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Best podcasts about AUC

Latest podcast episodes about AUC

Economy Watch
The UK's "whatever it takes" moment

Economy Watch

Play Episode Listen Later Sep 28, 2022 5:01


Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news markets are a lot calmer today and more willing to invest in 'risk'.First, the Bank of England has rushed in a £65 bln bond buying surge to be concentrated over the next two weeks to steady a British economy that has been lashed by some very bad recent policy moves. "The purchases will be carried out on whatever scale is necessary to effect this outcome," they said. It is a move that seems to have calmed markets globally.It comes after both the US authorities and the IMF urged their central bank to act decisively to halt the meltdown that those policy moves had initiated.In the US, mortgage applications resumed their decreasing trend last week after the unusual prior week interruption. And American mortgage interest rates rose above 6.5% for the main 30-year benchmark rate, and that is about as high as it got in the real estate frenzy in the 2006-2008 period before the GFC.American pending home sales fell in August, falling -2% from July to be down a whopping -24% from August a year ago. This fall was the third in a row and rising mortgage rates are getting the blame.The US trade deficit rose in August in its usual seasonal pattern even it the rise wasn't as much as expected. Exports rose more than +21% above the same month a year ago, and imports rose +16% on the same basis. Month-on-month the rises were +2.3% and +4.5% respectively as holiday season goods started their seasonal inflows.Those seasonal flows are making their inventory overhang worse. Wholesale inventories were up another +0.8% in August from July to be more than +25% higher than a year ago. Retail inventories were up +1.9% from July to be almost +22% higher than a year ago. Some of this will be inflation, but despite that, this inventory build is a serious overhang problem that would make any correction worse.In China, their central bank has set the official yuan exchange rate noticeably lower again today, now down to 7.11 to the US dollar. That is a one day devaluation of -0.5% and a devaluation since the start of the month of -3.2%. Half of that has happened over the past four trading days. The central bank has warned against "forex gambling".And staying in China, despite their weather and pandemic challenges, it looks like they will deliver record grain harvest volumes this year. Some southern regions struggled, but others in the north had particularly good results.In Germany, their GfK Consumer Climate Indicator fell sharply again heading into October, hitting a new record low for the fourth straight month and worse than market forecasts. The latest reading highlighted mounting concerns over surging inflation and high energy prices as well as persistent recession fears, with income expectations plummeting to a new record low.Aussie retail sales held up better than expected in August, rising +0.6% from July at an annualised rate of +7.2%. Year on year it was up more than +19% but a weak base affects that comparison. The August rise was also more than markets were expecting (+0.4%).The UST 10yr yield starts today at 3.73% and -24 bps lower than this time yesterday in a sharp reversal of recent trends. The price of gold will open today at US$1660/oz. This is up +US$30 from this time yesterday.And oil prices start today +US$3.50 firmer at just under US$81.50/bbl in the US while the international Brent price has risen to be just over US$87.50/bbl.The Kiwi dollar will open today at just over 57 USc and recovering almost +¾c than this time yesterday. Against the Australian dollar we are little-changed 87.6 AUc. Against the euro we are also unchanged 58.8 euro cents. That all means our TWI-5 starts today at just 67.6, and up +40 bps in a day.The bitcoin price is now at US$19,522 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been high again at just on +/- 3.1%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Fear grows despite positive data

Economy Watch

Play Episode Listen Later Sep 27, 2022 5:23


Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news of further chunky benchmark interest rate rises and growing market fear despite much economic data released being generally positive.American durable goods orders slipped in August from July, but less than was anticipated by analysts (-0.4%) and the dip was very minor (-0.2%). They remain +11.2% higher than a year ago. Non-defence capital goods orders were up +6.3% on that same basis.US retail sales as measured on a same store basis rose last week to be +11% higher than a year ago.After declining all year, there was an unexpectedly large surge in sales of new homes in August, rising to an annual rate of 685,000 and far above the +500,000 rate expected. It was particularly notable in the South and West.There was also a better-than-expected improvement in consumer sentiment in September, according to the widely-watched Conference Board survey.Adding to the upbeat data, the Richmond Fed's factory survey in the Mid-Atlantic states came in better than expected too, but it really only recovered the unexpected July drop and new orders are not growing.The US Treasury auctioned a 5 year bond today and that repeated yesterday's outsized rise in yields demanded by bidders. This one was just as large. The tender was very well supported by the median yield was 4.13% and up from 3.15% at the same event a month ago. At some point these much higher interest rates paid will weigh on the US federal deficit, but recall it has been falling at an amazing pace, down from disastrous levels in a very rapid repair.There were a series of other consumer confidence surveys out yesterday. These have increasing importance given the background economic data is wobbling. If consumer sentiment wobbles too, a downbeat future is all-but-certain. In Australia, consumer sentiment is rising in this ANZ-Roy Morgan survey and is now at a four month high. But in the longer-term perspective 'high' might be stretching it. In Taiwan, their consumer sentiment survey slipped slightly in September. In South Korea their consumer sentiment rose and is now well off its July drop.In China, industrial profits were unchanged in August, embedding in a small fall for the first eight months of 2022. Given the sluggish Chinese economy, a fall is consistent with other data. But that they have limited the slippage to just -2.1% is impressive, if true.Meanwhile, the yuan is falling faster against the US dollar. An aggressive pushback by the Chinese central bank is now expected.In The UK, there is a growing and significant trend of mortgage lenders withdrawing loan offers as their real estate market faces a sharp and sudden retreat. Lenders fear borrowers will go underwater quickly in this market leaving them with losses. Major lenders are among those pulling back.And just one day after indicating it wasn't about to move its policy to protect the British Pound, an official at the Bank of England said "significant" policy moves are coming. Markets will remain sceptical until they see action.In Australia, the Optus breach scandal is spreading. It is one that may affect over half their adult population and cause AMT/CFT issues for millions.The UST 10yr yield starts today at 3.97% and another +8 bps higher than this time yesterday in a continuing push up. It's a new 14 year high again. The price of gold will open today at US$1630/oz. This is up +US$2 from this time yesterday.And oil prices start today +US$1 firmer at just under US$78/bbl in the US while the international Brent price has risen about +US$1.50 to be just under US$84.50/bbl. A Russian gas pipeline to Europe appears to have been sabotaged overnight. Its supply disruption won't have a meaningful impact on their energy crisis however. No word yet who may be responsible, but it wasn't entirely unexpected.The Kiwi dollar will open today at just on 56.3 USc and marginally softer than this time yesterday and still close to the pandemic low and the rate that applied in April 2009. Against the Australian dollar we are firmer at just on 87.7 AUc. Against the euro we are also slightly firmer 58.8 euro cents. That all means our TWI-5 starts today at just 67.2, and little-changed in a day.The bitcoin price is now at US$19,160 and again up a mere +0.4% from this time yesterday. But in between it did pop up over US$20,000 but could not hold it. Volatility over the past 24 hours has been high at just on +/- 3.8%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Global markets under extreme pressure

Economy Watch

Play Episode Listen Later Sep 26, 2022 5:28


Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news international bond yields are still rising sharply and the momentum is rising. It is trashing our currency - and although most other currencies are struggling to stay with the greenback, we are doing relatively worse.First today, the global economy has lost momentum in the wake of Russia's war of aggression in Ukraine, which is dragging down growth and putting additional upward pressure on inflation worldwide, according to the OECD's latest Interim Economic Outlook. They now say global economic growth will be a modest +3% this year before slowing further to just +2.2% in 2023. This is well below the pace of economic growth projected prior to the war and represents around -US$2.8 tln of lost economic activity in 2023. Meanwhile in the US, the Chicago Fed's national activity index was unchanged in August, but its July reading was revised higher.But the Dallas Fed factory survey, which was already struggling, fell further in September. Incoming new orders are slowing now. This survey is more heavily weighted to the US oil patch than most other regional surveys there.The Chinese central bank made a surprise announcement yesterday, saying it would raise their required foreign exchange risk reserves to 20% from the current zero. The reserve ratio has been zero since 2020. This announcement marks the latest policy measure to stem the faltering yuan which officially fell below 7 to the US dollar yesterday, following the offshore trading pattern late last week.Japan's factory sector contracted in September according to the latest Markit PMI reading. But their services sector is expanding again in a shift that wasn't expected.Singapore's industrial production rose in August in an improvement that also wasn't expected. The rise wasn't a lot, but signs of improvement are hard to find these days.The mood in the German economy has deteriorated significantly. The ifo business climate index fell to 84.3 points in September, and down sharply from 88.6 points in August. This is the lowest reading since May 2020 and the decline runs through all four sectors of the economy.In Italy, the results of their national elections are still uncertain, but it does look like the far-right Brothers of Italy party will be forming a new government. A real feature of these elections has been a record low 64% voter turnout, allowing an extreme party into power there.A new Eurozone debt crisis is entirely possible.And England's economy seems to be going from bad to worse. Investors have panned their recent policy moves as deeply unstable, and now an attempt by the Bank of England to reassure markets are fallen well short, compounding pressures on them. A US Fed official has weigh in about how bad policy in the UK has some wider implications.In fact, it will probably not only be the UK that starts to raise rates out-of-cycle to contain their problems, this trend might spread. And even if the out-of-cycle trend doesn't spread widely, future benchmark rate hikes could well be super-sized.The RBA and the RBNZ are two central banks making policy decisions over the next week, the RBA on October 4 and the RBNZ on October 5. They will be facing fierce scrutiny this time.The UST 10yr yield starts today at 3.89% and +20 bps higher than this time yesterday in a new aggressive push up, almost as much in one day as we had all last week (and that was a lot). It's a 12 year high. The price of gold will open today at US$1628/oz. This is down -US$17 from this time yesterday.And oil prices start today -US$1.50 lower at just under US$77/bbl in the US while the international Brent price has fallen about -US$3 to be just over US$83/bbl. These are new eight month lows.The Kiwi dollar will open today at just on 56.4 USc and another full -1c drop since this time yesterday and now close to the pandemic low and the rate that applied in April 2009. Against the Australian dollar we are -½c softer at just on 87.4 AUc and a new nine year low. Against the euro we are -½c lower 58.6 euro cents. Against the yuan we are now under ¥4 and its lowest since 2015 (except the pandemic) .That all means our TWI-5 starts today at just 67.1, and down -80 bps to an eleven year low (also pandemic-excepted).The bitcoin price is now at US$19,076 a mere +0.5% higher from this time yesterday. It has been under US$20,000 for nine straight days now. Volatility over the past 24 hours has been modest at just on +/- 1.8%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Asian economies buckle on strong greenback

