Here's our summary of key economic events overnight that affect New Zealand with news that catches us up over the past two days.
First, the inflation measure the US Fed prefers, the personal consumption expenditure price index (PCE) was unchanged in May from April following a +0.3% rise in April. This was what markets were expecting. That means the annual PCE rate slipped to 2.6%, its lowest since March 2021. (The May CPI was 3.3% and we get the June CPI on June 13 (NZT).
Personal spending was up +2.4% from May a year ago, personal income a bit less.
US durable goods orders were unchanged in may from April but were -1.2% lower than the same month a year ago. Of more concern however will be that capital goods orders fell -10% on the same basis.
Eventually that may weigh on employment, but so far it hasn't. Last week initial claims for jobless benefits fell from the prior week. Compared to the same week a year ago the number of people on these benefits was higher, but in relation to their workforce, that gain was insignificant. The American's next report their labour market data for June this time next week. Markets still expect non-farm payrolls will have grown +180,000.
US pending home sales for May fell when a bounce-back was expected, reinforcing the fund the American housing market is in.
There was a major bounce-back in the regional Chicago PMI in June after its sharp fall in May. This was led by a big jump in new orders.
But that was not the case 'down the road' in the Kansas City Fed factory survey which eased back into a contraction in June.
The widely-watched University of Michigan consumer sentiment survey was little-changed in June, but it is up more than +6% from a year ago.
Japan industrial production rose +2.8% in May from April, beating market forecasts, flash data showed. It also recorded an unusual year-on-year result too. This was the second increase so far this year, mainly due to strong motor vehicles output. They think June will slip back but July will be another gain.
The ECB said that its survey of consumer inflation expectations over the year ahead are now back to 2.8%, the same level they were at when they started this survey in early 2020. They peaked at 5.8% in October 2022. Those survey said they felt inflation ran at 5.8% over the prior 12 months. (It actually ran at 2.7% in the year to May but averaged 3.9% over the past twelve months.)
The rise and rise of container freight rates continued last week, up +4% from the prior week to now be a massive 256% higher than the same week a year ago. Again the main culprit was outbound rates from China to Europe, hostage to the Yemeni Houthis and their piracy. Bulk cargo rates were up +2% for the week and are again in an uptrend. They are up +72% for the year.
The UST 10yr yield is now at 4.39% and up +7 bps from this time Thursday, up +8 bps for the week. The key 2-10 yield curve inversion is again much less at -37 bps. Their 1-5 curve is also less inverted, by -78 bps. And their 3 mth-10yr curve inversion is unchanged at -103 bps. The Australian 10 year bond yield is back down -7 bps at 4.35% on the Aussie CPI result. The China 10 year bond rate is down -3 bps at 2.21% and a new all-time record low. The NZ Government 10 year bond rate is now at 4.73% and up +8 bps from Thursday but up only +5 bps for the week.
On Wall Street, the S&P500 is down -0.4% in its Friday session but a weekly +0.2% gain and a +2.9% monthly gain. Overnight, European markets closed similarly on average. Yesterday Tokyo closed +0.6% higher. Hong Kong closed unchanged, but Shanghai rose +0.7% to be down -0.5% for the week. Singapore ended down -0.3%. The ASX200 closed up +0.1% yesterday to end its week down -0.4% and the NZX50 didn't trade yesterday of course, ending its week down -0.5%
The Fear & Greed index is little-changed, just in the 'neutral' range.
The price of gold will start today up +US$25 from Thursday at US$2326/oz. A week ago it was at US$2320/oz.
Oil prices are little-changed from Thursday at just on US$81/bbl in the US while the international Brent price is still under US$85/bbl.
The Kiwi dollar starts today slightly firmer from Thursday at just under 61 USc. Against the Aussie we are unchanged at 91.4 AUc. Against the euro we are also unchanged at 56.9 euro cents. That all means our TWI-5 starts today still lower at 70.5.
The bitcoin price starts today at US$60,654 and down -1.6% from this time yesterday. But that is -5.2% lower for the week. Volatility over the past 24 hours has remained modest at just on +/- 1.3%.
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95 Comments
Baywatch - read this, UK but same as here
https://www.timeout.com/london/nightlife/rip-ipa-who-killed-craft-beer?…
If we passed on all our costs, a pint would be a tenner
Even the super markets have reduced the shelf space for craft. It was always a discretionary product.
