Here's our summary of key economic events overnight that affect New Zealand with news two big central banks have been active in their signaling over the past 24 hours.
First up today, as many expected the US Fed sent a clear signal that they are more open to a September rate cut. That first came from changed wording in their no-change statement that was more balanced between the two aspects of their mandate: inflation and jobs. Powell then confirmed a potential September rate cut at his press conference.
Because this was largely what was assumed in advance, there has been no major financial market reaction, but the reactions there were, were 'positive'.
The US dollar slipped marginally on the news, the S&P500 rose after already being up sharply. The benchmark UST 10yr fell -3 bps.
The US ADP jobs report came in lower than the expected +150,000 gain. It reported a gain of just +122,000 in July. This is the precursor report to the official non-farm payrolls report which is expected to show a +175,000 gain when it is reported on Saturday (NZT). The ADP Report slowing is consistent with the Fed's expectation that the labour market is not pushing undue labour market pressure on the US economy.
The Chicago PMI also came in very much as expected, also not putting upward pressure on inflation from the heartland factory sector.
And neither are American pending home sales. They may have risen in June from May, but they are still lower year-on-year.
However, mortgage applications are still shrinking, despite mortgage interest rates staying well below 7%.
The Bank of Japan actually has raised its official policy rate, and from 0.1% to 0.25% with a +15 bps hike late yesterday. They also said they will cut their bond buying activity. This has been seen as an aggressive move that signals the central bank's growing confidence in the recovery of the domestic economy and its concern about the sharply weaker yen.
The yen appreciated significantly. Equities rose. Their benchmark bond yields rose.
Taiwan's GDP expanded +5.1% real in Q2-2024, high, but less than the very high +6.6% rate in Q1-2024. Both were the best results since the pandemic recovery, and back to their long golden economic expansion between 1994 and 2008.
China's official July factory PMI fell slightly into a further contraction. Their official services PMI fell to a very minor expansion. Both were about what was expected, but neither is very promising.
Perhaps we should also note the pressure by loss-making Temu on its suppliers has them pushing back in anger with a large-ish demonstration at the company's headquarters.
In Europe, their Euro Area inflation rate unexpectedly edged up to 2.6% in July from 2.5% in June, when forecasts expected it would slow to 2.4%. The larger economies kept it elevated, the smaller ones generally reported lower rates.
In contrast, Russian inflation hit 8.6% and well higher than the +6.3% rise in retail sales. War inflation is eating them up, which is why their central bank recently raised its policy interest rate to 18%. And it is not going to help that Russia is having to double its 'bonuses' for fighting in their invasion army.
The Q2-2024 CPI in Australia rose to 3.8%, exactly as analysts expected. Their June month inflation indicator came in at the same 3.8%. Markets seem to have focused on the 'trimmed mean' quarter-on-quarter rate of +0.8% which was lower than expected - and concluded the RBA is likely to hold rates unchanged next week.
The World Gold Council updated its Q2-2024 data yesterday with some interesting changes. Actual gold demand is weak, in fact, June quarter jewellery demand was the lowest since this series began in 2000 (pandemic excepted). Jewellery is the single largest category of demand for gold. Retail investor demand was uninspiring, back to a level first seen in March 2010. EFT demand was negative again (net outflow) and has been for nine consecutive quarters now. Industrial demand is always insignificant. And central bank demand came in its second lowest over the past two years. In fact it was almost half Q1 buying. Appetite by central banks may be tiring. So it is a curiosity that the gold price rose in the quarter to a record high. And that is an especial curiosity when you know that gold supply from mines and scrap is still hovering near its all-time high in Q2-2024.
The UST 10yr yield is now at just on 4.10% and down another -4 bps from yesterday. The key 2-10 yield curve inversion is deeper at -25 bps. Their 1-5 curve is now at -79 bps. But their 3 mth-10yr curve inversion is a little deeper at -128 bps. The Australian 10 year bond yield starts today at just on 4.14% and down -15 bps. The China 10 year bond rate is holding at its lows at 2.16%. The NZ Government 10 year bond rate is now just on 4.36%, and down -7 bps from yesterday.
Wall Street in Wednesday trade on the S&P500 is up +2.1% with some post-Fed change. Overnight European markets were all higher but nearly +1%. Yesterday Tokyo ended its Wednesday trade up +1.5%. Hong Kong rose +2.0%. And Shanghai rose +2.1%. Singapore was up +0.4%. The ASX200 rose +1.7% but the NZX50 only managed an insignificant +0.1% gain.
The price of gold will start today up another +US$20 from yesterday at US$2426/oz.
Oil prices are +US$3 higher at just over US$77.50/bbl in the US while the international Brent price is just over US$80.50/bbl. Rising Middle-East tensions are behind the move.
