Here's our summary of key economic events overnight that affect New Zealand with news the cost of the Trump capricious bulldozing is going to be much higher interest rates - and the bond market has a key signal today.
But first, US mortgage applications were virtually unchanged last week, up only +0.1% to be +2% higher than the same weak week a year ago. Mortgage interest rates eased very slightly but they are still above 7% so a six month high. No sign here that some political enthusiasm in part of their community extends to the residential real estate sector.
And the current US retail impulse extended its more modest tone last week, up +4.5% from the same week a year ago, basically holding last week's pullback. This expansion level is near the bottom of the range compared to all weeks in 2024.
And also falling back post-election is the Conference Board's Leading Index survey tracking series for December. It actually is quite a big move from November.
The bond market got another chance to price long term US Treasury yields, again in the shadow of federal debt authorisation stress. This morning's tender for the UST 20 year bond was again well supported but that showed a sharp rise in the median yield at 4.86%. This was notably higher than the 4.62% at the also well-supported prior equivalent event a month ago. And it is a shift that will undoubtedly move the secondary market later today. The bond markets are worried.
Uncertainty is at the heart of what the Whitehouse is doing. Yesterday, the President announced a US$500 bln AI initiative to be funded by billionaires. Today, it seems clear that the project "might" be US$100 bln, but then one of the billionaires, Elon Musk, said none of them have the funds for the announced initiative.
Meanwhile, Canadian producer prices rose less than expected in December from November, but it still means Canadian PPI is +4.1% higher than year ago levels.
Korean consumer confidence took a hiding in December in the midst of their political crisis (one that is still playing out). But the latest survey has consumer sentiment bouncing back - not quite to the pre-crisis levels (and still net negative) - but a notable recovery anyway. We will get their updated survey of business sentiment later today.
[In the UK, money talks. The high profile legal case brought by Prince Harry against the Murdoch papers has seen the Murdoch's fold, preferring to apologise and pay, rather than have the evidence presented in open court, including rife obstruction of justice.]
In Australia, they are getting a small uptick in economic activity. While the growth signal from the Westpac-Melbourne Institute Leading Economic Index is not particularly strong, it has shown a clear improvement from the persistently negative, below-trend reads recorded over the previous two years.
And staying in Australia, new data out today for the September 2024 quarter shows that residential dwelling construction is rising. New dwellings commenced rose in Q3 from Q2 at an annualised rate of +4.2%, driven by new house building, up +5.2%. Overall these dwelling starts were almost +14% higher in Q3-2024 than in Q3-2023. But their rental market "has well and truly past the peak". Real estate offices that specialise in the rental market are hurting now. Overall inventory for sale is up sharply and investors are quitting, especially in Victoria. A lot of the investor sales are to FHBs there.
And we should probably note that today the prices of many commodities are falling and under pressure from building economic uncertainty.
The UST 10yr yield was just on 4.61% prior to the US Treasury tender, and up +3 bps from this time yesterday. The key 2-10 yield curve is more positive at +31 bps. Their 1-5 curve is also more positive at +22 bps. And their 3 mth-10yr curve has also steepened, now to +28 bps. The Australian 10 year bond yield starts today over 4.52% and up +4 bps. The China 10 year bond rate is now at 1.65% and down -1 bp. The NZ Government 10 year bond rate is now at 4.67% and unchanged.
Wall Street was firmer in Wednesday trade, up +0.8% on the S&P500. Overnight European markets were mixed with London dipping in a minor way, Frankfurt up +1.0% and Paris up +0.9%. Yesterday, Tokyo rose a strong +1.6%, Hong Kong fell an equally sharp -1.6%, and Shanghai fell -0.9%. Singapore slipped -0.4%. The ASX200 rose +0.3% in its Wednesday trade while the NZX50 dipped a minor -0.1%.
The price of gold will start today at US$2758/oz and up +US$10 from yesterday.
Oil prices are down another -50 USc at just over US$75.50/bbl in the US and the international Brent price is now just on US$79.
The Kiwi dollar is now under 56.6 USc and little-changed from this time yesterday and holding its recent gain. Against the Aussie we also unchanged at 90.3 AUc. Against the euro we are up +10 bps at 54.4 euro cents. That all means our TWI-5 starts today just under 67.2 and up +20 bps from yesterday.
