Here's our summary of key economic events overnight that affect New Zealand, with news that American regulators have been active overnight.
First today, we should note that the regional First Citizen's Bank (assets: US$109 bln and #36) has taken over large parts of failed Silicon Valley Bank's business (assets US$72 bln being acquired). The takeover comes with SVB's balance sheet sanitised by regulators. The combination will make a bank that ranks #26 in asset size among all US banks. The remaining assets of SVB are being held by the FDIC for disposal.
Meanwhile, the closer the Fed regulators looks under the hood at SVB, the worse it looks. Charges against SVB management seem likely.
None of this news encourages investors to step up and fund new business startups in the way SVB did; that sector is now in the pits.
Secondly, regulator the Commodity Futures Trading Commission is suing Binance over some alleged serious regulatory failures, and alleged dishonesty by its CEO. They are being charged with willful evasion in an action that comes as no surprise to crypto and money-laundering watchers. The bitcoin price fell.
Elsewhere in the US, the Dallas Fed's factory survey for Texas was another poor one for their oil patch. It has now been consistently negative for more than a year now, the weakest region in the US. New orders were weaker, but the jobs component remained strong even if pay pressures eased. The outlook wasn't flash however.
Across the Pacific, in a grim start to 2023, China has reported that is industrial profits suffered a sharp retreat on their reopening in February, down more than -22% year-on-year. A damaging price-war in the Chinese car industry isn't helping as firms struggle for growth in demand. This official industrial profits report hurt both the Hong Kong and Shanghai equity markets because is was so unexpected.
Meanwhile in a bit of a surprise the other way, Taiwanese consumer sentiment improved in March. It was their highest reading since May 2022 as the economy recovered from pandemic disruptions and households' sentiment strengthened across the board. This is not to suggest sentiment is high again; it is not. But the improvement was unexpected.
In Germany, another business sentiment survey showed the continuing improvements of other similar surveys. In fact this was their fifth consecutive improvement, and its highest since February 2022 - and all this comes after the banking turmoil news.
But of course this may change with strikes spreading in Germany. Inflation is stoking wage demands there.
The World Bank is warning of a long-term global downturn. Average potential global economic growth will slump to a three-decade low of just +2.2% per year through 2030, ushering in a "lost decade" for the world's economy unless policymakers adopt ambitious initiatives to boost labour supply, productivity and investment, they say.
The UST 10yr yield starts today at 3.52%, up +15 bps from yesterday. The UST 2-10 rate curve is more inverted at -47 bps. Their 1-5 curve inversion is little-changed -91 bps. And their 30 day-10yr curve is less inverted at +70 bps. The Australian ten year bond is up +5 bps at 3.28%. The China Govt ten year bond is down -2 bps at 2.87%. And the New Zealand Govt ten year is starting today down at 4.07%. That is another -10 bps fall.
Wall Street has opened the week with a modest +0.3% rise. Overnight, European markets were more positive, up almost +1% across the board. Yesterday Tokyo ended its Monday session up +0.3%. But Hong Kong was down a sharpish -1.8%, and Shanghai ended down -0.47%. The ASX200 ended up a minor +0.1%, and the NZX50 was up +0.3% in its Monday trade.
The price of gold will open today at US$1956/oz and down -US$22 from this time yesterday.
And oil prices start today up nearly +US$3 from yesterday at just under US$72/bbl in the US. The international Brent price is now just under US$77/bbl.
The Kiwi dollar is little-changed against the USD and now at 61.9 USc. Against the Aussie we are also little-changed at 93.2 AUc. Against the euro we are down -¼c at 57.4 euro cents. That keeps the TWI-5 down at 70 and down very marginally.
The bitcoin price is lower today, now at US$27,138 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been high at +/-3.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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83 Comments
Hmmm....
