Here's my summary of the key issues from over the weekend that affect New Zealand, with news of a 'boost' to the Trans Pacific Partnership negotiations.
But first, American consumer prices fell -0.1% year-on-year to March is data out Friday in Washington. The one key metric the US Fed watches however - CPI less food and energy - was up +1.8%, a sign of emerging inflationary pressure. That has been seen bolstering the likelihood of a Fed rate hike this year ... and markets promptly went into another 'tantrum', falling sharply on Wall Steeet. Their previous 'taper tantrum' proved ill-founded and it is likely this one will too.
(To be fair, other factors were at play in the stock market retreat, including new worries about Greece and China announcing a new clampdown on margin trading.)
The New Zealand CPI is due out later this morning, and the Aussie CPI on Wednesday. Similar results are expected as for the US. Central bankers look past the season food effects and past the realignment in the oil price. Energy prices do have downstream impacts and the 'petrol bonus' is showing up in higher purchasing power.
China's real estate market is still weakening with new home prices in March registering month-on-month declines in most of the big 70 cities included in an official survey out over the weekend. Now top Chinese officials are pleading with banks to raise their lending levels and roll over loans that are falling due. And late yesterday, the Chinese central bank reduced its reserve requirement for its banks.
The latest rhetoric on Greece is here and here.
Also out over the weekend was data from Russia, which was particularly dismal for them. Real wages plunged and retail sales fell sharply. It could get even more ugly there.
Back in the US, the American Congress has agreed to give President Obama 'fast track' authority to negotiate the Trans Pacific Partnership deal. That makes agreement much more likely in 2015. Now the really tough negotiating ramps up.
Here's an interesting factoid to start the week: The New Zealand passport is the ninth most valuable in the world on a 'power ranking' basis, one better than Australia. Singapore, Japan, Malaysia and Canada rank ahead of us as do most European countries and the US.
UST 10yr yields fell on Wall Street in trading at the end of last week to 1.87%. New Zealand swap rates also fell -2 bps across the curve and are now completely flat with just 1 bp separating one and five year rates. Rates for 2, 3 and 4 years are even lower.
The US oil price has remains at about US$56/barrel, while Brent crude held at US$64/barrel in trading on Friday. Your view of the impact of cheap oil very much depends on your politics and your location. New Zealand certainly is a winner. (This map helps explain why sentiment seems to be improving sharply in Europe.)
The gold price gained US$6/oz and now trades at US$1,204/oz.
The New Zealand dollar starts the week at 76.8US¢, at 98.6 AU¢, and 71.1 euro cents. The TWI is the highest it's been since July 2014, at 81.5.
And as we get closer to ANZAC Day, the Aussies are trotting out their usual superficial thinking that New Zealand should join Australia economically and politically. Fat chance that will get any consideration on this side of the ditch even though large groups of powerful Australian CEOs always think it is a good idea. I doubt it will ever be a good idea for New Zealand. The noise will die away after this coming weekend.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk is by following our Economic Calendar here »
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13 Comments
And here comes that blasted TPPA again. We need to make it known what will be unacceptable for us to discover in it and there are plenty, way, way more than Pharmac. And anyone 'laxing back, safe in the "knowledge" that we can sort it out when it comes back to parliament, think again, once signed she's a done deal, and if it looks like getting voted down the govt has the option of not even presenting it to parliament just going through cabinet. Speak now before it is too late. You don't need to know what might or might not be in it but by Jesus you are entitled and maybe even duty bound to speak up and say what should NOT be in it.
Well it gives corporations the right to sue governments, which is why Key and Obama are so keen to sign. Good luck keeping GM out of our crops, everyone must have US regulations. All your medicines need to be US prices. No doubt there is more to it, but it's unlikely to be made public until it bites you in the arse.
From Elizabeth Warren, US Senator:
One provision hidden in the fine print – “Investor-State Dispute Settlement” – may sound harmless, but don’t let that fool you: ISDS could let foreign companies challenge US laws without ever stepping in an American court.
http://elizabethwarren.com/blog/hidden-in-the-fine-print
Large corporations could take NZ to that court, and since they have a huge amount of money to spend, we would go broke.
And another interesting development:
China concerned at reports of New Zealand-U.S. plan to spy on diplomats:
http://news.xinhuanet.com/english/2015-04/19/c_134163487.htm
Invasion of the Jaffas (those with sense are selling up now)...
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
I wonder if those nubs who think it costs over a million dollars to buy a decent home, because that's what it would cost to build new, have bothered to look at what a million dollars actually can buy. It doesn't surprise me that this is happening. The Auckland market is a bubble, nothing but air inside, just speculators bidding up prices in the hopes of flipping off to a greater fool later (well there are those who think another, bigger boom is coming and will hold till death). It's the fools that are buying now, the dumb money that rushes into the blow-off top. Hopefully the idiocy can be contained in Auckland.
We need to stop this immediately or provincial families will be priced out of the market! I've been to a number of auctions recently in p.n and have been shocked to see the rooms filled with AUCKLANDERS! All sipping on their lattes, wearing closed toe footwear and button up shirts! We need a register at least so we can get an idea of the scale of this problem!
Simon: Racial Profiling. I was once an Aucklander but now a serious provincial. If you are going to do profiling you need to do it correctly. Aucklanders seem to be cyclists, each living in a $2mil house but no money in their pockets. (how do you divide the price of a cup of tea between 23 cyclists? ) Locals here live in $500K houses, and watch with this with sympathy, as we each sip on our Carrick Excelsior.
But lets be clear, we are all New Zealanders.
For those wring hands about shale fracking debt. "The profitability of some U.S. shale wells at current prices will almost double as cost cutting and technology turns them into cash gushers despite oil’s crash.
A report by Citigroup Inc. highlights what companies such as EOG Resources Inc. have been saying for months: that belt-tightening across the industry and more strategic drilling in prolific areas would deliver ample profits even at $50 crude.
ConocoPhillips Chairman and Chief Executive Officer Ryan Lance said last week in an interview at Bloomberg headquarters in New York that the company was shifting its focus to shale over big energy mega-projects, preferring opportunities that offer flexibility amid market fluctuations.
The company can turn a profit on its U.S. and Canadian wells with prices of $50 a barrel or less, according to analyses by consultants ITG Investment Research, Wood Mackenzie Ltd. and Rystad Energy. ConocoPhillips is expected to report profit excluding one-time items of 2 cents a share on April 30, and EOG an adjusted loss of less than 1 cent a share early next month."
http://www.bloomberg.com/news/articles/2015-04-16/shale-wells-are-turni…
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