Here's our summary of key economic events overnight that affect New Zealand with news that while we were all distracted by the 'culture-war' US election, in fact the world's economy was expanding well, except perhaps in China (but even they are still expanding, just not like the they need).
In the US Redbook retail index rose +4.8% last week from the same week a year ago, extending its positive run that started way back in August 2023. This is still not a sign of household financial stress.
US consumer inflation expectations for the year ahead edged down to 2.9% in October, a four year low, and dipping from 3% in each of the previous four months. All indications are the US Fed has won its 'soft landing' in its inflation fight.
The NFIB Small Business Optimism Index rose in October to its highest in three months in a survey carried out prior to the election result.
The RealClearMarkets/TIPP Economic Optimism Index, another measure of US consumer confidence, jumped in November to its highest in over three years. It was a survey carried out after the election result was known.
But all this might change if today's trend of sharp rises in both benchmark interest rates and the USD continue. Certainly Wall Street is having second thoughts with a reversal that now puts it lower than election day.
In Canada, the value of building consents surged in September to be +11.8% higher than the same month a year ago, rebounding from a drop in the previous month. Residential consents rose +7.5% while non-residential building consents rose +18%.
In Japan, machine tool orders resumed their strong expansion in October after the September hesitation. They were up +9.3% from the same month a year ago, and bolstered by strong export orders.
In China, policymakers are still trying to find the key to unlock real estate optimism. Their latest move looks like it will be to cut transfer taxes on housing sales from 3% to 1%. The hope is that people will sell and upgrade their residences.
And of course, it was the Singles Day/Double 11 big retail event in China this week, and it is going off without special notice in the Chinese media. Given that Beijing is looking to boost consumption, you might have thought it would be getting wall-to-wall coverage, but it isn't. However, despite that, it is still an economically significant sales event.
India's industrial production rose +3.1% in September from the same month a year ago, exceeding expectations of a +2.5% growth and rebounding from a -0.1% contraction in the previous month. While this is quite good, it is not back to the average rise for 2024, and even those increases don't really explain why their GDP is rising faster than +7%. India's expansion isn't really based on rising manufacturing prowess.
And India is battling inflation and inflation seems to be winning. In October CPI inflation came in at +6.2%, in a rising trend to its highest since August 2023. Worse, food price inflation rose +10.9% over the same period and almost back to the level they had in 2019. Vegetable price inflation is running at +42%. Unless this is curbed, at some point this will cause social unrest.
Although it has been negative for nearly three years, the Westpac-Melbourne Institute Consumer Sentiment index in Australia rose in November to its highest level in two-and-a-half years as the outlook on the economy and finances finally turned optimistic.
Australia’s NAB business confidence index climbed into positive territory in October 2024, the first positive reading in three months and reaching its highest level since January 2023. There were notable improvements across most industries, except construction and retail. However those surveyed said their business conditions were largely unchanged.
The UST 10yr yield is now at just on 4.43% and up +8 bps from yesterday. The key 2-10 yield curve is now a bit less positive, by +8 bps. Their 1-5 curve inversion is now inverted by -8 bps which is less. And their 3 mth-10yr curve inversion is also less inverted, now by -18 bps. The Australian 10 year bond yield starts today at 4.65% and up +3 bps. The China 10 year bond rate is down -2 bps at 2.10%. The NZ Government 10 year bond rate is little-changed at 4.68%.
Wall Street has started its Tuesday with the S&P500 down -0.7%. Overnight European markets were all down around about -2%. Yesterday Tokyo ended its Tuesday session down -0.4%. Hong Kong however fell -2.8%. Shanghai fell -1.4%. Singapore fell -0.7%. The ASX200 ended its Tuesday session down -0.1%. But the NZX50 was the only market to rise among those we follow, up a full +0.5% with a rising trend all day after a slow start.
The price of gold will start today at US$2599/oz and down -US$17 from this time yesterday.
Oil prices are +50 USc firmer at US$68.50/bbl in the US while the international Brent price is now just on US$72/bbl.
The Kiwi dollar starts today at 59.2 USc and down -40 bps from yesterday as the USD rises. Against the Aussie we are unchanged at 90.7 AUc. Against the euro we have slipped -10 bps to 55.9 euro cents. That all means our TWI-5 starts today at just on 68.8, and down -10 bps from yesterday.
The bitcoin price starts today at US$87,134 and up another +3.4% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.6%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
61 Comments
Its been "all bets are off!" since trump won
Trump is being so much smarter with appointments this time, he now knows that loyalty is important as well as domain knowledge....