Americans’ life expectancy is plummeting. The graphic is stunning. “American life expectancy is lower than that of Cuba, Lebanon, and Chechnya.” #MedTwitter https://npr.org/sections/health-shots/2023/03/25/1164819944/live-free-and-die-the-sad-state-of-u-s-life-expectancy Link
Mr Hickey has written a column in his site The Kaka following up on the excellent work of our old friend here Jenee Tibshraeny at the Herald, exposing in great detail the absolute shambles of the merry go round of the public purse being manipulated between the government and the RBNZ. Includes gems such as “the move would suggest the Reserve Bank was too cosy with the government.” Mr Hickey was prevailed upon by his readers in The Kaka, to open the column to the general public, and he has obliged accordingly. Perhaps a print on this site wouldn’t be amiss? It is a cracker and all New Zealanders need the opportunity to assess the ineptitude thus described.
How can the Government argue with a straight face from now on that it has no choice but to cut funding for transport, health, education, climate change, benefits and infrastructure, when it is providing billions in subsidies for bankers and effectively transferring wealth from savers and renters to home owners.
Because this Government lies with a straight face all the time......
Rules based international neo-liberal order?
The Fed’s unrealized losses on bonds purchased during QE is over $1 trillion. Time to short the Fed? Link
Furthermore, the Fed pays 4.90% to banks on their ~$ 3.0 trillion reserve balances
How is the taxpayer paying the interest on reserves to the banks? Unless I've missed something the payments are coming from the RBNZ's balance sheet not the Treasury account- are they not? On one hand people on here are rooting for higher interest rates to stop inflation but now wanting to destroy one of the tools RBNZ uses to control rates...??? Pre QE they could control the rate by increasing or decreasing reserves. Now after RBNZ have flooded the banking system with reserves to buy bonds they need to encourage banks to hold reserves. Else they would go out and buy Govt securities and drive interest rates down or create more credit and increase the money supply. My understanding is that RBNZ only 'gets' taxpayer money via the interest it receives on the Govt bonds it holds...So it receives interest on bonds and pays it back out to banks as interest on reserves...What's the net difference here?
'Lost decade'? It's rather more profound than that. This quote was picked up recently, but is worth repeating.
'The era of procrastination, of half measures, of soothing and baffling expedients, of delays, is coming to its close. In its place, we are entering a period of consequences'.
Let's see how the capitalist construct deals with environmental ruin shall we..........
Our kids are rightly going to be mad when they find out what we have either (1) done or (2) allowed to happen to their world.
They face decades (ten years is nowhere near enough) of hard work and hard living to sort out the environment we trashed, to pay off debts we accumulated for them, and they will suffer major loss of life in resource wars (almost guaranteed now).
All in the name of greed and complete selfishness.
(the irony is the way we westerners still justify it - the number of people i know who have stripped printed money via investment properties, pumped sasset prices, been involved with pumping or selling real estate and so on, they also travel frequently overseas, buy tons of new clothes, run businesses that sell crap stuff and yet all they can go on about is the new electric car they have bought with their discount and how well they are thus saving the environment vs poor people who drive cheap petrol ones.)
i concur - i just suspect the media spin on protests now is designed to stop it, together with massive surge in automated armed forces (that could be used to quell disquiet withount needing people). The spin is the worst though - the speed at which anyone protesting about anything can be (and are) relabeled as being yobs or anti-progess.. and thus are truned against by the public... is frightening. in the old days in the UK massive protests drove change.. these days those people are quickly labelled criminals.
Yeah -
In life blaming anyone else for our own situation is rarely if ever a valid argument (victim mentality is all too common and a personal pet favorite). Its the one everyone (including those in RBNZ/govt sadly - use - so by using it ourselves we justify their position such as blaming external factors for inflation and becoming poorer). Assume the day of reckoning is when your grandchild as 'what did you do to stop the climate disaster or economic meltdown grandad/ma/other'
he may ask searching questions for a school project - e.g. did you
- protest and join organisations to make a difference, devote lots of time and energy
- stand for election as an independant with climate as a big issue with lots of solutions
- live in a tiny house off the grid self sustaining and cycling around buying second hand stuff and donate leftovers to charities and buy second hand etc etc
- vote for someone that would make a difference
or did you
- buy too big house house(s), drive around (electric and petrol vehicles both have massive footprints btw), fly places, work to earn money for stuff etc etc
I am not being self rightous either - i have not done much given the potential gravity. I wont have any excuses. Just not a bif fan of blaming the government or anyone else and try to catch myself if i ever do it and remind myself it is 99% my fault.
