Here's our summary of key economic events over the weekend that affect New Zealand with news that we will be watching for China holiday demand signals, and watching how the US Fed handles new sharp political interference.
Also, this week will bring a slew of big economic announcements in many places, but not China which is starting its Lunar New Year week-long holiday after their PMI data is released (later today). Elsewhere it will be a big week of central bank policy reviews, capped by the US Fed, although they are expected to deliver no rate change. However both Canada and the ECB are expected to cut rates by -25 bps. Sweden (-25 bps?) and Brazil (no-change?) will also be meeting.
We will also get GDP results for the US (+3%?) and many key countries in the EU. Australia will release its Q4 CPI result. And of course the Wall Street earnings season results will continue.
But first, the early 'flash' release of the globally-benchmarked S&P/Markit PMI for the US for January shows that their factory sector is back expanding with a small gain to a 7-month high. But there was a notable pullback in their services sector, still expanding but quite a bit slower than in December. So the composite PMI is at a nine-month low. (In January 2024 is was even, neither expanding nor contracting. In January 2023 is was contracting.)
US existing home sales were up +2.2% in December from November to an annualised rate of 4.38 mln units, the most since February 2024 and despite mortgage interest rates over 7%. But in a long term perspective, this level is still very low, similar to what they had in the mid-1990s.
There was an update to the University of Michigan sentiment survey for January out over the weekend, and it was revised lower. But the inflation tracking in this survey was unchanged at 3.3%, an eight month high.
Across the Pacific, Japanese inflation jumped to 3.6% in December from 2.9% in the November, the highest level since January 2023 and well above the 3.2% level expected. Food prices were a notable driver, up 6.4%. Their core inflation rate climbed to a 16-month high of 3%, in line with market estimates.
This bolstered the case for the Bank of Japan to raise its policy by +25 bps to 0.5% at their review on Friday, and that is exactly what they did.
Meanwhile the Japanese factory PMI contracted a bit more in January than the very minor contraction in December. But their services PMI expanded more in January than in December, and by much more than expected.
Singapore's central bank loosened its monetary policy on Friday, its first such move in more than four years. Rather than interest rates, their monetary policy centers on exchange rates, via the S$NEER, allowing the Singapore dollar to rise or fall against the currencies of major trading partners to stabilise prices.
In China, we should remind readers that their week-long 'Spring Festival' holiday will start tomorrow, Tuesday, January 28 and run until Monday, February 3, 2025. Only after that will they be back to normal. Chinese New Year is on Wednesday January 29, which ushers in the Year of the Snake.
In India, their January PMIs show 2025 beginning with the private sector slowing and services losing steam. Having noted that, the expansion there is still very strong. But inflation pressure, especially in their services sector, is rising suggesting growth at this level is creating distortions which will take the edge off it for most people.
In Europe, their January PMIs showed they "returned to growth". That came with the combination of their factory sector contracting less and their services sector expanding more.
Australia's factory PMI contracted noticeably less in January, and now is barely contracting at all. New orders rose, but prices rose faster too. Their service sector however expanded at a slower pace in the month.
And staying in Australia, Westpac is pointing out that tax cuts there are not boosting consumer spending in the way expected. Three quarters of these cuts are being used by households to either pay down debt or increase savings.
The UST 10yr yield has held 4.62% unchanged from Saturday at this time. The key 2-10 yield curve is still positive at +36 bps. Their 1-5 curve is still positive at +26 bps. And their 3 mth-10yr curve has remained at +29 bps. The Australian 10 year bond yield starts today over 4.47% and down -5 bps. The China 10 year bond rate has fallen a sharpish -6 bps to 1.61%. The NZ Government 10 year bond rate is still at 4.63%, unchanged. A week ago it was 4.75% so a big -12 bps fall since then.
Reporting of Wall Street's Q4 earnings is well under way and is off to a strong start. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages. As a result, the index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter. In addition, the index is reporting its highest year-over-year earnings growth rate for Q4 2024 in three years. So it is no surprise that the S&P500 is near its record high.
The price of gold will start today at US$2771/oz and down -US$5 from Saturday, but up +US$55 for the week.
Oil prices are holding at just over US$74.50/bbl in the US and the international Brent price is now under US$78.50/bbl.
The Kiwi dollar is now at 57.1 USc and down -10 bps from this time Saturday but still near a one month high. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are also unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.4, the same as we were on Saturday, but up +60 bps for the week.
The bitcoin price starts today at US$104,928 and down -1.4% from this time Saturday. Volatility over the past 24 hours has been quite low at +/- 0.5%.
Monday is the Auckland Anniversary holiday and most businesses in the northern half of the North Island are closed. It is also Australia Day.