Economy Watch

Play Episode Listen Later Sep 25, 2022 6:29


Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.First we should note that it is a public holiday in New Zealand and markets are closed here today.Today we lead with news the US dollar has hit a 20 year high on global recession fears, and that is causing issues around the world, including for New Zealand.It won't make getting our inflation back under control any easier given how much is cause by the tradeables sector.In the wider Asian region the strong US dollar will hurt. The yuan makes up more than a quarter of the weighting of Asian currency indexes. And the Japanese yen is the third-most-traded global currency, so its weakness has had an outsized impact on its Asian counterparts. At the same time the Chinese economy is shrinking. And it will soon take further steps to bolster consumption.In China, home loan interest rates have dropped to record-low levels in at least 80 major Chinese cities, as financial regulators endeavour to keep the property market afloat. In September, over 80% of 103 key cities surveyed show first home loan rates have fallen to 4.1%, while second home loan rates have fallen to 4.9%.Singapore's annual inflation rose to 7.5% in August which was above the 7.2% expected by analysts, and above the 7.0% they had in July. Generally ASEAN inflation is something to keep an eye on, and the surging US dollar won't be helping. Malaysia's inflation is rising and is at 4.7%. Indonesia is also at 4.7%. Thailand is at 7.9%.Taiwan's inflation rate is low (like China's) and currently running at 2.8%. But their retail sales activity expanded +12% from a year ago, and their industrial production is up at record levels.In Italy, they are voting, deciding whether to choose their most right-wing government since WWII. It's an election being followed in Europe. Giorgia Meloni leads the far-right Brothers of Italy party and is aiming to become the country's first female prime minister, allied with two other parties on the right. We will know exit poll indications tomorrow.Staying with parties of the Right, new tax cuts and outsized public spending and subsidies in the UK seem to have crashed the British currency. What they will do for their economy is uncertain, but it is a huge 'experiment' that markets are judging will have an unhappy ending. Nouriel Roubini says this will end in an IMF bailout of the country.There were a couple of early PMIs out over the weekend. The American one reported that private sector output fell at softer pace as new orders returned to growth in September. Their factory sector expanded in September, but their services sector didn't even if the contraction was very minor. The American economy may be doing better than the financial markets because higher interest rates cause a revaluation down of financial instruments (and cause losses) whereas the real economy responds to consumer signals, not Wall Street signals.Canada reported retail sales activity for July overnight and it wasn't positive with both month-on-month declines (their first in seven months) and year-on-year retreats.The early Eurozone PMI for September reported a steeper downturn as price pressures intensified. Both their factory and service sectors are contracting this month, but the quantum is quite small at this stage. The negative impacts are strongest in Germany. The French activity is positive and helping to hold up the overall results.Early Australian PMI indexes show their factory sector expanding at a good pace in September and faster than in August. But their services sector is not mirroring that, more or less marking time.But much of Australia is exposed to mining, and commodity prices are retreating. Now credit rating firm Moody's has changed its outlook for the global metals and mining Industry from stable to negative as a global economic slowdown continues to soften demand.Over the past week, the price of copper has fallen -2.8%. Over the past month it is down -8.4%. For aluminium it is -5.6% and -10.1% respectively. For iron ore it is-2.0% and -8.2% respectively. But there are others still rising, like nickel which is down -5.5% in a week but up +8.9% in a month. Then there is coal, up marginally this past week and up +4.5% in a month. Wheat is up a sharpish +6.7% over the past week and up +12.1% over the past month.The UST 10yr yield starts today at 3.69% and marginally lower than this time Saturday but it has still been a +23 bps gain in a week. The price of gold will open today at US$1645/oz. This is up +US$3 from this time Saturday.And oil prices start today still much lower at just under US79.50/bbl in the US while the international Brent price has risen about +US$1 to be just under US$86/bbl. These are still about eight month lows.The Kiwi dollar will open today at just on 57.4 USc. This is its lowest since briefly in the first few days of the first pandemic lockdown, and prior to that 13 years ago. Against the Australian dollar we softer at just under 88 AUc and still near its lowest in seven years. Against the euro we are little-changed at just under 59.3 euro cents. Against the yuan we are down under ¥4.1 and its lowest since 2015 (except the pandemic) .That all means our TWI-5 starts today at 67.9, and down -50 bps to a seven year low (also pandemic-excepted).The bitcoin price is now at US$18,981 and up +1.2% from this time Saturday. It has been under US$20,000 for eight straight days now. Volatility over the past 24 hours has been low at just on +/- 0.9%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Global rush to raise policy rates, following US Fed

Economy Watch

Play Episode Listen Later Sep 22, 2022 5:34


Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news central banks around the world are racing to raise rates in a concerted effort to squash inflation. The cost may be growth and jobs, but there seems universal agreement rampant inflation is a bigger long term risk.But first, US jobless claims rose last week to +178,000 but this level is still very low by historic standards. It is no indication their tight labour market is easing. There are now still less than 1.3 mln people on these benefits and the insured jobless rate is a tiny 0.9%.The US current account for Q2-2022 came in pretty much as expected, with a -US$251 bln deficit. It isn't good, and these huge quarterly deficits started in 2020 and haven't let up. Disastrous policy making is behind the ugly trend and although Q2-2022 was an improvement on Q1, it still came in at -4% of GDP. Recovery from mad policy isn't easy as they are finding out. (New Zealand's current account deficit is -2.7% and that isn't good either.)The latest regional factory survey, this one from the Kansas City Fed, reported a sluggish expansion, but firms continued to add workers and were moderately optimistic about growth in future months.But with mortgage rates hitting 6.29%, the American housing market is wavering and ready to a substantial drop, it seems. The chance to reset to improve affordability is ahead of them. Rents may have peaked too.The Bank of Japan met yesterday and held its ultra loose monetary policies. But the Japanese government had to intervene to support the yen for the first time since 1998 after the currency extended losses to fresh 24-year lows. The divergence between monetary policy in Japan and the United States has widened further adding to policy stress. The Bank of Japan maintained its key short-term interest rate at -0.1% with governor Kuroda saying the central bank won't be raising interest rates any time soon.The Taiwanese central bank also met and raised its policy rate to 1.625% from 1.5%. It was a modest rise in the face of a slowing economic expansion.Hong Kong had no inflation in August from July and very weak local economic activity, and the annual rate remained at 1.9% - almost all of which happened in October 2021 so is about to leave the index.Indonesia raised its policy rate by +0.5% yesterday as they are starting to experience inflation at too-high levels for them and now running at +6%. That took their policy rate up to 4.25%.Norway also raised its policy rate by +50 bps to 2.25%. They have an inflation rate running at 6.5%. Switzerland raised theirs by +75 bps to 0.50% and taking them out of a negative policy rate for the first time since 2015 and their highest rate since 2009. Swiss inflation is now running at 3.5%.The Bank of England joined the queue unanimously raising their rate by +50 bps too, to 2.25%. Their inflation rate is currently 9.9%. They also said the UK may already be in recession.EU consumer confidence confidence dropped further in August to a new all-time low since this series began in 2007. Container shipping costs dived -10% in the past week alone as demand in the sector deflates very quickly now. But the same is not true for oil tankers; the cost for them has doubled in the past month. And dry bulk cargo rates are inching higher again.The UST 10yr yield starts today at 3.70% and up a huge +19 bps from this time yesterday. This now its highest since 2010. The price of gold will open today at US$1672/oz. This is down -US$12 from this time yesterday.And oil prices start today up +50 USc from yesterday at just under US$83.50/bbl in the US while the international Brent price is now just over US$89.50/bbl.The Kiwi dollar will open today at just on 58.5 USc and more than -½ lower than this time yesterday, as the Fed signals settle in. Against the Australian dollar we are slightly softer at just 88 AUc and its lowest in seven years. Against the euro we are little-changed at 59.4 euro cents. That all means our TWI-5 starts today at 68.4, and down -40 bps.The bitcoin price is now at US$19,071 and down -1.8% than this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.5%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again on Monday.

Les Dérangeants
François-Pierre Chevalier | À chacun sa semaine de 4 jours

Les Dérangeants

Play Episode Listen Later Sep 22, 2022 51:30


Gérer une entreprise avec toute sa famille, c’est pas reposant. Surtout quand elle a un succès mondial! François-Pierre Chevalier, aujourd’hui président de Dynamark Management, nous raconte son aventure avec Bio-K+ International. Au C.A, Marie-Claude, Noah et Étienne se penchent sur le cas de la semaine de 4 jours avec Catherine Beauchamp. Voir https://www.cogecomedia.com/vie-privee/fr/ pour notre politique de vie privée

Economy Watch
Fed pushes a hawkish message

Economy Watch

Play Episode Listen Later Sep 21, 2022 4:56


Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news that's all about the Fed who not only raised rates today, they also see more big rises before the end of the year.As expected, the US central bank has raised its policy rate by +75 bps to 3.25%. Interestingly, that is now above the RBNZ policy rate (of 3%) for the first time since March 2020, and outside the pandemic period and the period immediately before it, the first time in more than 20 years. It is also their highest since early 2008.The US Fed has also significantly raised its sights on where its policy rate is headed in its battle against inflation. By the end of 2022 they expect this rate to rise to 4%. Markets have priced in more with a year-end rate of 4.25%. A year out they now see a 4.6% Fed Funds rate, up sharply from 3.8%. And their view of how that comes down from there is now much more restrained.This is a slightly more hawkish view than they had at previous reviews.Markets initially responded by bidding up the value of the US dollar. Our currency fell -40 bps on the news but is now back up. The UST 10 year benchmark bond rate rose to a new high since 2010 on the news but then sunk to below its pre-announcement level. The S&P500 which was up +0.8% just before the news turned down by -0.6% and is now back up. Oil prices fell.In other data released overnight, US mortgage applications actually rose last week from the week before, a rare rise in a declining trend and is down about -30% from the same week a year ago. A large part is due to fast rising interest rates, with the benchmark 30-yr rate at 6.25%, and up +25 bps in just one week.American existing home sales slipped in August, although not be as much as they did in July. But it does extend the streak of declines to seven straight months. Rising mortgage rates got the blame here, and of course it won't get any easier after today's Fed moves.The Asian Development Bank has downgraded its forecast for China's 2022 growth to +3.3% from +5.0% in April. The bank also cut its projection for next year to 4.5% from 4.8%. At the same time, it said, the emerging Asian region is forecast to grow at a +4.9% rate, instead of its earlier April +5.3% forecast. It has been rare for China's expansion to be significantly less than its much smaller neighbours. In fact the last time that happened was 30 years ago as Deng Xiaoping was working to recover from the disastrous Mao Tse-tung years. It was a foundation that served them well - until Xi Jinping, it seems.China is cutting the regulated price of petrol again, its seventh reduction so far in 2022.In Australia, their central bank says it will not pay a dividend to their government “for a number of years” as it nurses balance sheet losses relating to its bond purchase program that could top AU$58 bln.The UST 10yr yield starts today at 3.51% and despite some sharp initial reactions higher has now fallen to a lower level than this time yesterday. The price of gold will open today at US$1684/oz. This is up +US$18 from this time yesterday, moved only after the Fed news..And oil prices start today down -US$1 from yesterday at just under US$83/bbl in the US while the international Brent price is now just on US$89/bbl.The Kiwi dollar will open today at just on 59.1 USc and +20 bps higher than this time yesterday, following the US Fed signals. Against the Australian dollar we are slightly firmer at 88.3 AUc. Against the euro we are actually up almost +½c to 59.5 euro cents. That all means our TWI-5 starts today at 68.8, and up +20 bps.The bitcoin price is now at US$19,422 and firmer than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Nerves rise ahead of Fed

