Here's our summary of key economic events overnight that affect New Zealand with news financial markets in the US have the jitters ahead of a key speech by Fed boss Powell tomorrow at the Jackson Hole central bank shindig. Equities fell, bond yields rose, and the USD firmed and expectations grew Powell will make the case for only a gradual pace of rate cuts.
Meanwhile, US jobless claims actually fell last week and by about what was expected. But the seasonally-adjusted level rose and that wasn't expected and that grabbed the headlines in the absence of any other major economic news. There are now 1.86 mln people on these benefits, also a fall.
The 'flash' US PMIs from S&P/Markit shows their factory sector contracting slightly but their services sector expanding faster. New order levels are a problem for their manufacturing sector. But service sector activity grew at a solid and increased rate in August, and because that sector is far larger than the factory sector, that points to robust GDP growth in excess of 2% annualised in the third quarter, which should help allay near-term recession fears.
The Chicago Fed's National Activity Index for July basically confirmed the manufacturing slowdown.
But the Kansas City Fed factory survey held on with an improvement in August, showing there are some regions still improving in their manufacturing sector.
Also improving were the July existing home sales which rose modestly at about the expected level and that ended a four month retreat. But despite that, the sales volume levels essentially remained at the low levels they have had since early 2023. And on a broader perspective, sales volumes at this level were first achieved in the mid-1970s, and were the levels in the GFC. So July's rise is a very low bar.
In Canada (and the US), all eyes are on a stoppage in their key rail network due to industrial action. It is a lockout, and it will have many spillover impacts in both countries.
In India, the expansion rolls on for both their factory and services sectors in an impressive way, with them shrugging off capacity issues in their factory sector with a notable rise in job creation. 'Growth' is creating many more employment opportunities.
In Japan, although it rose, its August factory PMI is still contracting, slightly. On the other hand Japan's service sector is expanding at a good rate. That is the seventh consecutive expansion in their services sector.
In China, Reuters is reporting that regulators there will likely impose a six-month business suspension on a big part of PwC's auditing unit in the mainland as a penalty for its work on troubled property developer Evergrande.
In Europe, business activity rose at faster pace in August, but the rate of new order intake continued to ease. The uptick in business activity is largely due to the Paris Olympics however, so that probably won't last.
In Australia, their August PMI's sort of mirrors Japan but at a slightly lower level. The factory PMI is up but still contracting. Their services PMI is expanding although only at a modest rate.
Global container freight rates slipped another -2% in a continuation of the minor moves down from the extreme July heights, with the basic pressures unresolved. These rates are still almost three times higher than pre-pandemic and pre-canal-pressure levels. There is no real sign of a proper normalising. Bulk freight rates rose slightly last week.
The UST 10yr yield is now at just on 3.86% and up +8 bps from this time yesterday. The key 2-10 yield curve inversion is little-changed at -14 bps. Their 1-5 curve inversion is less at -73 bps. And their 3 mth-10yr curve inversion is now much less at -145 bps. The Australian 10 year bond yield starts today at 3.94% and up +2 bps. The China 10 year bond rate is unchanged at 2.16%. The NZ Government 10 year bond rate is now just on 4.21% and up a minor +1 bp.
Wall Street is slightly lower with the S&P500 down -0.8% in its Thursday trade. Overnight European markets were little-changed. Yesterday Tokyo closed its Thursday session up +0.7%. And Hong Kong was up +1.4% but Shanghai fell another -0.3%. Singapore was unchanged. The ASX ended its Thursday session up +0.2%, but the NZX50 fell -0.3%.
The price of gold will start today down -US$27 from yesterday at US$2482/oz.
Oil prices are recovered yesterday's US$1.50 drop, now back at US$73/bbl in the US while the international Brent price is now just under US$77/bbl.
The Kiwi dollar starts today down -30 bps from yesterday at 61.3 USc. Against the Aussie we are up +10 bps at 91.5 AUc. Against the euro we are still at 55.3 euro cents. That all means our TWI-5 starts today at 69.4 and little-changed.
The bitcoin price starts today at US$60,305 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.6%.