The bitcoin price starts today at US$103,539 and down -1.7% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.9%.
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98 Comments
Prince Harry 1 Murdoch empire nil. Not a fan of the prince at all but despite earlier avowals not to settle this is the right decision. Firstly money in the bank. Secondly we all are spared another court case frenzy by the media. Thirdly assuming he won, it would all soon be forgotten as per the forced closure of News of the World. Fourthly he and his princess may continue with being quieter.
Trumps owns Obama on healing the oceans.
"Snow fell in Houston and prompted the first ever blizzard warnings for several coastal counties near the Texas-Louisiana border. Snow covered the white-sand beaches of normally sunny vacation spots, including Gulf Shores, Alabama, and Pensacola Beach, Florida.
People made the most of it - from a snowball fight on a Gulf Shores beach to sledding in a laundry basket in Montgomery, Alabama, to pool-tubing down a Houston hill.
In New Orleans, urban skiing was attempted along Bourbon Street, a priest and nuns engaged in a snowball fight outside a suburban church, snowboarders shredded behind a golf cart, and people went sledding down the snow-covered Mississippi River levees on kayaks, cardboard boxes and inflatable alligators."
Obama was only 46 - hardly old. It's the new 36.
"...this was the moment when the rise of the oceans began to slow and our planet began to heal ..."~~Barack Obama upon winning the Democratic nomination for presidency conveys his thinking of what that means ....for the world, Tuesday, JUNE 03, 2008
Geez don't you realise omnipotent politicians hove the power to change the climate back to the Little Ice Age utilising the power of your back pocket? Or can only democrats heal the planet?
"...this was the moment when the rise of the oceans began to slow and our planet began to heal ..."~~Barack Obama upon winning the Democratic nomination for presidency conveys his thinking of what that means ....for the world, Tuesday, JUNE 03, 2008
The only snowflake Trump knows about is probably some high end escort or porn star he managed to pay enough to keep quiet( for now).
Read the end of nature, or any scientific report back in the 90's .
All predicted this kind of weather as a symtom/ consequence of global warming.
Pro tip - confidentiality agreements aren't illegal.
"Independent, March 20th, 2000:
However, the warming is so far manifesting itself more in winters which are less cold than in much hotter summers. According to Dr David Viner, a senior research scientist at the climatic research unit (CRU) of the University of East Anglia,within a few years winter snowfall will become “a very rare and exciting event”.
“Children just aren’t going to know what snow is,” he said.
Apparently the loudest clapping during the Trump speech was when he said they are pulling out of the 2015 Paris climate accord. Perhaps a few more fires and a bit more freezing to death and a few more Cat 5 cyclones are required, at least they are not getting away scott free for trashing the planet.
Yeah, on Bloomberg, the BlackRock guy is talking about sticky inflation and HFL: https://youtu.be/qQi8e__P_LA?si=mhRNqOedYY_JBfAq
He probably knows a bit more than the average RNZ financial expert saying rates are coming down.
The thing, for want of a better word, is though all the global territory yet untapped. As you have accurately explained the easy access stuff is first exploited. But now there is resultantly sharpened interest in such as Greenland and even Ukraine given vast but problematic shale deposits. There is no restraint on drivers such as Trump in this regard, as far as I can see.
First-World society requires a minimum EROEI - a minimum energy return on the energy invested. Time is an important ingredient - because we can stave-off maintenance temporarily (but not permanently, and not without increwasing repercussions). A further clouding factor is that we are still using high-EROEI energy sources (Ghawar, say) alongside inadequate ones (fracking). As we phase out the former and in the latter, the EROEI drops.
Eventually - inevitably - that drops BELOW what is needed t maintain BAU rates of throughput and maintenance. So we fudge the latter. And pretend the former isn't a thing.
Depletion-rates for conventional oil-wells is 4-5%. For fracking, much worse: https://jpt.spe.org/life-after-5-how-tight-oil-wells-grow-old
So his drill baby drill won't even keep pace with depletion, and even the current supply is no staving off entropy sufficiently. This is who the two Iraq wars, this is why regime change in Libya, Venezuela - the US cannot function at this level of consumption (25% of global resource consumption) without energy of a high EROEI. Higher than fracking alone, can deliver. Fracking is the bottom of the barrel.
