Here's my summary of the key events overnight that affect New Zealand, with news that despite a new prime minister and a sudden surge in his government's polling, those outside the 'lucky country' are taking a more depressed view.
But first, house sales fell more than expected in August, a cautionary stall in the American housing market which had recently looked on stronger footing. Rising prices are starting to catch up with buyers and may be leading some to put off buying for a little longer.
Existing home sales tumbled almost -5% in August to 5.3 million, the National Association of Realtors said overnight, the steepest month-to-month decline since January. Economists had expected August sales would drop just a bit over -1%.
In China, a respected survey company has said we are all over-reacting to the slowdown there. In a report out overnight, they said that while the country's economy in Q3 was moderately weaker than in Q2 it was hardly the “game-changer” that prompted local and global markets to react sharply. Manufacturing had its weakest performance in two years during the July-September period, but the service sector remained strong by any measure, they said based on a survey of more than 2,100 companies. They claim that while China exports were weaker, their economy is transforming faster than we realise to one supported by internal demand and services.
But there will be losers in this transition, and Australia has been flagged by the IMF as a major one. The negative views about Australia's prospects now seem to be the standard ones. It is clearly better to be selling food in our region than base minerals.
In New York, the UST 10yr yield benchmark has risen in today's trading and is now at 2.19%, up +6 bps. Equities are higher in Shanghai and New York today.
The US benchmark oil price is marginally up today, now at US$46/barrel and the Brent benchmark is at US$49/barrel.
The gold price has given back some of yesterday's gains however, to US$1,132/oz.
The New Zealand dollar starts today a little lower as well. It is now at 63.1 US¢, to 88.5 AU¢, and 56.4 euro cents. The TWI-5 starts at 67.6.
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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8 Comments
Australia has a more diverse base than us I would havethought.
http://dfat.gov.au/trade/topics/review-of-export-policies-programs/page…
Look at Komatsu sales and tell me China is bouncing back.
http://www.komatsu.com/CompanyInfo/ir/demand_orders/files/201506main_pr…
http://www.zerohedge.com/news/2015-07-22/forget-recession-according-cat…
and then theres the baltic Dry Index. The canaries have karked it.
http://www.zerohedge.com/news/2015-02-09/worlds-best-known-global-shipp…
Is this what's awaiting us under TPPA?
http://www.bloomberg.com/news/articles/2013-09-11/paulson-backed-gabrie…
and
http://www.euractiv.com/sections/trade-society/rosia-montana-omen-ttip-…
This is, around drug prices and no more generics,
http://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in…
"It is clearly better to be selling food in our region than base minerals."
I though Australia also exported a lot of food. But anyways, Australia should stand as a warning to not splash the riches from a boom into driving up real estate prices and a big car for everyone. Australia did not establish any modern industries from the proceeds of the China boom. Shame on it for that.
But there will be losers in this transition, and Australia has been flagged by the IMF as a major one.
One would have to consider Japan has failed if the domestic real wages metric is a political consideration. Read more
I am not so sure China is managing that well either. Shibor suppressed at higher levels suggest USD sales at the fix are not being matched by similar magnitude domestic Yuan liquidity injections. Read more
Japan is indeed an interesting case study, and I would agree with the main assumptions in your linked paper on their form of QE not having the stated intended effect. However the Japanese real economy I suspect is far more liveable than the paper suggests. 3.5% unemployment remains one of th world's lowest. A factor not mentioned in the paper is that since 2013, when it notes that total real wages have declined, there have been roughly 2.2 million people a year reaching the age of 65.
http://www.stat.go.jp/english/data/nenkan/1431-02.htm
Roughly 1.2 million people have reached the age of 23 each year. So although total employment has apparently remained the same, with a net million people per annum leaving traditional work stages of life, you would expect real wages to decline. As well, apart from health care, retired folks' spending needs drop, especially if they own their own house.
Japanese QE where they have bought trillions of dollars worth of assets, mostly foreign, seem to have been a great free asset grab, along with an effective competitive devaluation tool. If they really did want to cause inflation then helicopter QE would be the way to go; but I'm not at all sure they do want that. From the outside they seem to be going along pretty well, with net wealth per person just having to be the highest ever, and very high by world standards.
The rest of the world should be annoyed with them, but that is another story.
As I mentioned in a previous response.
Non-regular employees rose to 37 percent of the workforce last year from 15 percent in 1984, according to the health ministry. As economic growth stalled, companies became less willing to hire full-time workers, turning instead to part-timers who are easier to lay off and often receive less pay and fewer benefits. Read more
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