Here's our summary of key economic events overnight that affect New Zealand, with news India is the world's bright economic star at the moment.
But first in the US, the actual number of people claiming jobless benefits fell last week, but by less than expected to 194,000. Continuing jobless claims were unchanged at 2.1 mln, still the highest since November. It was a mixed picture. Seasonally these levels are higher than was expected.
American PCE inflation for January came in at the expected 2.4% which was a dip from the December 2.6%. Core PCE dipped slightly too. Personal income jumped an outsized +1.0% in January from December which puts it +2.1% higher than a year ago (real), while personal spending rose +0.3% on the same basis, also +2.1% higher than a year ago (also real).
The Chicago PMI fell again, its third straight fall. But there was a sharp recovery in the Kansas City Fed factory survey although new order growth was flat.
American pending home sales in January dropped -4.9% as the residential sector stays in the doldrums. The Northeast and West posted monthly gains in transactions while the Midwest and South recorded losses. All four U.S. regions registered year-over-year decreases.
Canadian data for Q4-2023 GDP shows them returning to growth.
Japanese industrial production disappointed in January, coming in -1.5% lower than a year ago. Meanwhile, retail sales in Japan rose +2.3% year-on-year in January, slowing slightly from an upwardly revised +2.4% gain in December.
Meanwhile, Taiwanese retail sales grew just +0.3% year-on-year in January, the lowest expansion since February 2022. But Taiwanese industrial production surged in January, up +16% from a year ago.
India released its Q4 GDP results beating both forecasts and the strong Q3 expansion, to be +8.4% larger than the same quarter a year ago. The Indian economic performance is a strong global highlight. It is impressive given how large it is, a famously difficult place to generate change. (But we probably should be a bit sceptical on this data. The Modi Government has a tight control over their stats, and an election is looming. Just saying ...)
But there are never any contested elections in China. China's per capita gross national income declined in US dollar terms for the first time in 29 years in 2023, data released yesterday shows, pulling it further from the World Bank's threshold for a high-income country. The comparison with India will be causing some concern in Beijing now. China's solution to their woes? More state planning and directed SOE activity. They seem a bit lost at the moment.
The -1.4% decline in real German retail sales continued in January. But that seems to be the price they are prepared to pay to get inflation back to where they need it. In February it fell to +2.5%, its lowest since mid 2021. In between it peaked at almost +9%.
In Australia, the January retail sales brought a modest bounce, but not to a level that satisfied anyone.
Container freight rates eased again last week, but remain very high for the usual climate (Panama) and security (Suez) restriction reasons. They are still almost +90% higher than year ago levels. Bulk cargo rates are rising now too, up a sharp +24% in the past week alone.
The UST 10yr yield starts today at 4.25% and down -4 bps from this time yesterday. The key 2-10 yield curve inversion is little-changed at -39 bps. but their 1-5 curve inversion is deeper at -76 bps. And their 3 mth-10yr curve inversion also deeper at -116 bps. The Australian 10 year bond yield is now at 4.14% and down -3 bps. The China 10 year bond rate is now 2.37%, and a new all-time low. The NZ Government 10 year bond rate is down a mere -1 bp at 4.81%.
Wall Street has started its Thursday session up +0.3% on the S&P500, and back near its record high. Overnight, European markets were mixed; Paris was down -0.1%, Frankfurt up +0.6% and the others in between. Yesterday Tokyo ended its Thursday session little-changed but Hong Kong fell -0.2% with a late dip and Shanghai recovered +1.9% with a late afternoon surge. Singapore ended little-changed. Meanwhile the ASX200 was up +0.5 but the NZX50 ended its Thursday trade down -0.2%.
The price of gold will start today up +US$13/oz from yesterday at US$2045/oz.
Oil prices are up +US$1 at just under US$79/bbl in the US while the international Brent price is now just over US$82.50/bbl.
The Kiwi dollar starts today at just on 60.9 USc and little-changed from this time yesterday. Against the Aussie we are down marginally at 93.7 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just over 70.3 and little-changed
The bitcoin price starts today at US$62,275 and up +0.82% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.9%.
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74 Comments
Exactly.
Been saying it for years everytime the headlines peddle fear of all this "wealth" being destroyed or lost.
Expectation or very faulty programming of the human collective?
And then we have the hypocrites in charge
https://www.nzherald.co.nz/nz/politics/benefit-mansion-christopher-luxo…
On a computer screen...
And when it's "lost" where is it?
This notion of monetary wealth has to be the most ridiculous, unintelligent, illogical and irrational concept/construct mankind has ever invented.
