Here's our summary of key economic events overnight that affect New Zealand with news the US is today moving from a prosperous and strong four years into an unknown future; the age where billionaires get all the gains. Markets are showing caution, especially the bond market which is likely to be the most reliable predictor of what is to come. And the USD fell. It is all very fluid.
And in the US, it seems the 'promise' of immediate tariffs on his first day in office isn't going to happen. The Trump team now says it plans to direct federal agencies to study trade relations with China and other countries without imposing new tariffs on his first day in office. (He has the office now, so the promise to voters is so last year.) But the tariff uncertainties and their threats to inflation control remain.
One thing he did re-promise in his speech today is war with Panama, committing to seize the Panama Canal. (Almost certainly, that will start work on a wider, more efficient alternative canal in another country.)
In Canada and in a central bank survey of firms taken in mid-November, after the Trump victory and before the Trudeau resignation, Canadian businesses were girding for a rocky relationship with the US marked by higher costs and new tariffs. But they were seeing improved demand. And if they can navigate the new US policies, they seem confident businesses there will improve.
Across the Pacific, Japan released machinery order data yesterday for November and that brought a much stronger result than expected. Excluding volatile items like ships and power companies, they rose +9.5% from the same month a year ago to a nine month high. And for the first time in more than a year, that propelled the annual levels to a small +1.2% gain. The recent strength comes on top of a good result for October as well.
China held its loan prime rates unchanged yesterday at its January review. The one year LPR, the benchmark for most corporate and household loans, remains at a record low 3.10% and their 5 year, the benchmark for mortgages, stays at a record low 3.60%.
In Australia, and following its pull-out of personal banking in New Zealand, HSBC is said to be considering doing the same there for its much larger retail banking operation.
The UST 10yr yield is now at just on 4.58%, and down -4 bps from this time yesterday. The key 2-10 yield curve is also less positive at +31 bps. Their 1-5 curve is holding at +22 bps. And their 3 mth-10yr curve has flattened, now to +29 bps. The Australian 10 year bond yield starts today under 4.53% and up +3 bps. The China 10 year bond rate is now at 1.67% and up +3 bps. The NZ Government 10 year bond rate is now at 4.75% and again unchanged.
Wall Street is having its standard inauguration holiday so there is no Monday trade. Overnight European markets were up about +0.3%. Yesterday, Tokyo rose +1.2%, Hong Kong rose +1.7%, but Shanghai was only up +0.1%. Singapore dipped -0.1%. The ASX200 rose +0.4% in its Monday trade while the NZX50 fell -0.3%.
The price of gold will start today at US$2707/oz and up +US$5 from yesterday.
Oil prices are down -US$1.50 at just over US$76.50/bbl in the US while the international Brent price is now just under US$80.
The Kiwi dollar starts today just under 56.6 USc and up +70 bps from this time yesterday. Against the Aussie we up +30 bps at 90.4 AUc. Against the euro we are unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.1 and up +30 bps from yesterday.
The bitcoin price starts today at US$106,643 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.8%.
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73 Comments
Trumps live speech was a classic, all the talk about a man on Mars and then they couldn't even get the music started at the end for the singer who reminded me a bit of Stormy Daniels. Talk about awkward, both presidents just standing there like opossums in the headlights, eventually she had to make the executive decision to go it alone without the music. Will the real president please stand up, please stand up...
The USA has had its time in the sun, it was the 1960's for them. Yes they all want the good old America back, but the world has moved on. They got greedy and tried to get the rest of the world to pay for their continued exuberant lifestyle. The chickens are coming home to roost.
Another thing that happened this morning was Biden's preemptive pardons of Milley, Fauci, and his family members on his way out the door.
Giving presidential pardons at the end of a term is not uncommon. Giving preemptive pardons for people who are not even under investigation is unprecedented.
Of course, the narrative being pushed is that these pardons are necessary to prevent political persecution. But unless they are overturned, this opens the door for the Trump administration to get away with whatever they like for 4 years, because it provides a precedent for him to preemptively (and retroactively) pardon everyone later on too. This is not how justice in a democracy works.
The pardons will not stop the truth from coming out, regardless if those responsible are ultimately prosecuted or not. By issuing them, Biden has not exonerated anyone for their crimes. He's incriminated himself.
The past few months have been almost surreal, I have a hard time believing a lot of what's going on. I can't imagine what the rest of this year has in store.
How the fark can a pre-emptive pardon even be a thing?
If a crime hasn't been committed or there is no prosecution, why the need for a pardon?
It's absurd that Biden has done it, and I'd be saying the same thing if Trump or anybody else had done it.
Firstly, it smacks of there being some underlying guilt. Secondly, it means a precedent is established that it is fair game to pre-emptively pardon your buddies even if they have done wrong.
Not even the most advanced of tertiary syphilitic Roman emperors would have dreamt up such nonsense.
You hint at the problem, but it is much, much bigger than Biden and co. The US seems intrinsically unable to do effective critical self analysis. And Trump has promised in the past to clean out the swamp, but just to get into a position to do that means you have to become a part of the swamp. The US establishment still doesn't seem to get why someone like Trump can even get traction, let alone elected.