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Second tranche of Resource Management Act reforms on the way
RMA Reform Minister Chris Bishop hopes to introduce a second RMA Amendment Bill to Parliament by the end of the year. Photo: RNZ / Nick Monro
The shake-up of New Zealand's planning laws continues with a proposed second amendment to the Resource Management Act.
It would focus on the areas of infrastructure and energy, housing, farming and natural hazards, with the intention of enabling projects to "drive economic growth and productivity", RMA Reform Minister Chris Bishop said.
The introduction of the bill would coincide with the government making changes to help prepare and amend National Direction, which is made up of national policy statements, national environmental standards and national planning standards that all help support local decision-making under the RMA.
Bishop, who made the announcement at the Local Government NZ conference on Thursday, is in charge of delivering on the 20 different coalition commitments relating to the RMA.
The coalition government has already repealed legislation the previous government had introduced to replace the RMA and introduced the first RMA Amendment Bill earlier this year. It makes urgent changes to give certainty to councils while new legislation is being developed.
Fast-track legislation has also been introduced, with the intention of creating a "one-stop-shop approvals, consenting and permitting regime" to speed up the delivery of significant projects, Bishop said.
That legislation has been met with both criticism and support.
"Our next step is four packages of reforms to be delivered through a second RMA Amendment Bill, which will be introduced alongside the single largest package of national direction changes in New Zealand's history: seven new national direction instruments, and amendments to 14 existing ones," Bishop said.
They include:
Infrastructure and energy
- Amend consent information requirements/requests and support decision-makers in making effective consent conditions
- Extend default lapse period for designations from five to 10 years
- Extend designation (requiring) authority to ports and emergency services
- Remove or simplify alternatives test, and reduce assessment and information requirements
- Extension of certain coastal permits for port companies by 20 years
- Introduce changes to Electrify NZ (Bishop said announcements would be made on this shortly).
Bishop said the package would enable a range of productivity-boosting energy and infrastructure projects, including a new NPS-Infrastructure.
A consistent approach to quarrying across the Resource Management System would be outlined, and it would extend the duration of port coastal permits by a further 20 years, which was signalled earlier this year.
Telcos would get greater certainty and reduced consenting costs as they upgraded infrastructure, Bishop indicated, through changes to the NES for Telecommunications Facilities.
The package would also give effect to the Government's Electrify NZ reforms to make it easier to consent renewable energy.
Housing
- Councils to demonstrate compliance with the 30-year Housing Growth Targets
- A process to allow Tier 1 councils to opt out from implementing the Medium Density Residential Standards (MDRS) into relevant residential zones
- Processes for councils that have not yet completed their MDRS and National Policy Statement on Urban Development related plan changes.
- Providing central government with new powers relating to compliance with housing and business development capacity assessments
- Exploring additional intervention powers to support implementation of the Going for Housing Growth plan
- Heritage management.
Photo: Unsplash / Tom Rumble
Bishop said the housing package would contain the reform needed to enable the government's Going For Housing Growth policies.
That included "requiring councils to demonstrate compliance with the 30-year Housing Growth Targets while providing the flexibility for councils to opt out of the Medium Density Residential Standards".
Bishop said the government planned to make changes to the National Policy Statement-Urban Development and the National Policy Statement-Highly Productive Land, as well as simplify heritage management, and develop new national direction to enable granny flats and papakāinga housing, which had been previously signalled.
Farming and the primary sector
The package was about driving primary sector productivity, Bishop said, and gave effect to National Party manifesto promises and coalition agreements.
"Cabinet has agreed to amend the National Policy Statement-Highly Productive Land to make it clear that indoor primary production and greenhouses are permitted on highly productive land, as well as specifying that farmers are also allowed to build new specified infrastructure such as solar farms on that land."
Further announcements would be made shortly, he said.
Emergencies and natural hazards
- Improvement to emergency provisions, including a new regulation-making power for emergency responses
- Ability to decline land-use consents, or attach conditions, where there are significant risks of natural hazards
- Rules relating to natural hazards have immediate legal effect (from notification).
