Here's our summary of key economic events overnight that affect New Zealand with news global equity markets re-found their 'greed' mojo with a risk-on shift in a week where interest rate moves down gained some serious momentum.
Most global equity markets celebrated with strong weekly rises, knowing that inflation seems beaten, especially as energy prices remain in retreat everywhere. Some can smell a new up-cycle. That could be good for commodities.
First up today, Canadian retail sales rose more strongly than expected in July, up +0.9% from a year ago when a +0.6% rise was expected. A key driver was car sales.
And Canadian PPI rose only +0.2% in August from a year ago, a sharp slowing from the +2.8% rise in the prior month. Month-on-month, their PPI fell -0.8% and a much bigger drop than expected. The key driver here is the falling cost of energy.
Japan reported 3.0% CPI inflation in August, up from 2.8% in the prior three months. It is their highest level since October 2023. Japanese inflation now seems well embedded, after decades of deflation.
The Japanese central bank left its 0.25% policy rate unchanged, as expected. They said "Japan's economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions." But press conference remarks after the release suggests that the Bank has turned dovish, so expectations for more rate hikes are lower now.
India's economic surge is built on aggressive borrowing. Loan growth is running higher than +13% from the same month a year ago, even if that is lower than the almost 20% rate it was running in the same month in 2023.
China left its loan prime rates unchanged yesterday in its September fixing, as expected. These remain at record lows. (It doesn't wish to be seen following the US Fed, even if a cut is warranted at this time.)
And data released overnight shows their 'youth' (16-24) unemployment rate was 18.8% in August, the highest since they changed the basis of this stat in January. They say their general jobless rate is 5.4%, and that too is its highest in a year.
Consumer sentiment in the EU continues to rise, in spite of their obvious economic struggles. In fact, it is almost back to its long-run average levels, something it hasn't managed since the pandemic period.
German producer prices fell -0.8% in August from a year ago, also largely due to cheaper energy costs.
The UST 10yr yield is now at just on 3.73% and unchanged from this time yesterday. But that is up +7 bps from a week ago. The key 2-10 yield curve is now +12 bps positive. Their 1-5 curve inversion is still inverted by -46 bps. And their 3 mth-10yr curve inversion is now at -103 bps. The Australian 10 year bond yield starts today at 4.00% and unchanged. The China 10 year bond rate is at 2.05%, and also unchanged. The NZ Government 10 year bond rate is now just on 4.20% and down -1 bp from yesterday, where it was two weeks ago, but up +7 bps from a week ago.
Wall Street has settled back today with the S&P500 down -0.1% from yesterday after the Fed decision. That makes it a +1.6% rise for the week. Overnight, European markets were all down -1.5% on the day. For the week, London lost -0.3%, Frankfurt gained +0.5% and Paris gained +0.9%. Tokyo ended its Friday trade up another strong +1.5% to end its week a good +2.3% gain. Shanghai was unchanged yesterday, up +0.5% for the week. Hong Kong closed up +1.4% and up a stellar +5.6% for the week, and helped by rumours Beijing will end limits on developments that were introduced to cool an earlier market surge. Singapore was down -0.2% in Friday trade. The ASX200 ended its Friday up a relatively modest +0.2% for a good +1.4% weekly rise.The NZX50 fell -1.5% on Friday and compounding its drop to -2.9% for the week.
The Fear & Greed Index ends the week in the 'greed' range, from last week's 'neutral' range. Overall market have recovered their risk appetite.
The price of gold will start today at US$2620/oz and up +US$31 from yesterday's high to near a new all-time high again. That is a +1.5% rise from a week ago when it was US$2582/oz.
Oil prices are down -US$1 at US$71/bbl in the US while the international Brent price is still just under US$74.50/bbl. A week ago these prices were US$69/bbl and US$72/bbl respectively, so a +US$2 rise since then. And they are down -17.7% in a year. Demand is suppressed by alternatives while supply is rising too fast for the comfort of OPEC.
The Kiwi dollar starts today at 62.4 USc and down -10 bps from yesterday but up +80 bps from a week ago. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are down -10 bps at 55.9 euro cents. That all means our TWI-5 starts today at 69.9, unchanged from yesterday but up +60 bps from a week ago.