Just do nothing, there is nothing to be done. If there is a problem, then it is not sustainable to have people like the greens or Labour thinking they are the solution. They aren't, they are experienced at nothing and have no answers for anything. The current approach is that "there is a problem, and here is how we will punish you for it, and force through rules that will have no effect whatsoever and cost lots of money that you will pay". That approach doesn't wash with most people so they are simply ignored. The right approach is that smart people recognize a problem and fund equally smart people to develop and commercialize a working solution that solves a problem properly. Option 2 is completely beyond the realms of the Greens' thinking, and therefore nothing will be achieved. The situation is completely hopeless in every problem that currently confronts us. Anyone that has any sort of decent idea just gets shouted down, so there is no point until the current lot is moved on after the inevitable failure occurs and the majority finally recognize them for what they truly are.
'and fund equally smart people to develop and commercialize a working solution that solves a problem properly'
Sorry, that's an F.
Hint - assumptions of growth, sooner or later, had to be proven wrong. Your posit assumes growth, and I'm betting you haven't researched the Limits to same, ever. Yes?
It's not 'funding', we need, it's 'a supply of the necessary resources, and energy to apply to them'. The former does not guarantee the latter.
Don't forget that the western world was built on the backs and resources of the lesser fortunate nations that were invaded. It is well documented, think back to when the British warred with India and the loss of millions off lives there through starvation that resulted. India was one of the leading countries in the world at the time until then. Cheap labour from China, Pakistan, India, African nations, etc etc etc.
Anyone who knows about Indian history knows that the British were latecomers to that subcontinents history of mass famine and exploitation of the masses.
Not forgetting Maos "Great Leap Forward" in the 1960s resulted in 15-55M dead (actual numbers a CCP state secret)
It surprised me that she lashed out with that racist spray , considering that her partner is white ... you'd have thought that after having 6 kids with him she'd have learnt to mellow her attitude towards us pakeha ...
( this comment popped into the wrong spot ! )
Being of Asian ancestry myself, it makes me happy to see Asians are underrepresented in crime stats practically everywhere in the West.
A big reason at play here is the fact that most migrate to greener pastures solely on merit, bringing the skills and/or drive required to maximise on economic opportunities that they didn't receive in their country of origin. They also understand the role work ethic and maintaining good character plays in long-term success.
Cheers.
Whether that will remain the case in a country like NZ is another debate. As economic opportunities have been shrinking here in recent years, many arriving with low skills particularly from South Asia no longer fit that generalisation. Many are here for the allure of living in a Western society, work hard until gaining permanency and resort to the bare minimum required to get by right after.
The government has to take back control of its borders from unscrupulous businesses/lobbies to ensure we continue reaping the rewards from inward migration.
This is an opinion not fact. Its actually based on a lot of other facts and probabilities and is also not true at all.
If the said person were to stand for election and this time be open about their background they would likely not be even close to being elected. Even though their voters are likely similar in demographics (except for the event mentioned).
Rust never sleeps.
Real estate "agents to renew their licenses they will be required to undertake and pay for a special study course in “the maori world view (maori customs, protocols and the maori language)”
https://nopunchespulled.com/2023/03/28/another-maori-wonderfulness-absu…
" Trainwreck Interview " of the week : PM Hippy Chippy trying to remain cool under the blowtorch heat of Mike Hosking's aggressive questioning this morning ...
... for a moment , a nano second , I actually felt sorry for Hipkins ...
Credit where it's due : unlike Ardern , Chris has the courage to front up on New Stalk ZB ...
Thats the 'good' thing about Chippy though and why he needs to be elected again. Whilst he cant possibly be all over everything - he tries to be and he at least doesnt duck the questions with fluff and tries to sort stuff out fairly. which is the way harder thing to do and bigger character - he actually believes in NZ and is trying to help (in what is a very complex environment with a ton of baggage and politics).
