Here's our summary of key economic events overnight that affect New Zealand, with news Australian business and consumer sentiment remains stunted.
But first, American retail sales last week as monitored for bricks & mortar stores on a same store basis, rose +4.6% from the same week a year ago, the best gain of the year and indicating demand is back and gains are now more than can be accounted for by inflation.
Following hot and dry weather in August, and in its first report since field sampling, the USDA lowered its estimates for corn and soybean yields. The outlook for wheat is unchanged and its price is falling on good harvests worldwide. American beef production levels are slipping and imports from Australia and New Zealand are rising, they say. They also lowered milk production forecasts for the US as cow numbers retreat. But they don't see imports rising either.
With the ending of pandemic support in the US, their poverty levels are rising back to previous levels. Their measures of what constitutes poverty is specific to the US and covers many factors on a variety of perspectives. But for a four person household with two children, it is an annual income threshold of US$29,700 or NZ$50,300 or NZ$24.15/hr.
In India, consumer price inflation eased from 7.4% in July (which was the highest since April 2022) to 6.8% in August which was a sharper improvement than expected. Food inflation fell from 11.5% (which was the highest since January 2020) to 9.9%.
There was also July industrial production data released by India and that rose +5.7% from the same month the prior year and right at the top of the range of increases over the past 12 months. It was also impressively above the expected +4.8% rise.
In China, there are resurfacing concerns about risks with their insurance sector. You may recall these were front-and-center in 2017, but they are back again now.
In Australia, the latest Westpac-Melbourne Institute survey of consumer confidence shows households are still very concerned about finances and cautious on spending. But they are less fearful of rate hikes. It is the cost of living and inflation that remain the key drags.
Business confidence is still low in Australia, even if the widely-watched NAB survey picked up a point in August. Still, it was the highest level since January. Business conditions strengthened because there was a broad uptick in sales, profitability, and employment. But the squeeze is going on with weaker forward orders, higher labour costs, and input costs rising faster too.
Meanwhile, the WTO says the US-China trade war decoupling between the two economic giants is gathering pace and spreading to the countries aligned with each superpower.
The UST 10yr yield starts today down almost -2 bps at 4.26%. Their key 2-10 yield curve is inverted at -73 bps. And their 1-5 curve is now at -100 bps and little-changed. Their 3 mth-10yr curve inversion is still inverted at -111 bps. The Australian 10 year bond yield is now at 4.17% and unchanged from yesterday. The China 10 year bond rate is little-changed at 2.67%. And the NZ Government 10 year bond rate is now at 5.06% and up only +1 bp.
Wall Street is softer in its Tuesday session with the S&P500 down -0.6%. Overnight, European markets were mixed around London's +0.4% gain and Frankfurt's -0.5% fall. Yesterday, Tokyo ended its Tuesday session up +1.0%, but Hong Kong was down -0.4% and Shanghai ended down -0.2%. The ASX200 ended up +0.2%, but the NZX50 ended its Tuesday session unchanged.
The price of gold will start today at just on US$1912/oz and down -US$9 from yesterday.
And oil prices are up +US$2 from yesterday at just over US$88.50/bbl in the US and a ten month high. The international Brent price is now up over US$91.50/bbl.
The Kiwi dollar starts today -¼c lower from this time yesterday at 59 USc. Against the Aussie we are fractionally softer at 91.9 AUc. Against the euro we are also fractionally softer at 55 euro cents. The TWI-5 is marginally lower at 68.4.
The bitcoin price has bounced back sharply from this time yesterday, and is now at US$25,992, a net rise of +3.3% overnight. Volatility over the past 24 hours has been high at just on +/-3.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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American beef production levels are slipping and imports from Australia and New Zealand are rising, they say. They also lowered milk production forecasts for the US as cow numbers retreat. But they don't see imports rising either.
On current projections, Russia’s pork exporters expect that by the end of 2025 – one year beyond the battlefield defeat of the Ukro-NATO forces – the profitability of Russia’s pig exporting companies will depend on rising export demand, especially in China, Vietnam, the Philippines, and Thailand. This, the exporters say, will require accelerated growth in grain output to feed the pigs, which in turn depends on low to stable fertilizer, fuel, other energy and grain prices.
