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 away from the headline political shifts, the global economic signals seem to be dimming further.

In the week ahead, the most important American economic releases include retail sales, producer prices, and housing data. Investors will be also keeping an eye on earnings reports from big retailers and the state of the crypto market after the weekend FTX bankruptcy. All this comes after their mid-term election results become clearer, and with a surprising good outcome for the incumbent President.

Elsewhere, in the spotlight will be inflation rates from Japan, India, UK and Canada. Also, we will get more German economic sentiment data, Q3 GDP growth rates from Japan, and industrial production, retail sales, and fixed investment data from China. And don't forget our own REINZ data for October will be released tomorrow.

But first in the US, the widely-watched University of Michigan consumer sentiment survey fell in November to its lowest level since July and by slightly more than expected. The current economic conditions index sank sharply and the expectations gauge tumbled too. Meanwhile, inflation expectations increased marginally for both the year ahead and the next 5 years. Of course, since this survey there have been elections and a moderating of a key inflation measure which have both energised financial market optimism.

That same survey reports about four in five consumers now describe buying conditions for homes as bad, a record in data going back to 1978. In fact, mortgage rate rises show no sign of slowing.

The American Federal Budget repair continues. In October, the first month of their new budget year, they posted a deficit of -US$88 bln, about half the level of the same month a year ago. That was because tax collections for a swelling workforce and stronger company earnings were up +12%, and spending was down -9%. By any measure this is impressive.

Meanwhile, giant crypto platform FTX has been placed into bankruptcy, and Twitter's mercurial new boss has warned that it too faces bankruptcy - after he paid US$44 bln for the firm, and then promptly moved to wreck it. For sure it needed repair, but the toxic way he handled the takeover has pushed it close to the edge. FTX was also hacked. Masters-of-the-Universe tech moguls (and narcistic recycled Presidential candidates) look vulnerable these days.

The spreading tech-sector layoffs should be watched closely. The numbers involved are large, large enough to impact their overall labour market.

China has labour market issues too. We all know that their economic slowdown is stubbornly extending. And we know that their jobless rate is surprisingly high with the official level over 5%. But what might surprise is that their youth jobless rate is approaching 20%. A growing number are university graduates. A shackled private sector can no longer absorb the numbers coming on to their market and the risks of great social unease is high as a consequence.

Normally at this time of year we report of the huge Chinese retailing event, "11/11" or 'Singles Day'. It went off as normal, but for the first time ever, none of the large platforms (Alibaba, JD.com) released specific results, rather saying trading was "in line with last year".

And China is reportedly working on a new sweeping rescue package for its troubled property development sector. It's not public yet but Bloomberg claims to have been briefed and they say it includes "16 measures" that range from addressing the liquidity crisis faced by developers to loosening down-payment requirements for homebuyers. Developers’ outstanding bank loans and trust borrowings due within the next six months can be extended for a year, while repayment on their bonds can also be extended or swapped through negotiations, they were told.

India's industrial production rose by +3.1% in September from a year earlier, reversing a revised -0.7% decline in the previous month and easily beating market expectations of 2.0% growth.

But not so positive was an unexpected fall in new car sales in India. They rose more than +9% in September from August to 307,000. But in October they fell to 291,000, and although that is much higher than year-ago levels, that base for both months was weak.

In Europe, a fall in Germany's industrial production, and a retreat in the UK's overall economic activity is generating rising talk of a winter economic recession there. It has been expected since the start of the Russian invasion, but the reality of it is closer now - even if it probably won't be as deep as originally feared. But some think the economic storm will be fierce, and be global.

At the ASEAN meetings in Cambodia, the full rivalry between the China Bloc (including Russia, Myanmar, Laos, etc.) and a varying grouping led by the US, was on display, especially around freedom of navigation issues in the region. The heightened levels of distrust only seemed to deepen.

In Australia, the giant hack of the records in their Medibank Private company, and the subsequent ransoming of personal details on the dark web, has brought an official claim that the hackers are known Russians: REvil. Security experts believe cybergangs are scaling up their attacks and changing their behaviour as they gain a form of protection from Russian President Putin.

Meanwhile, Sydney’s housing auction clearance rate sank to 61% as almost one-quarter of homes scheduled for auction last week were withdrawn, in a sign that rising borrowing costs and growing uncertainty are biting the east coast-dominated residential market.

The UST 10yr yield starts the week at 3.81%. 

The price of gold will open today at US$1771/oz. This is up +US$5 from this time Saturday but down -US$4 for the week.

And oil prices start today +0.50 USc firmer than this time Saturday at just on US$88/bbl in the US while the international Brent price is just over US$95/bbl.

The Kiwi dollar will open today at 61.2 USc. For the week it has revalued by +3.1%; over the past month by an impressive +9.5%. Against the Australian dollar we are little-changed at 91.3 AUc. Against the euro we are also little-changed at 59.1 euro cents. That all means our TWI-5 starts today at 70. This broader measure is up only +0.4% for the week, but up +5.4% over the past month.

The bitcoin price is now at US$16,561 and down -1.4% since this time Saturday. And volatility over the past 24 hours has been modest at +/- 1.5% with the light volumes returning after the prior four days of instability and highish volumes.

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 tomorrow.