Economy Watch

Play Episode Listen Later Sep 20, 2022 5:51


Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news markets only have eyes for the Fed, even as geopolitical tensions rise further in Ukraine.But first up today, there was another positive dairy auction this morning and overall prices rose a tad less than +2.0% which was probably a bit less than expected and which was no doubt due to the -0.7% slip in the SMP price when a good rise was anticipated. However the WMP price did rise +3.7%. Coming to the rescue has been the falling NZD however. Recall prices rose +10% at the prior event in NZD and this time the rise in local currency has been +4.6%. Fonterra's upcoming annual meeting will be full of satisfaction from their shareholders, even if this auction on its own probably won't change any farm gate payout forecast.We are now less than 24 hours from the US Fed meeting results and markets are bracing for some pain. The current view is that the Fed will stay tackling inflation strenuously (with another +75 bps hike) and be prepared to inflict painful growth-reducing consequences to achieve their goal. They need markets to 'know' they are serious about beating inflation no matter what the cost. Those may be costs others will pay, but this is probably their last chance to get on top of the inflation thief. Blinking now will damage their cred for a generation.In the US they reported that new housing starts rose in August while permits for residential housing slipped slightly. Completions dipped as usual during the August holiday period. Given the softness of their housing markets at present, this data is actually pretty good.US retail sales growth softened last week on a same-store basis, but they were still more than +10% ahead of year-ago levels.There was a UST 20yr bond auction earlier today where the yield rose sharply from the prior event. The well-supported tender drew US$32 bln in bids for the US$12 bln on offer and the median yield achieved was 3.75% which was almost +50 bps higher than the prior event a month ago.Canada reported its inflation rate at 7.0% in August, down from 7.6% in July and lower than the expected 7.3%. Month-on-month prices fell, and by more than expected.Japan also reported its August consumer price inflation but it rose to 3.0% from 2.6% in July. This was the 12th straight month of increase in consumer prices and the fastest pace since September 2014, amid surging food and fuel costs accentuated by a slump in the Yen. Core inflation also rose above analyst's estimates to 2.8%. Without food or fuel the rate was +1.6%. Now all eyes will turn to the Bank of Japan to see how they react. But while core consumer inflation exceeded the central bank's 2% target for five straight months, the central bank seems unlikely to raise interest rates anytime soon as wage and consumption growth remain weak, analysts say.China reviewed its loan prime rates today but made no changes to either the 1-year (used as a base for personal lending) or the 5-year (used as a base for institutional lending).Taiwanese export orders recovered in August which was impressive given the geopolitical pressures swirling around it then. They were up +2.0% in August when a -2% fall was expected after a -2% dip in July.Far more worrying however was producer price data out of Germany. These are now rising rampantly, up +7.9% in August from July when only a +1.6% rise was anticipated. That pushes their year-on-year PPI rise to a dangerous +45%. These are the largest changes ever recorded there. German industry is in a dark place at present.The race is on to insulate Germany from Russian risks. Newly released data shows that in the first seven months of 2022, China shipped photovoltaic (PV) modules with a combined capacity of 51.5 gigawatts to Europe, +25.9% more than the whole of last year.We should also probably note that in Australia, their officials face an improving Budget situation, one that could be +AU$50 bln better over the next few years.The UST 10yr yield starts today at 3.57% and up another +3 bps from this time yesterday. That is another new 11-year high.The price of gold will open today at US$1666/oz. This is another -US$5 below where it was this time yesterday.And oil prices start today down -US$1 from yesterday at just under US$84/bbl in the US while the international Brent price is now just under US$90/bbl.The Kiwi dollar will open today at just on 58.9 USc and more than -½c lower than this time yesterday, again. Against the Australian dollar we are also more than another -½c lower at 88.1 AUc. Against the euro we are down likewise to 59.1 euro cents. That all means our TWI-5 starts today at 68.6, down another -60 bps and a new two year low.The bitcoin price is now at US$18,816 and -0.9% lower than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
It's all about the Fed

Economy Watch

Play Episode Listen Later Sep 19, 2022 4:33


Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news all laser-focused on the US Fed today.In the waiting period before the US Fed policy announcement on Thursday (NZT), the US dollar is edging higher, and hovering at a 20-year high. This is a distortion that is having global impacts. The UST bond yield benchmarks are also pushing higher, at 11 year highs. But equities are little-changed, waiting nervously to see if they have priced in the Fed's expected rise properly. At this point, the expectation is for a +75 bps hike taking the US Fed funds rate up to 3.25%. Markets have priced in +80 bps now, and expect their benchmark rate to max out at 4.5% in mid-2023. That means they expect another +125 bps over the next nine months, indicating they think most of the work has been done and after this week's rise it will be mopping up operations from the Fed. Still, the last time the US Fed funds rate was at 4.5% was in 2008.There was a small fall in homebuilder sentiment in the US in September, but it is the ninth in a row for this sector. This is a sector on the front lines of any looming recession.Canada has reported that its August producer prices fell, making it three consecutive month-on-month falls in a row and taking the annual rise back to +10.6%. Recall the annual rise was over +18% in March so the recent declines are gathering pace. The falling cost of raw materials is a feature of this reversal.But from the Fed's point of view, inflation is still stalking their economy. US retail petrol prices might be -6.2% lower now than a month ago, but they are still +15% higher than year-ago levels. That's a big improvement, but probably not enough.Of more concern for policymakers is that inflation is embedding itself in wider sections of their economy, and the risk of wage-push inflation remains high.China has reported a good inflow of foreign direct investment in August, +US$14.5 bln and +11% more than the same month a year ago. In a longer perspective however, this level is only equivalent to a +5% rise pa from 2018. Good but not special.It has now been two months since many Chinese homebuyers stopped repaying mortgages to protest stalled construction on their properties. A lack of progress at more sites now threatens to intensify the boycott, despite assurances from authorities.Later today Japan will reveal its August CPI rate. It was 2.6% in July, 2.4% for its 'core rate'. Markets expect that core rate to rise to 2.7% in August. The Bank of Japan has maintained its ultra-loose monetary policy for a very long time now, and eyes are on whether these sort of rates will be enough to induce any sort of change.The UST 10yr yield starts today at 3.49% and up +3 bps from this time yesterday. That is touching an 11-year high. The price of gold will open today at US$1671/oz. This is -US$5 below where it was this time yesterday.And oil prices start today little-changed from yesterday at just over US$85/bbl in the US while the international Brent price is still just under US$91/bbl.The Kiwi dollar will open today at just on 59.6 USc and almost -½c lower than this time yesterday. Against the Australian dollar we are also -½c lower at 88.7 AUc. Against the euro we are down likewise to 59.4 euro cents. That all means our TWI-5 starts today at 69.2, down -40 bps and a two year low.The bitcoin price is now at US$18,987 and -3.5% lower than this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.0%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Risk at a crossroad

Economy Watch

Play Episode Listen Later Sep 18, 2022 6:26


Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news that the coming week will be dominated by interest rates decisions by the major central banks including US Federal Reserve, Bank of Japan and the Bank of England. Also in focus will be August inflation rates reported for both Japan and Canada.All this will come following the global recession warning from the World Bank that is focusing minds.Most equity market indexes ended last week sharply lower as investor fears grew. And the S&P500 futures suggest that Wall Street will open tomorrow down another -0.8%. From its peak in January this year, the S&P500 has now retrenched by -19.3%. The cacophony of news when it hits -20% and a bear market just might drive it to a new low. Certainly p/e ratios need correcting in this new environment of much higher benchmark interest rates.But consumers seem to have had enough of the 'fear' mood - they already did that. Now they seem to be feeling better about life.In the US the University of Michigan consumer sentiment survey rose to a five-month high, driven by a sharp, recent fall in petrol price inflation. Will it last? Who knows? Will the investor fear mood last? That seems equally uncertain but they are having to swallow increasing losses. Along with their bond investor brothers, equity market losses are piling up and portfolios are shrinking in value now. The negative mood might become a self-fulfilling trend in the back half of 2022.More positively we should note that the "interim settlement" of the US rail dispute is a significant risk removed from the immediate future. Given where the parties were, it is quite an achievement, under pressure. Ratification seems likely.China reported some key data late on Friday, and some of it was unexpectedly positive. Retail sales were up +5.4% in August from a year ago, an expansion at twice the July rate. Industrial production was up +4.2% on the same basis, also beating expectations. In fact, electricity production surged in August, up almost +10% from year-ago levels. But this is still a bit of a puzzle because these 'power' rises recently are far more than can be explained by industrial activity, or consumer behaviour.The Chinese central bank fixed the value of the yuan (CNY) at 6.93 to the US dollar on Friday. But in freely-traded offshore markets, the CNH is trading over 7. If you can get CNYs out of China, there is a good arbitrage trade available now with an "easy" 1% gain on each transaction.Chinese citizens are as heavily 'invested' in residential real estate as Kiwis, maybe even more so. But data out on Friday shows that in 50 or their 70 largest cities the prices of new housing fell in August from July. That is the most in more than seven years. More broadly, for housing resales, 56 of these 70 cities posted price retreats. The 'wealth effect' impact on vast numbers of Chinese households will be negative, and for many, disturbingly so. There may be building social disquiet.Meanwhile in Germany, they have seized control of some Russian-owned energy assets in the country to shore up its energy security concerns. Russia has turned off its gas and oil taps and Germany needs the local infrastructure to operate on alternate supplies, which are starting to flow in volume, including from the US. The price of oil and gas is not rising, nor is futures pricing.Elsewhere in Europe, Hungary is becoming the cheerleader for Russia at a time inflation is soaring. It has placed caps on mortgage rates, food prices and fuel costs. It is also cracking down of dissent, and the EU is worried for democracy in Hungary and is withholding US$7.5 bln in aid while those anti-democratic measures are in place. Hungary has inflation at 15.6% pa and a benchmark interest rate of 11.75%.The UST 10yr yield starts today at 3.46% and unchanged from this time Saturday. We should also note the sharp rises in wholesale swap rates in New Zealand on Friday, pushing up again. Our one year swap rate is now it's highest since 2008. Bond investors may be taking losses, equity investors joining them, but data out on Saturday (for July) shows an international rush to shift money to the US. In the month, they reported the sum total of all net foreign acquisitions of long-term securities, short-term US securities, and banking flows was an inflow of US$153.5 bln. While these flows are quite variable, there has been an upward trend in them since 2019.The price of gold will open today at US$1676/oz. This is -US$41 or -2.4% below where it was this time last week.And oil prices start today little-changed from Saturday at just on US$85/bbl in the US while the international Brent price is still just on US$90.50/bbl.The Kiwi dollar will open today at just on 59.9 USc and marginally firmer than this time Saturday. For the week it has been a -1.2% devaluation. Since the start of the month a -2½% devaluation. And since the start of 2022 the devaluation has been -12½%. Against the Australian dollar we are unchanged at 89.2 AUc. Against the euro we are still just under 59.9 euro cents. That all means our TWI-5 starts today at 69.6, marginally firmer but still very close to a two year low.The bitcoin price is now at US$19,674 and virtually unchanged from this time Saturday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Is the world in transition towards a 2023 recession?