As an associated aside, it amazes me that so many folk can assume growth forever, while simultaneously hearing comments about finite land-masses being desirable. Growth is undefined but exponential until it hits limits; land areas (and fossil energy reserves) are defined limits. So Malthus was 100% correct, and only fossil energy staved off mass starvation (the flip-side of overshoot). Temporarily...
We will war over what's left - using a substantive portion of what's left.
It's physics and ecology - both are hard sciences. Overshoot can apply to all species, and we are just a species.
But those who worshipped a false god - 'economic growth forever', strikes me as one such, 'humans are above nature', as another - are want to accuse others of what they themselves are guilty of.
The bloodhound gang were so far ahead of their time... https://youtu.be/5OvlrIwmt7k?si=mFG4PyMed2lFfta9
He probably knows a bit more than the average RNZ financial expert saying rates are coming down.
Blackrock are going to tell us what they think is going to happen, based on financial moves they've already made.
If you're listening to them, you're potentially a customer.
That's why you watch the tape, and US 10Y looks to be wanting to retest 5% on the all time chart, if it gets throught that there are higher tests coming. Looking at numbers below its serious flow coming.... most will fix at much higher rates then it was on, making the deficit even worse .
https://www.cnbc.com/quotes/US10Y
Key Points
- Nearly $3 trillion of U.S. debt is expected to hit maturity in 2025, much of it of a short-term nature.
- That could provide another headache should the market not be prepared to absorb what already is expected to be massive Treasury issuance as the U.S. finances a nearly $2 trillion budget deficit.
I think the drop in the DXY is maintaining SP500 while the US10Y tests 5%. If the USD remained strong US equities would roll over into a correction. So I expect the DXY to head towards 100 if long bonds continue to sell off. Can't have the US stock market crash first week Trump is in office.
Yet alot on here were screaming the Pacific peso. And oil going thru the roof. Oil back again today and it aint just the NZD that was dropping against the US it was every currency so really the USD was going up. The best cross rate to compare NZD with is the AUD and as usual we are around that .90 so in reality NZ is pretty much ticking along as usual
One of the US investment banks I worked for had a November top 10 positioning forecast for the following year. When I questioned a couple of them to their 2IC economist he said that these forecasts were largely already loaded into their clients positions and were expected to be neutralised even before they fully played out in the economy. So yea you’re dead right.
The Taxpayers’ Union can reveal through an Official Information Act request that Landcare Research gave $4,027,020 on the Oranga (Wellbeing) Project – including treating Kauri dieback with potions made from Whale-oil and music from whale song (yes, seriously) as part of the MBIE-administered National Science Challenges.
“Kauri dieback is a natural disaster. I’m no biologist, but I can confidently say a whale-song mix-tape isn’t going to stop it. Nor are pagan potions made from whale-oil on the basis, apparently, that whales once walked the Earth and are the brothers of Kauri trees.
“At the same time the Government’s plugging economic growth through science and innovation, we find out that the Strategic Science Investment Fund has been used to play nautical noises at trees.
“The Taxpayers’ Union are all for blue-sky thinking. But if the Government’s chucking millions at any ‘research’ project which comes begging, a common-sense check might be needed if even this one’s made it past the keeper.
“At $4 million, the very least taxpayers could at least expect is a copy of the CD.”
https://pointofordernz.wordpress.com/2025/01/22/4-million-to-subsidise-…
Apologies for the cliché but another unfortunate example of the wilful wastage of other people’s money by those with access to the public purse. Or as a clearly frustrated Mayor of Christchurch recently expressed that he has councillors and executive who think that money just falls from the sky.
- White House press secretary confirmed US federal employees in diversity offices must be placed on paid leave by Wednesday.
- Donald Trump ordered the shutdown of Diversity, Equity, Inclusion and Accessibility (DEIA) programmes, claiming they discriminated against white people.
- The Office of Personnel Management memo instructed agency heads to cancel DEI trainings and terminate related contracts by Wednesday evening.
Making up your own pseudo-gibberish is failing of grotesque proportions.