He has the same problem our 3-lown Circus has - they're up against limits and increasing entropy. The instinctive reaction is to remove rules (which are the social front for hard limits; rules were put there for an identified reason - think fresh water or speed restrictions in NZ). Not operating in a sphere which included hard limits, they see the rules as the impediment, and 'away with them'.
But growth is exponential, as is entropy load. So they're tinkering at the edges, and will fail. Trump will fight States re their environmental standards, but won't change the momentum - same here re roading and farming).
Both will be voted out - here and there - as the malaise (funny how DC's raft of indicators doesn't pick up the real reversal going on, that which underwrote the election margin - maybe he needs to add entropy?) inevitably deepens, poorest-first. Assuming continued cohesion of course; quite possible they are headed for a two-state format; would be a bit messier than the Mason/Dixon line was last time.
Another may be an unfolding tale of snouts in the trough, from the 'side' least though-of in that light. Kunstler used to be one of the best but has headed off down a rabbit-hole these last few years (anti-vax, etc); that said. he ain't silly.
Mysteries Revealed - by James Howard Kunstler Victori Nuland is a piece of work I've mentioned here a few times; married to a Kagan (and this is a thought-provoking read: While America Sleeps - Wikipedia ). Who knows where - and if - that goes?
Of course, different snouts are now lining up at the same trough - as happened in mediaeval England; Catholic and CofE taking turns to slurp, in between burning each other...
down a rabbit hole! From powerdownkiwi! Nice one
Anyone who is still pro the pfizzer share-price-boom bonanza scheme at the expense of the world economy clearly succumbs to the old adage, it is far easier to fool someone than convince them they have been fooled.
A quandry for the pro-pfizzers
- have they had all their available boosters?
- if not, why not when people are still reported as dying of covid?
- Do they somehow think they should have a individual choice in choosing to have or not have them?
Unbelievable! Thats anti-vax rhetoric. I say mandate the lot of them to have every one available - my share portfolio needs a boost
I see you are stuck between believing him intelligent (worthy of referencing) .... to then using lazy slurs ( rabbit hole/anti-vax ) as soon as you disagree with his opinions....
Its not a trait of an enquiring mind
Yeah, I don't think so. I read the trial data and looked at the mortality data and decided taking the vaccine was a sensible choice for me. The cost-benefit probably evened out for a healthy teenager/20 something, and is quite questionable for children. I am quite uneasy about the methods used to convince healthy adults to take the vaccine, but I would have encouraged them to do so for their own benefit.
Certainly if I was elderly or had significant underlying issues I'd be hoovering that vaccine up every time.
If I was 70 plus and obese with several underlying health issues then sure I would take it, what have you got to lose, you are more than half dead already. It has done untold damage to younger people who never even needed to take it. We will never, ever hear about all the damage it has done it will be like the recent abuse apology from the government, listen out for it in about 50 years time.
Those studies would be relatively easy to do in countries like the US where vaccine use was not overwhelming.
The study showing higher death rates in Republican states after introduction of the vaccine was quite suggestive to me - I think you are looking in the wrong place for the cause of that 'untold damage'.
I think Trump will be inflationary as he wants to cut taxes but will not be able to make the corresponding cut in expenditure to balance out these tax cuts. The net effect is a rise in the already problematic US deficit. This deficit will have to be monetised which is inflationary.
The other thing to consider is a regional middle east War which will cause oil prices to rise significantly. This will have inflationary implications in both the US and around the world.
I think trump is going to cut a peace deal with Putin
- Putin keeps his land bridge (probably his original goal)
- Ukraine becomes part of Nato BUT no Nato weapons are allowed on land - ie it becomes a demilitarized zone.
- If attacked Nato defends.
- Ukraine keeps Odessa port
- this way Putin saves face, trump ends a war, Ukraine stays as a buffur zone but no more attacks unless you want to attack nato.... Putin is very aware he may loose Syria ports one day, thus he must keep Crimea and a decent land bridge.
Everyone saves some face and Russian gas starts flowing again, this may well bring down energy costs offsetting trumps push to Make America great again.
The combination of tarrifs and reduces tax for those that return manufacturing to USA or Mexico is going to create a massive impulse of jobs and spending in the USA and will also damage their opponent China.
looks a big plus for US Growth, Europe is off the hook re $$$ to continue fighting and gets cheaper energy again, Putin saves face.
He might try, but Ukraine and Europe would have to buy it. Trump does not and cannot speak for Ukraine, or Ukrainians. Putin has proven to everyone in Europe he cannot be trusted, and there are new members of NATO now who will keep reminding them of that.
