Here's our summary of key economic events overnight that affect New Zealand with news both the US and China are adopting radical short-term gratification policies that leave you fearful of the medium term consequences.
But first, US retails sales were +4.2% higher in January from a year ago, a slightly slower pace than in December (+4.4%). This official data backs up the Redbook survey we report weekly. But we should note that the good January data came despite a sharpish fall-off in car sales in the month. That fall-off contributed to seasonally adjusted retreat in January from December.
Business inventory data out for December actually shows lower levels, and their inventory-to-sales ratio improved unexpectedly. This shift might be due to public-policy uncertainty around tariffs.
With inventories lower than expected, it therefore won't be a surprise to know that US industrial production in January rose on a year-on-year basis, and by more than expected. But the January rise from December wasn't as strong. But at least it was a rise
The new US Administration policy on tariffs emphasises reciprocity. But this is likely to be weasel words for most. Their definitions of 'fair' and 'reciprocal' seem very distorted. But even if you took this at face value, they shouldn't amount to much. The OECD reported weighted average tariff rates for most countries. For the US it is 1.5%. We have summarised the tariff load of other key countries here, and all but a handful are less. So, if it is to be reciprocal, will the US lower theirs to match most? I don't think the facts will get in the way of prejudice, however. The recalcitrants are only Brazil, China, the UK, India, Korea, Mexico and Russia.
Canada manufacturing sales rose, and for a third consecutive month in December.
Canada also released its Q4-2024 senior loan officer survey which revealed a sharp tightening in credit conditions in the period.
Not everyone is tightening. Some are loosening in a dramatic way. Across the Pacific in China, banks lent a record +¥5.22 tln in new loans in January, above +¥990 bln in December and easily beating forecasts of +¥800 bln. It is a spectacular show of support by banks for the push by Beijing to juice up its economy via more debt. We haven't been able to work out how much went to the property sector, so if you know, please note it in the comment section below.
Foreign direct investment in China plunged -99% over the past three years, Chinese government data shows, as their economic slowdown and concerns about their 'everything is national security' approach drove investors away. China only recorded a net inflow in 2024 of +US$4.5 bln and that is their lowest in more than 30 years. In two of the four quarters of 2024 there was in fact a net outflow.
Up from +1.8% in 2023, Singapore's economy grew +4.4% in 2024 on the back of stronger-than-expected rebounds in exports and tourism. This was an upward revision from the preliminary +4.0% rate reported by them earlier. By itself, Singapore's Q4 rose at a +5.0% rate.
Malaysia downgraded its growth in its Q4-2024 update to +5.0% from a year ago. This was due to weak progress in Q4 from Q3.
As expected the Russian central bank held its policy rate at 21%, despite inflation data showing it rising at about 12% and more than anticipated.
Apparently the Indian government has agreed to replace its oil imports from Russia with imports from the US. It is an odd move by the US because if it actually happens it will gift the Indians enormous leverage over the new Administration. India is one of the more extreme outliers on the tariff front the US says it is targeting. So it could be a great deal for the Indians, really problematic for the US.
The UST 10yr yield is at 4.48%, back down -6 bps from yesterday at this time. A week ago it was at 4.49%. The key 2-10 yield curve is still at +22 bps. Their 1-5 curve is flatter at +10 bps. And their 3 mth-10yr curve is very much flatter at +14 bps. The Australian 10 year bond yield starts today over 4.45% and down -1 bp from yesterday. The China 10 year bond rate is now at 1.66% and up +3 bps. The NZ Government 10 year bond rate is now at 4.61%, down -5 bps from yesterday, but up +5 bps from a week ago.
Wall Street has opened its Friday trade little-changed on the S&P500 but up +1.2% for the week. Overnight, European markets were mixed with London down another -0.4% but Paris up +0.2%. Yesterday Tokyo closed down -0.8% to cap its weekly gain at +0.6%. Hong Kong however ended its Friday trade up a spectacular +3.7% to be up +6.6% for the week. Shanghai was up +0.4% for a +1.2% weekly gain. Singapore was down -0.1%. The ASX200 ended up just +0.2% for a +0.5% weekly rise. The NZX50 ended up +0.6% in Friday trade to be up +0.7% for the week.
The Fear & Greed Index ends the week unconvincingly in the 'neutral' zone, and barely out of the 'fear' zone where it was last week.
The price of gold will start today at just under US$2988/oz and down -US$25 from yesterday, but up +US$27 from a week ago.
