Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are on tenterhooks for the Thursday US Fed rate decision.
In the meantime, US consumer inflation expectations over the next year eased in May, down to 4.1% and the lowest since March 2021 more than two years ago. Expectations for inflation for longer term periods however rose slightly. The rises were minor, but represent an upturn from previous surveys. Labour market expectations were mixed with expected earnings growth declining, but unemployment expectations and perceived job loss risk improving.
This expectation data comes ahead of tonight's May CPI data for the US, and analysts also see it coming in at 4.1% which would be a good drop from 4.9% in April.
And markets are expecting the Fed to pause its rate hike track when they deliver their latest decisions on Thursday, thinking they have inflation coming down quickly now and have done enough to keep that retreat locked in.
The US Government released its monthly Budget statement for May, and this came in almost exactly as expected. But it is on track for a slightly larger deficit this year than last, this year about -8% of GDP.
In China, there are more indications of their demographic malaise. The number of marriages registered last year fell for the ninth consecutive year to the lowest since 1986, when the figure started to be recorded. Only 6.8 million couples registered marriages in 2022, down -10.5% from the previous year and more than -49% lower than the peak of 13.5 million in 2013.
Japan's producer prices fell in May from April, only the third such drop in the past two years, and the steepest monthly drop (-0.7%) since 2016 (pandemic excluded).
Japanese machine tool orders weren't flash in May, unfortunately, down -22% from the same month a year ago. Orders from both local and export sources were equally weak.
The Bank of Japan also updates its monetary policy this week, on Friday.
India's CPI inflation rate rose slower, and by 4.25% in May from 4.7% in the previous month, the lowest in two years and lower than market forecasts of 4.4%. Food prices eased the most, with most key categories falling rather sharply.
April industrial production in India came in +4.2% above year-ago levels but it was quite a fall-off from the strong March levels.
The UST 10yr yield will start today at 3.75%, up +3 bps from yesterday. Their key 2-10 yield curve is less inverted at -81 bps. Their 1-5 curve is also less inverted at -121 bps. Their 3 mth-10yr curve is less inverted at -142 bps. The Australian 10 year bond yield is now at 3.96% and unchanged. The China 10 year bond rate has stayed down at 2.70%. And the NZ Government 10 year bond rate is still at 4.56%, and also unchanged.
Wall Street has started its week on a positive note, with the S&P500 up +0.5% in Monday trade. Overnight, European markets closed up too, bookmarked by London's +0.1% rise and Frankfurt's +0.9% gain. Yesterday, Tokyo closed up +0.5%, Hong Kong only managed +0.1%, and Shanghai fell a minor -0.1%. The ASX200 was closed for a holiday, while the NZX50 ended down a disappointing -0.6%.
The price of gold will start today down -US$5 at US$1956/oz.
And oil prices have fallen -US$3 from yesterday to now be just under US$67.50/bbl in the US. The international Brent price is now just under US$72/bbl.
The Kiwi dollar starts today still little-changed at 61.2 USc. Against the Aussie we are almost -½c lower from yesterday at 90.6 AUc. Against the euro we are softer but less so at 56.9 euro cents. That means the TWI-5 is now at 69.3 and little-changed.
The bitcoin price is again a little lower since this time yesterday at US$25,807, down -0.7%. Volatility over the past 24 hours has remained modest at just on +/- 1.1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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102 Comments
Well for a start I've attended a number of funerals for suicides in the past 5 - 10 years (extended family and social contacts). In the decades before that, I hadn't attended a single one (probably because nobody in my family or social circle was suffering to the extent that they needed to end their own existence - but that has obviously changed recently and people are really struggling). Also I know of many people who are now dependant upon anti-depressants and counciling just to get through each week. Are these signs that our society is healthy?
Were people killing themselves during the 1918 pandemic and during WW2 because they could suffer no more? Not in the reading I've done (but it is quite possible).
Certainly people were delusional in the 1920's, like many are now (e.g. mania in financial markets). But that delusion created the subsequent economic depression.