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45 Comments
https://scheerpost.com/2025/01/23/which-genocide-are-you-on/
Edit - and one for DC: https://www.paulcraigroberts.org/2025/01/24/trump-vs-the-establishment-…
I don't totally agree with either - but they're thought-provoking reads, best seen through the writers' lenses.
... you have too much time on your hands , Grasshopper , if you read the appalling doomsteridden links that PDK posts thousands upon thousands of times ...
Life is good , friend ... not perfect , but pretty good ...
... don't let the gloomsters wreck your pleasure of living in this moment with their repetitive horror scenarios of the future ... what if they're wrong ... they have been for several centuries , utterly wrong ...
"Only Americans of my generation know that formerly, in those days when America was great, there were no public sector unions. There was no civil service union, no police union, no firefighters union, no teachers union. Public sector employees were employed to serve the public, not to extort the public by refusing to supply the services for which they were paid unless the public paid up more."
Message bought to you by the philanthropists of the billionaire class. The US was greatest when you could drill a hole in Texas and get a geyser of black stuff. Worshipping the greediest individuals was never going to end well.
And it is wrong too.
Public sector unions formed quite quickly after the establishment of the public sector components. I suspect the author overlooks the fact that sectors like the police, firefighters, teachers, etc. were originally set up by the rich to protect the assets (and lives) of the rich, and in the case of teachers, to make the rich richer. (The rich convinced everyone else that the public should be paying for these services, even though it is the rich that gain the biggest benefits.)
Did you take this bit to heart, PDK?
So then, what is left for us to do, for we who embrace the radical hospitality of critical thinking, who mandate the urgent necessity for fair and honest and essential debate while strenuously refusing capitulation to kingmakers and kings regardless of whether they’re baring their teeth, their tongues, or their taints as coercion? How do we lead with love and empathy when challenging the troubling inaccuracies of what we perceive to be dangerous opinions and questionable values, forgiving others their trespasses without requiring they first ask for forgiveness while expecting equal consideration? What do we do to advance the most practical and rewarding certitude that moral consistency requires the universal surrender of all our egos in deference to a common good made equitable by common access? How do we embrace a grounding humility commensurate with the benign vulnerabilities of all our bodies, an inspiring and massively precious collective perpetually driven by a deep desire to simply live another day free from agony and in comradery with peace and harmony?
Do you understand why your repetitive posting that we're all doomed isn't helping anything? The answer is to just get on with it.
But get on with what? There is no one solution. But there some biggies. Take this bit ...
Which brings us to the modern-day example of [a deceitful president] and the unsettling entrenchment of Christian nationalism as the primary marketing technique of our elected officials who, in partnership with the most nefarious elements of the business class, have been able to convince the American public that a unilateral surrender to kleptocratic fascism is equivalent to an exhilarating unification with power, ...
I should point out that the author gets that bit wrong (along with quite a few other bits) as the president in not 'in partnership' with the mega-rich. He likes to think he is one of them. A useful fool if you like.
But I digress. Let's get back to the what the author euphemistically calls 'the business class'. That term is far too broad and doesn't target the real scoundrels that make up only a small percentage of the business class.
I am of course referring to the multi-billionaires who have substantial control over media and government policy in the USA (and have been using their influence in other countries, e.g. Brexit, and more recently Musk in Europe.)
1789 was the year people showed there was a solution. Madam Guillotine sang. And heads rolled. A somewhat drastic solution. But perhaps right for the times. And perhaps the only one left when government has become an outright plutocracy (i.e. government by the very rich).
Now days we have tax. But time is running out to use it. We also have regulation to control the ownership of MSM and social media. But again time is running out to use it. Eventually the only answer will be Madam Guillotine.
Poll after poll after poll shows the vast majority of people are extremely concerned about climate change. And yet we continue to elect governments that pay lip-service to the issues and/or reject its consequences outright. It's not difficult to understand why when you see who owns MSM and social media ... i.e. the mega-rich. There are only substantially reduced profits in addressing climate change issues for them (and for not a few - total ruin).
So you see ... There are solutions. I've presented this one frequently. It has just gone flying over your head as your mind is fixated in the doom-loop you repetitively post.
We, the people, have a problem. And we, the people, need to solve it. One way ... or another.
Bollocks as usual. Try reading the links I sent you, when you asked to become informed (didn't equals haven't, in my logical world).
Firstly, I don't project a doom-loop. For this scale of consumption, yes - it's doomed. By humanity can live other than by being mindless consumers of tatt. As I have long demonstrated; I walk the talk more than most.