What price will Ukraine demand to surrender Crimea and Kursk/Donetsk? Membership of NATO will not be enough, and Putin will not accept Ukraine being a member of NATO, or even have a revitalised military capable of putting up a decent defence. It'll prove to the Russian people Putin is a liar and weak. Do they care? Who really knows? I suspect Putin will want nothing less that total surrender of Ukraine. What would that cost?
Returnining manufacturing to the USA, I agree, but recall it was the big US corporations who drove globalisation and off-shoring of labour to cut costs. They will not roll over easily for Trump. But in that there is also an opportunity for NZ.
Murray. No Nato country will now 'buy' Putins seizure of part of a sovereign neighbouring country after seeing the dictator annex Crimea following Western acquiescence, brutally invade the Donbas and openly threaten Poland and the Baltic states. They now know the monster won't stop. The commentariat talk as though Trump will on a whim risk a tearing apart of the hard won Western alliance, place in Jeopardy critical US defence infrastructure in Europe, defy the sizeable support base for UKR within the GOP and ignore substantial public opinion in favour of not rolling over to Putin within the US population. It's nowhere near as simple as they portray.
Likely the original plan was to occupy a southern corridor, through Kherson, Odessa and complement the Transnistria insurgency in Moldova. However as it always has been the Dnieper proved a formidable obstacle and once the Russians were forced of the west bank at Kherson they had to regroup and thrust northwards. Securing that corridor would have cut the remainder of Ukraine off from the Black Sea and with Moldova in the bag Romania, thus pressured. That would give Russia quite some negotiating power at the least.
FG.Putins 'original' plan was to take all of Ukraine. His Peter The Great pseudo religious Russian empire 'restoring' delusions were evident in his many rambling pre invasion speeches. This position is popular with Russians who see Ukraine's drive for independence and shift to the west as betraying the 'gifting' of 'autonomy' to Ukraine by Khrushchev in 1954. His plan ought on paper to have succeeded given the massive military strength imbalance between them, crossing the Dnipro made easy with the UKR forces in flight. But he was blind to the incompetence and corruption in his military and failed to anticipate the spirited defence of the UKR army at Hostomel. Stout Ukranian resistance to Putins invasion of the Donbass in 2014 and UKRs famous history of struggle against invaders should to have been a warning.
I should have written - likely part of the plan, but in explanation, you have to follow how it has played out. Firstly a strike at Kharkov with Kiev in sight, seeking a quick capitulation. Secondly in the south moving westwards from the Donbas region intending to isolate Ukraine from the Black Sea and probably occupy Moldova. The offensive failed in the north and in the south only got as far as the east bank of the Dnieper at Kherson. As Prigozhin acknowledged at the time the front had no option other than to then move north and secure as much length of the Dnieper east bank as possible. That is problematic in itself. The Wehrmacht and the Red Army fought four huge battles in the north for Kharkov because it is the key to south east Ukraine. During the civil war the Red Army for example had huge difficulty advancing north through the industrial urban belt of the Donetz region as it was then and it is even more built up and industrialised now as Russia is demonstrating with huge casualties to overcome village by village. The Russians here have fallen victim to their own hard earned history. The only way they will get boots on the ground in sufficient numbers to occupy Ukraine entirely is north of the Dnieper and to do so they must first control Kharkov. It would not surprise me though if Trump & Co say to Ukraine your eastern border is now the Dnieper river and then draw a hard border west to east in some open area north of Donetz. That way Russia gets Crimea secured and possession of the Donbas industry etc. Who can tell.
Indeed, it's impossible to predict how the Russian invasion of UKR will play out. The soon arriving Rasputitsa will coalesce the front line for months, no doubt why Putin is throwing everything at the Kursk salient to reduce UKR's bargaining power. Agree with your strategy summary and historical context, except perhaps the reasons for the Red army struggle to advance in the civil war which I propose was more about multi front commitments than terrain challenges. It is incomprehensible really that Putin appears to have not grasped the lessons of the great patriotic war, especially the tyranny of distance. As Von Rundstedt put it 'the vastness of Russia devours us'.
Trump made the mistake of boasting that he could end the war in 24 hours - he gave away a great deal of power in that statement. Trump has already supposedly called Putin and told him not to escalate the war - the Kremlin denies the call took place.
https://www.reuters.com/world/kremlin-says-there-was-no-putin-trump-cal…
Yet Putin said he’s ‘ready’ to pick up if ‘manly’ Trump calls him
https://www.politico.eu/article/vladimir-putin-manly-donald-trump-us-el…
The mind games begin.
Additionally what happens if Putin does escalate - what is Trump going to do.....