I can sit outside and see a creation that provides life for all, I can see brothers and sisters, a family of flora, fauna and humans. I can see infrastructure that connects us all, that we are all dependant on. True wealth, real abundance. Yet we're fixated on numbers and data for some sense of meaning...
Some much wealth being destroyed now. Indeed:
Re: Manhattan fire sale.
Trump will not be happy. He has 30 days to raise $US445m as bond to be able to pay or appeal the fine; Engoron curtly rebuffed both his request for an extension and his offer to stomp up $100m. Trump's ability to borrow against his already over-inflated valued assets will have just got considerably tougher so may be adding fuel to the New York fire sale.
Well it shouldn't be a total surprise but two of the originals are sueing Trump for fraud. So his Truth social which is losing money hand of fist may not even list due to the upcoming court case. And Trump, if it did list has to wait six months before selling shares, unless he gets a waiver.
A quick and easy introduction.
https://www.investopedia.com/articles/bonds/07/price_yield.asp
People definitely need to understand this. It is a core part of the global financial system and without a thorough understanding of what is going on, much conversation will pass completely over people's head.
It was the very first thing that we delved into - in great detail! - doing Economics 200 at Uni. I think it is now covered in High School economics courses too. (My great aunt was a passionate technical investor & mathematics enthusiast. When she babysat - I was fed a diet of financial information and analysis. Fascinating stuff. I was chuffed that it went right over my parent's heads.)
Meanwhile the UK and Europe commit ecoloon net zero economic suicide.
"The country's energy usage has tumbled to its lowest level since the era of Edward Heath's three day week, official figures show. In 2022, excluding the 2020 Covid lockdown, the country used less energy than in any year since at least 1970.
...Industrial energy consumption hit a record low in 2022, down 35pc since its pre-financial crisis peak.
...Paradoxically, falling energy consumption also puts our net zero goals in jeopardy, economists warn. Britain and the rest of the world must spend heavily on building new infrastructure to deliver more electricity and cut out oil and gas use. That investment activity will be power-hungry.
European countries need to double their electricity consumption over the next 20 years to get to net zero, says McWilliams.
“That’s a consequence of the fact that, for most sectors, the low carbon solution is electricity, whether that’s electric vehicles or heat pumps or industrial processes.”
“The pathways to net zero involve significant electrification,” says Catherine Wolfram, a Professor of Energy Economics at MIT. “We would be expecting [electricity use] to increase.”
https://www.telegraph.co.uk/business/2024/02/28/collapsing-energy-use-b…
Beyond the peak of energy return on energy invested (EROEI) there was ALWAYS going to be a reduction in the amount of forward batting which was physically underwritten.
But attempting to maintain the unmaintainable, is an invalid goal, and Profile's opening comment is therefore also invalid. The physics of a finite planet always said that economic GROWTH was unsustainable; the question is how do we ascertain and maintain a sustainable level of activity?
"Perhaps we should also note the rather stunning fall in natural gas prices worldwide. In inflation-adjusted terms, natural gas has never been cheaper."
https://www.interest.co.nz/economy/126340/us-inflation-expectations-eas…
"Qatar plans new gas output boost amid global price collapse"
https://www.reuters.com/business/energy/qatarenergy-set-further-expand-…
"Even the most cautious of forecasts at the conference saw demand for all grades of coal reaching 1.5 billion metric tons by 2030, with some reaching as high as 1.9 billion.
To put that in context, India's coal demand was 1.23 billion tons, composed of domestic production of 964 million tons and imports of around 266 million.
Put another way, even the more pessimistic of forecasts expects an increase of nearly 300 million tons of coal demand in India in the next six years, an increase of 25%.
To put the scale of the increase in context, 300 million tons is more than the total annual demand of Germany, the fourth-biggest coal-consuming nation after China, India and the United States."
https://www.reuters.com/markets/commodities/indias-coal-sector-sees-hug…
PDK is more of a supply side tragic.
"Proven natural gas reserves stood at 406.3 billion cu m at end-2022, up from 378.65 billion cu m a year ago.
At the end of 2023, the world’s proven oil reserves reached 1,754.6 billion bbl, an increase from the previous year’s 1,746.8 billion bbl, according to OGJ's annual assessment."
https://www.ogj.com/general-interest/economics-markets/article/14302481…
PDK, our finance world is based on the concept of borrowing money to invest pull future returns towards today.
In a fully sustainable world this cannot be done, hence current financial models will not support it, or sustainability cannot support current finance patterns...
Queue the retirement investment industry that needs this growth or you will retire poor....
IMHO the best thing you can do is move rural and become as self sufficient as you can, as central planning and services will let you down over time. Have your own water, sewage system, wind and solar generation.