Economy Watch

Play Episode Listen Later Sep 15, 2022 5:19


Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news of China stumbling and central banks fiercely focused on controlling high inflation, the chances of a global recession in 2023 seem to be building.But last week only +156,000 Americans made jobless claims, taking the total number on these benefits to just 1.275 mln, an historic low. Whatever else might be going on, the Americans have a very tight labour market still.And American retail sales rose more than expected in August from July, and bouncing back from the disappointing prior month. These sales are now +10.4% higher than year-ago levels, so more than keeping up with inflation.However there were two regional Fed surveys out overnight and neither were especially positive. The Philly Fed one for September was the weakest, with new order levels no longer driving an expansion. The New York Empire State one came back from a deep August retreat with a small rise in new orders. Neither noted that businesses see a positive outlook.In fact the Fed's national monitoring of industrial production reported a small retreat in August, one that wasn't expected. This activity is up +3.7% for the year, but to be fair the main weakness is in mining activity. Consumer goods production is lackluster. But production of business goods remains quite strong, except perhaps for construction activity.It looks like a deal has been reached in the nationwide rail labour dispute, one that should avoid strike action. That has been a big threat hovering over near-term economic activity.In China, their seven largest banks dropped term deposit rates in coordination. It was their first decrease in seven years and strongly hints at fast-weakening loan demand, probably led by mortgage demand. But with many economists now forecasting 2022 Chinese growth to be only about +3%, business loan demand is likely much lower too.And China has again deferred tax payments for SMEs, the third time in 12 months they have taken this emergency action.Japan ran its biggest single-month trade deficit on record in August as imports surged on high energy costs and a slump in the yen, exposing the economy's vulnerability to external price pressures. Imports rose +50% in a year driven almost exclusively by energy imports. Their cost in yen ballooned because the value of the yen fell. Exports rose +22%.In Australia, the Melbourne Institute survey of year-ahead consumer inflation expectations fell to 5.4% in August from 5.9% in July.Australia reported its August labour market data yesterday and that showed a good +59,000 expansion in full-time jobs, and a fall in part-time jobs. The AUD firmed. It also showed a small rise in their jobless rate to 3.5%. A new study by the World Bank says a recession is possible next year if monetary tightening and the focus on beating inflation remains the goal of central banks.Container shipping costs are falling even faster now, down -8% from last week alone to be now -50% lower than year-ago levels, which were admittedly high. The key Shanghai-Los Angeles rates are collapsing, down -11% last week alone and are down by two thirds from year-ago levels. Against the grain, shipping rates for bulk cargoes are rising recently, although they are only back to pre-pandemic levels.The UST 10yr yield starts today at 3.46% and up +5 bps from this time yesterday. The price of gold will open today at US$1665/oz and dropping -US$32 from this time yesterday. That is a 2 year low.And oil prices start today -US$4 lower at just on US$85/bbl in the US while the international Brent price is now just on US$90.50/bbl.The Kiwi dollar will open today at just on 59.8 USc and nearly -½c lower than this time yesterday. For the week it has been a -1.2% devaluation. Since the start of the month a -2½% devaluation. And since the start of 2022 the devaluation has been -12½%. Against the Australian dollar we are marginally lower than yesterday at 89 AUc. Against the euro we are lower at 59.8 euro cents. That all means our TWI-5 starts today at 69.5 and a new two year low.The bitcoin price is now at US$19,833 and another -1.4% fall from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.2%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again on Monday.

Economy Watch
A consolidation mood settles over markets

Economy Watch

Play Episode Listen Later Sep 14, 2022 5:12


Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news of more evidence inflation may be topping out.But first, US mortgage applications fell -1.2% last week, a fifth consecutive decline as the base mortgage rate hit 6% for the first time since 2008. That is now nine weeks in the past twelve that they have fallen, suggesting their housing markets are in retrenchment mode. But that isn't coming with excess stress, it seems. Delinquency rates remain very low on housing loans. We are seeing declines, yes, but without stress.American producer prices fell -0.1% in August from July and this was as expected. Year on year they are up +8.7% which was less than expected and less than the +9.8% rise in July and was the least it has risen in any month over the past year. There are definite signs here that the punchiness of price rises are easing. Maybe yesterday's CPI data wasn't the harbinger it seemed.But concerns are mounting over the potential upward pressure on prices if a huge rail strike snarls supply chains and hurts economic activity.In China, a new people's movement is underway. After going on a mortgage strike over undelivered housing, others are now rushing to repay their mortgages. As the property market slumps, the once sought-after leverage has turned into a burden. Now increasing numbers of borrowers are cashing up their "wealth management products" (essentially money market funds) to pay down the home loan. The drive is helped because those funds are now returning very meagre results. A disinvestment push like this won't help reinvigorate their economy. And it could be deflationary.Japan reported machinery orders for July, and they were up strongly (just like the machine tool orders we noted yesterday for August). It was a rebound that wasn't expected, showing the company board rooms are still investing. These orders were up +5.3% from June and up +12.8% from year-ago levels.In India, their widely watched wholesale price inflation rose by 12.4% in August. But this was less than July's 13.9% rise and less than the expected 13% rise. Food prices were also up 12.4% in this survey.The annual inflation rate in the UK unexpectedly edged lower to 9.9% in August from 10.1% in July, which was the highest reading since 1982. Analysts had expected it to rise to a 10.2% rate. It was milk and cheese that is helping propel their costs higher. Their food prices were up more than +13% in August.In Sweden the ruling center-left coalition has been beaten by a centre-right grouping in a razor-thin result. The center-right only wins however because of a surge in support from a far-right anti-immigrant party which will be part of the new government. The new government may not be very stable. Failure to deal with rising gang violence undid the center-felt parties.And staying in Europe, their General Court in Luxembourg has upheld an NZ$8.5 bln fine on Google for the way it used its Android operating system to favour Google Search.In Australia, new home sales are still declining. They were down -13% in July. Now new data shows they are down another -1.6% in August. They have been falling all year from the peak in December 2021 and are down -28% since thenThe UST 10yr yield starts today at 3.41% and little-changed from this time yesterday. The price of gold will open today at US$1697/oz and down another -US$7 from this time yesterday. But most other precious metals made some sort of recovery overnight.And oil prices start today +US$1.50 higher at just under US$89/bbl in the US while the international Brent price is now just under US$94.50/bbl.The Kiwi dollar will open today at just on 60.2 USc and little-changed from this time yesterday. Against the Australian dollar we are firmer than yesterday at 89.1 AUc. Against the euro we have remained lower at 60.2 euro cents. That all means our TWI-5 starts today at 69.8 and still at its two year low.The bitcoin price is now at US$20,116 and another -3.0% fall from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Outsized market reactions to a small but unexpected US CPI change

Economy Watch

Play Episode Listen Later Sep 13, 2022 5:22


Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news markets have reacted sharply to a 'small miss' in the US inflation data. The impact on the NZD has been large.This small change in the American inflation rate has brought huge reactions. The US CPI slipped in August from 8.5% to 8.3% at an annual rate. Month-on-month the rate rose from 0% in July to +0.1% in August, or an annualised rise of +1.2%. The data may seem tame, but it wasn't the fall to 8.1% markets were expecting and there has been a truly outsized reaction.Equity markets have dived. Bond yields have jumped. The USD has strengthened sharply. Markets are bracing for a Fed that says it is more determined than ever to squash inflation and benchmark policy rate hikes may now be higher for longer given the policy action so far isn't working, apparently.The American CPI benefited from sharp falls in fuel cost. But it was food and rent that is creating the latest upward pressure, showing the inflationary impulse is much more embedded that many had assumed. The prior assumption was that falling petrol costs would be enough to quell inflation. It isn't. Core inflation actually rose.The market reaction seems to be based on the fear that the inflation fight might necessitate their economy suffering a hard landing, and a period of recession.Meanwhile last week, same store retail activity rose more than +11% from a year ago. That remains much more than can be accounted for by inflation and continues a long run of 'real' gains and far above what this tracking showed pre-pandemic.And as at June 2022, deposits at US banks flowed out, falling -US$370 bln to US$19.6 tln. It is the first quarterly decline since 2018 and comes as households seem to be shifting to a more active investing stance. It is an enormous shift, on a global scale. It's even an enormous shift in terms of their economy, equivalent to about 1.5% of GDP.In China, it appears that another very large hi-profile company is in trouble, mainly because of its exposure to the property sector. This could be another HNA-style meltdown. This company is Fosun International. Beijing has apparently told its state-owned banks and other SOEs to review their exposures to the company. The Shanghai based company was built on debt, and has seen its share price wither by half in the past year. Today's official warnings may trigger some sharp moves when the Hong Kong Stock Exchange opens later in the day.Economic sentiment in Germany has dived to its lowest level since the GFC, obviously driven by concerns about what lies ahead in a winter without the backstop of Russian energy supplies. The September fall is being described as 'significant'.In Australia, there are 10.8 mln dwellings. In total they were worth AU$10.146 tln as at March 2022. But by June they had fallen in value to AU$9.983 tln. That is a loss of value of -AU$162 bln - or -AU$1.8 bln per day.Staying in Australia, that value retreat hasn't hurt business confidence - yet. The widely-watched NAB business sentiment survey for August improved, with conditions holding high and confidence improving. Westpac had a consumer sentiment survey out too, and that improved as well.The UST 10yr yield starts today at 3.42% and another +6 bps firmer from this time yesterday.The price of gold will open today at US$1704/oz and down a sharpish -US$25 from this time yesterday. But that was a minor fall compared to some other precious metals.And oil prices start today -50 USc lower at just under US$87.50/bbl in the US while the international Brent price is now just over US$93/bbl.The Kiwi dollar will open today sharply lower at just on 60.1 USc and an overnight fall of -1½c from this time yesterday. That is a 28 month low. Against the Australian dollar we are down at 88.9 AUc and a -½c fall. That is a nine year low. Against the euro we are also -½c lower at 60.2 euro cents. That all means our TWI-5 starts today at 69.8 and a fall of -90 bps over the past day. The last time we were this low on the TWI-5 was November 2020.The bitcoin price is now at US$20,747 and a sharp -6.7% retreat from this time yesterday. Volatility over the past 24 hours has been extreme at just over +/- 5.0%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Au cœur de l'histoire
Napoléon : le petit tyran de Sainte-Hélène (partie 2)

