Here's my summary of the key news overnight in 90 seconds at 9 am, including some big news from Australia.
The announcement late yesterday that Toyota will stop making cars and engines in Australia in 2017 means the A$21 billion a year car manufacturing industry will be shut down completely given that Ford and Holden have made similar decisions. 50,000 jobs are involved, although some say it could be as high as 100,000.
It also means the Aussie government will save millions in subsidy support - A$492 million over the past four years for Toyota alone. Since 1997 the Aussie taxpayer has subsidised the industry to the tune of about A$30 billion.
And it means many skilled workers will be redirected in their economy away from import substitution and a failed industry.
Productivity should improve.
Aussies will now pay much less for their cars - probably about what we pay here. Their used car market values however will take a big one-time hit.
The decision has had virtually zero impact on the Aussie exchange rate.
Gold continues its New Year rally and is now up to US$1,275/oz - demand from China is booming - oil prices are unchanged - US up, Brent down - and the UST benchmark 10 yr bond yields are at 2.68%, down slightly. In mid-day trade, New York equities are almost unchanged. Investors are awaiting Janet Yellen's first Congressional testimony.
The NZ dollar is also pretty much unchanged as it starts today at 82.7 USc, 92.5 AUc and the TWI is now at 77.9.
If you want to catch up with all the changes on Friday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
8 Comments
So now we see the rent cheque as a gambling option.....
http://www.motherjones.com/politics/2014/01/blackstone-rental-homes-bun…
Lets not have real businesses making things, lets have more financial stupidity.
Toyota, hardly surprising is it.....how many years do cars have? with already vastly over-capacity? maybe 10....for the likes of me....
regards
AGW, so food output in America likely to be impacted in the future,
"If what the tree rings say is true, California hasn’t been this dry in more than 500 years. If what the leading climate scientists say is true, that dryness">will only get worse in the coming years. And if what economics predict is true, grocery bills nationwide may be some of the first things to suffer."
"When conditions are ripe, California’s $44.7 billion agricultural industry is “the supermarket of the world,” producing nearly half of all the fruits, nuts and vegetables grown in America. The most abundant source of produce comes from Central Valley — deemed “The Land of A Billion Vegetables” by the New York Times — which produces 8 percent of America’s agricultural output by value.
But now, Central Valley is the biggest victim of the state’s three-year drought. And there are no sign that things will get any better in the coming years.
but no.....more CO2 helps plant growth.......right?
So NZ's output is likely to be in demand and "rich" americams buying our food will shove up prices for NZers....
TPPA? nuts frankly, it will be a sellers market.
regards
We have just had 4" of good rain and there is a nice covering of snow on the mountains. More due later this week.
As a Kiwi Beef farmer this article is scarry. From what Im seeing here he has nailed it. Ive been talking to farmers and saying if you herd numbers are down dipp into the dairy industry. Sex slection is going to totaly change the US beef industry. Its a no brainer, they have a milk cow and dispose of the calf, the rancher carries a cow a year feeds it a couple of tonnes of hay for a calf.
Its going to merge the production of beef animals with the dairy industry like in Chile, beef production will be a lot more efficient.
The big question for us is, 'is China a stable reliable export market'? i'd say, no way.
http://www.stuff.co.nz/business/farming/beef/9701866/Seismic-shift-in-g…
where is a stable market?
like no where...
regards
Been exporting bull beef to the USA since 1968 with quota access. Been a very reliable stable market, except for 1973. Bull beef has saved many farmers as the returns have been so much better than in sheep or tradittional beef breeds. This could be a big game changer for rural NZ
So from 2017 , the Aussies have stopped the blood letting in subsidies for the car manufacturing business .
I wonder how they wil manage the process of the gutting of the workforce and the domestic economies in those cities most affected .
Lets hope for their sake it does not co-incide with a fall in mining commodity prices , a drought , pestilence and fires.
It will almost certainly lead to a localised fall in property prices in those cities , a spike in unemployment , a fall in retail sales , and it will feel like a localised recession.
A good piece by Leith van Onselen on how Australia has rendered itself uncompetitive through high overheads (land prices) and a high dollar....sound familar?
http://www.macrobusiness.com.au/2014/02/its-housing-thats-killing-produ…
"The high price of land in Australia is one of the reasons businesses like Holden and Qantas are uncompetitive and the combination of several recent developments is making the situation much worse…"
"Land is a key input cost for most businesses. So when costs are inflated, it reduces the competitiveness of industry, making it harder for Australia to compete abroad. The associated higher housing costs also places upward pressure on wages."
"For 15 years, the Australian media have celebrated the nation’s appetite for pouring domestic and foreign capital into non-productive assets – the housing stock – while many firms have failed to recapitalise to upgrade technology, management techniques or plant and equipment."
A $30b taxpayer funded prop up! About time it ended. Welcome to reality Australia.
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