a certainty under the present conditions of elevated CO2 which is rising at an unprecedented rate- temperatures will skyrocket.
'After Arctic sea ice set a record low annual maximum in March, it was widely expected that this summer melt season would rank among the top 5 or 10 lowest melt seasons on record since the dawn of satellite observations there in 1979.
However, even the most pessimistic projections have turned out to be too conservative so far, as pulses of unusually mild air and milder-than-average ocean temperatures have eroded the unusually thin sea ice cover from above and below.
Unusually thin and even totally absent sea ice cover is emerging on both the Atlantic and Pacific sides of the Arctic, raising the possibility of a new sea ice record low and possibly a hastening of when the first ice-free Arctic summer takes place.'
http://mashable.com/2016/06/01/arctic-sea-ice-record-low/?utm_content=b…
Toyota are spending billions on it being the future
thats a gamble that if they can crack, would come back in returns for them that would dwarf the outlay.
its also interesting when we now have google and apple heading down the electric driverless car route.
which one will be the winner, its a bit like watching the VCR vrs Beta revolution
You know what ? China is starting to look like a slow moving train-wreck , its monetary policy settings are all over the place , its almost like the right hand does not know what the left hand is doing
One week its reigning in debt and reducing infrastructure spending , the next week its massive stimulus (which implies printing and borrowing to spend )
The other problem is that ( much of) this stimulus money may not flow into the productive sector , but rather flow out of China and end up here or elsewhere in the West as speculative , rent seeking flows
Most likely a consequence of the planned economy. The Communist party has one fear - worker unrest - either the regime changes or there will be a regime change. With the party so dominant in the economy I don't think the party knows what to do - deer in headlights.
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