Here's my summary of the key events overnight that affect New Zealand, with news of more unnatural Chinese stock market activity.
But firstly, in the US, the Federal Reserve minutes from their last meeting were published overnight. They showed an improving American job market has edged them closer to an interest rate hike even as policymakers continued to express broad concerns about lagging inflation and the weak state of the world economy. And bond guru Bill Gross said overnight that he thought there will be a rate hike announced at the next meeting.
Inflation in the US came in pretty much as expected in data out overnight, with the key measure of "CPI-less-food-and-energy" up +1.8% as expected. At the same time, real average weekly earnings were up +2.2%, higher than the previous reading of +1.8%. This data is unlikely to deter the Fed from its September policy rate hike.
Worryingly odd trading in equities continues in China. Their stock markets took a wild ride yesterday, tumbling and soaring in a session that made little sense other than to highlight that investors have almost no faith in a month-long government effort to stabilise them. After being down more than -3% on the day, they then jumped to close up +1% after state-backed funds jumped in to change the direction. All very unreal.
In Germany, their parliament has approved the Greek bailout deal.
In Japan, apart from a bigger trade deficit, data out recently has been very encouraging. In fact we are seeing a substantial decline in credit default swap spreads for Japanese government debt.
In Australia, their Reserve Bank has accused banks of super profits from their credit card business, saying they have added 3% to their already fat margins since 2009 and taking their spread up to 9%. It is likely to be just as bad in New Zealand.
In New York, the UST 10yr yield benchmark is marginally lower today at 2.16%.
The oil price is also lower and now just under US$41/barrel, with Brent crude down to US$47/barrel. The oil glut is deepening.
The gold price however is up, now at US$1,130/oz.
The New Zealand dollar starts today marginally firmer than where it was at this time yesterday. It is at 66.2 US¢, at 89.8 AU¢, and at 59.6 euro cents. The TWI-5 is at 70.7.
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 today is by following our Economic Calendar here »
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25 Comments
Bears Using Tight Stops Easier To Hit Than A Sitting Duck!
http://brucewilds.blogspot.co.uk/2015/08/bears-using-tight-stops-easier…
''In Japan, apart from a bigger trade deficit, data out recently has been very encouraging.''
Presumably then the fact that their last quarter GDP figure showed a sharp contraction is also 'very encouraging'?
http://www.bloomberg.com/news/articles/2015-08-16/japan-s-economy-contr…
''Gross domestic product fell an annualized 1.6 percent from January-March, ending two quarters of growth, the Cabinet Office said on Monday. The median estimate in a Bloomberg survey was for a 1.8 percent drop.The slump in private-sector demand came as exports to the U.S., Asia, and Europe fell, undercutting a support for the world’s third-biggest economy. ''
I am starting to believe in the existence of a parallel universe......
Insight into dairy job losses:
http://www.stuff.co.nz/waikato-times/news/71221845/jobs-go-in-otorohang…
You've got your Filipino dairy workers, Vanuatu fruit pickers and so called "international students" undercutting the locals in the rural areas. Move to Auckland and you're up against immmigrant taxi drivers, building labourers & tradies, gas pumpers, cafe, bar and resturant workers, telemarketers, "masseuses" retail assistants and so on. Basically, the alternative options for someone in an industry in a down phase have been destroyed by our "skills based" immigration policy. Even the Aussie option is not looking so flash. Reposted from Tuesday, thanks JH.
http://croakingcassandra.com/2015/08/18/skills-based-immigration-who-ha…
...regional NZ... the new zimmer frame zones. The regions are getting/going to get a boost from the burnt out/ageing Aucks cashing up and moving out. They will then burn through their cash making heartfelt trips back to the big smoke for coffees, showing of fthe new SUV, drinkies at the viaduct and aid packages to their kids who are still there. Time to invest in regional undertakers.........
Now that a few more months have passed all those headlines about the US fracking industry remaining unbowed and being able to 'face off against the Saudis' have all disappeared. The US fracking industry is starting to implode and US production is tumbling :
http://www.forbes.com/sites/christopherhelman/2015/08/17/as-oil-goes-do…
'Last week two companies showed that having a heroic name is no defense. Hercules Offshore, a Gulf of Mexico drilling contractor, announced it had reached a prepackaged bankruptcy with creditors to convert $1.2 billion in debt into equity and raise $450 million in new capital. While Samson Resources on Friday said it is negotiating a restructuring that will see second lien holders inject another $450 million into the company in return for all the equity in the reorganized company.'
So who will be next to fall? The list of troubled companies slumping toward Chapter 11 is growing. SandRidge Energy, Goodrich GR +% Petroleum, Swift Energy, Energy XXI, and Halcon Resources have all lost more than 90% of their market value since 2014, are larded up with too much debt, and would be lucky to survive the bust.'
It seems the first US rate rise may be moving back in time.
This from CNBC:
Following the announcement, RBS said its calculation of market pricing suggests traders are betting that the Fed's first full rate hike will occur in January.
Expectations for a rate increase in September fell to 36 percent. The odds for a December rate hike declined to 85 percent, from 100 percent before the minutes were released.
China will wait until the warehouses hit the "inventory re-buy trigger" stock level.
Russia is more likely because milk powder is good for military actions.
With China, they will also be busy assessing their own production levels, so as long as the "stock re-buy" level isn't triggered they'll be calculating on that for some time - excepting a political image incident.
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