So on a daily basis, I meet people who are severely depressed, and also people who are severely delusional (house prices can never fall, boys can be girls, climate change isn't happening etc etc. This didn't happen in previous decades (at least that I was alive) in my experience. If this is true for you, then so be so.
y/n - think it through; at the end of all you list, there were south of 3 billion people on the planet. Even if they were all depressed, that's 3 billion. There's 8 billion currently present, so we can have double the number depressed, and still would have 2 billion happy.
Never forget population-growth.
Curled up in that is an existing wealth tax that must have given the Greens some ideas perhaps. In just about all localities local rate calculations pivot largely on property value. The more it is worth the greater the rates charged. Yet it is a goods and service charge. That means a household occupied by one person availing those services can end up paying four times the rates of another household of six people. Or as has happened in our neighbourhood . Two houses side by side, same sized sections and road frontage, same sized structure, same occupancy one pays $5100 the other $9200 annually. The difference being the latter is new, a EQ rebuild. It is disproportionate and inequitable and central government collects 15% GST as the icing on the cake. Who needs or wants another wealth tax then.
Why should it incentivise anyone? The house with 6 in it may suit the group there while the one with just one or two might well suit them. Unless you are suggesting that people's freedom to choose should be removed as to how they live? You would name and shame the ones living, in your view, less efficiently to further motivate them into living more, in your view, 'efficiently'? What gives you the right to pass judgement on how another lives if they're not doing harm to others?
Both houses have access to the same resources, and most of those resources are a per household cost not a per person cost. It doesn't matter whether 6 people use our local park or 2, there needs to be a park and playground and the cost is virtually the same.
Transport, rubbish and poos are probably the exceptions, but transport has a user pays component in fuel taxes, poos are paid for in water bills, so it is really only rubbish that I can think of.
It's removing people's freedoms in the same way that Tobacco duty removes their freedom to smoke, or the carbon cap & trade scheme removes their freedom to pollute.
That is to say, it doesn't remove any freedoms. It just helps poke people towards behaviour that benefits them or society by putting on a financial burden. In this case, the social cost is our limited housing stock being used inefficiently while others live on the streets or other sub-optimal situations.
Sir Ian Taylor's open letter to Chloe yesterday ("open" however the Herald paywalled it)
https://homepaddock.wordpress.com/2023/06/13/did-you-see-the-one-about-…
Self-justification, self-justification. self-justification, self-justification.
Paywall bypassed.
He's an interesting fellow, but part of the existential problem, not of the solution. Interesting that he identifies Swarbrick as the threat to the status-quo - oddly enough she's a long way short of where Jeanette Fitzsimons was; much less understanding of the big picture. Smarter IQ-wise, perhaps, but narrower in scope.
A UBI is a great motivator for entrepreneurs to take risks knowing that they won't be destitute. Want to try out a business idea - go for it. The settings need to be right so that any extra earned above the UBI is not punitively taxed and people are incentivised to work.
It has also been shown that not knowing where you next meal is coming from leads to poor financial decisions Poverty Impedes Cognitive Function | Science
Totally. I attended a Digital Twin symposium in Wellington last year. The attendees included many public servants from both local and central govt and a guest speaker from Melbourne presented excellent work on creating a digital twin of the Melbourne CBD. Very impressive! Contrast this with the local contingent presentations centered on how to include more Te ao Maori in technology and hand-wringing about not having the funds to do anything useful (ironically given the cost of flying them all down for the day). This is symptomatic of NZ spiraling downward toward ever increasing mediocrity. Unfortunately, we need to hit rock bottom before anything positive happens.
It will be interesting to see if the unemployable Chloe replies.
She has been found out to be a fool again, she' s a boomer hater who blames all the issues of the world on the oldies .. I wonder if that includes her parents?
She will/is driving our biggest tax payers to reconsider where to base their businesses... she's a Bloody idiot.
Be interesting to see how her generation is viewed in the future ... I'm picking " they will make the Boomers look fantastic"!
These Green whingers hate success ... Which is why they only Garner 150000 voters... Mostly idiots
Have you ever done any reading? Like, the Limits to Growth, EROEI, the physics of entropy, stuff like that?
I'm guessing not.
She and her generation, have every right to be p---ed. We are the echelon who have never had it so good, are watching it crest and decline, and apparently some of us aren't willing to address the implications.
What a self indulgent fool!...
You just didn't read the article did you.
It's about taking more from the rich. The rich that employ most kiwis. Not about how good you think we had it!