Noted at a 2 eating/drinking establishments in Auckland over the Matariki holiday, $17 dollar pint beer. We agreed $20 sooner or later. Blame the Kiwi peso as the businesses are barely break even.
Went out on the town last night in the CBD. Pint prices at 3 destinations:
$17
$13
$11
The cost seemed relevant to the distance from the Viaduct, the establishment's policy about charging extra for a public holiday, and the volume of people there trying to score.
Was disappointed, had expected downtown to be the degraded wasteland I've heard its become, seemed pretty tame. Maybe all the homeless junkies took the long weekend off.
Hospitality death spiral as they raise prices to cover their fixed overheads, and the result of doing that is reduced patronage as less people can justify or afford the prices. Pricing themselves out of clientele.
I could pay $10 - $12 for a pint, but $17 becomes hard to justify especially when beer from the Supermarket is in the range of $3 - $5 per pint.
Southern Spain over Christmas. Loved my $4-5 beers. Smooth and lovely.
You just asked for one and it came. No choices, which was a plus.
Back here in NZ it's $12 plus plus plus and up. "Craft"
Vast choices in NZ, every one of them quite foul, and with a stupid name.
You'll trigger poor old Flying High.
Considering Joe's been like this for most, if not all, his Presidential term then I guess the DNC were hoping Trump wouldn't get the nomination. The fact CNN are now openly discussing his cognitive issues when they've been defending the same mental state in the past is quite telling. What a complete circus it is over there.
I think they will replace at conference with Newsom, current odds below from sports bet, to many voters its all about illegal immigration this vote.... (that's from US based friends from both sides)
Donald Trump 1.57
Joe Biden 4.33
Gavin Newsom 7.50
Michelle Obama 20.00
Newsom is amazing but being from California doesn't help in the swing states. I'm thinking
https://www.msn.com/en-us/news/politics/gretchen-whitmer-thinks-she-cou…
is a better choice at this particular time. Given the abortion debacle and the absolute angst from women the country over about the Christian fundamentalists' intention to take their rights away - it's time for a female in the Oval Office.
But Joe Biden has to stand down and the sooner the better. He should have a say/be the lead promoter in his successor - as that's the best way to retain the unity the Dems have had all along.
Biden in the primaries was down and out in 2000 until the Dems realised the other nominees were unelectable. And Biden went ahead and won after over thirty years of effort. Seems like he is finding that long harboured ambition for the presidency, hard to let go. But for the sake of the nation he must and as well if he leaves now his legacy remains as a good one but if he loses or has a second term failure that legacy will be shredded.
I always thought the party machine made the wrong choice with both Hilary and Biden. They were always party machine favorites, not public favorites. Biden has turned out to be a stand out President but it's now time to retire for good. And yes, that would serve his reputation even better historically.
Big call to switch riders in the final run, labour did it in 2017 but only because of MMP. Biden poll ratings are up since
Their overarching narrative - that growth can go on forever - is false, and increasingly showing up as being so.
In it's place are a plethora - most getting some parts right but extrapolating until they have to be wrong. Same goes for both major cliques.
And those who benefit from the narrative, are established/old/elite - all getting older. Good chance neither man is alive in 4 years' time - when was that last the case? This is a dying hegemony.
The fix is in.
The Supreme Court weakens federal regulators, overturning decades-old Chevron decision
https://apnews.com/article/supreme-court-chevron-regulations-environmen…
The Supreme Court strips the SEC of a critical enforcement tool in fraud cases
https://apnews.com/article/supreme-court-regulatory-agencies-sec-36f164…
To Snow, CNN had doubts about Michael Cohen's and Stormy Daniels testimony and the jury could still see and smell trumps guilt a mile off
Rachel Maddow gave a review that trump performed better in the first half but by the end was flagging. Maybe the uppers had worn off by then
BTW I don't need your empathy or patronage, im neither poor nor old, thanks
Doesn’t matter. The scene isn’t even set. The GOP attack dog machine that outwitted Gore, discredited Kerry and on the way dishonoured their own McCain hasn’t even started in on Biden. He can’t defend himself let alone promote himself, a sitting duck and dog tucker The America voter reacts before anything else, negatively to perceived weakness without even thinking about the credentials of the alternative. For example previous one term presidencies. Carter, weak.Reagan strong. Bush, weak. Clinton strong.