The Kiwi dollar starts today another +40 bps firmer at just on 59.4 USc. Against the Aussie we are almost +1c higher at 91.1 AUc. Against the euro we are up another +40 bps at 55 euro cents. That all means our TWI-5 starts today at 68.5 and up +40 bps from yesterday.
The bitcoin price starts today at US$66,595 and up +1.1% from this time yesterday. Volatility over the past 24 hours has been modest, at +/- 1.1%.
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98 Comments
https://www.1news.co.nz/2024/07/30/govt-set-aside-216m-to-pay-for-heate…
Coalition govt looking after the little guys like *checks notes* Big Tobacco.
I've been doing some research into thinking-styles recently - in a bid to understand the entrenched biases folk hold. It's interesting. Essentially a combination of self-justification (to peers, mainly, but somewhat to self). An inability (often via age) to go back and do things differently. A problem with 'Initial Occurrence Syndrome' (where 'because it hasn't happened yet, it won't' is the way they cogitate). Tendency to Confirmation Bias. Lack of ability to separate messenger-appraisal (often visual, body-language) from message-content - indeed, allowing the former to reject the latter.
Put another way, Myers-Briggs N-types are a minority. This piece is the standard explanation: https://dothemath.ucsd.edu/2015/04/programmed-to-ignore/
So no, they will cast around for something to justify - or they will ignore and fasten onto something else. The ignore won't be counted as an 'I was wrong'. It's hard to understand, but that's what happens. Journalists are not immune, either...
Everyone, yes EVERYONE is sick of the constant changes to rules and methods. Its costly to implement then to reverse or modify depending on the new thinking.
Govts have no clue about the right direction, maybe when chloe is in charge she and Marama can just legislate and enforce wholesale big time sweeping change but not tell the electorate beforehand or they wont be elected. Stage a coup and get rid of democracy as well because you will need a dictator. Decarbonise decarbonise. One person will be over the moon excited about it
But we know thats not happening, and we know viable solutions wont be forthcoming in time for the vaunted calamity. Just accept it, go back to reading novels. STOP torturing yourself
Classic example.
Who said I'm torturing myself? Assumption, via confirmation bias; yours.
My aim is simple and clear - to shift the dial, thinking-wise. To do that in a democracy, needs a majority to be thinking (Lake Wobegon comes to mind) better than the y currently are, prior to the event-window closing. One lever-point is the media... Failing that, at least the greatest number who get the picture, that we could amass.
You are entirely intelligent enough to 'get it' holistically - yet 'decarbonise'? That is one - and not the main - facet of out Limits-to-Growth predicament. And I've long rejected Davidson, here. Swarbrick gets enough (Doughnut Economics, Planetary Boundaries) to be valid leadership material. Yes, democracy may not step up in time - indeed the way War Cabinets always appear in times of stress, tells us this.
The current narrative needs to bury any/all negative narratives (negative to it). The inevitable result will be twofold - increased/forced scientific ignorance, and increased 'wealth' disparity. Until the ship sinks. Thereafter? Hands-on skills; food-production, local skill-interchange, local leadership. Infrastructure triage. Lots to foster...
With Universities operating as businesses vs education providers, the view of attaining higher education is no longer held as a pinnacle of society and success. University used to be the key way that one could become further educated and utilise such knowledge and newfound methods o analysis and thinking to go forth in the world and succeed. Now we see tiktok 'influencers' getting rich from menial work, and the desire for higher education slowly dwindling. Personally I think unless society once again values higher education above all else, I can't see the masses becoming educated enough to see past their own self interests in heeding your warnings of overshoot. It is admirable to continue to try and educate others as you do, however due to the aforementioned points, it is an uphill battle indeed.
The lies people tell themselves. Tyranny of the masses. Don't forget a few years ago people believed the sun went round the earth. ( https://www.astronomy.com/science/when-did-we-realize-that-the-earth-or… ) and some still believe the earth is flat.
People don't understand that they don't understand.
Read the book - Warnings (Clarke/Eddy).
The whole point about Cassandras (warners) is that they do not suffer from IOS. Think it through - it is illogical to think (?) they would.
The book explores a method of separation chicken-little chaff, from logic-checkable warnings. Cites Fukushima, the GFC, Kuwait invasion, Madoff uncovering, mine disasters, Climate, etc. etc. All accurately forewarned-of. Those who, when presented with the evidence, obfuscate; fail to grasp; reject; avoid - are the flawed-thinkers. And IOS is a common-denominator factor.
So you are wrong, there.
Food for though, perhaps
:)
That's an interesting rabbit hole to go down PDK. Mind you anything to do human psychology is generally. I would throw in the mix that often to change the way we do things takes resources, up front and sometimes sustained. Most people don't have those resources available, even if the long term might offer significant savings. There's an element of risk aversion too. Change is seen as a risk, and improvement is not guaranteed.