You make the fatal mistake of believing money - and that a redistribution of it, along with 'using renewables to solve climate change' (the ignorant GND standard line) will solve all ills. Actually, we are an overshot species, needing to recoil back within long-term-maintainable parameters - of which climate is just one of many. Redistribution of debt - all money is a forward bet on future energy and resources being available - doesn't solve the supply-issue of the latter.
But you need not to understand. And to assert, while choosing not to learn (smart-a comments re hydrogen come to mind - you missed the point that time, because you... need to miss the point, for your story to sound correct). Good luck with that wee oxymoron...
Edit - I did mention that those pieces had to be read through the writer's lens.
So you are saying the massive power the billionaires have isn't a problem for you PDK? Good to know.
When our planet grows too hot to feed all life on it ... Let me know how your "stay at home" conservation strategy is working out for you. (And yes, that "stay at home" conservation strategy is a direct PDK quote.)
Great comment Chris, and your response to PDK.
And I agree, the time is getting closer when those in power will not be able to ignore the people singing the song of angry men, who will not be slaves again.
And PDK, to get the outcomes you want and we all need, extremism both in argument and action will only ever achieve more harm.
I have no problem dissing the billionaires (elite, psychopaths, whatever) and indeed if humanity is to continue, something may have to be done re psychopathy.
But they aren't the problem here. We are. Our numbers, and our rates of consumption. People blame all sorts of others; rich/poor others, right/left others, cultural others, rather than go 'mea culpa'.
And we're all - at NZ levels - culpa.
Rubbish! You haven't thought this through PDK if you think the mega rich are not the problem, who do you think everyone else is trying to emulate, and who do you think is getting in the way of politicians doing what is really needed?
Yes there are too many people on the planet but look at the higher level discussions and media on the subject? There is no mention of that part of the problem at all. In fact the mega rich want us to keep on doing what we are doing because they just benefit from all of it.
Religion has the little bit about 'going forth and multiplying'. Great fun really but the omnipotent god they so revere has not messaged anything about limits to what can be done. My theory is that is because that God gave us all a brain with the expectations that we would use it, but the rich and powerful including those in religions the world over really don't want that to happen because it will result in their power and privilege being challenged and them being exposed as the charlatans they are. When it does happen they arrange for a few to burnt at a stake or crucified to silence their critics, and even today they will still do a form of that. So the root of the problem we face today is not amongst the masses, its the leaders and they really will not change until a few face Madame Guillotine as Chris has suggested.
Agreed. And thanks for hitting on the problem with Religion.
The countries with populations that are growing fastest are also the ones where religion bakes into their societies the need to 'multiply'. Most religions have this baked in because in the 'good old days', the size of one's army was all that was required to win wars (but mainly to protect the wealth of the richest, or take the wealth of a rich neighboring country). Obviously this is no longer the case as technical superiority has come to fore. (And once the a-bomb was created, that level of technical superiority fell - as evidenced by N.K.)
But the more insidious issue is that many religions disempower women. The simple act of removing education, or terminating education early, disempowers women. It is notable that countries with high education standards for women have barely sustainable birth rates. This is a good thing IMO. (But not a good thing if it is simply a financial decision because women can't afford it.)
I've raised this with PDK as being a substantial part of the solution to the climate change conundrum.
He simply ignores it and/or misdirects. He simply can not see anything changing. I see change happening all the time.
My biggest concern is that change won't happen fast enough. And with the mega-rich in charge? I'm pretty certain it won't. Which is why I believe the days of the mega-rich are numbered.
They should have just called Sweden four years ago.
"Our findings contribute to the evidence that reopening schools did not alter the pre-existing trajectory of COVID-19 hospitalisations and deaths during the Delta and early Omicron periods. Our findings show that there were no consistent patterns to case, hospitalisation or death rates in each country or jurisdiction, irrespective of whether schools were open for onsite learning or changes to PHSM."
https://www.sciencedirect.com/science/article/pii/S0163445324003256
"1,951,905 children in Sweden (as of December 31, 2019) who were 1 to 16 years of age was 65 during the pre–Covid-19 period of November 2019 through February 2020 and 69 during 4 months of exposure to Covid-19 (March through June 2020) (see the Supplementary Appendix). From March through June 2020, a total of 15 children with Covid-19 (including those with MIS-C) were admitted to an ICU (0.77 per 100,000 children in this age group) (Table 1), 4 of whom were 1 to 6 years of age (0.54 per 100,000) and 11 of whom were 7 to 16 years of age (0.90 per 100,000). Four of the children had an underlying chronic coexisting condition (cancer in 2, chronic kidney disease in 1, and hematologic disease in 1). No child with Covid-19 died."
https://www.nejm.org/doi/full/10.1056/NEJMc2026670
If I may point out the obvious... note the word adult. "In this ecological study, we describe SARS-CoV-2 case incidence and COVID-19 hospitalisation and death rates for school-aged and adult populations during the Delta and early Omicron periods, before and after schools reopened in five countries." Despite being a vector "School reopening did not alter existing trajectories of COVID-19 hospitalisations and deaths during Delta and early Omicron."
