Here's our summary of key economic events overnight that affect New Zealand with news of more data dragging in the US, and more debt plans in China.
First up, American mortgage applications fell again last week, and this is despite their benchmark 30 year mortgage interest rate falling further below the 7% level. Lower home loan rates now are not motivating home buyers.
And that lack of motivation is really coming through in new home sales, which were down more than -10% in January from December to an annual rate that was -15% below year ago levels. For their new home building industry, this will be a real cause for concern.
There was another US Treasury bond auction earlier today, this one for the 7-year Note and it delivered a median yield of 4.15%, lower than the 4.41% at the equivalent auction a month ago. Demand for these issues is not flagging.
In China, they are adding capital to their big state-owned banks, maybe as much a ¥1 tln to the six of them. The funds will be raised by new sovereign bond issues. More debt for the state so that banks can lend more debt to clients.
And that could just be the start. Bloomberg is reporting that a key policy adviser said China needs to vastly step up its efforts to cleanse the balance sheets of their local governments, giving them the space needed to support consumer spending and strengthen the economy. He said central government should take on at least ¥20 tln worth of local sovereign debt. For reference ¥1 tln is about NZ$240 bln. ¥20 is NZ$4.8 tln. They are talking real money here.
Singapore's industrial production rose +9.1% in January from the same month a year ago in a solid turn up, although the gain was pretty much as analysts had expected.
Taiwan revised its Q4-2024 GDP growth rate up to +2.9%, and it was a sharp revision higher from the earlier estimate of +1.8%. That means their economic activity expanded by +4.6% in all of 2024.
Australia's monthly CPI inflation indicator rose 2.5% in January, unchanged from the prior month but below market expectations of 2.6%. Despite this, inflation remained at its highest since August. But this monthly update probably won't shake the RBA estimate of acceptable inflation in Q1-2025.
And staying in Australia, the latest data available, for Q3-2024 released yesterday, buyers from China were the largest group of foreign investment into Australian housing, recording more than AU$400 mln in approvals. This data was for the period ahead of the Australian ban on temporary residents acquiring established homes and Chinese buyers accounted for 30% of it. You have to say it isn't much of a surge - and since then foreign buyer demand has fallen away.
The UST 10yr yield is at 4.27%, down -4 bps from yesterday at this time. The key 2-10 yield curve is flatter at +18 bps. Their 1-5 curve is now inverted again, now by -2 bps and much flatter. And their 3 mth-10yr curve is now completely flat, facing inversion again. The Australian 10 year bond yield starts today at 4.40% and down -1 bp from yesterday. The China 10 year bond rate is now at 1.77% and unchanged. The NZ Government 10 year bond rate is now at 4.60%, also unchanged from yesterday.
Wall Street has opened its Wednesday session with the S&P500 up +0.2% in a retreating trend as the day progresses. Overnight, European markets were about +1.5% higher, except London which was up half that. Tokyo ended its Wednesday session down -0.2%, Hong Kong rose an outsized +3.3%, while Shanghai rose +1.0%. Singapore slipped again, down -0.2%. The ASX200 was down -0.1% in Wednesday trade. But the NZX50 recovered significant ground, up +1.2%.
The price of gold will start today at just under US$2910/oz and recovering +US$16 from yesterday.
Oil prices are marginally lower at under US$69/bbl in the US and the international Brent price is still under US$73/bbl.
The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today just under 66.9, and little-changed from yesterday.
The bitcoin price starts today at US$86,928 and down a minor -0.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.
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79 Comments
Well kids
It's potentially timely the end of open access to comments coincides with myself taking an expended spell retreating deep into the wilderness.
It's been an interesting few years conversing with you all. Thanks to all for the discourse.
Remember, in an illusory world full of human abstract concepts like money, our only real asset is our attention. So try to invest it wisely.
We don't deserve any of this
But should spend our entire lives trying to
Chuckle.
Yes, I have long smiled at the 'helping you to make financial decisions' heading here.