You only need to consider the one thing that Trump has total control over and that's the ongoing funding of the war from the USA. Please let me know what you think will happen if Trump cuts Ukraine off, because that's all that matters after he walks away. This is all but guaranteed, the USA is wasting nearly USD$1 Trillion a year on wars it doesn't need to be involved in.
The US is mostly supporting Ukraine with old military equipment rather than money. The EU has been doing the heavy lifting in terms of actually handing over cash.
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-trac…
I would guess that Ukraine would gradually lose ground, unless the EU steps up their support, which they no doubt would to some extent - the countries behind the Ukraine buffer see this as an existential fight. It's even possible that countries like Poland would put feet on the ground/in the air. Alternatively/simultaneously, Ukraine would begin to compromise and aim for a peace deal. Perhaps one that allows the remnants to join NATO/EU to reduce the chance of round 2 (3?).
What do you think would happen?
Well Germany is the next cab off the rank and look what a mess they are in and like much of Europe, the far right are gaining strength. People think of themselves first, exactly what they are now doing in the USA. Germany is not going to want to start spending billions of dollars it doesn't have while its economy tanks thanks the USA blowing up its gas pipeline. Can you just imagine what will happen if Germany starts pouring money into a war that could eventually also need soldiers ? There will be riots on the streets. That war needs to end and end fast by negotiation before its too late.
No if the war carries on then Russia will take the whole of Ukraine. Trump has already stated recently that Crimea is Russia's. The writing is on the wall, Ukraine needs to quit while its ahead. Russia takes the Donbas and Crimea is the best that Ukraine can hope for, carry on fighting and Ukraine will fall. Trump is going to pull the pin in January.
You're essentially arguing for appeasement. Look at history and figure out how well that went? If you need help - not well at all.
Give Putin anything and the war continues. Ukraine is not ahead. It has lost a lot already, quitting means surrender. They won't do that.
Hard not to accept that Poland, the three Baltic States, and probably Sweden, Finland and even Romania would consider that Russia has no ambitions beyond Ukraine. Consequently if they should need to fight to preserve their sovereignty, then it would obviously be preferable to not do so within their respective borders. Russia is not of the same power as the Soviet Union and this incursion has weakened it even more so, militarily, economically and socially. In NATO the UK, Germany, France & Italy have economies sized about the same size as Russia. Throw in the other continental NATO members and Russia is dwarfed. Given Russia’s weakened position the Western Allies of Europe would be able to do a lot more than just check Russia.
It is an interesting question. There will more than two outcomes, because the message to Europe and NATO will not be missed either. If Trump walks away from Ukraine, he will also threaten the cohesion of NATO, because that action will push war closer for Europe and NATO. The US military will have a lot to say about that. Trump's last JCS (Milley) is not there now, and is the current one as sharp and aware as Milley was?
There is no simple answer, also because of the threats to escalate to nukes.
That makes an assumption that Russia is still standing and is able to continue the war. Accurate assessments of Russia's ability to continue are difficult to make (the fact that Russia is using NK troops instead of Russian's suggests that Russia has a problem with recruitment. Additionally Russia has largely depleted it's stockpiles of Soviet era equipment not to mention the issues with the economy). .
As mentioned above Trump supposedly warned Putin not to escalate the war. What that means is open to speculation.
To answer your question - maybe not a lot.
mfd. Yes and the 'old' equipment is a key card in the US's hand. Putin is well aware that more modern equipment could turn this war on its head overnight, as he doesn't have the technology to counter it. On EU cash, if Trump does walk away and Europe further increased its defence spending by just a point or two, Putin is in trouble. UKR military arms production JVs with the likes of Rheinmetall are already underway and the Ukrainians have a long history of arms production, including rocketry. It's no co-incidence that RU has recently seen a large spike in armour losses as UKR developed a shaped charge for its FPV drones that defeats defensive cope cages.
I think that estimate is for dead and seriously injured, no less horrific for that. How any human being could perpetrate such a monstrous slaughter and unleash so much pain and misery is unfathomable. At least Stalin had the appearance of a brutal psychopath, Putin looks more like an AI composite image of an anonymous bureaucrat.
It would seem deeply imbued into the Russian national psyche that suffering and death are simply the norm. After all the Tsars had scant regard for their subjects lifestyles and were pretty effective at squandering lives in battle. The Bolsheviks just carried on where they had left off.
Yes true. But the extent of willingness to sacrifice their lives for Putins imperialistic ambitions is not yet being really tested, with so far most conscripts coming from remote corners of the motherland where the population has limited understanding of the geopolitical realities. Putin has deliberately avoided drawing on the more developed cities where people are more informed. Then there is the swelling diaspora of young Russian men fleeing the draft, thought to number in excess of 750K. These guys are now exposed to alternative realities to Putins pervasive propaganda. The Tzar of all Russia has an army man power crunch but more worryingly for him, a significant chunk of the next generation has stopped listening to his lies.