"This package will provide a comprehensive, nationally consistent framework for addressing the risks posed by natural hazards, including risks from climate change," Bishop said.
That would create efficiency in the form of a new national direction on natural hazards, "which will provide direction to councils on how to identify natural hazards, assess the risk they pose, and how to respond to that risk through planning controls", he said.
The RMA Amendment Bill 2 would also include "improved emergency provisions to better enable rapid responses to disasters".
Bishop said he hoped to introduce the bill to Parliament by the end of the year.
I’m just trolling. I think that precious metals are okay for <5% of a portfolio but until we are in a recession and the fed funds rate is close to 0 with nowhere to move, they won’t spike.
I’ve traded JNUG before and it’s a bit of fun but yeah anyone holding it longer than a couple of days is an idiot as the price is designed to go down with the daily re-indexing.
Daily reminder of how deceitful and incompetent the coalition is. Budget cuts to health will hit frontline staff. Lester is no magician, look at his Auckland Transport track record...
https://www.nzherald.co.nz/nz/health-nz-cant-cut-14-billion-without-eat…
Team Blue pulls a chainsaw on everything, even the much-needed public investments. People get sick, vote them out. Team Red promises critical investments in public service and infrastructure but ends up spending large amounts of money on meaningless pursuits and vanity projects.
People get sick and vote in the "fiscally conservative" Team Blue again that ensures the only money that ever gets spent in this country is on either building roads or buying existing houses.
We've been locked into this downward doom spiral
We've been locked into this downward doom spiral
Not definitively. We've simply brought a greater awareness to how hopelessly uninformed the average voter is, and stressed the need for greater education, and engagement in politics at both local and central government levels.
Zeblaze Stratos 2 GPS Smart Watch from AliExpress. I though I was reasonably tech savvy but it caught me out its not a straight watch that you just "turn on" and it works. You need the App first and like scan the QR code on the watch to get it all started, it needs to pair with your phone before you can do anything. Thought it was faulty but just user error. The only thing that could be a problem an I don't like is they do not waterproof rate them to say 50M or 100M and have meaningless IP ratings. I wouldn't go swimming with it on even though swimming is one of the activities on it. Newer version Stratos 3 is available now.
With Covid the position was taken that if you didn't comply with a certain health policy deemed necessary to prevent the disintegration of the health system, then you were prohibited from many things we take for granted in day-to-day life, such as going to the pub or the movies.
I'm not trying to make this a vax argument btw (I personally did as was asked) but it's unequivocal that people who said 'no' had their previously-enjoyed freedoms restricted at least to some extent, because a personal health decision they made was deemed incompatible with what public health required.
Considering the health system is now disintegrating not because of an acute Covid emergency but in large because of a chronic obesity epidemic (with all of its attendant issues and costs ... I feel like I recall seeing an article a while back saying that within 20 years the entire health budget will be consumed treating Type 2 diabetes) maybe there is an argument to take the Covid approach.
I'm being half serious at this point, because what other choice do we have that could potentially have as big of an impact in the shortest possible space of time?
If you're obese, then you can't go to the pub, or go out to your favourite cafe or restaurant, until such time as your personal health choices are no longer risking the public health system unnecessarily. Talkback radio, social media commentary etc can shame you until you comply. And this is coming from somebody who was rather overweight for much of his 20s but has got into good shape, so I know it can be done with hard work.
And for anybody who says "oh well Covid was different because you just had to take a quick jab, losing weight is hard" ... then you can whip through the government funded drive-thru Ozempic clinic and get your "BMI passport" that way! It seems perfectly safe and effective, so what reason could you have to say no? There might even be some free Warriors tickets on offer.
Nobody would be forced to do it, there would just be consequences for not doing it. We've already proven the framework works - let's get our asses into gear (pun intended).
Yes freedom is so passe ...
No need for papers or tests. Theres a proven thing called Age which is highly correlated to poorer health outcomes. Therefore we should publically shame the elderly in talkback radio and social media and social events in general until they do the right thing.
Otherwise
"what other choice do we have that could potentially have as big of an impact in the shortest possible space of time?"