Really, it's about making life/strategic decisions - like society at large, some folk myopically fixate on money - keystroke-issued fit-levered debt, related to nothing tangible - as if it is the controlling 'thing'. It isn't; look at Trump grabbing Ukraine's minerals (as the US had done by coercion, stealth or invasion these last few decades; he's just more open about it).
We were always going to be staring into the abyss - the Limits to Growth on a finite planet were always going to curtail us - but I have the feeling that the moment seems to be now...
Trump is neither new nor unique in this sector. Messrs Carnegie, Morgan and Schwarz were plundering worldwide very openly building their steel empires and let’s not start in on the like of Standard Oil but Hammer of Occidental was lauding the Soviets in the 1980s for access to Ukraine. Then there were the European predecessors. Foremost the British Empire but Germany, France, Belgium - all the colonialists if you like. Guess though as you suggest the Trump of today avails broadcasting about it all, like no other.
https://truthsocial.com/@realDonaldTrump/posts/114068387897265338
What a bizarre world we live in.
Gold, solid gold, statues of Trump. reminds me of the dictator of Turkmenistan and his Sun God cult.
Statues and portraits of him were put everywhere throughout the country. In Ashgabat, he erected a rotating, $12 million, golden statue of himself that always faces the sun.[67][68] Niyazov gave every citizen a watch with his portrait in its dial
[...] by the time he died, "Niyazov's personality cult ... had reached the dimensions of a state-imposed religion."
https://en.wikipedia.org/wiki/Saparmurat_Niyazov#Cult_of_personality
It's a pretty vile thing to post considering how many people have died in Gaza, especially for a sitting president.
Makes me absolutely sick to my stomach.
Expel the Gazans to, er, um, somewhere outside Gaza, but not the USA obviously.
Does he not realise the video is taking the piss out of him?
Yep, he's not new, yet the scale it's happening at the individual level is relatively new.
All of those examples were ideally teachings for how not to be and do, yet we've been taught that it's the mark of success to emulate, the accepted norm. And we wonder why we have the issues we face today.
Pa1nter we'll mis you. While not always in agreement you raised pertinent points and views that stimulated thought and discussion, all contributing to learning.
"Remember, in an illusory world full of human abstract concepts like money, our only real asset is our attention. So try to invest it wisely." I would add that as an old fart one thing I have learned is that life is for living, and what ever that means to you, get out and do it, and enjoy what it brings to you. But yes this is an illusory world where human abstracts distract us from reality.
"We don't deserve any of this" in part true, but as we age and interact we more and more do so because we mostly act to perpetuate them rather than dismantle them.
Good luck Pa1nter where every you find yourself i hope it is with joy and happiness. From a pilot - clear skies and smooth flying, or if you will smooth seas and a steady wind.
...good luck in detox. Will you make it or will the need to post drive you back?
Hard for the owners of a business to pay their bills through exposure and good will. I'll pay i think, I spend enough time on this site.
Good on you.
It's been a real pleasure having you comment on Interest. IMO, you're the most valuable commenter. I would love to meet you in person one day, I'm in Auckland.
My 80's Sharp gf 800 boombox will comfort me while I read the free content ... 'Another one bites the dust' (Queen) , Be nice too each other. RE agents, I suspect will now have the run of the comments section... Looks like its the boombox forums for me .... Was nice while it lasted... Ciao
I was very sad when my Sharp WQ-T352 died - dual cassette for making "totally legal" copies of anything, X-bass, Surround. Good times.
Pa1nter enjoy your life the one positive is think of all that time you will have to do something else. I am off to Japan tomorrow so will decide wether I will sign up when I get back more leaning towards your thinking. As the time saved can be utilized alot better to more productive prusuits
Thank you too Pa1nter.
Enjoy your bliss.
The Chinese Communits Party must keep the people happy at all costs. I wonder how their warship exercises in the Tasman sea and entry into Australias exclusiive economic zone is being portrayed in Chinese media? Sounds like a great way to divert attention from the financial and demographic cliff the country is facing.
It will be portrayed internally as a reply-in-kind.