Au cœur de l'histoire

Play Episode Listen Later Sep 13, 2022 12:18


Ecoutez la suite du récit "Au Cœur de l'Histoire" de Virginie Girod consacré à la chute de Napoléon Ier, à ses dernières années passées à Sainte-Hélène. Sur l'île, les courtisans rivalisent pour être cités dans le testament de Napoléon. Ils savent qu'il a fui la France avec 200.000 francs en poche. Mais un nouveau venu vient bouleverser les tensions déjà présentes dans ce qu'il reste de la Cour de l'ancien empereur des Français. Il s'appelle Sir Hudson Lowe, il vient prendre le poste de gouverneur de Sainte-Hélène. Et surtout, il a pour mission de surveiller Napoléon… Dans ce nouvel épisode du podcast "Au coeur de l'Histoire" produit par Europe 1 Studio, Virginie Girod raconte la rivalité qui s'installe entre les deux hommes.   "Au cœur de l'histoire" est un podcast Europe 1 Studio Ecriture et présentation : Virginie GirodProduction : Adèle HumbertDirection artistique : Adèle Humbert et Julien TharaudRéalisation : Clément IbrahimMusique originale : Julien TharaudMusiques additionnelles : Julien Tharaud et Sébastien GuidisCommunication : Kelly DecroixDiffusion et rédaction : Eloise BertilVisuel : Sidonie Mangin 

Economy Watch
Transitioning to lower inflation

Economy Watch

Play Episode Listen Later Sep 12, 2022 4:29


Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news of more evidence we may be transitioning to a period of lower inflation, globally at least.The latest US Fed survey of inflation expectations shows them retreating. For petrol, households surveyed expect them to remain at the current lower levels over the next year. That means overall inflation expectations are now 5.7% in the year ahead, down from 6.2% in July. House price growth expectations fell sharply, now down to just +2.1% and a two year low, and expectations of future credit access fell. Households however were much more optimistic about their future income and financial situations.The latest update to the USDA World Agriculture Supply & Demand Estimates (WASDE) show that global wheat prices will remain historically high, but are falling from prior estimates. High harvest levels in Russia and Ukraine have stopped these prices rising further., they say. Coarse grain yields are slipping and prices rising they say. Rice prices are up on India's export ban and very much lower production in the US. They don't see much change in the beef or dairy trade.There were two US Treasury bond tenders today. Both brought sharply higher yields. The 3-year bond came in with a median yield of 3.50%, and up from 3.14% a month ago. The 10-year bond came in with a median yield of 3.24%, up sharply from the 2.69% a month ago.The recovery of the Japanese economy continues, probably best illustrated by the growth spurt in machine tool orders. They were up almost +11% from August a year ago even though this was a slight slip from July, this is a usual season pattern. This high-tech sector is back to pre-pandemic levels now. What is interesting is the strength in order from domestic clients (+16%).China and Australia may have their high-profile squabbles, and China may have thrown its hand in with Russia. But China also knows Russia is an unreliable partner. In 2021, China bought 2.2 mln tonnes of Australian wheat and it cost them about US$500 mln. In 2022 they will buy 6.3 mln tonnes and it will cost them more than US$2 bln. China seems trapped into relying on Australian-sourced commodities, be it wheat or iron ore or coal. No wonder Australia is generating huge trade surpluses - China is paying up, despite the disrespect China perceives from Australia.And in China, after last week's brush-by from Typhoon Hinnamnor, the weather tracking suggests Shanghai could get a direct hit from the next on heading its way, Typhoon Muifa.In India, inflation rose in August to 7% and higher than expected, but that was just back to levels we had seen for the prior four months.Indian industrial production growth was quite anemic in August however, coming in up just +2.4% when a +4.3% rise was expected. Both benchmarks were well lower than July's +12.7% rise from a year ago.The UST 10yr yield starts today at 3.36% and +4 bps firmer from this time yesterday. The price of gold will open today at US$1729/oz and up +US$12 from this time yesterday.And oil prices start today +US$2.50 higher at just under US$87.50/bbl in the US while the international Brent price is up a bit less, now just over US$93.50/bbl.The Kiwi dollar will open today just on 61.5 USc and back up +½c from this time yesterday. Against the Australian dollar we are little-changed at 89.3 AUc. Against the euro we are also little-changed at 60.7 euro cents. That all means our TWI-5 starts today at 70.7 and up +20 bps over the past day.The bitcoin price is now at US$22,237 and another 2.7% rise from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.4%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Are we on the other side of the inflation bubble now?

Economy Watch

Play Episode Listen Later Sep 11, 2022 6:39


Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news central banks are keeping the pressure on the inflation bogey just as there is mounting evidence inflationary pressure are easing and in some places quite quickly. However, this weekend China is on holiday (Mid-Autumn Festival), a muted affair with travel discouraged. Authorities have issued warnings about unnecessary travel as pandemic cases grow relentlessly, across many provinces.New yuan loans expanded more in August than July, but then the July level was very depressed, and the August 'recovery' was less than expected. It was driven by stronger 'corporate demand' including forced financing on Beijing's orders. Household demand remained very weak. Their money supply is now growing at three times the rate of economic activity - maybe much more in recent months.Staying in China, after effusive official start-up claims, their carbon market trading is grinding to a halt. The need to be carbon-efficient is no longer a priority there it seems.The inflation impetus has leaked away almost completely in China. The annualised CPI rate over the past 4 months is just +0.6%, even though they are reporting annual CPI inflation of 2.5% to August and down from 2.7% to July. Most of those gains happened in the early part of the year. Food prices are stable now. But lamb prices rose again in August even though they fell in the last 12 months. Beef prices are hardly rising however.Producer price inflation has vanished in China, replaced by deflation now. It's been a sharp retreat and prices are falling at a rate exceeding -14% pa now. For the full year to August they are up +2.3%, and that is far below the annual +9.5% in August 2021. Current rates are 18 month lows. This sort of data makes sense of the sinking yuan exchange rate.In the US, and after months of gloom, Americans are finally starting to feel better about the economy- but more resigned to inflation. Petrol prices have fallen quickly, but overall inflation is still relatively high and the August numbers will be out on Wednesday this week (NZT), and are expected to slip from 8.5% to 8.1%. But the fast rise in sentiment isn't because of year-on-year changes, it is because of month-on-month changes to household budgets, and the relief is widespread.US wholesale inventories rose slightly in July from June, but that just adds to a long string of increases. Year on year they are up a disturbing +25%. That is more than inflation can account for. Supply-chain pressure is also part of the reason. But wholesale sales slipped in July from June. So the inventory-to-sales ratio jumped, and although it is not yet back to pre-pandemic levels, companies will notice the pressure now and the risk of a de-stocking period is high - which is always a corrosive sign.This year American online sales will rise just +9.4% to US$1 tln, the first time the growth rate has slipped into the single digits, and given inflation's surge, an unusually modest rise. Bloomberg is reporting that sellers on the giant Amazon platform are bracing for a weak upcoming holiday season and the worry that they will need to discount heavily to shift inventories. That will depress inflation too.The impact of lower order levels is being noticed particularly hard in China. In what should be their peak-season of export shipments, in fact it now looks like an off-season period. It is another key reason why containerised shipping costs are diving. And the number of container vessels waiting offshore of the Port of Los Angeles-Long Beach has declined from more than 100 in January when it was at its highest, to less than 10 now. This is more pressure-relief sure to reduce inflation.But none of this is deterring the US Fed from its focus on battling inflation, no matter what the impact on demand. Another board member called for an out-sized hike in September in a speech over the weekend.Canada delivered a surprisingly disappointing jobs report for August. The number of full-time jobs fell sharply in a way that wasn't expected. A small gain was expected. The move was substantial, enough to raise its jobless rate sharply too, up to 5.4% from 4.9% in July. It was a sharp fall in public sector jobs that drove the change, rather than an impact of interest rates on the private sector where employment was unchanged.In Sweden there is an election underway, with the center-left expected to best a recent surge by the anti-immigration 'Sweden Democrats' party. A failure to deal with a recent gang violence upsurge has bolstered the far-right party.In New Zealand, grocery heavyweight Foodstuffs is reporting that their suppliers raised prices to them +8.7% over the past year with almost 7,500 product lines rising in cost. Fruit and vegetables led the way. Overall the pace is quickening, with the August cost rises running at a +12% pa rate over July.The UST 10yr yield starts today at 3.32% and unchanged from Saturday. The price of gold will open today at US$1717/oz and up +US$1 from this time Saturday.And oil prices start today -US$1.50 softer at just under US$85/bbl in the US while the international Brent price is now just under US$92/bbl.The Kiwi dollar will open today just on 61 USc and unchanged over the weekend. Against the Australian dollar we are unchanged at 89.2 AUc. Against the euro we are at at 60.8 euro cents. That all means our TWI-5 starts today at 70.5 and down a minor -20 bps for the week.The bitcoin price is now at US$21,650 and a 2.3% rise from this time Saturday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Higher rates bring the targeted economic slowing

Economy Watch

Play Episode Listen Later Sep 8, 2022 5:45


Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news the death of their monarch in the UK will be grabbing all the headlines today, but the global economy is "carrying on". Here are those economic events.In the US jobless claims were lower last week, both from the prior week and from what was expected. There are now 1.4 mln Americans on these benefits and still hovering near its all-time low.In remarks at a monetary policy conference, Fed boss Powell doubled-down on outsized rate hikes in bullish comments. That reinforces market expectations that their September hike will be another +75 bps.The recent expansion of American consumer credit in July has come in at a tame level and well below what was expected - and well below the inflationary impulse, so a 'real' decline. This is an indication that the Fed's higher interest rates are working to suppress demand.In Hong Kong, Evergrande's local headquarters has been seized by its bankers, probably state-owned CITIC, after the struggling Chinese property developer defaulted on a loan and twice failed to sell the building. The prime-located 26-story building was valued at US$1.2 bln.Across China, local governments are getting tough on developers who have stalled projects. Fire sales are about to happen.In Beijing, they seem to have drawn a line under their exchange rate with the US dollar, working hard to avoid the ignominy of the CNY falling above 7 to the greenback. Their faltering exports and falling FX reserves aren't helping.The Q2-2022 GDP data for Japan was released yesterday (the second estimate) and economic activity came in better than expected. It was +3.5% higher than a year ago when a +2.9% expansion was expected, boosted by a strong pickup in private consumption and a faster rise in government spending. (Don't forget, this is after inflation has been removed.)After its +50 bps rate hike in July, the ECB raised them today again, and by an unprecedented +75 bps. The main refinancing rate is now at 1.25%, the marginal lending facility at 1.5% and the deposit facility one at 0.75%. Policymakers also said that interest rates should rise further over the next several meetings. Bank boss Lagarde said the ECB is far away from the rate that will get their inflation rate back to the 2% target. They have significantly revised up their inflation projections to average 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024. And they sharply revised growth estimates lower to +3.1% in 2022, just +0.9% next year and +1.9% in 2024.In Britain, a change of monarch is underway. They have just changed their Prime Minister. And change at the UK Treasury Department is also underway with the immediate sacking of its top official.Meanwhile the country said it will cap household energy costs for two years, a substantial bailout aimed at staving off a deep recession and bringing down inflation that is running at more than +10% and the highest rate among large developed economies. But energy cost support for businesses facing the same stresses didn't eventuate.In Australia, the RBA Governor was been speaking yesterday and left his audience with a dovish message, implying that their next rise might be just +25 bps. These comments moved both rates and currency markets locally. He was expected to be a bit dovish, but in the end he was more so than expected.Continuing the theme of big numbers being reported yesterday, Australian exports plunged in July from June mainly due to sharp falls in the export of minerals and coal. That tanked their trade balance sharply, in fact the June to July fall was their largest ever, falling almost -AU$11 bln in one month resulting in a surplus of only +AU$8.5 bln (the previous record monthly fall was -AU$6.7 bln in January 2017.) Within this data was the note that Australia's rural exports rose +3.9% on a 'healthy'(?) grain market.Container shipping costs are falling ever faster now, down -5% last week alone. But the costs of shipping bulk cargoes seem to have stopped falling, and back to pre-pandemic levels.The UST 10yr yield starts today at 3.29% and up +2 bps from this time yesterday. The price of gold will open today at US$1710/oz and down -US$7 from this time yesterday.And oil prices start today +US$1.50 higher at just under US$83.50/bbl in the US while the international Brent price is now just over US$89/bbl. The Kiwi dollar will open today just over 60.6 USc and little-changed since this time yesterday. Against the Australian dollar we are unchanged at 89.7 AUc. Against the euro we are also unchanged at 60.7 euro cents. That all means our TWI-5 starts today at 70.4 and the same as this time yesterday.The bitcoin price is now at US$19,210 and a 1.1% firmer than this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.3%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again on Monday.