These are Russia’s strategic advantages in the present war. They are killing the profit margins and competitive advantages of the US-NATO side, and forcing the allied states to trade between themselves. This is the thin end of the NATO sausage. Link
Doesn't look too flash.
https://www.energylink.co.nz/publications/hydro-watch
And the snow was pretty late this year down there.
But I'm sure all those EV owners who point out they can time their battery charge to be off-peak will help allay the situation.
Lake levels are fine.
Yes it looks like a massive drop in levels in the last few weeks, but look at where they started, well above 90th percentile, In fact late June they are showing storage levels above "nominal full" not sure how that happens. I expect operators have been generating hard to avoid having to spill.
Current storage levels are pretty much average for this time of year (see the last page of second link).
If the last few weeks of limited rain continue all summer... then things might get tight, but a summer with no rain is always bad. We are not there right now.
https://www.transpower.co.nz/system-operator/notices-and-reporting/week…
https://tpow-corp-production.s3.ap-southeast-2.amazonaws.com/public/bul…
Snow is sort of a trickle feed. The real lake fillers are the westerly storms coming off the Tasman that dump 100s of millimetres on the west coast, with significant spillover. Usually they occur from about now and are a classic El Nino pattern. The Rangitata and Rakaia although not so much hydro rivers, were low last Friday, meaning not much supply from snow melt, or westerly storms at the mo.
I think that is a valid concern, I would add the price of stone fruit etc should be higher anyway after the floods this year wiping out a number of suppliers.
In regards to the power situation, if you look behind the curtain every time we have had a situation where out lakes are low you will find that the generators have gamed the system through unnecessary price manipulation or "required maintenance". They are simply gaming the system. (https://comcom.govt.nz/__data/assets/pdf_file/0025/219094/Electricity-i…)
Wellington Water are first off the ranks to announce potential water restrictions in case the region receives less than average summer rainfall. This is new because we've never had to rely on summer rainfall for our water supply.
The underlying problem is (similar to every part of NZ I assume) that catchments and reservoirs in the region were last upgraded decades ago and no longer capture sufficient amounts of water during winter months for a rapidly rising population. Add to that the issue of century-old leaky pipes running under the grounds of the capital region and you have a problem that will significantly worsen in the months and years to come.
Perhaps once Russia has defeated NATO with that army of T55 tanks, otherwise known as coffins on tracks, it can spend all that flood of pork money on plumbing?
https://www.themoscowtimes.com/2019/04/02/indoor-plumbing-still-a-pipe-…
As significant as this I imagine.
https://m.jpost.com/international/article-742392
Meanwhile Russia sends 70 year old rust buckets to try and hold on to the territory they have thieved.
https://www.forbes.com/sites/davidaxe/2023/04/14/russia-sent-70-year-ol…
Or trading pork futures
"Meanwhile, the WTO says the US-China trade war decoupling between the two economic giants is gathering pace and spreading to the countries aligned with each superpower."
I think that while this might have started as "trade war", it is more complex than that. One of the lessons from COVID is the fragility of global supply chains, and the vulnerability to nations who surrendered their resilience to the global market component of the free market theory. When those supply chains break down, irrespective of the reason, countries suddenly find themselves very short of basic commodities and no way to generate them quickly. COVID taught the lesson, but part 2 is the geo-political tensions that continue to rise which also threatens to disrupt them. Our Government is asleep at the wheel on this matter too. Add in the trans Pacific trade agreement where we have surrendered our sovereignty to some extents and they have essentially created a situation where we cannot rebuild our resilience without withdrawing from it.
So then why would anyone want to stay in NZ if its going to be much worse? At least Aus has minerals and natural resources to produce (unlike Green NZ which has to import everything), and runs an export surplus. And they are several years behind on the race based policies that NZ is so "progressively" pushing.
It is certainly going well for me over here.