Answer; Change our mental viewpoint towards Health .. ie
- Accept that there has to be a limit to what is spent on trying to prolong life - pretty obvious. People die! Make it comfortable but dont fight it (youth excepted)
- Throw our limited resources at emergencies & preventative Health, not managing sickness
Cue the backlash from consultants and surgeons on a gravy train of endless ops & procedures all leading to the same inevitable outcome. Just because something is possible, doesnt mean it should be done
I was going to start ranting and raving about the age issue next.
It's easy for me to say as a young (please tell me early 30s is young anyway!!) person, but I'm not convinced humans are meant to live as long as they often do now.
There seem to be a lot of very old people just clinging on because modern medical intervention/treatment makes this possible. Not NZ, but I really noticed this on a work trip to the UK recently. Spent some time in a couple of little towns on the periphery of London, and it was just a sea of extremely elderly people shuffling (if they could shuffle, otherwise driving their mobility scooters) up and down the high street.
The other day I took my kid to the doctor, hadn't been in the practice in ages myself, and the waiting room was rammed full of people whom I'd charitably describe as "existing" and seemingly not really living. These are people who'd make Joe Biden look like a spring chicken.
Once again easy for me to say, but you have to wonder what the quality of life is for many of these very elderly people. I'm not talking about those in their 60s, 70s and even some "lucky" ones into their 80s who can often be quite active and in good health. But those who are so old they seem to stumble from one health issue to the next, kept alive by the miracle of modern medicine but who are very much at that point delaying the inevitable.
I'm not advocating going all Logan's Run, but I'm also not sure this is the way humans are necessarily meant to live.
How about the government doesn't ban councils from making our urban streets safe for walking and cycling. People would get a bit more movement and take pressure off the health system.
Nah, being kids being able to walk to school or to their friends house isn't what they mean by 'back to basics'.
The new safe speed limits around schools only apply to 100m outside of the main school entrance. So it doesn't allow people to walk to school, only to walk from the car drop off to the school gate
So you'd prefer cuts to our frontline health services, than a sovereign currency issuing nation "borrowing" the lot? Don't get me wrong, I too cannot stand the idea of a Maori HA but if I had to choose between that and cuts to our frontline health service?
Labour probably wouldn't have given us a $20 per week tax cut, and that alone would've funded the savings Health NZ need to find twice.
It's not Labour vs National, it's the quality of their policies, and these policies are not traditionally National policies, National are being driven into the ground by their extreme fringe populist partners. I want National to be strong and not be taken down the hole the Tories went down with Boris and Truss (Brexiteers) and Republicans with Trump (tea party and conspiracy nutjobs). If you are a traditional National supporter you should be pushing back against this nonsense.
- Health - Coalition worse, see above plus tobacco
- Transport - both terrible but National marginally worse due to ferry fiasco and borrowing (PPP) to build mega roading projects at the expense of public transport, rail and sea transport
- Energy - draw
- Climate - Coalition worse, no need to elaborate
- Environment - coalition worse, non-democratic fast track in exchange for donations
- Law and order - coalition worse, massive cuts to police
- Housing - coalition worse, reversing the good Labour policies to appease landlords and banning KO from building when now is the time they should be building. Yet to see what the actual MDRS alternative is.
- Education - no difference, soundbites from both but essentially same track which is fine
- Cost of living - overall draw but coalition worse for lower socioeconomic groups due to benefit changes
- International reputation/perception - coalition worse, the only things we've managed to be in the news abroad for is tobacco laws, cost of living and exodus of young people, housing costs, meth in sweets, anti-maori policies
- Defence - draw
- Finances and tax - coalition much much worse, borrowing to pay for tax cuts to wealthy and landlords, cutting services and expenditure as we go into recession, mystery spreadsheets
On the healthcare side, it seemed relatively clear at the time that ordering the mass-reform of the entire nations healthcare system in a time of high inflation was going to be very costly and foolish, but they went ahead with it anyway, and the costs are still piling up from this and inefficiencies of the transition. We could have simply waited 4 years or so until inflation dropped of and the Govt books looked better to get cracking on that one. Currently they are not replacing staff that leave and the workload is piling up higher and higher so I can't see positives coming in that sector until either the transition is completed and everything is smoothed out process-wise, or we have some freak decrease in need for healthcare which seems statistically unlikely with the boomers likely to need greater levels of healthcare as time marches on.