Your/ this latest generation have it better. They just want it given to them
Technology, modern medicine... All better for the Gen yxz's... Yet you focus on houses because you waste your money, want luxury, and want it for nothing!
Complete bollocks on his mates $40m in tax.
Company tax, fair enough but I notice he doesn't itemize that.
Paye, employees pay that.
GST, companies are gst neutral, if they paid $12m in GST they will have received $12m in GST. Or their accountant needs a bullet or they had $80m in personal spending.
The other taxes are all for direct services many of which don't even cover costs.
PS there's an article about a "self made man" hard working ex MP in stuff. Having a real good suck at the public teat as he always has, draining the tertiary Ed coffers.
Don't know what Council jurisdiction you in and whether its just the land value which determines your local rates, not regional, but here in NP Its the rates you pay=land value * cents/$land value. If the land value doubles then your rates would, keeping the cents/$land value the same. I doubt this occurs as the cents/$land value is adjusted down. Here water and sewerage are seperate charges. Then there is a fixed cost annual uniform charge which is a fixed charge independent of valuation. I think this is typical of many councils.
The two houses you quote as an example seems to me the rates are based on improvements as well, not just land and hence the large discrepancy.
I have gone through an exercise of objecting to QV (NPDCs contractor for valuations) but to know avail. They don't take into account a quantitative measure $/m2 land value of a few sections in my immediate surrounds.
That’s the point. The difference in rates for the two neighbouring properties arises from the improvements, one being a newer house of greater value. So in effect that is simply a wealth tax. Yet the council insists rates are a charge for services and so does the government so it can gobble up the GST thereby a tax on a tax.
The business commentators both referred to the new BULL market underway in s&p500, defined as 20 percent swing. Came as quite a shock. Up 20 percent since October last year.
The nasdaq is higher still and I think the Japanese nikkei is doing well. Trends developing.
"Time will tell"
Is'nt it a shame that as a country we now have to shut schools and shops because of gang tension (same gangs the government dished money out too), I mean kids are hardly at school because of strikes anyway, and add a few more closures in, it is no wonder our literacy rate are going backwards.
You raise a point, but your bias is... well established.
Actually, pre television, we read much more. We tolerated a whole chapter just introducing characters and place (think Dickens). Now, there has to be a murder and a chase by Page 3, or - yawn - the book has been put down. Short sound-bytes, shallowness and laziness are the norm. Many houses have no books, parents who don't read, who just indulge in digital entertainment.
As to cause, there wouldn't be gangs, if the folk involved had the same chances you and I did. Unfortunately, the speed of a society is the speed of its slowest members; ignore them too much and you get a Bastille/tumbrels moment. Just like the west vs Russia, we see use of our rules, enforced by our police, as a truth. We see 'them' as evil and a threat. They, in turn, see us as resource-extractors-using-force/power. Realising that doesn't mean you back them indulging in thuggery - but asking why the thuggery is an important part of social maturity.
As to reading - we can't have enough; ignorance is the biggest sin.
There is probably more disinformation to lead people down rabbit holes when they read these days, than there used to be PDK. it used to be that a well read individual was considered 'educated'. Today 'well read' has no such implication, as that 'educated' term implied an ability to apply reason and logic to see through history for understanding. That ability to reason is clearly not possessed by many who would consider themselves well read today.
Too much detail can cloud an issue, just as easily not enough can lead to wrong conclusions. The whole picture must be seen to gain an understanding.
PDK. So if you haven't had chances you go out and burn down the houses of other people who haven't had chances. Yes it's a factor sure.
But you also have choices.
Plenty of people who have limited chances have made the choice not to burn down houses. Actually most would not even consider it.
As to cause, there wouldn't be gangs, if the folk involved had the same chances you and I did. Unfortunately, the speed of a society is the speed of its slowest members; ignore them too much and you get a Bastille/tumbrels moment.