"The increase in energy production over the last two decades has turned the United States into the world’s largest crude oil and natural gas producer today and from a net energy importer to a net energy exporter starting in 2019. U.S. net energy imports in the first seven months of 1974 were about 6.8 quads. The United States exported a net total of about 5.0 quads during the same period in 2024. The main driver of this shift has been growing exports of crude oil and petroleum products and liquefied natural gas (LNG) over the last 15 years."
It's not a 'producer'; it's an extractor, and it's down to fracking, option-wise.
And yesterday - and every day, we extract and consume100 million barrels. Yes, 100 million.
Not all is burned - much ends up as degrading microplastics...
But it's a linear, planet-habitat-changing, once-off arrangement, and the faster we go, the bigger the impact. Not something to crow about.
Your comment the other day that the easy access sources are always attacked first leads to the play today which involves ever increasing fracking. In turn that then brings up the very sizeable resources of shale in Ukraine which though have been regarded as both difficult and expensive to extract. As previously noted Armand Hammer of Occidental Oil had with relative intentions, been courting the Russian hierarchy for years but actually Chevron & Shell were poised to get seriously involved when the upheavals in the Soviet Union in the late eighties shut the door. So thirty something years later, there is still vast untapped wealth underground in Ukraine.
Why go to Ukraine, or NZ for that matter, when proved reserves are increasing in the US? A far cry from the Chicken Little Club of Rome having them run out of oil in 1990 and gas in 1992!
"U.S. crude oil and lease condensate proved reserves increased 9% from 44.4 billion barrels to 48.3 billion barrels at year-end 2022.
Proved reserves of U.S. natural gas increased 10%, from 625.4 Tcf at year-end 2021 to 691.0 Tcf at year-end 2022, establishing a new record for natural gas proved reserves in the United States for a second consecutive year
Release Date: April 29, 2024"
Fair enough. That has been suggested in Texas -why waste oil and gas on electricity and heating, when you could just tap geothermal. There is a 2 GW project kicking off in Utah.
"It would take approximately four years of drilling at the rate Texas currently drills for oil and gas to produce the equivalent energy of all oil and
gas used for electricity and heat production currently in the State from Texas’ geothermal resources.
An aggressive geothermal drilling program at ‘home’ such as this may serve to free up Texan natural gas for export, instead of being required for domestic electricity production.
Source: Future of Geothermal Energy in Texas, 2023."
"The Fervo Cape Geothermal Power Project generates energy by injecting water into hot subsurface rock formations.
It then extracts the heated water to produce electricity, rather than relying on naturally occurring underground hot water like traditional geothermal systems.
If fully developed, the project will cover approximately 631 acres, including 148 acres on public lands, and produce up to 2 gigawatts of clean energy. "
https://www.enr.com/articles/59636-giant-2-gw-geothermal-project-in-uta…
"But wait—isn’t the U.S. producing a record amount of oil? Yes, U.S. output increased by more than 1 million barrels per day in 2023 to 13.2 mmb/d and about 80% of that increase was from tight oil plays. How can well performance be decreasing while production is increasing?
The answer is that shale wells are producing at higher initial rates but are declining faster than in previous years. Their total recoveries are lower than just a few years ago. The wells are burning out. Oil supply—like life—is a marathon, not a sprint. The plays have been over-drilled and wells are interfering. They are cannibalizing production from each other."
https://www.artberman.com/blog/beginning-of-the-end-for-the-permian/
Edit - proven reserves are booster-wash. Nothing is being added; what's there is being assessed and 'proven'. It's still a case of depletion of a finite resource, as fast as can be done.
But the point is that already. it takes more than $1 of debt to 'create' $1 of GDP - and GDP doesn't count entropy - although sometimes as a plus (infrastrucure maintenance).
Yet shale is a lesser energy-return on energy invested. Globally, that doesn't work. So, wealth? Maybe. There's certainly energy there, and probably positive EROEI - but how positive?
Inflation is going to be a problem in the USA, they cannot simply put tariffs on everything without inflation going to the moon. Trump only got in because he promised people would get richer not even poorer. Poor old Americans, guess what, in a world of declining resources and greed at the top, most Americans are going to get poorer.
He thinks the whole of the USA just gave him a mandate to do whatever he likes. You need to start thinking like Trump, he is a guy that can do no wrong, just like the "I could just shoot somebody and not lose voters". The guy is a convicted felon and still got elected, basically he now has no limits. Potentially he is incredibly dangerous and we need to keep out of the fray.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.