Here's my summary of the key events overnight that affect New Zealand, with news today from China and Europe.
First up, in Ireland, their government, which has been roundly criticised by other nations for its preferential tax treatment of multinational giants like Apple and Google, has announced a move that seemed likely to further incense its critics.
It has a corporate tax rate of only 12.5% (and already one of the lowest in the developed world) and now it has announced it will cut that rate in half for a new tax category - one covering revenue pegged to companies’ patents and other intellectual property. The Irish claim they are just emulating the UK's 10% rate. So much for the recent OECD base-erosion initiative.
In China, their trade balance in September has come in way better than expected. Exports missed forecast by just a whisker kept high by western demand, but import values were very low again, as raw material imports fell, especially of oil and coal. While there was a small restocking blip for iron ore last month, the prognosis for suppliers like Australia is not good. China has way too much steel-making capacity.
Back in Europe, Volkswagen has announced a major pivot in its strategy to try and survive its cheating scandal. That involves slashing this years R&D budget by US$1 bln, and shifting to EV development. One consequence of all this is that New Zealand (and Australia) may become a dumping ground for dirty diesel cars. It turns out we adopted Aussie pollution standard rules, and they are stuck at US 2007 and Japanese 2009 levels. Even without the cheat device, VW's vehicles sold here would probably meet our current standards.
Meanwhile, back in China again, car sales are growing again, up +3.3% from the same month a year ago and restoring growth to a market that had shrank for the past three months.
In New York, the UST 10yr yield benchmark is slightly lower today at 2.07% however.
The US benchmark oil price is unchanged at US$47.50/barrel, while the Brent price is lower at just on US$50/barrel. The IEA has issued a bearish report - bearish for the industry, good for consumers - predicting high supply levels well into the future and demand falling, as economies transition away from energy-intensive demand.
The gold price is unchanged in New York at US$1,165/oz.
The New Zealand dollar starts at about the same place we left it yesterday afternoon. It is now at 66.8 US¢, at 91.6 AU¢, and 58.7 euro cents. The TWI-5 is at 70.9.
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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18 Comments
"A dumping ground for dirty diesels"???
I still contend that these so called dirty VWs would not generate half the nasties that the decrepid smokey diesels do that Helen Clark allowed her constituents to buy.
Nissan Safari, Toyota Estima, Mitsubishi Delica. Everyone must remember driving along behind these things and having to close their windows and vents to keep the cancer causing diesel particulates out
On another topic, has any of these ever been turned down for a wof?
No..The real dumping grounds..see below link.
Toyotas mostly, next must come all those VW ... choakers.
A Given....if my estimation is correct.
http://www.zerohedge.com/news/2015-10-13/us-government-supplied-isis%E2…
why has our government not provided more incentive to owning and running electric vehicles, especially l in the cities, trucks vans and cars. they are still a big owner of power generation so any incentive could be offset by increased income. there is a kiwi who has designed and is building electric trucks pity we cant bring him home to build them here
http://www.stuff.co.nz/auckland/local-news/northland/dargaville-distric…
I once wrote a letter on the subject to my mate Duynhoven when he was the minister of transport (mainly why we didn't have an equivalent of the european quadricycle vehicle class), the response was a speil of bureaucratic self justification, so no i don't know why when we are a small country with an excess of electricity
What China is red-flagging:
http://www.businessinsider.com.au/china-export-data-shows-global-slow-d…
''China released its export data for the month of September on Tuesday, and there’s something funky in the data that suggests the country’s slow down may not be the only reason for a 1.1% decline from the same time last year.
A lack of demand from the rest of the world may also be a big factor here.
It shows that problem isn’t just China, and that the rest of the world is also in trouble.''
Here comes global recession:
http://www.cnbc.com/2015/10/13/citis-buiter-world-faces-recession-next-…
"The policy arsenal in the advanced economies is unfortunately very depleted, debt is still higher in the non-financial sector than it was in 2007. So we are really sitting in the sea watching the tide go out and not really able to respond effectively to the way we should."
Buiter predicts that global growth, at the market exchange rate, will fall below 2 percent and will lead to rising unemployment in many of the emerging markets, as well as a number of the advanced economies.''
As the UK 'unexpectedly' drops back into deflation:
http://www.bloomberg.com/news/articles/2015-10-13/britain-s-inflation-r…
Aaaahh. The old 'unexpectedly' word again. Might it be as overused as 'iconic'?
As global warming damages marine ecosystems economic costs will rise:
http://www.theguardian.com/environment/2015/oct/13/marine-food-chains-a…
Amazingly even the dunderhead yanks are starting to wake up:
http://www.theguardian.com/environment/2015/oct/13/rising-numbers-of-am…
Perhaps a nice crisp summer this year in NZ might wake up a few of the locals here (since it seems only personal experience will convert the slumbering masses)?
While you weren't looking - did you know
Australia's middle class no longer the world's wealthiest - NZ is - it's right up there
The median AU wealth is $US168,300, which is the second highest in the world after New Zealand.
Credit Suisse analysts found the average wealth per Australian adult was $US364,900, just below NZ's
http://www.smh.com.au/business/the-economy/australias-middle-class-no-l…
How much longer can the world tolerate such a trade imbalance with China? Apart from from all the goods that they are exporting, they are exporting unemployment and the rest of the world is having to borrow or print money to keep buying their goods. If the world economy worked and wasn't subject to so much manipulation, their currency would go through the roof and trade would balance out. This cannot carry on; it has to be addressed.
The Irish claim they are just emulating the UK's 10% rate.
Captured civil service apparatchiks are on the rise, so it would seem.
In the Treasury’s own blunt words, the businesspeople were providing “strategic oversight of the development of corporate tax policy”.
Corporation tax alone is one of the biggest earners for the government, worth over £50bn a year – and now companies with millions, even billions of pounds at stake were to be given direct say on how they should be taxed.
The Treasury set up working groups specifically to advise on taxing multinational business – fitted out with directors from 40 multinationals, all with extensive networks of offshore subsidiaries. In his book The Great Tax Robbery, the former tax inspector Richard Brooks records that a Vodafone representative was put on the group “deciding how to tax offshore financing of exactly the sort his company was running through Luxembourg and Switzerland for hundreds of millions of pounds in tax saving every year”. Read more
The new regime for multinationals began in 2013. Within five months, AstraZeneca had set up an unusual and intricate Dutch tax avoidance structure that would enable it to take full advantage of the new loopholes it had so helpfully advised on. To call this a conflict of interests is to miss the point – it’s far too brazen for that. Osborne’s Treasury blithely invited in some of the country’s biggest businesses and asked them to help design their own tax regimes. It’s like trawlermen asking fish to design their nets, or the Highways Agency allowing Jeremy Clarkson to set his own speed limit. Read more
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