Here's our summary of key economic events overnight that affect New Zealand with news we are living in a new world of imposed distortions. Ethical politics or business dealing is out the window. Trust is being replaced by force. It is hard to see how this will end well. After all, business relies on trust, honesty and integrity. Without it, why would you make a deal? The result can only be higher risk premiums.
First, the annual Davos meetings are underway, and today they were dominated by US Presidential bluster where we claimed he would force interest rates down, force the oil price down, and force other countries to "put America First". He also threatened any country who challenged the American FANGs with taxes on their activities in their own countries. Billionaires don't see the need to pay taxes - their fair share, or any share - to anyone.
US jobless claims fell back sharply from last week's big seasonal increase. But the fall was not as much as seasonal factors would have anticipated. On a seasonally-adjusted basis they rose. There are now 2.24 mln people on these benefits, which is actually the highest since the last Trump Administration. (Interestingly, the new US-DOL leadership 'hid' this data, shifting it to a 'new' location.)
In the regions, the December factory survey from the Kansas City Fed revealed a further contraction. New order levels were low, and despite improved manager sentiment, they actually don't expect new order levels to rise much.
In Canada, retail sales rose much more than expected in December, their best December rise since 2019, and the biggest any-month gain since May.
Japan said its exports rose +2.8% in December from a year ago, meaning that eleven of the past twelve months recorded export growth. Only nine of the past twelve recorded import growth.
And all eyes turn to the Bank of Japan and their expected +25 bps rate hike, later today.
A rise in South Korean business sentiment in January comes after authorities there reported a quite soft Q4-2024 GDP growth outcome.
Singapore's CPI inflation was up +1.6% in December, the same as November and slightly more than the +1.5% expected.
Taiwanese retail sales rose +2.9% in December with a modest performance. But Taiwanese industrial production surged +20% in December from the same month a year ago which itself wasn't especially soft.
In China, they are directing insurers to buy equities, a move designed to put a floor under the pressure on those markets.
After 'peaking' in October at their long-run average, the EU consumer sentiment survey has slipped to be more net-negative since. But the latest January 2025 survey essentially held the December level to be almost 2 percentage points better than year-ago levels.
In Turkey, their central bank claimed overnight that inflation there is under control at 44% and heading in the right direction. So it cut 2.5% from its policy interest rate taking that benchmark down to 45%.
Driven by rates out of China, container shipping freight rates fell a sharpish -11% last week, although they are still 140% higher than pre-pandemic levels. The Baltic Dry index for bulk cargoes fell a sharp -16% in the past week, now at the very lower end of its long-run average level since 1969.
The UST 10yr yield is up at 4.65% with a +4 bps rise from this time yesterday. The key 2-10 yield curve is more positive at +36 bps. Their 1-5 curve is also more positive at +26 bps. And their 3 mth-10yr curve has also steepened, now to +31 bps. The Australian 10 year bond yield starts today over 4.55% and up another +3 bps. The China 10 year bond rate is now at 1.67% and up +2 bps. The NZ Government 10 year bond rate is now at 4.66% and down -1 bp.
Wall Street was little-changed in Thursday trade, up +0.3% on the S&P500. Overnight European markets were up +0.7% except London which was up +0.2%. Yesterday, Tokyo rose +0.8%, Hong Kong fell another -0.4%, but Shanghai rose +0.5%. Singapore rose +0.7%. The ASX200 fell -0.7% in its Thursday trade while the NZX50 rose +0.2%.
The price of gold will start today at US$2757/oz and down -US$1 from yesterday.
Oil prices are down -US$1 at just over US$75.50/bbl in the US and the international Brent price is now under US$78.50.
The Kiwi dollar is now on 56.8 USc and up +20 bps from this time yesterday and more than a one month high. Against the Aussie we basically unchanged at 90.3 AUc. Against the euro we are up +10 bps at 54.5 euro cents. That all means our TWI-5 starts today just on 67.2 and also essentially unchanged from yesterday. A fall against the Yen offset the USD rise.
The bitcoin price starts today at US$106,275 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.8%.
Monday is the Auckland Anniversary holiday, and Australia Day, so the newsflow will be light. But we will have continuing regular service on Monday.
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38 Comments
Noting the lower net migration numbers from yesterday, this seems logical, less migrants viewing NZ as a great place to come to, and more locals bailing to what looks like a greener pastures.
Interesting that china is telling insurers to invest in equities to try and put a floor under the stock market, I suggest this kick the can down the road may halt the bleeding but eventually you will reach the can, and then the insurance industry will need a rescue package.
I am hearing stories of states? in china holding rich visitors hostage and extracting payments for relaese, so desperate for funds as no land sales are happening for revenues..
Wonder why the US-DOL would see fit to hide the latest jobless figures when the new administration is only days old? Given the penchant in US politics for the full on blame game this was likely ammo especially by adding a claim that it had been tracking well four years earlier?
The full Davos speech if you can stomach it;
https://www.youtube.com/watch?v=D6yYHUC_134
The comments stream is quite entertaining.
Lol - heading to Hollywood frankie?
A cult is described as a system or group of people who practice excessive devotion to a figure, object, or belief system. Its characteristics include having a leader that preaches an explicit belief system or ideology and who is followed by unquestioning believers
Who remembers the Greater East Asia Co-Prosperity Sphere from fifth form history?