Oil prices are down -50 USc at just under US$71/bbl in the US and the international Brent price is now just under US$75/bbl. These are levels little-different to a week ago. These low prices mean that the North American rig count is unchanged from last week, and lower on a quarterly and annual basis.
The Kiwi dollar is now at 57.4 USc and up +90 bps from this time yesterday. A week ago it was at 56.5 USc. Against the Aussie we are up +40 bps at 90.2 89.8 AUc. Against the euro we are also up +40 bps at just on 54.6 euro cents. That all means our TWI-5 starts today just under 67.3, up +60 bps from yesterday at this time to its highest since Christmas Eve. A week ago it was at 66.9.
The bitcoin price starts today at US$98,702 and up +3.3% from this time yesterday, but only up +0.9% from this time last week. Volatility over the past 24 hours has been modest at +/- 1.8%.
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51 Comments
"The speakers at Waikato University's 2025 Economic Forum, "Unconstrained Thinking for Constrained Times", Symbolize NZ's Stagnation."
https://www.downtoearth.kiwi/post/the-speakers-at-waikato-university-s-…
This....
After Willis - and I kid you not - are the Big Monopoly Bank Chief Economists, from ANZ & ASB, pretending to be concerned about solving NZ's problems with "unconstrained thinking", when in fact their job brief is to strengthen their own Banks monopoly position and increase the cost-of-living for down-trodden Kiwis, so they can send more profits back to their US & Aussie Shareholders (and get paid more themselves).
And this...
How come an establishment of well-connected types keep bobbing up again & again in the big jobs, blocking career paths of a talented young generation of Kiwis who were passed over for those positions & so decided to leave the country? Waikato's speakers are not symbols of the types of people required to take NZ forward - who are genuinely interested in "unconstrained thinking". Shame on Willis for not promoting this new type who is capable of leading change. Shame on her for reaching backwards, not forwards, and surrounding herself with the old guard. She cannot pretend she wants change when not a single one of her appointments intends to disrupt the old order.
"Apparently the Indian government has agreed to replace its oil imports from Russia with imports from the US. It is an odd move by the US because if it actually happens it will gift the Indians enormous leverage over the new Administration. India is one of the more extreme outliers on the tariff front the US says it is targeting. So it could be a great deal for the Indians, really problematic for the US."
Not sure how this can be considered a win for India given they have been paying for that Russian crude in rupees
It's surprising how much oil the US exports, especially in recent years. I thought oil was the new "unobtanium".
U.S. crude oil exports reached a record in 2023
I think essentially the new light stuff that they are producing bucket loads of doesn't match what their refineries actually need. So they import heavy crude to balance, and export the excess light stuff they can't use.
Someone else might know more of the details, but this mismatch means they are far from self-sufficient even if they do have significant exports.
"It's surprising how much oil the US exports"
Less surprising is the US imports more than it exports.
Looking for an investment that might do better than a soggy Auckland Villa? But still worried that this Bitcoin thing is some sort of ponzi? (even though you dont understand anything about how the dollar works either).
The Quarter One 13F Filings with the US securities and exchange comission have revealed the newest buyers. A couple of highlights:
One of The United Arab Emirates Sovereign wealth funds (They have 4 of the largest 20 in the world) purchased 8.2M shares, worth $437 million ($762M NZD) in Blackrocks iShares Bitcoin Trust (IBIT). That's just dipping their toes in, considering the Mubadala fund manages over 280B in assets.
Global investment bank and financial services company Barclays, has also revealed they purchased 2.47M shares worth $131 million ($228M NZD) worth of shares in IBIT during the 4th quarter of 2024.
This is all still incredibly early, and it can't be any more obvious.
Intriguing, but as you say, dipping their toes in.
Larry Fink was talking with the sovereign fund this week and questions were like how much allocation to ratty should we have - 2%, 5%?
Fink's response was if everyone adopted this conversation, the price would be 500K, 600K, 700K.
In the far south, very concerning. Pasture growth rates are dropping fast and march is approaching. Anyone carrying finishing stock is getting nervous as high quality feed is becoming scarce, Crop growth is also compromised and even though it’s still mid 20’s in the afternoon good Southland farmers now have their eye on preparing for winter. Ewe and hind condition going into winter, sets how well they winter, which sets how well the lamb/fawn. It’s a never ending circle. So yeah, the forward thinking folk are certainly thinking at the moment.