LOL its not a Labour versus National thing... yet the previous Govt is the same or better in EVERY measure!
Like a north star, you have found your true home.
Well, only a few hundred days till Chippy gets back in to doing whatever he was doing and we can breathe easy
Yes, but the previous government was not perfect and I was happy to critique them as well e.g. transport. I didn't rate the policies Labour took into the last election, they were also fundamentally populist nonsense.
That doesn't stop this coalition being worse. National has had good transport policies before, they agreed (reluctantly but did eventually agree) to fund the city rail link and they kicked off the major investment in cycling with the Urban Cycleway Fund.
This coalition is not National, that's the point I'm making. It will result in a wild swing to the left and increased polarisation. Luxon did a deal with the devil to get into power and in a few years the National brand will be tarnished by it's association with the extreme policies it's implementing. It will have to increasingly rely on anti-woke nonsense, racism and ineffective populism to get back into power, it's a slippery slope.
The Maori Health Authority was just another 14 layers of management sucking at the taxpayer trough. The actual health care services delivered to Maori were the same ones that were being denied to non-Maori by putting non-Maori straight to the bottom of the surgical and specialist waiting lists, and not making lifesaving prescription drugs available to non-Maori. Basically the Labour policy was kill more non-Maori to make Maori health outcomes look better. Thus "equality of outcomes" is achieved.
The 14 layers of management that the coalition talked about (but have not been able to actually put forward) included
- The patient
- emergency physicians (very senior specialist doctors, also known as consultants)
- registrars (senior doctors working towards becoming specialists)
- hospital medical officers (doctors working in the emergency department, not training to be specialists)
- The nurse
- The charge nurses
- allied health professionals, such as physiotherapists, occupational therapists and emergency department pharmacists
- the mental health emergency care team, who can conduct mental health assessments
- The Chief Executive
- The Chief executive's Chief of Staff
- The Board
So maybe lay off spreading your misinformation and coalition bullshit.
"Reality check re what living closer to actual means means."
Yip exactly.
The outlook for world trade is pretty ugly and NZ as an insignificant outpost miles from anywhere is one of those periphery countries that will get exposed as highly expendable in the next big external shock. Best get our heads round what lower spending entails ...
And Health is just a bottomless pit where there will never be a solution - All the surgeries and treatments and pills and potions thrown at 70 - 100 year olds is a luxury thats simply not sustainable. Often to prolong a few years here and there.
They should (like local govt) lower their ambitions; Highly prioritise the health and preventative health for the young. Become a Health department rather than a sickness industry. They then might actually live a few years longer
I've tried looking (really hard) for the reasons for cost overruns.
From the documents and media is looks to be a combination of optimising to meet targets rather than living within means, and misaligned management as 28 organisations merge without accountability and continuous leadership, and needing better financial alignment and accountability through the merger. Plenty of overspend on outsourcing at double to triple the price rather than providing the capital and opex to deliver internally, one off pay adjustments and a largely non compliant, unknown and increasing holidays act payroll liability.
The Commissioner seems like he's driving accountability, and will likely achieve the cost cuts, but in doing so may kill much of the organisation's capability to perform once after his 12 month tenure, leading to unintended consequences for anything that isn't specified in the Govt's narrow health targets.
Focus is good. Action is good, so long as the implications are acceptable. Hmmm
I've just found out how our defence force can get F16s that we can afford;
https://www.twz.com/air/inflatable-ukrainian-f-16-decoy-emerges-at-defe…
Trying to fly them might be a little bit of a let down, but they might work as kites?
We don't deserve any planes, we couldn't even build hangers to put them in . Remember the old Strikemasters or whatever they were, spent millions on the electrical warfare upgrades then put them under tarps and refused to sell them. Probably ended up at the local scrap metal recyclers. This country is a joke on so many levels.