Trump has the nomination, full stop. The Republican aristocracy, Bush, Cheney couldn’t prevent that and nothing else will stop Trump running for president provided he stays on his feet. To assist his re-election the Kennedy independent will attract the majority of votes from democrats. Once in office Trump can dismiss all the federal prosecutions he faces and tell the civil and criminal convictions to go to hell because he ain’t paying a penny. QED. Trump has the characteristics of a megalomania I would suggest, and as it is now obvious Biden is incapable of stopping him, he should hand over to a candidate that can, if he should think to put his country before himself.
Trump and Trump backed candidates have lost consistently
the accusations trump levels at biden are really a confession... "we won't have a country anymore". (Which he said at the 2020 election and proved to be untrue). We have seen what Donald is like, Trump wants to be king with complete immunity
All of that and more. It defies sanity that Trump has ever got to be president let alone that he is on the verge of reclaiming it. Second time round the world is much more precariously placed and god knows what sort of inner circle of “advisors” will surround him this time. True, election day will decide but historically weak looking candidates such as Biden, don’t win. Like it or not, the moths will go to the stronger shining light.
Having viewed the entire debate ,I think Trump is 'as usual' very overconfident ... What I did glean from it was the strong hint that Trump might pull the plug on the NATO alliance which could lead to disaster for Europe. Taken in its entirety I didnt see the incompetent Joe the press are portraying . Will be interesting how this all plays out.
There are Republican & Democrat diehards that will never vote otherwise. That leaves the swings and that vote is how Trump defeated Clinton in the critical states. That vote was something of a protest vote. Going back a bit Carter was voted out, weak. Bush senior, out of touch. And here Biden presents both of those plus enfeeblement and highly questionable durability. Trump really has been handed a free pass here.
Interesting. So what is stopping the trucking companies buying rail wagons and having Kiwirail locomotives move them in trainsets? Any operator can use the rail network. You pay the necessary charges and meet the regulatory criteria. Same as air transport and use of airways. The trucking lobby is constantly whinging that the driver cohort is aging and there will not be enough drivers for future projections. Why not send suitable applicants to locomotive training school and then the option to buy/lease locomotives arises. One driver and an average of 45 container equivalents ( inter island trainset). What's to loose?
"The political and bureaucratic class were using a State-Owned Enterprise to pursue a wider economic program. They were trying to run a trucking business when they should just have built the road. It has ended badly.
I am unsure if cancelling the iRex program was the right one but it is clear that we will soon have a severe supply constraint on a vital node in our transport infrastructure and those best placed to respond have been falsely vilified by the political and bureaucratic class seeking to cover their own ineptitude.
KiwiRail should be sold. Again. For good this time."
https://www.stuff.co.nz/nz-news/350326675/damien-grant-kiwirail-should-…
Yes, the ministry of transport were all over the place on this, as was treasury.
To me, his whole article seems to point to Kiwirail not been totally to blame, but then chucks in privatizing it in the last sentence.
It is worth noting that Kiwirail was borrowing money to buy the actual ferries. The govt money was for the infrastructure. In that sense, Kiwirail is the same as Bluebridge, who don't provide their own land infrastructure either.
Industrial Policy Is a Nostalgic Pipe Dream
It is true that ordinary people are angry. Having been brought up on the promise of a middle-class democracy underpinned by stable industrial jobs, many find themselves toiling as serfs in the gig economy. They are ruled by oligarchs, and condescended to by entitled urban professionals, with economists among the worst offenders. How did this happen? It may be comforting to blame China (or Mexico, or Japan, or even South Korea), but the story properly starts with the breach between labor and anti-war liberals that occurred within the US Democratic Party in the 1970s. That set the stage for President Ronald Reagan and Federal Reserve Chair Paul Volcker’s destruction of US manufacturing and associated unions, followed by the rise of Big Finance and Big Tech in the Clinton era.
But to do any such thing requires state capacity, and the Berlin summiteers acknowledge that this has been “hollowed out” over 40 years of neoliberal neglect and predation
You're one of the most vocal critics of state bureaucracy on this site and have just voted in a govt committed to hollowing out the state even more. You're part of the problem he's talking about, own it.