Other studies showed that being around children reduced your chance of severe illness in complete contradiction to closing schools. I guess being around snotty nosed filthy mitts improves your immune system.
"Risk of severe COVID-19 infection among adults with prior exposure to children
...In a large, real-world population, exposure to young children was associated with less severe COVID-19 illness. Endemic coronavirus cross-immunity may play a role in protection against severe COVID-19."
US existing home sales were up +2.2% in December from November to an annualised rate of 4.38 mln units, the most since February 2024 and despite mortgage interest rates over 7%. But in a long term perspective, this level is still very low, similar to what they had in the mid-1990s.
Good, if people run out and buy houses at a 7% mortgage rate it would push up the mortgage interest component of CPI.
It'll be interesting to see what the final bill for the LA rebuild comes to, we've ready seen mention of $250bn in the LA times this week. I'd imagine that, coupled to increases in insurance risk premiums, this could actually adds a few points to CPI.
"... it would push up the mortgage interest component of CPI."
You are mistaken. Our CPI does everything it can to strip out the effects of interest rate changes.
If you want an index that includes the effects of interest rates - and gives a better overall approximation of the cost of living - you want the Household Living-costs Price Indexes (HLPI).
Classic - the State is the reason they weren't insured... but I think you know that. Force insurers to set premiums below the costs of risk, don't do fuel reduction burns, don't keep reservoirs full during fire season, fly to a Ghanan cocktail party during a critical fire risk warning etc.
https://www.interest.co.nz/insurance/131570/gary-yohe-explains-why-hes-…
Apparently the way insurance works in California is that there is a state run insurer who offers insurance to anyone who is in a high risk area and can't get cover privately can insure through that. However the way that works is such that if claimed exceed reserves (which looks likely to happen) the cost is born by other insurers in the state. So people in safer, low income areas will end up paying higher premiums to subsidise people living in multi-million dollar mansions in the Palisades.
The key thing to realise here is that government should not seek to distort the insurance market through legislation or subsidisation. By doing that they encourage more people to build houses in high risk areas.
Who says tariffs don't work ... Donald Trump threatened Colombia with immediate tariffs of 25 % , after the Colombians refused to allow 2 US military planes carrying undocumented illegal immigrants from the US back to their homeland ...
... within hours the Colombian President had not only caved into Trumps demands , but had also offered his own Presidential aircraft to help bringing the illegals back home .... teeeee heeeeee .... yay Trumpy !
You missed the entire point of the Columbian President's response. He stated very clearly that he will not accept those being sent back to Columbia if they were treated as criminals. In the US military planes they wore handcuffs and had their ankles shackled. Columbia has stated no civil aircraft will be allowed to land if the Columbians are shackled in a similar manner, but will be allowed to land if they are treated as ordinary, innocent people. It is not about the tariffs. It is not clear if Trump can do that as Columbia has a free trade agreement with the US.
No retraction or correction of news on Argentina linked yesterday, so there goes my faith in any integrity in editorial at Interest and any chance I'll pay for a green tick.
https://www.interest.co.nz/economy/131617/us-pmis-positive-inflation-lu…
See my comments in the link above for details. Be very careful about the assuming the information you read here is accurate and it's framing balanced would be the key takeaways from me.
Yep, was a very disappointing framing from DC. He clearly took no time to actually understand the current Argentine situation, how it differs from the past, and why Milei has such broad local support. Went straight to cheap point scoring with an ax to grind against libertarianism even though a heavy dose of that is exactly what Argentina needs.
Argentine's are great people and deserve better and Milei is the best hope they've had for decades (and is getting results at least so far). It is also one of the most interesting economic shifts happening in the world today and deserves more serious treatment by DC if he intends to touch on the subject.
It'[s been funny reading the thread.
Argentina, like all SA 'countries', has been repressed and controlled from outside, for well over a century. That has mostly, and recently, been US corporatocracy, via political clout using US force and clandestine institutions.
'Whenever anyone gets voted in by the locals, who want the vacuum-cleaner hose removed, the US steps in. Usually the local risen leadership is Left, but that is irrelevant to the US - they need to keep resource-access and repression going.
Both DC and T&T miss that, to my way of thinking.
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