On resources; this country's perspective and dogmatic adherence to a low wage economy traps the majority with too few resources to change in a meaningful way. Too much of what they have is used just for day to day survival. It take a lots of courage to risk it all for something bigger.
..."the $216 million figure is based on the scenario that the lower excise tax will actually lead to smokers switching to HTPs. So there would only be a loss of revenue if smokers switch to less harmful HTPs – which is the exact purpose of the trial!
So the official Ministry advice is that for policy purposes no smokers will switch to HTPs, but for fiscal purposes 7,200 smokers will switch to HTPs!"
https://www.kiwiblog.co.nz/2024/07/the_216_million_nonsense.html
Apirana Dawson — who was director of operations and research in the office of Winston Peters between 2013 and 2017 and led the election campaigns for the party in 2014 and 2017 — has been director of external affairs and communications at Philip Morris since January 2021.
Dawson was a guest of New Zealand First Cabinet Minister Shane Jones at the swearing-in ceremony for Government ministers last year and Jones told Stuff he had taken "soundings" from Dawson on the party's tobacco policies.
Tail wagging the dog
Would you rather them:
1. Die of cancer, and lose all associated revenues with the tobacco excise tax, and pay for pension until they do pass?
2. Switch to HTP, which will reduce/remove chance of dying, and users continue to pay excise tax until they pass
3. Quit altogether, perhaps take up another vice (which may or may not be taxed), live longer and pay for pension until they pass?
It's economics at the end of the day. Nobody wins from this and since the government puts all excises into the general fund there will be less revenue and costs will be recouped by other means. Let humans be humans, we're around for max 100 years and after that it literally does not matter.
I would rather blog authors not ridicule public servants advice on the impact of government policy decisions when to me at least, that advice seems totally logical. The author has confused the distinct categories of "Switch to htp" and "quit tobacco"
I make no claims as to the best course of action for smokers to take.
Two senior corporate communication positions at Philip Morris are held by people who previously held senior roles in the New Zealand First party.
David Broome, chief of staff for NZ First between 2014 and 2017, is external relations manager at Philip Morris.
Apirana Dawson - who was director of operations and research in the office of Winston Peters between 2013 and 2017 and led the election campaigns for the party in 2014 and 2017 - has been director of external affairs and communications at Philip Morris since January 2021.
Dawson was a guest of New Zealand First Cabinet Minister Shane Jones at the swearing-in ceremony for government ministers last year and Jones told Stuff he had taken "soundings" from Dawson on the party's tobacco policies.
Neither Broome nor Dawson has responded to numerous requests by RNZ for comment.
A million dollars worth of stored joules, at current exchange-rates.
Gold is inert, money is a keystroked debt token - merely a future bet.
Energy is the real gold - so much so that we will never see $200/barrel oil, sans inflation. I was naive back in 2007/8, and though you could, as did G/S. They probably still do...
In contrast, Russian inflation hit 8.6% and well higher than the +6.3% rise in retail sales. War inflation is eating them up, which is why their central bank recently raised its policy interest rate to 18%. And it is not going to help that Russia is having to double its 'bonuses' for fighting in their invasion army.
This is what Milton Friedman called the interest rate fallacy, and it indeed refuses to die. We can tell what monetary conditions are in the real economy, as opposed to financial liquidity, though the two can be linked, by the general level of interest rates. When money is plentiful, interest rates will be high not low; and when money is restricted, interest rates will be low not high. The reason is as Wicksell described more than a century ago:
[The natural rate] is never high or low in itself, but only in relation to the profit which people can make with the money in their hands, and this, of course, varies. In good times, when trade is brisk, the rate of profit is high, and, what is of great consequence, is generally expected to remain high; in periods of depression it is low, and expected to remain low.
When nominal profits are expected to be robust, holders of money must be compensated for lending it out by higher interest rates. Thus, the same holds for inflationary circumstances, where nominal profits follow the rate of consumer prices. During the Great Inflation, interest rates weren’t low at all, they were through the roof well into double digits and higher by 1980. At the opposite end in the Great Depression, interest rates were low and stayed there because, as Wicksell wrote, the rate of profit was low and was expected to be low well into the future. High quality borrowers were given as much money as they could want while the rest of the economy was deprived of funds; liquidity and safety being the only preferences in what sounds entirely familiar.
The United States has demanded that Georgia stop the construction of a joint port with China in the Black Sea. "The Georgian government should be clear that there is a way back: to prevent China from building a deep-water port in Anaklia," said Assistant Secretary of State O'Brien, speaking before senators. Earlier, the American Conti International LLC failed to fulfill its obligations to attract $400 million for the construction of this port, and the Georgian authorities terminated the contract with the consortium of which it was a part. - RD reports Link
Health NZ could adopt this technology to address certain aspects of current issues.