I couldn't agree more. Where Western Society went wrong was the idea that it was fit and proper to outsource its manufacturing to China. Before that the "slowest members of society" all had jobs that gave them a life, and kept them within reasonable income distance of the upper middle class. In 1973 I had a manufacturing business and the rule then was "If it can be manufactured in New Zealand-it must be manufactured in New Zealand". We had to prove our case that it couldn't be by getting testimony from 3 domestic suppliers before we were allowed to import via an import license-that was dollar capped annually. Those were the good old days for tranquillity in NZ society and the same in the 'Rust Belt" of the US. The past 40 years have been great for the top half of the income curve and nothing but slippage for the bottom half. Too much depression set in because of this in the bottom half and now we get what we see. Formerly the system was set up to insure all Kiwis had good jobs--hasn't been the case since Rogernomics Revolution.
Great post.
Essentially, we chose someone else's disadvantage over our own, and it's come back to bite us in the bum. We have regulated ourselves a level of comfort, incompatible with our level of production. And we've lost the production-skills (those of us capable of wielding tools are all ancient, and aren't allowed anyway; we potter in or sheds these days). And we can't afford them at the rates we'd need to pay.
In short, our society can no longer afford itself.
Which is why I advocate a different one. Much more local, locally-led. Much more self-governing, self-supplying, self-sufficient.
Couldn't disagree more. It's simple. The law on drugs and crime is to soft in NZ. Organised crime is funded by drugs. There is money to be made and with that it's easier to recruit. Drug dealers are scum bags, destroying not just the drug user life but families and communities too.
We shouldn't be asking why people are in a gangs. Instead we should be punishing criminals to the fullest. It's important to place more money into the correction services. Keeping the prison guards safe and staffed well, with good pay. Police need the rights to dismantle gangs. Gangs are not clubs. For example as a prospect you to not get patched by doing community work!
Btw my area in NZ, most people aren't rich and majority are not gang members. All the pandering to gang activity doesn't solve the problem. Maybe we look to Singapore. It transformed from violent riots and gangs to the safest city in the world. It's not because it's small. It's because the first rule was crime won't be tolerated and especially the death penalty for drug dealers.
Lived in Melbourne for 13 years. Cant recall a school ever being shut down due to gang activity. And yet Melbourne has poor people, refugees, disadvantaged indigenous people. This is a particular NZ problem. Gangs now seem to expect that roads, schools, businesses should all shut down to accommodate them every time there is a gang gathering. The entitlement attitude comes from Govt policies that pander to the gangs. The number of gang members have doubled under Labour, from 4000 to over 8000 members. When the Govt makes it so attractive to be a gang member, free of all consequences of your criminal activities, and the rest of society cowers in your wake, why wouldnt they be signing up in droves?
Re China demographics, has anyone been able to poke holes in Peter Zeihan’s arguments (and others’) on this topic?
If he’s right, China has significant challenges ahead… (that’s probably understating it a tad.)
Could pose problems for NZ economy too given our trade reliance with them. Keen to hear any new insights.
Zeihan is late to the China skeptic party. But better late than never.
Pretty robust case if you ask me. I honestly don’t see a way out of the pickle for them.
Having said that I don’t think their economy is going to collapse overnight. Probably more like a slow, steady decline over the next 10 years.
Middle Income country status guaranteed.
Going to be interesting to see how this impacts the rest of the world. Chinas rise has in many respects been a driver of high debt in many western nations (we used their cheap labour to reduce our CPI allowing us to create more debt than we can/could sustainably maintain using our own labour).
Yes, and it’s not just demographics. There seems to be many factors going against their long term prosperity; environmental degradation, massive housing bubble, food and energy dependency, Xi…
I was speaking to a Kiwi who interprets and translates in Mandarin the other day. She has very interesting insights into what’s happening there. She believes that the media is very much underreporting the seriousness of the issues in China.
Interestingly, she thinks too that it is a matter of when - not if - China invades Taiwan.
I think you’re right and that the next 10 years of observing China will be very interesting.
Am certainly struggling to find evidence to the contrary.
I was thinking something very similar this morning. 3 years ago we had a party to vote for that offered positivity and transformation. This election we have 3 parties offering almost nothing (despite our infrastructure deficit), and the greens who have some good ideas but wont have any money to do anything after they give it all to no hopers. Is there any party that actually wants to invest in NZ? Are we so short minded that we only vote for tax cuts or handouts?
Can anyone think of anything positive that ACT / National / Labour have promised (other than tax cuts or handouts)?