Neolithic (stone age) is a widely used and understood term to describe a certain level of human development.
Funds were the resources that were allocated by government on behalf of taxpayers to address the Kauri dieback issue. NZD was the unit of account.
It may be 'widely used', but it's wrong.
Energy blind - just like economics.
It was, in energy terms, the firewood age. We evolved to whale oil, coal, oil, gas - each time adding rather than replacing. But the rate of forewood growth is limited (we often locally outran it). And all the fossilised-sunlight sources are finite. Meaning we will end up harnessing solar energy, ex fossil. Yet we have not proven that we can build solar caprure technologies (dams, windmills, PV) without fossil backing.
I repeat, it wasn't stones, it was firewood. That classic quote about the stone age not ending for lack of stones, and the oil age not ending from lack of oil, is a fatally mixed metaphor. Probably - given the original source - purposely mixed.
Too many people don't stop to think. Too many fail to apply logic.
Try not confusing the issue?
Energy is the underwrite of all life-forms, and the underwrite of all societal constructs. Irrespective of race or creed.
Period.
Geothermal and nuclear aside - both hugely cavetated - all energy originates from the sun. There is short-term storage (warm bodies), seasonal storage (plants), decades-storage (firewood/timber) and aeons-long storage/formation (fossil energy).
Irrespective of label, we have run into trouble if we burn our way through any form at faster than the formation-rate. Which for oil. coal and gas is so slow as to be non-existent in human-scale terms.
You aren't alone; I ploughed my way through Gibbon's Decline and Fall once - no mention of energy depletion, of entropy, of dissipation. Yet historians still see it as a gold-standard effort. Jared Diamond and Joseph Tainter did rather better...
Try an experiment - go without food for a week (it's solar energy). Don't fuel up your car ditto, or charge anything up. Tell us how you went...
Try talking about something other than your hobby horse pseudo-science? Just once...
We were discussing grift with Kauri dieback funds and somehow, against all odds, here we are again being subjected to this entropy psycho-babble rant.
It sounds like an affliction.
Sure.
Some folk - more perceptive than you - have realised that modernity is temporary (being based upon exponentially-increasing draw-down, as it is).
So they are turning to indigenous cultures to see if their lesser impact can be of guidance. Fair enough. But they, like you, are energy-blind. Those indigenous cultures just lacked the fossil-energy lever. Which is why they lost every skirmish bar a few (Little Big Horn style). They were still capable of unsustainability - just slower.
And they are turning to nature for guidance - which is much more the way to go (nature having survived a few years more than capitalism...). If they make mistakes - and I for one think that one was one - well, they're still not so ecologically (and therefore human-impactly) destructive as Simeon Brown - who I regard as a zealot and an ideologue.
The point I think he is making, and is consistent with the rest of PDKs posts, which nobody on this forum has managed to counter, is that the stone age civilisation was actually underpinned by energy, in this case firewood.
Just as the actual foundations of any human civilisation is also ultimately underpinned by energy. However the accountancy system we currently use is energy blind. Happy to stand corrected.
"....underpinned by energy, in this case firewood" So true but more than that. Stone age society were essentially hunter gathers so they needed meat, usually herbivores, to survive. They were morphing into farming, but all that still required sunlight.
Even at that level there can still be too many people on the planet.
Few people can be bothered debating with PDKs & others blinkered dogmatism. Over millenia historical civilisations have always come up against "limits to growth" & energy constraints.
Until they overcome them & found innovative solutions because some bright spark (!) refused to take no for an answer. Some of us are confident in our ability to similarly progress in future.
"The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man." — George Bernard Shaw
It's worse than you think. I also posted the TPU link yesterday:
https://www.taxpayers.org.nz/whalesong_trees
Further, from the TPU email
“…we’ve uncovered that the “research” was outsourced to a private “not for profit” company: Te Tira Whakamātaki Limited.
And that’s when we came to a stunning realisation – which now explains why the departments have been so cagey about giving us information on the project…
According to Te Tira Whakamātaki Ltd’s website, its “Co-funder and Trustee” is Melanie Mark-Shadbolt.