Les Dérangeants
Danièle Henkel | Le mot en « R »

Les Dérangeants

Play Episode Listen Later Sep 7, 2022 51:47


C’est parti pour une 5e saison! La grande dame de l’entrepreneuriat, Danièle Henkel, nous retrouve en studio pour l'occasion. Il est question d’Henkel Média, de la relève familiale, des coulisses des Dragons et de son historique avec Étienne (!). Au C.A., Alex, Carlo et Étienne expliquent à Catherine Beauchamp comment ils prévoient affronter la récession annoncée.Voir https://www.cogecomedia.com/vie-privee/fr/ pour notre politique de vie privée

Economy Watch
The global trade recovery stutters

Economy Watch

Play Episode Listen Later Sep 7, 2022 5:50


Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news global trade is losing altitude, with the geopolitical pressures starting to take their toll.But first, US mortgage applications fell yet again last week, continuing the long string of declines and are -23% lower than year-ago levels. Mortgage interest rates rose to 5.94% in this survey.The US reported its July trade balance data earlier today which showed a smaller overall deficit by -US$10 bln to a 9-month low of -US$71 bln, broadly in line with market forecasts. Total exports were up a mere +0.2% to a new all-time high of US$259 bln as a rise in exports of services offset a decline in goods shipments. Meanwhile, imports went down by -2.9% to US$330 bln as a decline in imports of consumer goods and industrial supplies offset a rise in shipments of cars. Given their moderately expanding economy, its a good result. That takes their trade deficit to just under 4% of GDP for the first time in a very long time.The US Fed's Beige Book summaries of regional surveys painted a modest picture of their economic expansion in August. Economic activity was unchanged since July, with five Districts reporting slight to modest growth in activity and five others reporting slight to modest softening. Most Districts reported steady consumer spending as households continued to trade down and to shift spending away from discretionary goods and toward food and other essential items. Car sales remained lackluster across the country, reflecting limited inventories and elevated prices. It is not a very upbeat assessment.The US may be transitioning to a period of lower growth, but the Fed signaled it will stay targeting inflation until the effort is successful, no matter what the economy does. A top official said they will need to see “several months” of low monthly inflation data to be convinced that rapid price growth is finally cooling, raising the odds that they will again raise interest rates by +75 bps when they meet later this month.The Bank of Canada raised its policy by +75 bps to 3.25% overnight in a well signaled change. It is the fifth consecutive rate hike, pushing borrowing costs to the highest since 2008. They also said this rate will need to rise further given the outlook for inflation. In addition they will continue their quantitative tightening by selling off their bond holdings. The widely-watched local PMI series reported a sharp expansion in August, after the unexpected drop in July, so there is still strong growth pressure in their economy.China released its August export data late yesterday and they were weak, even weaker than expected. Their import data was weak as well. Their trade surplus dipped and that was even after their trade surplus with the US rose in August from July.China's FX reserves fell more than expected in August, taking them down to US$3.05 tln and a drop of -US$50 bln and to their lowest level since October 2018.Taiwanese exports struggled in August, but by the political and military squeeze put on them from China. Although they remain at an historically high level, the growth impetus disappeared in the latest month.Global air cargo markets faltered in July, interrupting the expansion track they had been on. The Asia/Pacific region reported almost a -10% reduction year-on-year.In Australia, economic activity rose in Q2-2022 by about what was expected to be +3.6% more (real) than a year ago. In Q1-2022 the growth rate was +3.3%. Consumer spending was the bright spot in the June quarter. Exports also performed well, however, elsewhere conditions were pretty mixed. These Aussie results are far better than what most countries are reporting for the June quarter.The UST 10yr yield starts today at 3.27% and retracing -6 bps after deciding some of the earlier rise was overdone. The price of gold will open today at US$1717/oz and up +US$15 from this time yesterday.And oil prices start today -US$4.50 lower at just over US$82/bbl in the US while the international Brent price is now just over US$88/bbl. At these levels they are back to price levels in effect at the beginning of 2022 - and in fact prices pre-pandemic. The weak Chinese trade data undermines these prices today.The Kiwi dollar will open today just over 60.6 USc and little-changed since this time yesterday. Against the Australian dollar we are unchanged at 89.7 AUc. Against the euro we are a bit softer at 60.7 euro cents. (Notice the parity with the greenback.) That all means our TWI-5 starts today at 70.4 and unchanged since this time yesterday.The bitcoin price is now at US$$19,001 and a tiny -0.6% lower than this time yesterday. It got down to US$18,559 in between. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

NJCPA IssuesWatch Podcast
144: A&A Update with Brad Muniz – 9/6/22

NJCPA IssuesWatch Podcast

Play Episode Listen Later Sep 6, 2022 12:34


This episode covers the extension of time for PPP loan forgiveness audits; FASB's exposure draft on tax credit structures; AICPA SAS 148 on compliance audits; PCAOB's agreement with Chinese authorities; SEC's new pay versus performance disclosure rules; and R&D accounting for taxes. *** This episode qualifies for nano CPE credit. Find out more at https://njcpa.org/nano. *** Resources:FASB Seeks Input on Proposal to Improve Accounting for Investments in Tax Credit StructuresAICPA SAS 148 – Amendment to AU-C 935, Compliance AuditsPCAOB Signs Agreement with Chinese Authorities, Taking First Step Toward Complete Access for PCAOB to Select, Inspect and Investigate in ChinaSEC Adopts Pay Versus Performance Disclosure RulesNJCPA Accounting & Auditing Knowledge Hub

NJCPA IssuesWatch Podcast
A&A Update with Brad Muniz – 9/6/22

NJCPA IssuesWatch Podcast

Play Episode Listen Later Sep 6, 2022 12:34


This episode covers the extension of time for PPP loan forgiveness audits; FASB's exposure draft on tax credit structures; AICPA SAS 148 on compliance audits; PCAOB's agreement with Chinese authorities; SEC's new pay versus performance disclosure rules; and R&D accounting for taxes. *** This episode qualifies for nano CPE credit. Find out more at https://njcpa.org/nano. *** Resources:FASB Seeks Input on Proposal to Improve Accounting for Investments in Tax Credit Structures AICPA SAS 148 – Amendment to AU-C 935, Compliance AuditsPCAOB Signs Agreement with Chinese Authorities, Taking First Step Toward Complete Access for PCAOB to Select, Inspect and Investigate in ChinaSEC Adopts Pay Versus Performance Disclosure RulesNJCPA Accounting & Auditing Knowledge Hub

Economy Watch
Bond prices take a hammering

Economy Watch

Play Episode Listen Later Sep 6, 2022 5:46


Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news bond prices are taking a hammering today, with losses mounting quickly now.But first, the latest dairy auction has delivered higher prices. Overall they were up +4.9% in USD terms, and with our currency weakening, the rise in NZD was a stellar +10.2%. These rises were led by WMP which delivered a bit of a surprise. WMP was up +5.1% from the last auction. But in between there was a GDT Pulse event for WMP a week ago and that did not signal such a big rise today. Today's WMP result is +5.7% higher than the GDP Pulse event. Buyers are realising that future supply is going to be lower than they were planning so demand is returning to shore up that supply shortfall.This the US, they have returned from their long Labor Day weekend to face sharply rising yields as bond losses pile up. The USD is surging too especially against commodity currencies which are in full retreat.However, the US service sector is firing on all cylinders (if that is a valid phrase these days as the car industry turns electric?). The ISM services PMI expanded at a faster pace from its already healthy level. It was led by activity and new orders. Labour markets remained tight, they said.The ISM services PMI is the widely-watched services survey in the US, but it isn't the only one. The internationally benchmarked Markit one told a quite different story. Usually these surveys see quite similar conditions, but not this month. The Markit services PMI is in contraction and reporting its sharpest fall since May 2020 with new orders retreating. One of them is wrong, its just not clear which one at this time.Separately the US logistics LMI reports a fifth month of easing in August, the lowest expansion since May 2020. Mostly it is falling demand. Although the index shows the overall logistics industry continues to expand, the rate of growth is now the all-time high/tightness in March. Warehousing Capacity is down again, transportation prices fell for a second month while transportation capacity continued to increase and inventory levels grew. This logistics LMI suggests the Markit PMI might be closer to the mark rather than the ISM one.Despite these risks, the bond market is back to pricing in another full +75 bps rate hike at the next US Fed review on Thursday, September 22 (NZT). Bond prices are taking a hammering.In China, economic news has gone very quiet. It is neither fashionable not wise to report news that their economy is struggling, especially ahead of the upcoming Party Congress. But it is clear that house prices in their resale markets are falling across a broad range of cities now. And the Chengdu lockdown is shaping up to be a make-or-break situation for their zero-Covid policies.In Japan, their currency is weakening fast. The Bank of Japan is holding on to its aggressive easing program to finally get inflation rising, and it might succeed. But the cost is a sharply falling yen as those easing policies are now in sharp contrast to the rest of the word. The very much wider yield gap between US Treasuries and Japanese government bonds has encouraged investors to dump the yen for the dollar.In Europe, almost countries are well into formulating extensive support programs for energy supply and household budgets as the winter season looms, one where there will be no Russian energy to cover the cold snap. The size of these programs in total could be epic, and the EU is stepping up itself with overarching support.In Australia late yesterday, their central bank raised its cash rate target by +50 bps to 2.35%. This was as expected. They said they aren't seeing any reason to expect CPI inflation lower than 7.¾% in 2022, so the pressure remains to get it back to 3% and within their policy range. In turn that means more outsized hikes can be expected, although they are clearly trying to avoid tipping them into a consumer-led spending recession.The UST 10yr yield starts today at 3.33% and up +13 bps after Wall Street's long weekend. The price of gold will open today at US$1702/oz and down -US$9 from this time yesterday.And oil prices start today -US$2 softer at just under US$86.50/bbl in the US while the international Brent price is now just under US$92.50/bbl.The Kiwi dollar will open today just under 60.5 USc and more than -½c lower on a surging greenback. Against the Australian dollar we are unchanged at 89.7 AUc. Against the euro we are a bit less than -½c softer at 61 euro cents. That all means our TWI-5 starts today at 70.3 and -30 bps lower this time yesterday.The bitcoin price is now at US$19,110 and a sharpish -3.6% lower than this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.2%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Energy stress spreads