The bitcoin price starts today at US$62,499 and down -2.1% from this time yesterday. A week ago it was at US$59,737, so a +4.6% gain since then. Volatility over the past 24 hours has been modest at just on +/- 1.4%.
Go the ABs !
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78 Comments
I've owned the miners for nearly 3 decades and learned a lot of lessons in the PM space.
The current Bull looks to have more legs and fundamentals than the run upto 2011/12. It is good to be overweight in it a little.
It's not hit any of the water cooler chats that I frequent........so only a few of us are excited, by where the PMs are going.
When the water coolers are humming with Golden talk and the blow off top is happening, its time to lighten off. Wont be for a while yet!
https://www.rnz.co.nz/news/national/528584/government-urged-to-interven…
Time to go back to Hyundai, cap in hand .
No , the extra rail costs were a few hundred million, the cost blowouts were in the earthquake and flooding issues , which remain.Part of the flood costs were to cross the creek to provide a BlueBridge terminal . Why Kiwirail was wearing the cost of that , i have no idea.
The only way Corolla Willis can come in under the rail costs (given the now full cost cancellation fees), is to ignore these threats, or more likely , get the standards changed.
Thank you. Exactly right. Sell/scrap the existing rust buckets and do nothing. If there is enough demand to cross the Strait then there will be supply. Sure the Bluebridge broke down, it happens. It’s just unfortunate that we have so many drama queens to talk it up. Why is it that the lefties think the government (the taxpayer) has to do every bloody thing for every bloody one. Have a look at yourselves.
Good idea. Both Army and Police in a shocking state currently. Navy worse. Can’t believe I’m saying this but I am warming to Luxon. He may actually be there for the right reasons and appears to be having a go. And for all you lefties getting wound up, let me be clear, the righties are not much better. Abolish central government. 4 States.
Golds unstoppable BULL MARKET is irrefutable and still early stage. Good call on that Yvil.
Best of all, Its early days.
Just as the juxtapose NZ property market is: mid-PONZI-bust. Still navigating the downhill slalom!!
Gold has been on the best run in many decades and Ole Painter and Wingers antiGOLDbug - wobbleism, has not aged well AT ALL!!
I been accumulating the AU miners for some time. Super profits/dividends are coming biatches!
Sticking to Digital Gold thanks
Now that approval of options for ratty ETFs have been approved, it's probably that the glory days are over. The 20x cycles are gone. Doesn't mean that BTC won't perform better than other assets, but the easy money opportunities have dried up. Less volatility means less chance to make out like a bandit. March 2020 was the last great opportunity. Wonder how younger people will react. Could potentially mean a focus on far more speculative assets in the defi space now.
Just wondering if the gold price moves are related to this announcement. The insiders (ruling elite) know what's going on and it might be time for the focus on price suppression to shift from gold / silver to BTC.
Interesting summary of current global new energy vehicle sales:
https://youtu.be/Zjuj1xB_Ze8?si=sSuKm1pJC_Zna_yM
The TLDR:
- sales growth of only 1% in Europe
- China is almost single handedly lifting overall global growth
-PHEV growth is outstripping BEV growth
- Tesla is falling out of favour (which you'd have to expect given increased competition and slow development cycles)
Your comments to me just days ago, about the decline in Gold, is haunting you badly......
Wise advice for you: Flies should not poke and prod a strong Gecko. Never ends well, as the fly is always tastily digested :)
If you had the attention span of a fruit fly and the memory of a goldfish, I can see why these short movements could excite you.
Something like gold isn't supposed to have such increases in value in the short term. History shows such activity more often ending badly.
If you want to insulate yourself from inflation, the best bet is to mitigate how much of that CPI basket you source externally.
I've heard of dividends, but I've also heard of the history of gold mining investment.
The few people I've known to do really well are much higher up the food chain.
You're investing in a business, not actually gold. Here's how it often plays out
- gold price goes up
- new mining activity increases, based on the economics of more expensive gold (if gold is more expensive, more costly mining processes become viable)
- gold prices adjust, many new mining operations go bust/profits disappear.
The place to be is existing gold miners, that are profitable at US$1200 OZ.
So get into a lower AISC miner and the profits multiply as the gold price goes up.
Another big positive is the softer labour market in Aussie now and the much lower Diesel price. Yum Yum, more profits in my Tum!
Not hard and much better than the fatties who have become financially negative/obese, gluttoning up in the dying NZ Ponzi.....