The Flaw in Apple’s Plan to Make Chips in Arizona
No matter what happens with TSMC's high-profile facility in Phoenix, many cutting-edge chips it produces for Apple, Nvidia, AMD and Tesla will still require assembly in Taiwan
https://www.youtube.com/live/0V4gDDzmY_A?si=zZcn4AF2Uhwww_wH
We seem to have a fundamental misunderstanding in NZ of how property markets operate over the long term. Please watch and it might help...
With the ending of pandemic support in the US, their poverty levels are rising back to previous levels.
Today, the Census Bureau made sure that everyone else knows as well, when it reported that inflation-adjusted household incomes in the US decreased 2.3% in 2022 from a year earlier, the third year in a row of declining real incomes, highlighting the toll surging cost of living is extracting on American families, a near-record number of whom are forced to take multiple jobs just to make ends meet.
The median income last year was $74,580 compared with $76,330 in 2021, $76,660 in 2020 and $78,250 in 2019 (the all-time high hit during the Trump administration), according to the Census Bureau’s annual report on income, poverty and health insurance coverage. Link
I like that the US has a proper definition of poverty instead of NZ where we keep talking about poverty without even knowing how much actually exists (and why). A four person family with one adult earning min wage in NZ would not meet the US's poverty metric when you consider the other perks in NZ like WFF, free health, etc. Is it unreasonable to expect at least one person in the family to work, particularly when the unemployment rate is almost 0? Is it unreasonable for families to not have lots of kids if they can't afford it? There really should be no families in NZ that meet the US's poverty metric.
Actually the min wage in NZ is $47,216 and it looks like if you have 2 kids you also get $282 a week from WFF ($14,664) meaning a family with one adult earning min wage and 2 kids gets a minimum of $61,880 a year. On top you get free health, accommodation supplement?, winter energy payments?, free prescriptions, free public transport for kids, free daycare, etc.
Luxton was on Radio Red this morning (another miss-step, his PR is a how-not-to master class), just 1-2 mins after they had finished berating him, they deliberately mis-represented his comments in their following "news" segment. My child who was in the car with me turned to me un-prompted and said "thats not what he said?" and I had to explain the concept of propaganda.
If there is one area of the blob that needs the hardest trim it's that lot; amongst the dizzying array of Labour plots and schemes their funding of the propaganda arm needs to be cut down. That's a funding hair-cut that needs to start at the ankles.
The failed "merger" of RNZ and TVNZ cost us ~$20 million ("The cost of the aborted public media merger is being put at $19.6m, almost 60 percent of which was spent on contractors and consultants.")
In April this year they increased the funding by $25.7m! The waste of public money must be like heroin to these guys.
Indeed, the landscape should be cleared so the only bias is the right. As much as RNZ has become too much a social engineering service, privatised radio has been the same, except for longer. Seems thats the balance we are now fed, although personally both are impossible listening. The hard right was first though, the hard left late to the party. Hosk and Leighton Smith had the knee jerkers twitching decades ago.
Newspaper owners in the 19th century were people with axes to grind. No difference to now. The idea of media non-bias is a myth. If it ever existed, it wasn't for long, and was an anomaly that has reverted to the mean. But at least media should acknowledge their biases.
Agreed. All media is inherently biased one way or another, and the issue arises when this is not properly disclosed or otherwise denied.
I do think that the private media generally does a better job of this, but also the media-consuming public is more switched on to the fact that private media will be biased one way or another so there's another angle to this.
One problem I have with publicly-funded media is that - wherever you look, not just limited to NZ - it is typically trading off its past reputation of being a sort of noble medium of mass communication, with journalistic ethics and content standards that are above those of the private sector.
Maybe that was the case in the past, but I can't think of a single public media source that isn't clearly biased in some respects. Part of this, I believe, is that journalists more than ever see their role as shaping narratives and altering perspectives, as opposed to reporting just on facts and figures (outside of clearly marked opinion pieces).
I studied journalism for a bit at university, and I recall the professor endlessly screeching and screaming about the evils of the Murdoch-funded press, private businesses influencing media because "money dictates the news". A dollar is a dollar is a dollar, so how does government money have any different effect other than to influence the media?