Economy Watch

Play Episode Listen Later Sep 5, 2022 5:13


Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news energy stress is spreading everywhere now.Remember in the US it is their Labor Day long weekend holiday, essentially signaling the end of their summer holiday season. Markets will return to regular mode tomorrow when volumes traded will be more regular.But even though they are on holiday, the heat wave in the West is unrelenting, spiking electricity demand and pushing their grid systems to the limit. The California grid operator has declared an emergency today, pleading for users to turn off appliances to avoid uncontrolled blackouts.In China, their central bank cut its FX reserve ratio by -200 bps from 8% to 6% to try and stem the losses of their plunging currency which hit a 2 year low overnight. But these move to protect the yuan are unlikely to stop its slide. Even their huge FX reserves can't do that. China's financial institutions held US$954 bln of foreign-currency deposits as of July, down from a record US$1.1 tln in February, a -13% fall.The lockdown in Chengdu is tightening. Now that region has been hit with an big earthquake, compounding the misery. And another large city in the west, Guiyang is under lockdown orders too.The Caixin China Services PMI fell to 55.0 in August from July's 15-month high of 55.5 amid the recent pandemic wave and the impact of adverse weather. Still, the latest result was the third straight month of growth in services activity, as new orders grew solidly with the rate of increase the second-steepest since October 2021 while broadly in line with the series average. Meantime, new export orders fell for the eighth straight month, down at a steeper rate than that in July; while employment declined for the second month running.The sagging demand, especially from China, has seen OPEC agree to a small oil output cut of about -100,000 bbls/day. This reverses their increase of the same size a month ago. Even though the practical impact is tiny - less than -0.1% - it is intended to show OPEC will defend a price level of about US$100/bbl. Prices rose after the news.In Europe there is plenty of planning, and an equal amount of angst after Russia has blocked energy supplies from flowing their way. The price of coal hit a new all-time record high. Oil and gas prices rose too. But overall, Europeans seem stoic in the face of the threats, pushing back against the Russian actions. When this whole crisis calms down, Europe will unlikely ever be a buyer of Russian energy again.Turkey released its August CPI inflation rate and it ticked up over 80%, a 40 year high for them. It does seem to have topped out however.In Australia, corporate profits rose by +7.6% in Q2 from Q1, easily beating market expectations of a 4% gain. But this follows a downward revision of the Q1 gain from 9.8%. Listed company results are very transparent, so I suppose the downward drift is because unlisted companies aren't doing so well.Aussie job ads data came in stronger than expected, rising +2%. Given other recent weakish Aussie data, it was expected this job ad metric will have fallen - but not yet, at least.All eyes are now on the Reserve Bank of Australia's rate review which will come at 4:30pm this afternoon (NZT). They are widely expected to raise their 1.85% cash rate target by +50 bps to 2.35%. (The next RBNZ OCR review doesn't come for another 4 weeks, on October 5, 2022.)The UST 10yr yield starts today at 3.20% and unchanged. The price of gold will open today at US$1711/oz and down -US$2 from this time yesterday.And oil prices start today +US$1.50 firmer at just on US$88.50/bbl in the US while the international Brent price is now just under US$95/bbl.The Kiwi dollar will open today just under 61 USc and little-changed. Against the Australian dollar we are softish at 89.6 AUc. Against the euro we are unchanged at 61.4 euro cents. That all means our TWI-5 starts today at 70.6 and very little different to this time yesterday.The bitcoin price is now at US$19,826 and very little-changed from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.0%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
A slowing China reins in global inflation

Economy Watch

Play Episode Listen Later Sep 4, 2022 7:48


Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news the iconic 2022 inflationary pressures from rising commodity prices seem to be easing, and as fast as they rose earlier in the year.But first, in the US it is their Labor Day long weekend holiday, essentially signaling the end of their summer holiday season. Markets will return to regular mode on Wednesday, NZT and volumes traded will be more regular.Global food prices retreated again in August to their lowest level in seven months, due to a broad-based fall, Cereal prices went down -1.4%, led by a -5.1% drop in international wheat prices on improved production prospects, especially in Canada, the US and Russia. Dairy prices fell -2% and meat prices fell -1.5% from the prior month.In China, three state banks have been ordered to lend ¥200 bln (NZ$45 bln) to property developers so that they can complete projects underway, so that buyers off the plan can get their properties. Laudable as it may be, it crystalises the losses involved. Those developers are also bust, having burned through the cash from the original sale (mainly other, earlier bank loans). The new loans to complete the projects guarantee they will deliver the projects at huge losses (¥200 bln or more?). The Chinese property development sector is a huge drag and drain on their economy. It is very hard to see how those three state banks will ever get their money back. The losses are to be socialised, it seems.Construction machinery manufacturers in China are seeing orders and profits plunge.In the US, the headline non-farm payrolls data reported a +315,000 rise, pretty much as analysts had anticipated. But is was less than the outsized July gain although similar to May and June. The jobless rate ticked up to 3.7% on a higher participation rate. This is the seasonally adjusted data, but the 'actual' data is very similar this month (+309,000) taking their employed labour force to just under 153 mln and its highest ever.Average hourly wages rose +5.2% from a year ago.It is hard to image a recession when employment and wage growth is strong. The Fed will be emboldened to push ahead against inflation knowing their labour market remains tight despite all the inflationary hurdles. Equity markets retreated on this thought.But American July factory orders slipped when they weren't expected to. They fell -1% in July from June, but remain +11.6% higher than year-ago levelsBut there is evidence supply-chain pressures are easing, including for carmakers. Ford has been posting strong year-over-year gains on climbing electric-vehicle sales and improved deliveries of trucks and SUVs. The company's EV sales increased fourfold from a low base a year earlier, while sales of ICE vehicles rose by a quarter.In Canada, Vancouver is reporting that sales of houses are down -45% from year-ago levels in August, and prices are now dropping month-on-month. Toronto's report was little better.In South Korea, inflation seems past its peak. It rose 5.7% year-on-year in August, slowing from a 24-year high of 6.3% in July and below the consensus forecast. Energy and food prices have started declining from elevated levels. The country's annual inflation rate also slowed for the first time since January and marked the slowest pace in three months.The most dramatic data has been from the EU. Their producer price index surged +3.7% in July alone, to be up +38% in a year. That means it is accelerating at a truly stunning pace. But even among that, one country stood out - Ireland, who reported that their producer prices rose +26% in one month! to be +48% higher than a year ago. "Interesting" statistical data collection there. Ignoring the crazy Irish data, Italy (+6.5%) and Germany (+5.6%) led the month-on-month rises by Europe's large economies, whereas Spain (+0.0%) and France (+1.6%) were the most restrained of the remaining large economies.Germany is instituting an excess profits tax on energy suppliers there. That is part of a much wider program of "support" to deal with the impending winter pressures.We should also note that prices for some commodities are sinking, some back to their July lows, others well below. For example, copper is retreating and heading towards its July low again, but aluminium is now near an 18 month low. Nickel, zinc and lead are back to July lows, but tin is also approaching 18 month lows. Iron ore is heading for year-ago lows. All are weak because markets judge Chinese demand will remain weak.The UST 10yr yield starts today at 3.20% and up +1 bp from this time Saturday. We haven't updated movements in the US Fed balance sheet recently. Quantitative tightening is well underway, with more than US$140 bln shed from their holdings since mid April. It is likely the pace will pick up a bit on this sell-down, draining liquidity, and on its own, and independent of their policy rate signals, putting pressure on yields.Junk bond yields are rising fast again too, and probably related go the Fed actions. The recent peak was in early July and they fell from there. But over the past week they have surged higher again. Although benchmark rates are rising sharply, these junk bond yields are another marker to watch as losses build for the holders of this script.The price of gold will open today at US$1713/oz and little-changed from this time yesterday, but down -US$25 in a week.And oil prices start today marginally firmer at just on US$87/bbl in the US while the international Brent price is now just over US$93/bbl. A week ago these prices were US$93/bbl and US$99/bbl respectively so a sharpish -7% fall in a week.American petrol prices are still slipping. They are currently averaging NZ$1.64/L nationwide after having been NZ$1.67/L a week ago and NZ$1.79/L a month ago. They peaked at NZ$2.13/L in June, so down a quarter from then and releasing significant inflationary pressure because they are now almost back to February levels.The Kiwi dollar will open today at 61.1 USc. From a week ago it is virtually unchanged as well. From a month ago it is down -3.3%. Against the Australian dollar we still up at 89.8 AUc and up +0.8% in a week. Against the euro we are up to 61.4 euro cents and little-changed in a week. That all means our TWI-5 starts today at 70.7 and up +20 bps for the week.The bitcoin price is now at US$19,841 and down -0.6% from this time Saturday. But it is -3.5% lower than this time last week. Volatility over the past 24 hours has been low at just on +/- 0.9%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
Data supports an aggressive Fed

