Here's my summary of the key news overnight in 90 seconds at 9 am, including news that the Aussie dollar is sinking, pushing the Kiwi to almost an eight year high.
RBA Governor Stevens has called on Australia to face up to the spending cuts and tax reform that will be needed to get their federal budget back into surplus.
He pressed business leaders to support policy that backs the overall community rather than “themselves lapse into rent-seeking behaviour”. He also said he wants to see a AUD:USD exchange rate 85 USc - its currently over 89 USc even after this morning's fall.
International investors are preferring our currency to the Aussie these days.
In the US, early data released overnight for November retail sales is encouraging. They came in higher than expected, up 0.7% above October, and more positive than early anecdotal reports.
Not so good was an unexpected rise in initial unemployment claims last week. Actually, a rise was expected, but not this large.
There was disappointment in Europe too with industrial production in an unexpected slump in October, according to the data released overnight.
In China, they are expecting dairy prices to rise as the nation's fragmented domestic industry can't keep up with rapidly rising demand - in fact, they are reporting domestic supply is shrinking. Fonterra's inability to switch more production to milk powders will limit our ability to respond, although prices for powders will likely stay high.
Gold has also lost US$30/oz overnight, back to US$1,230/oz after a brief flirt higher over the past five days. Stocks are down in mid-afternoon trade in New York, and yields on benchmark UST 10yr bonds are up to 2.88%.
The NZ dollar starts today at 82.4 USc, 92.4 AUc, and the TWI is at 77.6.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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Meanwhile the Crisis in Manufacturing continues:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=111…
'New Zealand manufacturing activity rose in November, extending expansion in the sector for 12 consecutive months, according to the latest BNZ-BusinessNZ PMI.
The seasonally adjusted PMI rose 1.8 points to 56.7 in November from October, though the report and commentary isn't scheduled for release until 10:30am today. The data showed broad-based gains in most sub-indices.
Government figures this week showed manufacturing sales volumes edged up 0.5 per cent in the September quarter, with growth in metal products and petroleum and coal products offsetting declines in meat and dairy.
The New Zealand dollar didn't react to headlines citing the PMI, recently trading 82.48 US cents from 82.46 cents immediately before the reports.'
Not bad for the worst government we have had ah!
Some graphs of Private Debt to GDP ratios would be very enlightening.
The brown cardie wearers with the beige mindsets who gather round a table at the RBNZ are NZ's biggest impediment.
When Central Bankers get it wrong - what happens - supply and demand goes out of kilter.
From the Daily Reckoning,
"The thing is, if the RBA controls half of every transaction by setting the price of the opportunity cost, it really controls all transactions. So much for a free market economy"
NZ has the same problem as Australia, when a central bank controls all transactions we don't have a free market economy.
We have to consider what happens when the RBNZ controls the price of debt?
And again from the Daily Rockoning
Especially central planning of exchange rates and interest rates. In fact, the second is far worse. After all, the exchange rate only affects a few of us directly. The interest rate affects just about all of us. So having 'a few blokes sitting around a table' determining the interest rate is even more absurd and dangerous.
We have to look at issues like overnight settlement - OCR - and who's obtaining the benefits.
Interesting China article over at Torygraph.
With a nice leetle warning about the Weevils of Nationalisation, which Cunny and Normal Russian would be well advised ter have a squizz at. From no less than a former Premier of China....
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