IMHO the best thing you can do is move rural and become as self sufficient as you can, as central planning and services will let you down over time. Have your own water, sewage system, wind and solar generation.
The issue for most, is that to do this requires significant financial resources.
As things are currently, its the only practical way it can be done. Basically you have to borrow now and pay it back over the years, otherwise you will be chasing your tail for a lifetime. Even saving a house deposit now must be like trying to run up the down elevator trying to get to the top and yet it can still be done.
Luxy leading by example - getting the country back on track
Luxon claims $52k payment to live in his own Wellington apartment (which is mtge free)
Christopher Luxon is the first PM in at least 34 years to claim the accommodation payment as previous titleholders have either lived in Premier House or were already based in Wellington.
and at the same time
Prime Minister Christopher Luxon says he has spoken to a lot of Work and Income frontline caseworkers who say their biggest frustration was people abusing the beneficiary system.
“They don’t feel that they can apply the sanctions when they need to be applied, people who are wilfully and knowingly abusing the system and not taking their situation seriously,” Luxon told Newstalk ZB’s Mike Hosking.
Jacinda Ardern, the most recent prime minister to live in the house, publicly documented leaks and problems with possums in the roof and walls.
Ardern created the Premier House Board, made up of heritage experts and other appointed by both the Government and Opposition, which produced a report on work needed to be done in September 2023.
https://www.thepost.co.nz/nz-news/350173109/luxon-yet-move-premier-hous…
"If I can pay, I should pay", says man about what others should do, while putting his own hand out for extra taxpayer money at every opportunity. Housing, health, electric vehicles, even Māori language lessons.
Why does so much of NZ's faux-Right behaviour seem to be advocating free market stuff to apply to others, while for oneself seemingly unlimited taxpayer support is always the preference.
Gross bludger mentality. Too entitled.
There is an advantage to being a right leaning, not necessarily libertarian, politician in that you can claim these things. A poor Prime Minister would be able to get the same benefits too. Those that complain about this could always have fronted up to be Prime Minister themselves and received these sweet returns.
I guess we don't really want rich Prime Ministers virtue signaling by turning down legitimate recompense. That flat would have been rented out and giving Luxon a return if he wasn't having to stay there while performing his duties.
There's nothing untoward about this, it's all legit. In fact it's quite a good deal for the country as I imagine a residence for a Prime Minister would cost more than a grand a week ordinarily. Luxon has elected to live in one of of his own hovels for the sake of the country.
Here's what that $52,000 could buy if Luxon were renting his apartment out. 3 bed, 2 bath on the Terrace
https://www.trademe.co.nz/a/property/residential/rent/wellington/wellin…
I agree, but Luxon is also following the homo economicus path - it's not abuse if you're allowed to do it. The WINZ example they're not allowed to do it but are getting away with it. There's a big difference, even if one party is doing what it takes to survive while the other is hypocritically skimming the cream - that sweet, sweet cream - from the top.
Hopefully the media will put pressure on him - the opposition can't until they put their own houses in order - and the conditions on the allowances will be tightened.
Personal income jumped an outsized +1.0% in January from December which puts it +2.1% higher than a year ago (real), while personal spending rose +0.3% on the same basis, also +2.1% higher than a year ago (also real).
Government handouts exploded higher by $92BN MoM in January!!!! The biggest jump since July 2021...
This was driven by the COLA adjustment (but after this, how is the consumer going to keep spending). Link
Rightly so.
The Modi government is taking corruption to a whole new level if my contacts in Indian academia are to be believed. Basically, so many scandals that the frequency means a scandal just a week old is largely forgotten as the new one gets all the air time. Hindu nationalism is becoming akin to fascism. Combine extreme religious doctrine, populist politics with a largely uneducated and volatile population ... What could go wrong?
But there are never any contested elections in China. China's per capita gross national income declined in US dollar terms for the first time in 29 years in 2023, data released yesterday shows, pulling it further from the World Bank's threshold for a high-income country. Hardly:
China's economy grew by 5.2 percent year-on-year in 2023, according to the statistical communique released by the National Bureau of Statistics (NBS) on Thursday, reaffirming the figure released in January and staying above the official GDP growth target of around 5 percent in 2023. Meanwhile, the per capita GDP in 2023 increased by 5.4 percent over the previous year. Link
I can understand them backing off the first two of their three tobacco law changes. But deciding not to require the reduction of highly-addictive nicotine in cigarettes? That seems bizarre... That decision to reduce freedom of choice for Kiwis who pick up cigarettes in favour of allowing them to be more addictive, that just seems weird pandering to tobacco money donors.
The MP for Marlboro seems to have had quite the influence, possibly?
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