Economy Watch

Play Episode Listen Later Sep 1, 2022 5:29


Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news the American dollar has jumped to 20-year high as jobs data supports aggressive Fed rate rises and quantitative tightening. This will have tough, tough consequences for many other countries, especially those with debt in US dollars.All eyes are now turning to the US labour market culminating in the August non-farm payrolls report out tomorrow. Today their jobless claims data for last week was a low +177,000 new weekly claims with now under 1.4 mln people on these benefits, a new modern low.And so far there is no evidence yet in their job cuts and layoffs monitoring of anything but a strong labour market.The consensus expectation for the growth in non-farm payrolls is +300,000 (sa) and continuing their two year streak.There were factory PMIs out overnight for August. Both report an extension of the modest expansion in their factory sector. The widely-watched ISM one reported a rise in new orders and that was despite a sharp contraction in new export orders. The employment aspect turned higher after a retreat last month. Price pressure softened.The internationally benchmarked Markit one reported similar trends although the new order intake was weaker in this survey.Canadian building consent levels fell a rather sharp -6.6% in July, an result that was not expected. (The expected a -0.5% slip.) Its a situation very similar to Australia where housing construction is going into a steep reversal.The surging US dollar is especially tough on Japan, and may be quite inflationary. Toyota is a major buyer of steel and those costs are rising sharply. They also insist their parts suppliers use 'Toyota steel' - and have raised prices recently to those suppliers, some by as much as +30%.In China, the private Caixin factory PMI came in weaker than expected; in fact it is now contracting. A small expansion was expected but it actually reports the first contraction in the sector since May. It comes after widespread lockdowns and electricity shortages. Output grew at the softest pace in three months, both new orders and buying levels fell for the first time since May; and employment fell for the fifth month running. For the first time in quite a while, it was matching the official factory PMI so there is now question their manufacturing sector is retreating,In the EU, there was a surprise in the data for German retail sales for July. They actually rose from the prior month, even after adjusting for inflation. A further retreat was expected, so this is a big miss by analysts there. But year-on-year, there is a small -2.6% retreat in retail volumes - quite modest given the tough situation the Germans find themselves in.However, German factories contracted in August, a 26 month low, and the wind is going out of there manufacturing sails. In France, their factories aren't in contraction mode yet, but new orders fell in August. Overall the EU has just tipped into a factory contraction, but at least the cost pressures are subsiding now.Globally, factories are barely expanding and now at a 26-month low. Output falls across consumer, intermediate and investment good sectors are widely recorded, but input cost and output price inflation are both easing. China weighs heavily on the global results.In Australia, lending for housing retreated in July at a fast rate. In fact lending to investors fell at its fastest pace since mid-2015, and lending to owner-occupiers fell at its fastest pace since 2008. Bank lending to their construction industry dived a startling -35% in July from June. There's more than a whiff of fear in these figures.The UST 10yr yield starts today at 3.25% and up an unusually sharp +11 bps from this time yesterday. The price of gold will open today at US$1698/oz and down another -US$16 from this time yesterday.And oil prices start today down -US$4/bbl at just under US$86/bbl in the US while the international Brent price is now just under US$92/bbl.The Kiwi dollar will open today at 60.7 USc and down -½c from this time yesterday. Against the Australian dollar we holding at 89.5 AUc. Against the euro we are holding at 61 euro cents. That all means our TWI-5 starts today at 70.3 and another small retreat and all because of the muscular USD.The bitcoin price is now at US$19,741 and down -1.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again on Monday.

Economy Watch
Supply chain cost pressures ease

Economy Watch

Play Episode Listen Later Aug 31, 2022 6:55


Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news supply chain cost pressures seem to be easing now.But first, US mortgage applications fell again last week and are now -23% lower than year-ago levels. Benchmark mortgage interest rates rose to 5.8% which puts them back to their highest since 2008. The American housing markets is in the doldrums, undermined by those rising rates.On Saturday NZT we get the next American jobs report and today we got the ADP pre-cursor employment report. It has been tracking the non-farm payroll quite well in its revised format. But they say the era of supercharged jobs gains may be over. They report a shift toward a more conservative pace of hiring in August, possibly as companies try to decipher their economy's conflicting signals. They say American jobs grew just +132,000 in August from July. The latest consensus for the non-farm payroll gains is +300,000 however, suggesting the strong jobs expansion remains on track.The ISM Chicago PMI for August in this heartland manufacturing region has the moderate expansion rolling on even if not as hot as it has been. But new order levels were up and order backlogs are growing in their region they say. They also say jobs are now easier to hire for.The official measure of Chinese factory activity contracted for a second straight month and the fifth decline in the past six months. These signs of weakness are building up now. Meanwhile the official Chinese service sector PMI is still expanding but at a slower pace. They can take some heart from that expansion even if it is their slowest in three months. The extended weakness has some analysts reducing their 2022 growth estimates down to just 3% and for such a large economy, that is a long way from Beijing's target of "about 5½%".China needs its stimulus projects to work, to pay off not only now with employment and spreading demand, but long-term by avoiding these 'investments' becoming white elephants. Sadly there is no assurance that will be the case. We may have underestimated how much is being committed to these projects. Some say US$1 tln, some say up to three times that once debt and company investments are added to the official largess. But will China get anything like US$3 tln in benefit from these projects, however laudable they may sound? It is pretty clear that all the prior stimulus they invested hasn't worked long term as planned - or they wouldn't have needed the new stuff. If this is rinse-and-repeat, we are witnessing waste on an epic scale. It is not only the Chinese property market that is causing company pain, their airlines are reporting deep losses as well.India said its economy expanded +13.5% in Q2-2022 from the same quarter a year ago, the most in a year, but less than the expected +15.2% gain. It is actually a remarkable spurt for the world's sixth largest economy. And it stands in stark contrast to China at the moment. But the Indian spurt, which came after a series of much lower gains, isn't expected to be repeated any time soon.Germany reported its unemployment rate as 3.2% in July, tighter than for June, and given their inflation stress, a somewhat surprising result. They have unusual pressures but they are yet to show up in their labour market. Employment is still expanding.The EU said its CPI inflation rate was 9.1% across the zone in August, a small rise from an already high level. They also said their core inflation rate was 4.3% however. But food prices were up more than +10% in August from a year ago.Russia reported a series of economic statistics overnight and none of them were positive, except perhaps their jobless rate which officially held at a low 3.9% level in June - which seems odd given all the other very negative data.Russia said it will shut down its NordStream 1 pipeline to Europe "for three days, for maintenance". The Europeans were expecting this new pressure. It not the first such shutdown and has only been operating at 20% anyway.In Australia, total construction work done unexpectedly fell by -3.8% on a quarter-on-quarter basis for the three months to June, sharply missing expectations of a +0.9% rise and following a -0.9% fall in the first quarter. It was the second straight of quarter decline in construction work done, due to a fall in building work done (-4.6%), residential (-6.8%), non-residential (-1.1%), and engineering work (-2.7%). Don't move to Australia for a construction job.Australian house prices took their biggest fall in 40 years in August, down -4.7% from year-ago levels. Prices in Sydney led the way down. Sydney is currently stuck in the chaos of public transport strikes, making life very difficult at present if you commute.Internationally, container shipping costs are falling faster now, down -4% last week, down almost -40% in a year although they are still well above five-year averages. Freight rates for bulk cargoes are falling fast now too and are now lower than pre-pandemic levels. The extreme cost pressure surrounding international supply chains are easing quickly now.The UST 10yr yield starts today at 3.14% and up +2 bps from this time yesterday. The price of gold will open today at US$1714/oz and down -US$10 from this time yesterday.And oil prices start today down -US$1.50/bbl at just under US$90/bbl in the US while the international Brent price is now just under US$96/bbl.The Kiwi dollar will open today at 61.2 USc and little-changed from this time yesterday. Against the Australian dollar we still down at 89.4 AUc. Against the euro we are down to 61 euro cents. That all means our TWI-5 starts today at 70.5 and another small retreat.The bitcoin price is now at US$19,982 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.0%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.

Economy Watch
US reports surprisingly upbeat data

Economy Watch

Play Episode Listen Later Aug 30, 2022 6:48


Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news the US Fed's interest rate rises haven't yet quelled enthusiasm in either their retail or labour markets, nor consumer sentiment, which is something of a surprise.American retail sales rose faster than expected last week on a same-store basis to be +14% higher than year-ago levels, picking up the pace and by faster than can be explained by just inflation.The number of job openings in the US rose and by almost +200,000 in July from June to 11.2 mln, while markets had expected it to drop to 10.45 mln. It was the first increase in job openings after three consecutive months of small declines.And American consumer sentiment improved, as measured by the widely-watched Conference Board survey. While it wasn't an expected improvement, it doesn't really affect the overall trend of sliding sentiment yet. But it does hold out the possibility that a trend reversal is possible over the rest of 2022, something that seemed unlikely a month ago.Yesterday we noted the weakness in the Texas factory survey. But today, their service sector survey came in positive for August, even if slightly less so than for July.The US Fed is raising its benchmark interest rate as we know, and will likely keep at it with chunky increases for some time. They next review this 2.5% rate on September 22, NZT. But at the same time they are pushing through quantitative tightening, and now upping the withdrawal of prior monetary stimulus to -US$95 bln per month from bond markets. This is likely to have a compounding impact on core interest rate yields across the curve. Doing both at the same time is aggressive - and potentially quite risky.Across the Pacific, yesterday we noted in China that rains had returned to southwestern regions but that they weren't enough to save agriculture or really break the drought. But they have lowered temperatures and reduced electricity demand. Now officials are worried that they might turn out to become excessive quickly and have issued warnings about flash flooding as a possibility. Slips and other land damage is possible too if they become strong. Officials have warned miners to be wary, including at coal mines.And now that Evergrande has faded, the new 'largest property developer" in China is Country Garden Holdings, a developer that builds lower-end housing. They just filed their six month interim financial reports revealing profits fell -90% compared with the prior year. At least it wasn't a loss. But such weakness could be corrosive for them keeping their funding active. Being "China's largest property developer" is an unwanted title these days.We should also note that the Chinese yuan is weakening quite quickly now, down -2.0% since the start of the month, down -8.1% since the beginning of the year. There is a loss of face involved here.In Hong Kong, a total of 140,500 residents had applied as of the end of June for a special British visa that paves the way for citizenship in the UK, with China's sweeping national security law spurring more people to leave, especially families. Their population totaled 7.29 mln as of the end of June, down roughly 120,000 from a year earlier. It maxed out at over 7.5 mln in 2009. This marked the biggest drop since tracking began in 1961. The local government highlighted a "natural decrease" from deaths outpacing births. But in reality a large portion of the decline stemmed from the net outflow abroad of over -110,000 residents over the course of the year to June.In Europe, Germany reported its August inflation rate overnight, and at +7.8% is was slightly higher than they expected, boosted of course by the cost of Russian energy. On an EU harmonised basis it came in at +8.8%. But it is really the cost of food that is giving this metric the real extra boost, as they wean themselves off Russian energy. Still the high rate in August is very similar to what they have had for the past six months now.Their rate is tame compared with Hungary, which is paying for the mistake of cozying up to Russia. They have an inflation rate of 14% over the past year and 27% as the annualised rate between June and July, and to try and deal with this pressure they raised their policy interest rate overnight by +100 bps to 11.75%.The ECB will also be weighing their new moves and that too is sure to include a rate hike as EU inflation might hit 9% when it is announced later tonight. Just how much the ECB will move is the current question. Their next review is on Friday, September 9, NZT.In Australia, building permits were expected to fall -2% in July from June, but they actually fell -17%, a huge miss. Year-on-year they slumped -18%. Much of this is because approvals for new apartment building are now very weak, down -45%. But even for houses, the year-on-year retreat is approaching -20%. Rising RBA interest rates are getting the blame.The UST 10yr yield starts today at 3.12% and up +1 bps from this time yesterday. The price of gold will open today at US$1724/oz and down -US$14 from this time yesterday.And oil prices start today down -US$5/bbl at US$91.50/bbl in the US while the international Brent price is now at US$97.50/bbl.The Kiwi dollar will open today at 61.3 USc and a -¼c dip from this time yesterday. Against the Australian dollar we still down at 89.5 AUc but off a 5 year low. Against the euro we are down to 61.2 euro cents. That all means our TWI-5 starts today at 70.6 and a small retreat.The bitcoin price is now at US$19,702 and down -2.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.