But we in the west, aren't told how many of our warships perambulate through their waters...
As for diversions from what is being faced - the west is pretty good at that too.
A decent media would update us on the Chinese media view.
Mid 19th century Commodore Perry sailed much of the then US navy into Tokyo bay with demands that Japan and the USA immediately commence buying things from one another. Never been quite sure what Japan had that the USA was so desperately short of. Unlikely precedent to the current Tasman Sea situation, but you never know.
When our warships participate in a 'freedom of navigation' exercise in the South China Sea, it's always reported on by the media. Are you saying our warships are doing more such exercises in secret? Do we conduct live fire drills with no warning that affects chinas commercial airliners?
Touching on this, does the creating of the ability to lend more to Chinese bank's clients mean that the people will borrow and spend in a searcch for happiness?
Or have the Chinese people wised up and will not get laden with debt?
Or have the Chinese people wised up and will not get laden with debt?
No, they love chasing their capital gains just as much as your NZ investor. I was surprised how much an apartment went for in Guangzhou while living there for the birth of my children. Prices were higher than Auckland but would yield maybe 1% or 2%, while interest rates were north of 5%. Building cost was reasonable and we helped build and 8 story apartment block on family (rural) land with middle levels rented out. The hope from the in-laws was that the government would come buy up the whole area for development and they wanted to build up before they were stopped from doing so - because they pay a lot more if you've built up already (so yeah, chasing capital gain).
I know that DC has called the Chinese actions as "Debt" But is it really? Recall many discussions in the past on how money works in a modern economy. China is the sovereign owner of the Yuan and can therefore produce as much of it as it likes. The size of the population ensures the economy will be fairly robust. The only real issue is the value of the currency against other currencies when trading (if that is important at all for them).
So the real issue for China then is what they want those funds to achieve and whether that is realistic and achievable. Taxation will remove funds from circulation, and where that is targeted is important. elevating the overall wealth and living standards of the population can only reap benefits for the CCP, albeit with the risk that some will become more politically active although that can strengthen the country.
Maybe the CCP have a better understanding. As much as we might not agree with many things they do, it would appear they've learned from the capitalist model and applied it better. They've taken advantage of the "Western" worlds foibles very well.
It's all debt though isn't it? How it's used and the balance of who gains is the real issue. Our current clamouring for overseas investment is just another form of indebtedness.
So long as the world pays/needs China to fund their cheap consumerism lifestyles, they will have advantage. They can issue debt and have the western world pay it off for them. Unlike the west, they don't care about comparing themselves to other western nations short of the power and influence of the USA around the globe. We are too tied up in comparing ourselves to other OECD countries and making changes to try and improve on these stats. We care too much about what the world thinks instead of being ourselves.
I disagree it is all debt (PDK would say otherwise). Some at least is a tool to raise the nation. Money gives people choices, and it is through choices many find their true talents. But for a country to develop there does need to be some level of access to natural resources.
But populations must be at a sustainable level. this is not about growth but about balance. Balancing consumption with production, and balancing those against the environment. Its not conducive to a future if we're poisoning the planet.
Any country must decide for itself how to expend the resources it has to sustain it's future. Too often we see politicians divert and squander what is available to appease their own ego, but at the cost of their constituents and the future.
All money is created as debt. Mankind has a history of debt servitude, only there were rules that balanced it out and limited the timeframe. We seem to have intentionally forgotten this.
There is a saying that we don't inherit the Earth from our ancestors, we borrow it from our children.
I think you will find that Chinese and Russian society are not that different to us if you piss enough people off.
Apart from Sweden in 15/16th centuries and Genghis Khan’s earlier lot, Russia has been all Russia and only Russians can change Russia. Both Napoleon and Adolf found that out the hard way. China since 1949 has made sure that previous incursions and exploitation from the West will not recur.Both nations conduct totalitarian regimes and the respective populations are resultantly subjugated. History would suggest any great upheaval would require the backing of the military hence the high ranking officers are heavily scrutinised.