As much as I dislike Luxon, I agree with his points that we're an inward-looking whiny bunch constantly waiting for the government to step in and fix everything. Our business sector is no prize either. We are probably one of a few if not the only developed nation where the majority of our big businesses cater to domestic markets and get bigger by squeezing every last penny out of our pockets.
NZ has a strong tradition of undervaluing local talent, forcing them out of the country for better opportunities, and readily replacing them with foreigners willing to take orders from us and toil away in our kitchens, farms and construction sites.
Tough pill to swallow but even IMD listed "short term policy thinking, short term societal (non-political) thinking" as one of NZ's key challenges in its competitiveness study in 2022.
How about more than one? I've seen it many times over the last decade in IT - usually the fault lies with HR, not the team wanting the new member.
When local candidates are rejected on 'failed' psyche tests - "the career path won't suit them", "they won't fit our team well", "they're the wrong personality type" - despite having worked hard for their qualifications, having prior experience and testing above the requisite skill level - all in favour of bringing in an immigrant for $30kpa less. (Looking at Auckland IT businesses 2010-2020 in particular).
I used to track "skills" listings in programming on seek, just to see where the market was. Over one 6 month period, there were 300 different 'skills' listed - usually a software package or language - of which 177 had just a single listing. Software packages can be learned, and proficiency in languages transfered, but it's not good enough for HR - they want an excuse to bring in an immigrant who is cheaper. Best part is, if they're approved for visa sponsor, they can reject local candidates for any reason they like - the only way to lose sponsorship is if the company is convicted of slavery (I had some interesting conversations with INZ about that one).
Had one lovely letter from a CEO of a company pre-Covid bemoaning the lack of specific talent for his niche role (vehicle control systems). He had local applicants with PhDs and Masters, several of whom had significant related-but-not-specific experience (e.g. one person wrote vehicle tracking systems prior - you'd that that'd be a fair precursor to control) - but NO, they weren't good enough for his little role. Far too many employers fail to recognise the transferability of skillsets - and that disdain is reflected when local talent decides to up sticks and leave.
(Disclaimer: I employed immigrants on working visa's because I had no local applicants for my roles - the local universities graduates were 90% immigrants on postgraduate study, and the locals moved elsewhere upon graduation. But I would've taken a suitable local in a heart-beat - actually had to check with INZ and check the legality of restricting applicants to local workers - it's illegal if they have the right to work here, including a un-restricted hours a post-graduate international student is allowed to work, btw).
Great comment CIF. Things are much worse and often overlooked in the engineering workstream. It takes years of university and work experience to get fully trained to handle complex projects such as power generation, mechanical design, EI&C, etc.
Our CE recently said that we are quick to dismiss our economy's lack of industrial depth to tyranny of distance. In reality, it could be more because 9% of our high school grads go into STEM fields as compared to 24% in Germany.
I spend 5 months ( may to September) of every year from 2005 traveling.
I've sèen most countries in the world extensively and can tell you that NZ has fallen from top 5 to bottom 3 for me.
I only summer in NZ to maintain my business interests, (which are more like paid summer hobbies).
I have property's in Europe and Australia and am currently selling up in NZ to live/retire in Aussie / Greece/SPAIN.
Even the poor of Egypts Alexandria have more integrity than most kiwis.
The whole global economy is powered by fossil fuels - our transport, food production, heating, cooling, chemical production, manufacturing etc. Now imagine that the price of fossil fuels goes up - what happens to the cost of everything else? Now imagine that the price goes down again? What happens to prices now?
Now imagine that instead of controlling the price of fossil fuels, we instead adjust the cost of money to try and prevent prices going up - hoping that if we reduce consumer demand enough, and make enough people unemployed, people won't put up their prices, and, somehow, this will persuade the Saudis to reduce their prices, or Russia to get out of Ukraine.
As inflation subsides with oil prices, central banks will claim victory for their medieval monetarism and thousands of commentators and economists will talk earnestly about whether we have now reached the natural rate of unemployment, and whether the output gap is finally at the right level, and whether inflation expectations are now anchored. Idiots.
Woke does not lead to dignity and happiness. Woke leads to this.
https://i.stuff.co.nz/national/132301628/schools-out-in-ptiki-over-gang…
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