And now we have Trumponomics wanting to do the same? The population of the USA is some 350 million whereas the rest of world is quite a bit larger. For Trumponomics to function, it is going to require a huge investment in logistics assets with a huge corresponding - and ongoing - hit to the environment moving stuff around.
I don't see America being 'great' if our world heats up faster and mass migration ensues as people have to move from regions that were once arable but have now become so arid nothing much will grow. And many areas of the USA are in this category.
If people in developed countries think they have immigration problems now, mainly from places already affected by global warming like the middle east, africa, mexico etc, then they ain't seen nothing yet.
But don't worry. There aren't many billionaires and they can go live wherever they like because governments fawn over these scoundrels. Never in human history have so few been able to privatize such massive gains while socializing indescribable suffering and losses.
Again it seems Trump is of the fixed opinion that the world needs the USA more so than the other way round. Except of course there is stuff, minerals & other raw material, that the USA has never had. Interesting though that there is a notion that Trump is heading policy towards the individual states taking more care of themselves at the expense of federal assistance, for instance natural disasters, floods, fires you name it. Possibly that could be considered within the context of size where as a matter of comparison ten states each have economies larger than or similar to Russia. How though that though would be “adjusted” within the federal tax take is not clear.
Trump is heading policy towards the individual states taking more care of themselves at the expense of federal assistance
No he's not. He's just talking shit as he always does. Ignore what he says it's undecipherable because he doesn't actually have any coherent policy. Look instead at what actually gets passed by congress and signed off. It's almost the exact opposite of half the stuff he spouts.
The pathetic bit about Trumps actions and claims are that it is clear that he does not understand how and why America was considered "great" post WW2. It did that by mostly working with the western world, not against it. True its politics required it to have enemies and the USSR and China seemed keen to fill those squares, and they did bully a lot of smaller countries due to their anti-communist phobia (which still lingers in their anti-socialism rhetoric), but for the majority they presented opportunities and often partnership.
His current path is isolationism which will more likely cripple the US as other countries build their own manufacturing to avoid buying from the US. Trade blocks will be created without them and they will find they can't bully their way in without significant concessions. NZ should be reconsidering some of its treaties with the US to see how they will fare under the Trump administration. In the end it might all come down to their military posture and how that pans out.
The international expansion, globalisation if you like, commenced by Reagan & Bush senior was partly aimed at embracing China and thereby undercutting the Soviet Union and it succeeded somewhat there. The accompanying exploitation of Chinese manufacturing, its scale, prowess and cheapness was though at the expense of the equivalent sectors in the USA itself. Which in a way is ironic because all that international outgoing support post WW2 had bolstered the same. Trump now seeks to turn back the tide. Even old King Canute knew he couldn’t do that.
"For every 10% increase in solar and wind share, the electricity cost increases by more than 5 cents a kilowatt-hour.
...That means we’re paying for two power systems: renewables and backup. Moreover, as fossil fuels are used less, those power sources need to earn their capital costs back in fewer hours, leading to even more expensive power.
One study shows that in China the real cost of solar power on average is twice as high as that of coal. Similarly, a peer-reviewed study of Germany and Texas shows that solar and wind are many times more expensive than fossil fuels. Germany, the U.K., Spain, and Denmark, all of which increasingly rely on solar and wind power, have some of the world’s most expensive electricity.
The International Energy Agency’s latest data (from 2022) on solar and wind power generation costs and consumption across nearly 70 countries shows a clear correlation between more solar and wind and higher average household and industry energy prices."
https://www.wsj.com/opinion/green-electricity-costs-a-bundle-wind-solar…
That's the problem - what's the solution?
I note Bill Gates first molten salt reactor is progressing, albeit foundations only so far - https://newatlas.com/energy/molten-salt-nuclear/.
China have approved a very large dam in Tibet that will produce 300 TWH, three time the Three gorges Dam. (https://newatlas.com/energy/yarlung-tsangpo-hydroelectric-project-china/) Can't see the Greenies let NZ do another dam anytime soon.
And dams are so cheap to build ..?
$211 million
Waimea Water Limited (WWL) announced on Monday that the final cost of the controversial dam is $211 million, double the $104.5 million projected cost when the Tasman District Council voted to go ahead with the project in 2018, and nearly three times the $75.9 million price it consulted on in 2017
Reiterating what I think must be a very important concept for the economy focussed.
https://www.britannica.com/science/confirmation-bias
The very familiar but often ignored concept of <i>confirmation bias which threatens flexible thought and adaptation to changing conditions.</i>
As for the type of people that go to Davos- not my President, not my Prime Minister in fact for most of them, <i>no-one did or would vote for them</i>.Doesn’t mean I wouldn’t listen but scepticism required. Self interest and ego settings at maximum. World government types- no rabbit hole required.
I have appreciated interest.co.nz's political neutrality; reporting facts not opinions, and opinions are clearly indicated as such. It seems a rare quality amongst journalists these days as the MSM has only become a mouthpiece for propaganda. I am no Trump fan, but for people who are - that is their prerogative. The anti-Trump sentiment that has emerged on this site compromises its previous political neutrality and I'd encourage interest.co.nz to consider how this impacts interest.co.nz's cred.
First, the annual Davos meetings are underway, and today they were dominated by US Presidential bluster where we claimed he would force interest rates down, force the oil price down, and force other countries to "put America First". He also threatened any country who challenged the American FANGs with taxes on their activities in their own countries.
How is this anything other than objective reporting on factual things Trump said. If you are challenging the word 'bluster' then please explain how you would better describe what it is.
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