And here’s the startling thing: Ms Mark-Shadbolt is also the Co-Director of the very same BioHeritage Science Challenge Science – i.e. the Government initiative funding the project!
I had the team work through the finances and Charities Commission records of Ms Mark-Shadbolt’s company. The company’s costs are almost entirely salaries (surprise, surprise!), and its charitable purpose is merely “Provides advice, information, and advocacy”.
The last time that I looked there were nearly 28 000 registered charities ( in a country of just 5 million people , WTF ! ) , which held combined assets of $ 65 billion ... and annual revenue of $ 16 billion ....
... that's $ 16 000 000 000 of annual income ,
& $ 0 of tax paid ... ahem !
Maybe David Seymour's Ministry for Regulation could pivot so as to focus on weeding out the dodgy ones and imprisoning/deporting those that run them.
The NZ Edutech Trust charity is no doubt the tip of the iceberg. Here's a story on it - Where is the due diligence? | Kiwiblog
This morning's tender for the UST 20 year bond was again well supported but that showed a sharp rise in the median yield at 4.86%. This was notably higher than the 4.62% at the also well-supported prior equivalent event a month ago.
Is the bond market staging a US coup? All hail the real leader of the world, King Bond!
The focus is on the US Economy, but the real victims will be those countries and projects internationally that fund via the Eurodollar market. Where does our 360 billion funding for the Residential house market come from.... thats right a massive chuck has to be raised offshore in competition tot he US Treasury market, which is consider lower risk then NZ Banks, thus we will continue to see rising offshore bank funding costs.
Why blame individuals?
Sure they're probably all psychopaths - you pretty much have to be to climb over enough people to get to the top anywhere.
But they're all products of their societies and their times - just like 18 Rabbit and Augustus-Nero. Biden represented the (basically bipartisan, revolving-door) elite/military-industrial complex. Why else do you think Israel pushed until Trump? Even Carter was part of it...
Trump will support US dominance re other people's resources - it's a prerequisite for political popularity. His list of 'others to demonise' might be slightly different, the tactic won't be though.
My point actually.
Power plays however they pan out are all about egos.
Same as the comments about diversity. Anyone who thinks they are somehow better than others because of race, skin colour, gender, genetics, culture, appearance, language or any other dreamt up thing, including a sense of entitlement is nothing more than a moron.
It is simply ones attitude and how they treat others around them that counts.
A call for balanced transport planning.
Fat chance with this donor driven lot
https://newsroom.co.nz/2025/01/22/why-some-are-working-against-public-t…
There aught to be an enquiry into this - there's no way this would have passed muster in any normal government red tape laden process.
It smacks of some kind of relationship between the people making this decision to 'invest' and those performing said 'research'. Might be mates, might be iwi, might be fam, but there's the smell of some type of corruption about it.
Further, what has the taxpayer gotten in terms of results from this investment - any actual records of it being performed? any resulting reports? stats? heck did anyone even interview the trees about their feelings?
edit: fairly sure I replied to a comment above, if it wasn't obvious, I'm referring to the $4m dollar investement into whalesong.
I regard both as lightweights, and wait for Ryan - who is marginally better (still steeped in economics though).
But the serious question is: Why was fiat-issued digital 'currency' not included?
It too, is quite capable of being a Ponzi. All you have to do, is issue more of it than there is physical backing.
Not going to comment on cryptocurrencies as a whole and whether they're a good idea or not. But I listened to the segment, and all I would say is, if I was a radio host who went on a radio show and publicly said I had "spent all day yesterday, up until 3 in the morning, learning about [the subject matter] to get up to speed" and also simultaneously called myself "an expert" on that subject matter, I would be ridiculously embarrassed.
I think it's telling she spends almost all of her time explaining historical examples of bubbles, and provides no actual analysis of what cryptocurrencies are and what they do. It's because she has no clue what they are; only that she thinks they're a bubble because there have been bubbles in the past.
I had "spent all day yesterday, up until 3 in the morning, learning about [the subject matter] to get up to speed" and also simultaneously called myself "an expert" on that subject matter, I would be ridiculously embarrassed.
Yes. I doubt the journo has even read the BTC white paper. Let alone understand it within the technical and monetary contexts. RNZ is better interviewing someone who's done the work.
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