Now surgeons are switching to remote work: a doctor from China removed a tumor from a patient’s lung, being 5,000 km away from her. The surgeon operated the machine from his office in Shanghai, and the robot itself was in an operating room in Kashgar, in another part of the country. - FRWL reports Link
Oops, we don't have national 5G coverage.
OK it seems it does use 5g for the last hop to the robot.
But I agree when you have Fibre to the node already it seems a bit irellavent to use 5g to get to your shanghai fibre link.. Might be useful in a rural outpost that doesnt have fibre to the doctors surgery, but this is a hospital in Kashgar.
I see Microsoft has just had another outage....
https://www.rnz.co.nz/news/national/523823/microsoft-services-go-offlin…
Oops, we don't have national 5G coverage.
All the towns with hospitals in northland have 5G
Our cell coverage actually looks pretty decent on a map compared to china. Of course the more relevant metric is how much of your population centres have coverage.
When economic reality and pragmatism overrides principles:
https://www.1news.co.nz/2024/07/29/auckland-vegan-cafe-starts-serving-m…
Lots of things!
But I've noticed that even the next door neighbour's cat has grown little furry flaps over her ears that slowly close when I start to tell her what's going to happen in the markets.
But to answer your question - whatever it was, I had no idea that Israel would assassinate the peace-talks negotiator on the other side of the table. And given that, whatever we see on the news re the plight of the people in Gaza; donkey's pulling tragic members of the human race along, then that is also what Israel is going to look like at some stage in the future. It's only a matter of when. And that will alter whatever most of us think is going to happen.
Well getting rid of the people making the decisions rather than those pulling the trigger can have a limiting effect on future conflict. The ayatollah in Iran may be contemplating that issue right now
You could imagine that if Putin stopped breathing tomorrow the war in Ukraine could end quite quickly
Grattaway. The horrifying catastrophe in Ukraine being visited on young Russian rural men is not solely due to Putins will. His expansionist invasion of UKR is strongly supported by the powerful in Russia. Fanatical nationalist influencers such as Dugin and the Orthodox Church, as well as his oligarchic thug mates who depend for their very existence on his patronage, must be supporting him or he'd have been dumped long ago. It is impossible to predict if his demise would see an end to the invasion.
The balance of power in region is dominated by Israel’s nuclear weaponry and couple that to the precedent set in place by Russia’s Putin that use thereof is justified in the face of an existential threat. So at present the balance of power is not really balanced. That then brings into play Iran’s progress in obtaining nuclear capability. The open question from that then is given the centuries of embedded hatred, vendettas, terrorism and extremists aplenty whether there is likely to be any constraint to someone, somewhere, sometime pushing the red button.
Putting the cat amongst the pigeons and by way of speculation where do you think Iran will test their first nuclear weapon? Israel somewhere, somewhere in Iran, somewhere else on the planet?
An open air test will tell the whole planet they've got one (or at least the capability), plus likely cause some environmental damage. What are they prepared to do?
Yes. Israel developed an extensive nuclear arsenal without open air testing. There is credible speculation that in 1979 she detonated a test bomb in the southern Indian Ocean but it's unlikely such a test by Iran today would be possible. There are reports, denied by Israel, that it scaled back nuclear activity at its Dimona research centre in the Negev desert due to the risk of attack by the Iranians.
FG. Yes, in theory Israel's nuclear arsenal acts as a deterrent to Iranian expansionist ambitions but in reality the Mullahs in Teheran know that Israel would never use the bomb until its existence was under obvious threat (as bible bashers put it - 'when you see Jerusalem surrounded by armies, then know desolation is near'). Teheran would readily engage in a conventional but destructive border war with the Jewish state if they believed they had a chance at giving the zionists a bloody nose.
Arguable indeed in the state of normal events. The rogue element in the region though is extremism as demonstrated by readiness to locate and employ suicide bombers. A cohort of such fanatical mindset with illegitimate, or even legitimate, access to a nuclear device, is unfortunately not an impossible likelihood.
You forgot to include that many of them, if not all, believe they are blessed by God (or Allah, and don't forget those virgins!) if they're out there murdering infidels. Also don't forget that in the Koran their version of a particular Commandment is "thou shalt not kill without just cause". Thus even murder can be justified.
bw. Necessary precursor's to your jews in donkey carts prediction is a significant erosion in Jewish lobbying power in the US, an enormous Russian technological and military industrial capacity ramp up, combined with the Chinese developing Hannibal like ability to project military power across vast and rugged lands. A lot of unlikely moving parts have to come together. There's nowhere for Israelis to escape to in donkey carts, it's fight or die for them.
BNZ Private Bank Quarterly Investment Briefing July 2024 (~40 minutes webinar)
- anticipating the OCR reduction curve
BNZ Private Bank Quarterly Investment Briefing July 2024 (youtube.com)
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