Seymour should resign over this debacle. Nobody wanted this and it's causing teachers to have to deal with it instead of focussing on helping kids learn. He is an ideologically driven buffoon and his pretty meddling for his own personal gain is costing taxpayers millions. If Luxon wasn't such a piss poor leader, scared of firing people, he'd be gone.
https://www.stuff.co.nz/nz-news/360595750/principals-federation-says-ti…
Yes, I must admit one of the things I liked (if we're in the business of providing school lunches) about the previous model was it was local in many cases. I think it should have gone the other way and insisted on really high-quality food (less carbs), even prep being done as part of the school learning by students.
The kids help at our primary, plus it provides 2 part time jobs.
My boy brought me home a spare meal yesterday, it was tasty, and had a large piece of broccoli in it.
Alot more appetizing than the ones photographed at the colleges.
I liked the previous model where kids made their own lunch.
And free Uni no doubt?
He is saving our kids paying his pension by living in London.
I liked it when the taxpayer didn't have to spend $20b p.a. on a cohort that couldn't become self-reliant in retirement, despite having the biggest economic tailwind in modern history, where as a young adult they could buy a house and raise a family on 1 income.
$220m p.a. (now $90m) to feed 240k kids in school vs $1b p.a. to 50k over 65's with >$100k incomes that don't *really* need it. 🤔
But I guess the kids should pay tax if they want something back from the taxpayer. Let's scrap mobile dental clinics and free doctor visits while we're at it.
That's a pretty sweeping generalisation that ignores a lot of factors, resulting in it just being wrong.
How about you don't like generations of politicians who de-regulated the economy without understanding the consequences, exporting too many jobs, and now have no clue on how to fix it and actually serve the population of NZ.
What does that have to do with:
- Spending $900 per child p.a. on "hopefully" nutritional food before it was cut to $375 due to outrage
- vs
- Spending $20,000 per person p.a. for discretionary spending with not a peep about need.
Funny how old people don't like to be on the receiving end of sweeping generalizations but are happy to dish them out.
Part of the reason why a family can't rely on one income today is their high needs to live, large house, mobile phones, sky, gym membership.
Our first house was a 60's built 3 bedroom, 87m2, that house today has a CV of $355,000, got to a peak of $420,000.
It is in a cheaper area of Wanganui.
The boomers had to contend with higher interest rates than today, over 10% between 1976 to1992
https://teara.govt.nz/en/graph/23100/interest-rates-1966-2008
The boomers didn't have to contend with higher interest rates. If interest rates were above 10% they could've just saved a little harder thanks to much higher TD rates and bought the house with a bigger deposit or for cash, not sure why in their early 20's they needed to take on 2 mortgages and sometimes vendor finance. Houses were a much lower ratio of income, almost the same ratio as a down payment is today.
But these are the same boomers that today are relying on the taxpayer in their retirement because many were too spendthrift and couldn't save during the good times, yet have the gall to claim young people today are frivolous.
The boomer did have to deal with interest rates above 10% see the link in the above.
My wife and I knocked around for 4 years before we were married, we lived with our respective parents, ( I know not normal) we both saved and had 33% deposit. We purchased a house 6 months before the big day and still stayed with our parents. I painted and wall papered the house.
We decided to not have children for at least 2 yrs so we lived off my wife's income, mine went on the mortgage, my income was the equivlent of $140k today due to 60hr work weeks.
Our focus before we married was to get our own house.
If you kept saving, that deposit could've been 50% or higher. The house would've only been tops 2 - 3 your annual wage unless you decided to go for the bigger house with all the luxuries. Yes high interest rates were there, but you didn't have to deal with them if you just saved a little harder you know?
Would prefer high interest rates on a small loan than low interest rates on a big loan. How quickly was your wage increasing in a high inflation environment? What does an 8 - 10% pay rise look like against a mortgage 1 - 2x your wage vs a 2 - 3 % pay rise against a mortgage 7 - 8x the average wage?
mobile phones, sky, gym membership.