The problem doesn’t lie with me at all.
The problem lies with the failed ‘left’. I use ‘left’ in quotation marks because they most certainly are not ‘left’.
If the previous government had been left of centre, then:
- they wouldn’t have welcomed mass immigration - they wouldn’t have believed the BS that deregulation of planning is the answer to affordable housing and climate change
- they wouldn’t have promoted hugely expensive vanity projects like the light rail
- they would have invested heavily in basic human needs such as health, which in terms of the hierarchy of needs has to be critical
- they would have introduced a wealth tax, or equivalent
I voted strategically, to help avoid National’s awful foreign buyers policy.
Agnostium. Useful state capacity got hollowed out for sure. It changed from serving the public to the public serving it. And made itself huge at the same time.
You tell yourself that. When you privatise and start to rely on the private sector (consultants and contractors). What do you expect. The private sector is profit driven not public serving. It amazes me those that keep arguing for privatisation and further hollowing out of the public sector then complain when the public sector becomes decoupled from public service. Newsflash champ doing the same thing over and over and expecting a different result is ...
Consultants and contractors was not privatisation. It was mindless mismanagement. Fundamental to it was not building resilient skills in the organisation. Then public service dimness at it's extreme. Employee finishes Friday. Back Monday as contractor at twice the rate.
You can't blame that on the private sector. It's stupidity. Not being able to function within the parameters others are obliged to.
As for your "newsflash". Try looking in the mirror.
" It amazes me those that keep arguing for privatisation and further hollowing out of the public sector then complain when the public sector becomes decoupled from public service. Newsflash champ doing the same thing over and over and expecting a different result is ..."
~40%/18000 increase in public servants in Labours 6 years & we get this dysfunction when too many people don't have enough real work to do.
Exhibit #123456789
"While roads across the country are looking like Swiss cheese, the geniuses at the New Zealand Transport Agency, decided the best use of their time (and our money!) would be developing a $5.2 million (and counting) mobile phone app designed to function as a digital driver licence.
Sounds sensible enough, right?
The problem? NZTA didn’t bother to check whether the Ministry of Transport and the Police would (or could) actually accept a digital driver licence!
So your humble Taxpayers' Union did check. And, digital versions of driver licences can't be used under existing traffic or identification laws.
Put another way, for the app ever to be used for this purpose, Parliament will need to change the law and no one noticed! 🤦
Officials commissioned a $5.2 million mobile "app" that can't legally be used the very purpose of the app."
https://www.taxpayers.org.nz/_nzta_blows_5_2_million_on_unusable_app?ut…
So how did we get here? (A brief history ...)
Mega-rich people: We need more. How can we get it?
Machiavelli: There is a way ...
Mega-rich people: We will cover you in gold!
Machiavelli: Buy enough of of media companies' stock to take control ...
Mega-rich people: But why? They make almost nothing. In fact, they mainly lose money. The tax losses won't help us much.
Machiavelli: To control the narrative ...
Mega-rich people: We're not interested in the narrative. It's boring, irrelevant to people as rich as we are, and they whine all the time.
Machiavelli: People talk about what is in the media ..
Mega-rich people: So what? We don't care what they talk about. Only that they come to work and accept what we choose to pay them.
Machiavelli: People vote based on what they talk about ...
Mega-rich people: Who cares what they talk about. We tried to buy voters. It's vastly expensive.
Machiavelli: You only need 5% ...
Mega-rich people: Not anywhere near enough!
Machiavelli: You only need the swing voters ...
Mega-rich people: Maybe. Not very reliable.
Machiavelli: Just one term of a government slashing education back to only what you need ...
Mega-rich people: But we need educated people to work for us!
Machiavelli: Some, but actually few. Mainly you want less critical thinkers (philosophers) and more 'back to basics' (engineers) ...
Mega-rich people: How does that help?
Machiavelli: Eventually, you'll control the government ...
Mega-rich people: That sounds nice. But eventually the people realise this and start building guillotines!
Machiavelli: What if the people believe it is always the government that is at fault ...
Mega-rich people: That might work! In fact, it will work. Everyone will overlook us and it will always be the governments fault!
Machiavelli: My gold please ...