Can he make it better; I doubt it? He routinely demonstrates a seriously flawed character, that is at least as bad as the other politicians there, he just has no skill nor awareness (apparently) that he should try to conceal his flaws. He will just likely put his own taint on the corruption that is there. I postulated some months ago that he may have matured since his last term, and having been shot at and missed (Winston Churchill seemed to understand that effect) but one has to wonder if he has asked himself why someone would even try? The next four years no doubt will be interesting and how long will it take the world to recover from that?
I think PDK was referring to the "unknown future" - in a world with dwindling energy resources the future is very much known, and it's not a pretty one. The "gains" made by billionaires are simply bets placed against those resources that are increasingly hard to win, and eventually the house of cards comes down.
Happy to be corrected.
Yes, they have very bad wage disparity. But that is how they like it, capitalism, free market etc are not even questioned by those that get paid badly, you would have to be a damn commie to expect your employer to pay above the market rate. I doubt Trump is going to raise the min wage etc.
Exactly remeber sitting in the Blue Marlin in Pensacola with friends and a friend of theirs joined us for a while then left to do a uber his parting shot was that the uber driving paid for his petrol and running costs of his vehicle. And he was some blue collar worker. Most americans work their full time job with 6 public holidays a year (NZ 13) then work a part time job and most a either selling real estate and or solar panels as an example.
Top google result:
For the year 2022, the U.S. Census Bureau estimates that the median annual earnings for all workers (people aged 15 and over with earnings) was $47,960; and more specifically estimates that median annual earnings for those who worked full-time, year round, was $60,070.
$60,070 * 2 = 120k = $212k NZ
It seems Americans are paid a lot more than some people think, here are the 2023 wage stats for an extensive list of jobs from the US Bureau of Labour Stats. The lowest mean hourly rate I saw was around $15 for laundry and dry cleaning workers.
Well spotted, PDK.
For those confused, the billionaires have been creaming it in over the last four years.
Not much will change in the next 4 years - they'll continue creaming it in.
Trump's original tax cuts from his first term - that went mainly to the rich, very rich and mega-rich - were set to expire this year. Now they won't. But worse - the Trump Cabal wants them made even bigger !!
Panamanian government should start arming everyone of military age and distributing supplied/medicine. The US doesn't have the stomach for long, bloody wars.
Also call up the Nicaraguans, they still have a lot of bitterness and resentment about the US. The Venezuelans have little to lose either.
'One thing he did re-promise in his speech today is war with Panama, committing to seize the Panama Canal. (Almost certainly, that will start work on a wider, more efficient alternative canal in another country.)'
https://www.theguardian.com/world/article/2024/may/08/nicaragua-cancel-…
https://en.wikipedia.org/wiki/Nicaraguan_Canal_and_Development_Project
https://porteconomicsmanagement.org/pemp/contents/part1/interoceanic-pa…
The US has a long history of Steers, Beers and Queers. It's actually one thing that makes America great. You know - individual freedom.
Make America Generic Again is an homogenous movement of less than average based on fealty - it will be those individuals who won't bend the knee who will do the heavy lifting for US democracy... again.
Fancy thinking that males in dresses exposing their genitals in your daughters change and bathrooms was not an issue, political or law enforcement wise and if you think perverts are not taking advantage of this gender woo woo craziness, you dont live in the real world.
People can dress however they like.
Adults can have sex with whoever they like.
Adults can marry whoever they like so long as they are not closely related.
Nobody, however, should be required to pretend that anyone else is a sex different from what is biological reality - and that is what the "gender" woo woo is seeking to impose on everyone else.
Probably one of the only two good things in his speech was there is now only two gender types and the guys in the miliary that got ousted with the vaccine mandates are getting full back pay. Trump might actually get some respect from me if he got to the bottom of the Covid saga.
There are only two sexes. This is biological reality. No declaration or law can change that biological reality. All Trump is doing removing all the woo woo that pretends otherwise. Doing that will be one of the best things that any USA president will have done because by doing so he is bringing the USA back to reality.
I'm all for choose yourself when it comes to personal stuff. That said, so many shows now have two grown mean making out with full on mouth sucks and the like. One would think every other person swings the other way in movie world.
Go for it lads, but for a straight guy its bloody awful viewing - I guess I should suck it up.
The world will be holding its breath to see how the Panama Canal issue plays out. Logically I assume China will be asked to defend it as they have business assets at stake? Or is Trump just using the threat to re-negotiate new terms/conditions on US access/charges? Or perhaps a US military base to be established alongside it?
Interesting that only it (Panama) got a mention in the inaugural speech - not Greenland.
What hasn't been mentioned and is of importance is Trump will issue about 200 executive orders in his first few days . Of note is withdrawal from the Paris Accord, cancelling the Green New Deal, a national border emergency, a raft of energy policy cancellations and no more DEI in the federal govt. What's not to like?
Yep its drill, drill, drill baby that was in his speech this morning. All that woke green stuff just went out the window to a round of applause. The USA is going to become an energy exporter baby, they are filling up all those reserve tanks and selling the rest worldwide. Personally I cannot wait for petrol to cost $1.00 a litre again /sarc.
From 60% tarrifs on the first day to assigning people to study trade relations, surprise surprise, the orange man has not kept his word. UST 10 year getting nuked right now looks like inflation won’t be taking off any time soon, and should be back to QE talks within a week.
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