I don't know anyone under 30 who even watches Freeview TV, let alone has a sky subscription.
The two things that are putting pressures on incomes are far and away is groceries, and rent/mortgage. Nothing else even comes close. It's willful ignorance to claim it's phone/sky/gym memberships that are causing the most issues currently.
I would say eating out and "Entertainment" is general is way higher these days. You would be lucky to even find a restaurant in NZ in the 1970's, now entire suburbs have been overtaken with eateries.
People definitely spend more on eating out and other discretionary spending, but it's the old avocado toast analogy which tries to frame systemic issues as personal moral failings. The reality is that other costs such as insurance, medical, housing, and grocery costs have a much more significant effect on household budgets than minor luxuries do.
Apparently going to the pub, buying swappa crates, buying records/audio cassettes, smoking etc did not happen in the 1970's - 1980's.
Restaurants did not start appearing until the late 1990s early 2000s, back then people lived a simple life with home cooked meals which is a foreign concept in the 21st century.
Wait until they berate you for having your milk come in a plastic container rather than glass bottles like they did back then, while they share memes on Facebook about hot metal playground slides, drinking from the garden hose and how they knew when to go home when the streetlights came on.
Yes it is a shame as he came across as educated and fluent in debate maybe 1yr pre-election until he sucked up to Luxon and it has been downhill since. Almost as if he was himself before, confident and articulate, and now he's bought into the back scratching culture in the beehive.
Seymour slops - meanwhile in Italy and India
Guidelines state that Italian school lunches must include a starchy dish such as rice or pasta, a main course such as meat, fish, cheese, two or more vegetable side dishes, and plenty of fruit.
Since 2001, children attending a public or government-aided school till the upper-primary level are legally entitled to a daily hot meal of locally cooked pulses, rice, chapati, or vegetables, and milk or eggs on some days; a total of 700 calories and 20 grams of protein. In 2021, nearly 118 million children in 1.12 million schools were provided midday meal.
But David is the deputy PM..
Time to scrap the 'free' food in schools programme. Time for parents to make THEIR kids lunches.
Would be better value to the taxpayer if we scrapped the $1b per year in NZ Super we give out to those with 6 figure incomes.
The "free" food in schools initially cost $220m to feed 240k kids. Far better use of taxpayer money at a fraction of what goes into the slot machines on Princess cruise ships.
Agreed, and they'd also have to consider income of companies and trusts, of which the 65+ are shareholders or beneficiaries of given they are used to minimise personal income for personal gain.
Disagree. Previous programme was gold plated and did not value OPM. It needed to be reined in. Whether Compass is the correct choice, maybe not.
If you don't like the food, bring your own lunch. If you don't like the lunch made for you, make your own.
The teacher, principals etc, don't like Seymour and his other views on education and are using the lunches for as much emotional damage as they can.
The "ideologically driven buffoon costing taxpayers millions" was Jacinda Ardern + Labour who decided that parents weren't responsible for their children (cf WFF).
https://www.beehive.govt.nz/release/school-lunch-programme-launched
The mistake Seymour has made is ending up on a hiding to nothing in attempting to constrain the out of control costs instead of reverting to 1st principles
There is no free lunch.
Lol. The village is just as responsible to the individual as the individual is to the village.
What are 1st principles? Is it the same as the Golden rule?
first principles are what you say when you want to sound like Elon Musk
I support lunches. A good lunch will encourage attendance and learning and goodwill towards schooling by some pretty neglected kids. The parents don't give a toss, but the school. i.e the system does.
This is in contrast to increasing or paying benefit payments to those that are meant to make the kids their lunch - there is no guarantee the lunch gets made, but the booze and smokes get priority.
A major problem with welfare payments that increase due to the number of children is that the gatekeepers of the cheque don't use it on the kids.
All in all a value for money exercise - but because we can't value it , its seen as a cost, not an investment.
Agnostium is an ideologically driven bu*****n. Just the other ideology. And grumpy.
Agnostium is an ideologically driven bu*****n. Just the other ideology. And grumpy.