He may not get it all right but he actually means well. Definitely he gets my vote over the alternative. If we dont reward politicians for trying to do whats right and instead reward them for avoiding the questions well... then we will end up with more mess for sure.
Definitely he gets my vote over the alternative
Don't forget that a vote for Chippy is a vote for the extremists that have taken over TPM and Greens party command. If he can't bring them in line while in majority government, it is likely they will all be openly running their rogue agendas in a Labour-Green-TPM coalition gov.
That's the problem for me.
I really don't mind Chippy. At least he fronts up, makes an attempt to answer questions and doesn't have some of the nausea-inducing mannerisms of his predecessor. The fact that I don't feel the need to reach for the remote when he comes on screen is a good thing.
I am on board with his Khrushchev-esque program of de-Ardernization in terms of cutting bad policies, improving communication style and going back to a more bread and butter approach around cost of living.
However, the kicker is that unless something massively changes in the next ~6 months, Chippy and Labour will be dependent on at least one, if not two, deranged tails in the form of The Greens and TPM that could seriously wag the dog.
You can see this with yesterday's Marama Davidson furore. She made a truly racist comment, and one that is easily disprovable by pesky colonialist statistics. He decided to give her "leeway" ... why?
I have little confidence that he would be able to reign them in (and if he cannot, it is bad news for the stability of the country). I'm not even convinced he would want to reign them in; more that he - and Labour's strategists - have realised that they need to give the appearance of making a clean break before the election, only to probably bring back most of the bad policy with the cover this time of saying "The Greens/TPM made us do it".
He's that friend you quite like, but who brings his insufferable mates to everything.
Labour, behind the scenes is a house divided and expect the breaking of ranks to re-emerge as the faction in question goes into self survival priorities. As such the prospect of Labour arriving at a formal coalition, with the very obvious vagaries, discordancy and extremes being evidenced by both the Greens and TPM, is hardly evidence of a stable government in the making. Quite the opposite. New Zealand is facing a whole number of very serious challenges, it would be catastrophic to say the least if such a concoction of government was to be in charge
Fair enough OldSkool we each get a vote.
Personally I'm horrified at how NZ has headed backwards under this government. Education, Crime, Health, National debt etc etc
On a side note I see that Business Desk is reporting that DuVal has stopped distributions from another of their funds this morning. 'Investors taking legal advice'.
One word comes to mind.....discombobulation. Actually as I write this two more have come up........criminal prosecution.
My vote will be assigned to a party based on how i stack them up against the opposition not because the current lot got it wrong.. what if the next lot are even worse.
I am hopeful.that luxon will drop his stiff corporate demenour, sell some investment houses, buy into some nz productive businesses and throw out some good nonpopulist but well needed policies that appeal to the man in the street Come on luxon mate.. show i what you got.
- how to solve truancy (based on best practice)
- solve water investment (and why councils will actually invest this time and some form of guarantee improvements under his model).
- details of whats wrong with cogovenance rather than divisism (i dont agrer with it but want facts).
- how will he make housing affordable
- whats his idea to increase immigration and maintain imfrastructure
- solve crime.. not via bootcampsand more jails that are priven to fail
Convince us why you should be in.power chris.. not why labour shoudnt.
I'm not denying these problems exist (Education, Crime, Health, National debt...) but to think they emerged or were caused by a single party over 6 years is just daft bi-partisan politics - these issues have been building for decades and neither Labour nor National have any solid solutions. That is a problem for democracy.
Then you don't understand math.
No exponential growth is possible within a Bounded System.
2% just double slower than 3% - but they both double. Then double. Then double....
Cessation of growth BEFORE we went into overshoot, was the only valid pathway in town. We passed that point a long, long time ago. Now there is only 'best we can do in the 'circumstances'...
An interesting post over on the 'Personal Finance NZ' sub-Reddit: https://www.reddit.com/r/PersonalFinanceNZ/comments/1235pxv/redundancie…
A number of posters reporting an increasing, noticeable number of redundancies filtering through in their industries (particularly construction and related industries).
Aligns with what I am starting to see as well.
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