"The report confirms that public media is losing audience and seeing trust dissipate. RNZ currently reaches less than 10% of the public each week, not even on a daily basis. Despite huge government support, RNZ is facing an operating deficit of approximately 10% of its revenue this financial year. “Modelling done for the Establishment Board last year concludes that, without change, RNZ and TVNZ are financially vulnerable given their gap between revenues and costs. Over the ten years from 2023/24 to 2033/34, the modelling showed RNZ’s and TVNZ’s costs exceeded revenues by $1.63 billion.”
https://twitter.com/CranmerWrites/status/1701009063612678402
They did receive funding, maybe not directly to Newstalk ZB but NZME received $6.8m in funding from the Journalism fund (the biggest portion). Obviously the funding intent was just for Maori stuff, so very racist, but still funding for the organization nonetheless.
https://www.taxpayers.org.nz/pijf
Newstalk ZB even directly receive funding from NZ on Air for Mike King's "nutters club".
https://www.nzonair.govt.nz/about/our-funding-strategy/spoken-content-a…
The problem is still showing up isn’t it though. Luxon was training on the job as an mp, same now as leader of the opposition and likely again as Prime Minister. A tyro regardless however you may frame it. Whatever schooling he has had will now just have to do. There is quite some strength though to be had, in just being natural. Better to be natural say boringly in my book than a facetious & flippant fibber.
I agree but he has just not found that balance. He is still trying very hard to talk into a persona rather than be himself. This morning he said "that's rubbish" to some of Dan's claims and it just rang flat, it's not authentic.
He needs some competent PR no doubt, maybe you could give him a ring and some coaching :)
Not me! I was backroom relying more on putting it in writing rather than boardroom jousting. Never have forgotten the advice of my first seriously big CEO before I started attending top industry meetings. Something like what is not said is twice as important than what is said and what is in writing is worth more than the sum of both of them. That ain’t of much cop in politics though, ever since Muldoon clued up on how to best exploit TV.
Agree. The criteria for accessing the $100M "journalism" (propaganda) fund is straight out of the Labour party manifesto https://d3r9t6niqlb7tz.cloudfront.net/media/documents/220221_PIJF_Gener….
The Te Tiriti framework
https://d3r9t6niqlb7tz.cloudfront.net/media/documents/2022_03_Irirangi_… looks like something Mahuta and Jackson cooked up.
Also, watched their latest electoral commission advert to promote voting in the upcoming election last night. All of the actors are stereotypical Labour/Greens profiles.
Who has forgotten! The very first address from the podium of truth, signalling financial assistance packages, the very first question from the media something like - how much is the media going to get and when are we going to start getting it. Sums it all up rather, doesn’t it.
Here's a breakdown of the recipients of the Journalism Fund. Quite a lot of initiatives to cater to 17% of the population.
In the fine print is PIJF is actually is a loan so if you don't toe the governments narrative the rug can be pulled bankrupting your business. Media manipulation at it's finest. Hence Mike Hosking is controlled opposition - he never goes fro the jugular and forever asks patsy questions. Every Hosking/HDPA interview is following by a government favourable sound bite in the next news slot.
They are harsh on both sides, which I think is good. Just yesterday they had Chippy on and grilling him over Labours polls. The journo was a bit stunned when Chippy said something like "I think the polls reflect NZers want a change", which shocked the journo that he had "won". Then the next news broadcast was "Hipkins has admitted defeat..." when he didn't say that at all.
""sentenced for immigration fraud and migrant exploitation charges""
Immigration national manager investigations Stephanie Greathead said the Madaans provided false and misleading information to INZ when submitting visa applications and paid their temporary workers beneath the minimum wage, an action that "deliberately undermines the integrity of the immigration system"
10.5 months each to be served in home detention. Additionally fined the companies $4,000 for three charges and entered a conviction and discharge for all other charges their companies faced.
How many guilty companies are never prosecuted? How many Kiwi companies went under because they couldn't compete with sub-Minimum Wage businesses?
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