Here's my summary of the key events overnight that affect New Zealand, with news Wall Street is up +1% in late trading today.
But first, a few minutes ago the US Fed released the minutes of its last meeting and those show it is unlikely to raise its policy rate at its next meeting on April 28. Policy makers have turned more cautious, especially wary of global stresses more so than their domestic situation. They are trying not to signal an inappropriate urgency. But unless those global headwinds change the expanding US economy, their caution will only delay the next hike by a meeting or so.
The Panama Papers may have taken down a democratically elected prime minister, but countries with less open governments are responding much more defensively. China has blocked any conversation about the issue. But the evidence that powerful Chinese families have used tax havens to shelter their personal wealth is mounting, implicating even President Xi. Not that anyone in China will know, however. There is still no major scalp revealed in New Zealand yet (apart from our general reputation of course).
In China, on average, each person now has four bank cards, according to an official report. That's 5.1 bln debit cards and 432 mln credit cards. And on those credit cards, they have borrowed NZ$1.6 tln (or NZ$3,700 each).
Staying in China, people there were more enthusiastic about buying a car in March as fuel costs fell and the perception of the current timing for buying a car turned more favourable. Their Car Purchase Indicator – a composite indicator designed to gauge future demand for cars – rose to 91.4 in March from 88.2 in February, marking its third consecutive increase, and the highest reading since May 2014.
The latest international airfreight volume data shows some trade headwinds however - volumes were down a sizable -5.6% in February compared with the same month a year ago. But one big factor distorts the result. Last year there was a US port strike which unusually boosted overall volumes. Adjusting for this, IATA says freight growth in the first two months of 2016 is up +3.2%.
In New York the benchmark UST 10yr yield is steady at 1.75%. Equities on Wall Street are higher by about +1% today, given a push up by the tone of the Fed minutes.
The oil price is rising today too, and now at US$38/barrel in the US, while Brent is just under US$40/barrel. Markets are surprised at the higher-than-expected draw on US crude stocks in the past week as demand rises there.
The gold price is down, now at US$1,221/oz, erasing yesterday's gain.
And finally, the NZ dollar will start today still in its range at 68 US¢, at 89.8 AU¢, and at 59.7 euro cents. The TWI-5 index is at 71.1
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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20 Comments
Panama Papers
In two short days it's now yesterday's news - almost disappeared from the NZ Herald and elsewhere
Other things to marvel at now
Meantime The Panama Papers over at the BBC
Full analysis of the files by the ICIJ shows that nearly one third of the firm's business came from its offices in Hong Kong and China - making China the firm's biggest market and Hong Kong the company's busiest office - the tempo to get money out of China quickens
http://www.bbc.com/news/world-asia-china-35957228
So Mossack Fonseca's busiest office was Hong Kong and if you listen to the video the money has then been invested in..shock horror..the property markets of UK,Canada,Australia and New Zealand. As has been discussed here many times dirty money from overseas has fuelled the property market meaning it has become unaffordable for honest Joe.
New legislation came into operation in the UK yesterday where the ultimate beneficial owner is now named on the deeds-something the Govt here needs to introduce ASAP to ensure no more "shonky" money gets invested into our Property market.
Have to agree, the boomers love JK..steady as she goes approach, house price keeps going up and minimum wage Filipino help to do the chores and make the bed.
Unless Generation Zero get off their arse it just more of the same, however I see the cracks appearing everyday, just watch the USA election.
At this point even the Greens crazy ideas would do less harm. We need a change of Government to keep them honest. There's no reason to vote for National as their left wing politics are only focused on social welfare for the rich, while our streets are filling up with beggars.
I see the IRD wheeled out John Nash (international tax) to defend these trusts this morning. Nice try - hows the arm John?
What our so called leaders do not seem to grasp is that they need to lead by example. By and large the majority of criminals, tax evaders and so on feel better if they can justify their offending. When we have a system that is (or even appears to be) rigged for the 1% ers to evade tax, then the 99% are encouraged to fnd their own ways.
These leaders should be encouraging a culture of zero tolerance.... not one of accepted avoidance - foreign or local.
Quite so Rastus. What are we hearing? The evil tax avoiders need to be rooted out, fined, embarrassed maybe a jail sentence might deter the buggers. I mean we're talking serious stuff here: fruit stalls, the neighbourhood guy that fixes lawn mowers or mum doing sewing repairs and kids costumes in the spare bedroom.
Your multinational companies,crooked politicians, speculators, fraudsters, drug and arms dealers? Well nothing to see there.
Justice - not being done or seen to be done.
As alluded to above the Govt will only react when they are bullied into it by other nations. Being proactive in tackling the issue is not on their agenda. They are treating the electorate as idiots when reality is that it is the elephant in the room that will influence the next election.
The electorate has voted for National 3 times despite all their denial of problems, bumbling, and scandals. Is this not grounds to consider that perhaps the majority of the NZ electorate are in fact idiots?
National hasn't been working in the interest of New Zealanders for some time now.
While there may be some truth in that statement I strongly suspect this has become a purposefully propagated meme from the right and a complicit media who benefits from the status quo.
Parrot this line enough and it serves to scare the plebs which helps to prevent meaningful change from happening. Status quo reins and the ship sinks lower.
But first, a few minutes ago the US Fed released the minutes of its last meeting and those show it is unlikely to raise its policy rate at its next meeting on April 28. Policy makers have turned more cautious, especially wary of global stresses more so than their domestic situation. They are trying not to signal an inappropriate urgency. But unless those global headwinds change the expanding US economy, their caution will only delay the next hike by a meeting or so.
It matters not one jot - the US controlled IMF yanked the veil right off central bank efficacy earlier in the week.
The world outlook is clouded by “weak growth, no new jobs, no high inflation, still high debt — all those things that should be low and that are high,” Lagarde said in an interview in Frankfurt on Tuesday with Bloomberg Television’s Francine Lacqua. The downside risks have increased and “we don’t see much by way of upside,” she said.
The International Monetary Fund’s view of the world economy has dimmed over the last six months, exacerbated by China’s slowdown, lower commodity prices and the risk of financial tightening in many countries. The Washington-based fund, which will hold its spring meetings starting April 15, is warning that political populism now also poses a growing risk to the economic order, fueled by income inequality and the ongoing fallout from last decade’s financial crisis.
“What we fear is this sort of very new mediocre,” Lagarde said in the interview after delivering a speech at Frankfurt’s Goethe University. In the talk, she urged governments to front-load structural reforms that can boost growth potential and warned that monetary policy can’t bear the burden for supporting output alone. Read more
A possible cured acolyte of the sane amongst us?
The United States needs a long-term economic plan including tax and education reform to revive growth, not rely on more monetary or fiscal stimulus for a short-term boost, St. Louis Fed President James Bullard said on Wednesday. Read more
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