Surprising picture in Eastern BoP. Really little rain, we seemed to avoid all the thunderstorms and have only had 15mm or so this year. But we've also avoided the really hot windy days so evapotranspiration hasn't been high. Max temp of 26. Not much feed growing but we're still green and production is 10% up both ytd and month.
The 50 million dollars of condoms for Gaza episode has parallels with how our government forces change against the voters interests. Musk said a blatant lie to give him reason to make a change. He makes the change. Then later admits that the reason was a lie, but does not undo the change.
Reminds me a lot of the 10 layers of health beurocracy. Once it is outed as a lie, Luxon said, "look are you still talking about something as petty as 9 or 10 layers of beurocracy" (which itself is a mischaracterisation of the issue). No mention of undoing the change made. His supporters still believe the original lie of course, because they want to.
If a change is good for the voters, you don't need to lie about it.
DOGE website hacked within days.....
https://fortune.com/2025/02/14/elon-musk-doge-website-hacked-hackers/
Sigh
Not everyone is affected like Pinocchio. Some time ago, but likely not forgotten, many claimants in the Canterbury EQ sequences found agents of both the government and insurers in their houses in aggressive lie and deny mode in the face of the stark reality of damage. And on the other side, as the courts came to evidence, some claimants and their representatives were equally bad. It was not a good example of our society at large and it became virtually habitual. Reminiscent of Adolf fielding repeated complaints about his deputy Goering’s persistent and blatant lying - what am I supposed to do, hell even Goering doesn’t know when Goering is lying.
Interesting the US now being led by former democrats.
"I’m so grateful to you, Mr. President. A lot of people told me that I couldn’t trust President Trump—that I better get it in writing. “And we did a handshake, and everything that he told me he was going to do, he has done. And I’m so grateful to him. And I’ve told you before, I genuinely believe that you are a pivotal historical figure, and you are going to transform this country.”
Not just "this country"
Sell off in gold, silver, crude oil, and palladium last night. The timing of the price correction look orchestrated. Of course having those pesky Asians and their markets closed means that manipulation is far easier.
Would be good if Trump and Musk could look at the ongoing systemic abuse of the gold and silver markets by Wall Street banks and insiders. The CFTC and SEC should be scrutinized for their overt failure to oversee these markets.
Comment from reputed gold trader re last night's corruption:
The manipulation of gold and silver in the last trading session was one of the most obscene I have ever seen - my bet is the BIS orchestrated it with Fed/Bank of England blessing since defaults on gold and silver contracts physical delivery in the system must be postponed as long as possible
I wonder (in NZ) how much it relates to the rise in MPs paychecks.
No longer taking a teacher's salary for rendering a service to your community/country, instead it's now a lucrative career for those who've never had a real job.
We should scrap the lifetime rewards scheme for these bastards - they've already been compensated more than adequately during their time in office.
I don’t think they get paid well at all. The leader of the country gets paid about the same as the CEO of a pretty average company, and likewise for the finance minister compared to a CFO. Maybe we need to pay them better rates if we want the best people in those positions
The leader of the country gets paid about the same as the CEO of a pretty average company, and likewise for the finance minister compared to a CFO.
Are you assuming that the current horde of MPs in Aotearoa are capable of being a CFO or CEO of a listed company? Why do you think that?
Luxo has a track record. Imagine Chippie, Jacinda, or even Robbo being a CEO of a listed company. Personally I would remove any exposure to those companies.
Consumers can’t afford price rises at the lower end of the US hospitality scene. These will be rough times for the restaurant industry.
‘No one wants to pay $25 for breakfast’: US restaurants are cracking under inflation
Amy Smith, an economist with the consulting group Advanced Economics Solutions, said the median price increase for popular breakfast items like eggs, coffee, sausage, bacon and orange juice was 19% compared with last year and double 2020 costs.
But restaurants risk alienating customers who are already feeling squeezed by inflation. “Companies that are selling these things don’t have a lot of room to increase prices because consumers are already on edge,” Smith said. “If they’re paying triple or quadruple for a dozen eggs every week and coffee is going up, it’s certainly going to impact the decision to go out for a fancy brunch.”
https://www.yahoo.com/news/no-one-wants-pay-25-110007105.html
China only recorded a net inflow in 2024 of +US$4.5 bln and that is their lowest in more than 30 years. In two of the four quarters of 2024 there was in fact a net outflow
Why would China need foreign investment when they run a massive current account surplus? Are they short of FX?
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