If you're investing in mining over physical gold, you're chasing the big returns of a new mine that hits payday. An existing mine isn't going to have a return much greater than holding actual gold.
Not hard and much better than the fatties who have become financially negative/obese, gluttoning up in the dying NZ Ponzi.....
So we're now moving from you railing against property spruikers, to you now being a gold spruiker.
The place to be is existing gold miners, that are profitable at US$1200 OZ.
So get into a lower AISC miner and the profits multiply as the gold price goes up.
I'm interested in how all of a sudden gold miners are now the hot topic across the nation. And to be honest, while GDX has performed solidly this year, its performance has not been great. Remember, we're still approx 30% down from 2011 peak.
Only 10% of my friends really follow the PM market. Its not a major interest for most.
At least gold mining pays high wages, in the West has environmental controls and has been the longest safe store of value for 5000 years.
Producing Miners I have are also prospecting to increase the life of mine and keep the stockpiles full into the plant. Smart management, with track history of profits, is what I buy, when looking at any miners.
I'm interested in how all of a sudden gold miners are now the hot topic across the nation
Since 2020, much of everything is undergoing a revaluing process, and that process is at or close to fever pitch. So we are seeing money move all over the place in an attempt to find a reliable home for it. So gold, or gold mining is more attractive in that sort of environment.
Something like gold isn't supposed to have such increases in value in the short term. History shows such activity more often ending badly.
I disagree P. Previous bull runs in gold have seen similar price moves. Just because you're not aware or don't understand it doesn't mean it "isn't supposed to happen".
I prefer the wisdom of legendary technical trader Peter Brandt on the current price action in gold:
"it is possible to define Gold as having entered a parabolic advance. It is an easy mistake to take profits prematurely in parabolic moves. Previous bull cycles of Bitcoin are cases in point".
I disagree P. Previous bull runs in gold have seen similar price moves. Just because you're not aware or don't understand it doesn't mean it "isn't supposed to happen".
History is the most reliable measure we can have. If your non fungible asset is moving in price like it's a future growth tech stock, the value growth needs to be viewed with a degree of scepticism.
Maybe we're all living in a simulation.
But apparently we have record of what's gone on in the past, and that's usually a more reliable framework to view objective reality than blind future punts. That's not to say dynamics never change against the past observance, just that it's kinda rare, and predicting it accurately is highly problematic.
Much of the change going on now, while "new" to those experiencing it, is nothing that hasn't occured before.
Hearse sales are the place to be.
"In July 2024, excess mortality increased in the EU. The indicator reached 4.7% above the baseline.
In July 2024, the highest excess mortality rates were in Malta (26.7%), Greece (25.2%) and Cyprus (24.8%). "
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File…
The higher mortality rates aren't that much of a mystery.
https://www.worldweatherattribution.org/deadly-mediterranean-heatwave-w…
Especially when you ignore cold or mild weather - or that extreme cold or hot weather is attributable to less than 1% of deaths.
Mortality risk attributable to high and low ambient temperature: a multicountry observational study
"More temperature-attributable deaths were caused by cold (7·29%, 7·02–7·49) than by heat (0·42%, 0·39–0·44). Extreme cold and hot temperatures were responsible for 0·86% (0·84–0·87) of total mortality.
Most of the temperature-related mortality burden was attributable to the contribution of cold. The effect of days of extreme temperature was substantially less than that attributable to milder but non-optimum weather."
https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(14)6211…
You believe your reference supports any position of global heating denial you troll the interest comments section with? It is logical to assume that as global temperatures heat, climate related deaths will begin to skew towards heat related, rather than cold related. Increasing rates of energy poverty in cool climate countries could of course slow the trend, if not absolute numbers of deaths.
"We estimated 47,690 (95% confidence interval 28,853 to 66,525) heat-related deaths in 2023, the second highest mortality burden during the study period 2015–2023, only surpassed by 2022. We also estimated that the heat-related mortality burden would have been +80.0% higher in absence of present-century adaptation, especially in the elderly (+100.7% in people aged 80+ years)."
https://www.nature.com/articles/s41591-024-03186-1
It's just the beginning. Any normal human would try to limit future heating, or better, reverse it.
https://www.dw.com/en/fatal-heat-wave-sweeps-greece-claims-more-lives/a…
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