Mega-rich people: Here's an economics degree. And we'll get you a job at the giant blood-sucking squid bank, or a tenure as a Professor of Economics at any Ivy League college you want. Whichever you wish. And we'll also ensure you're a celebrity and interviewed all the time.
Machiavelli: My lords, your humble servant is most grateful ... (exits stage right...)
Mega-rich people: Hmm. Have this fool discredited, or killed. Nobody must ever believe it is this easy. And someone get that Zuckerberg guy on the phone. We need more than the old media to control the narrative. A few tweaks to his algorithms should do it.
Mega-rich people: Is there any way to silence that Galbraith fellow? Actually, we may not even need to. Leave him as voice in the wilderness so we can pretend our media is unbiased.
(Note: In actual fact - it wasn't all Mega-rich people - it only needed a few. But they all benefited from it. ... And when the guillotines start singing, few are likely to be spared.)
Lol...not a bad story, but the reality will likely be the mega rich will slip away while the rest have to deal with a collapsing, violent dysfunctional society...at least initially.
Have you ever wondered why in the post WW2 period (for around 30 years) conditions improved markedly for the working man (and consequently their partners and offspring)?
"Have you ever wondered why in the post WW2 period (for around 30 years) conditions improved markedly for the working man ..."
That's what happens when you've trained millions of men to be an organised fighting force. The old saying goes, "people should not fear their governments, governments should fear their people". As to a large extent, the governments represent the rich far better than the poor (for all the rhetoric that is spouted to the contrary), the rich were careful not to awake the ire of these millions. The rich learnt from the way returned service men were treated after WW1 when communism became a powerful counter force to rich's beloved capitalism.
Pretty much....and those returned servicemen (and their experience and capabilities) are not present in subsequent generations....the understanding has been lost, but circumstances may provide an opportunity to relearn.....hell of a way to relearn a lesson though.
The French Revolution was pretty effective and they all 'learned on the job'. Few of the mega-rich escaped. And some were hunted down after they had fled the country.
Most revolutions have a significant money / inequality aspect albeit our media likes to pretend it is mainly about something else. Religious differences are a common con. But for most of the people involved in a revolution, it is not what media paints. It is about inequality, and fairness.
Here's the Forbes list of billionaires: https://www.forbes.com/real-time-billionaires/#669d5b573d78
That list will be both woefully inaccurate and woefully incomplete. Why? Hiding billions is what rich people are very good at and they employ armies of 'wanna be rich' to do it. And incomplete because there are many, like Putin for example, that have it 'hidden' so well they pretend to be just ordinary wealthy people.
But not to worry, revolutions have millions of people that are very happy to build a complete asset register of who owns what. Damn hard to hide assets from that many bean counters.
Yvil, I don't think you, and almost all people for that matter, really comprehend what I'm talking about. Let me put it into terms you'll most likely understand better.
The magnitude of difference between billion and million can be illustrated with this example of the time scale:
A million seconds is 12 days.
A billion seconds is 31 years.
12 days is just a bit less than 2 weeks ... 31 years? Think of all the time between when you were born and when you hit your 31st birthday ... can you feel that difference? Another way to think about it? What if it were a criminal sentence? 12 days wouldn't be so bad. But 31 years?
NZ doesn't really have any of the mega-rich I'm referring too. None at all. Not even Graeme Richard Hart really qualifies as he's only around 10 billion.
Or another way to think about it? ... Yvil et al, do the maths. The 5 minutes you spend will give you a real WTF! moment.
Consider a billionaire that decided they were going give away $10 billion by working 8 hours a day, 5 days a week, giving away $100,000 to every person that turned up and gave a 60 minute presentation on why they deserved a $100,000 dollars. (Don't worry, $10 billion is just 1/2 of their total wealth. They'll still have $10 billion left.)
How long would this billionaire 'work' to give away the full $10 billion?
BTW ... the recipients would be earning $1,666.66 per minute during their presentations.
A billion is a big number.
I'm not so sure though in a global Communist revolution involving billions of extremely poor people if they'd stop the guillotine at just the Uber wealthy, and instead continue on to wipe out the rest of us who've profited immensely from centuries of raping and pillaging them. Somehow I think "you don't have to kill me, I've got an electric car and give to registered charities" won't win many new friends.
Good thing the rest of us mere extremely wealthy Western citizens have an expensive military machine to keep them at bay.
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