My take is agno is more egalitarian than ideological. Just because someone believes in the needs of the many outweighing the needs of the few doesn't make them ideological, however if they believe in something one stands to lose from, they will naturally get defensive......
I see electricity transmission and distribution costs going up by $50/month from April. Thanks iwi, windmills and solar panels, smart meters.
"Payouts to DOC, Fish & Game, and Ngāi Tahu are part of a $180 million package Meridian (and therefore consumers of electricity) were obliged to pay. Ngāi Tahu’s take is thought to be over $100 million."
https://www.nzcpr.com/too-intimidated-to-speak-out/
Transpower sets transmission charges, not Meridian.
Not just transpowers transmission prices going up chap, hence I used the word distribution. But I think you knew that.
Still nothing to do with Iwi payments.
Good link to show how single issue minded your sources are though.what a joke.
Who do think is paying the iwi, the smart meters, the lines to remote low power density windmills and solar panels, the back up generation transmission and distribution, the load balancing etc. etc? Taking another $50 bucks month out of everyone pocket is quite a broad issue. How many links do you want?
Meridian revenue is $ 4.9 billion. I'm sure the $50 increase is due to the $ 100 million payment to Iwi(existing), without a doubt.
Strange commerce commission didn't mention 'payouts to iwi' as contributing to the price increases, why is that?
Why are these costs rising?
There are three key reasons for the upcoming estimated bill increases for the distribution and transmission component of your electricity bill:
- High inflation – Recent high inflation has led to significant increases to electricity lines companies’ costs.
- Interest rate increases – Similar to a fixed term mortgage, interest rates are fixed for a period of 5 years under our regulations. Interest rates are much higher now than when we last set revenue limits in 2019.
- Higher levels of investment – Transpower and local lines companies plan to spend more than they have previously to maintain the network and support growth. This is because assets built in the 1960s and 1970s need replacing, different resilience investments need to be considered in response to the increasing frequency of extreme weather such as Cyclone Gabrielle, and increased demand needs to be supported as New Zealand’s population grows and we rely more on electricity as we switch away from fossil fuels.
https://comcom.govt.nz/regulated-industries/electricity-lines/electrici…
"Transpower and local lines companies plan to spend more than they have previously to maintain the network and support growth. This is because assets built in the 1960s and 1970s need replacing..."
The privatised electricity companies first act following deregulation ~30 years ago was to change their basis of depreciation from historical cost to replacement value, thereby immediately decreasing tax & increasing profits at a keystroke.
Now ask ourselves, who benefitted most over the last 30 years of their working years from this, and who is most likely to front the bulk of the increases today? Surely this means there will be far more demand for a winter energy supplement by the govt for many who benefitted from the profits and lack of investment keeping prices down....
Gang protecting their turf?
Police Association slams beefed-up citizen arrest powers
Police Association president Chris Cahill describes the reforms as risky and unnecessary.
"It's not worth getting hurt, or even killed, for a few dollars or some cigarettes," he said.
Um no, it's not just a few dollars or some cigarettes. It's that multiplied by every occurrence and that adds up to a lot. More importantly, the police haven't been able to do what they have been empowered to - protect the public (not a criticism). It makes sense to me that the public get more power, even though there are risks - each may decide for themselves if those few dollars are worth it or not.
People in general are afraid to act. This move encourages people to do something even if it is just to pull out their phone a film what's happening. Ultimately it is a good thing. The police can't speak. They are unable to protect the public, now the public have a right to protect themselves.
If you’re the victim, or a nearby witness, of an armed robbery in progress and you pull out your cellphone to film it you’re likely to get shot or at the very least beaten. The only way it could work, in these sad times, is if everyone carries a sidearm.
So the question becomes what is justifiable in protecting yourself/ your property. What if the attacker / robber is seriously hurt or killed. Is that going to change? If you kill someone attempting to steal a pack of cigarettes. ?
No one seems to have put two and two together.
I see this is the beginnings of private policing.
I expect private security will be rubbing their hands together.
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