EW upgrades to the Strikemasters? I was an aircraft engineer in the RNZAF and I can assure that never happened. What happened to them was their wings were coming apart due to the rough air we have this far south. They finished their service with titanium reinforcement plates on most of their wings.
You might be confusing them with the A4 Skyhawks which were upgraded with avionics and radar between F16A and C, and we got good service out of them, but they were just too old and would be ineffective in a modern contested environment. The A4s are still flying with Draken in the US as adversary trainers. We had a deal of the century going for F16s but Helen Clark's ideology saw that one killed, and she crippled our defence forces.
It's the politicians who screwed us mostly. The people serving do not deserve your disrespect.
Not necessarily. Their age and fatigue life would have seriously limited their value. While we had them our pilots gained somewhat of a reputation for handing out humility by the bucketful to other pilots who thought because the jets were old, they weren't capable. But their capability only came into play at what is called "the merge", when they get into close in dog fights. Most air to air weapons focus on taking out adversaries way earlier than that, but Murphy's law will dictate that about the time you run out of weapons that have some reach, you'll find yourself nose to nose with an adversary and you have to be able to fight your aircraft close in. This is to all intents the close WW2 dog fights. The movie Tog Gun shows the US Navy adversary Sqn using A4Fs and Js as adversary fighters years after the A4 was past it's use by date as a front line attack aircraft, they were that good.
They are still that good. Our A4's have an early F16 radar on board making them dangerous to a complacent fighter pilot who lets them get too close. They're only a target for pilots who employ their BVR weapons appropriately. Close in the other aircraft tends to be the target.
Pretty quiet on here today without any Team DGM vs Spruiker skirmishes
If anyone needs some friday motivation:
https://www.youtube.com/shorts/azvEIMg5vNY
I guess old mate has a fair bit of 'free' time now
This was the week when even Interest.co.nz really turned on the Spruikers, even NZ Herald is DGMmy these days.
So now the reframe is what will happen quickly "after the bottom is in", no discussion that the last bottom in 2023 did not hold. No real forcast for when this new bottom is truely in (except every spruiker is calling yesterday/today, never tomorrow). no its all about how fast the bounce will be FOMO surely must replace FONGO... soon, pretty please.
Meanwhile the market marches onwards and lower
We are 7 days away from the August dataset being in, probably a slight bounce in AKL (given a 7.8% fall, but I suspect a faster fall for the rest of NZ). More speculation that some magic fairy dust will mean the buyers come out to dance play ... and buy over summer, when the best rate they can put into their pipes and smoke is only 6.85% 6month fix right now.
Perhaps it will be 6.25% by 1st Dec.
Its all Tip Top
-10% Dec 2023 to Dec 2024 (we got 7.8% last month in AKL alone and 14% in central suburbs akl... checked TAB and they paid out central suburbs bet at half time...)
Back on track, getting things done by *checks notes* paying consultants to shuffle people around and disrupt delivery.
https://businessdesk.co.nz/article/public-sector/kainga-ora-forks-out-n…
Toyota makes some of the most reliable vehicles on earth. Some of this is down to the production line approach they take.
If a flaw is found, the whole production line stops, they source the root of the problem, and fix the production line, so that all cars going forward are made properly.
Someone like Alfa Romeo, just lets the cars keep rolling off the line, and fixes any issues in the cars found at the end of the production line. They don't address issues on the production line. This allows them to keep making cars that have a significantly higher failure rate.
We've been making really bad houses, Alfa Romeo style.
Will team Blue fix it? Hard to say.
Except I'm talking about an entire organisation, and not just a supplier at the end of the line.
Although the nature about how KO approaches house building also means they're not exactly passing out projects to be built by the cream of the crop. Whoever screws up their price the most, wins!
Great approach to apply to our health system, just let the dead bodies keep piling up in the emergency rooms and GP surgeries while the coalition fiddle with the employment settings.
Another example of how the private sector approach doesn't necessarily work for the public sector. You can stop making cars but you can't just stop people getting sick so you can pause and optimise the system.
Same with housing, I guess the plan is to just let people sleep on the street and in cars...
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