Here's my summary of the key events overnight that affect New Zealand, with news of an unexpected threat to some retail dairy trade with China.
On Friday, a new tax law in China came into effect on e-commerce trading and duty-free entry points into the country. As part of its implementation, the country's authorities issues a safe-harbour list of permitted products - but wholemilk powder and UHT milk are not on the list. In fact, many things are not on the list, but these two affect New Zealand directly. Travelers returning with them need to abandon them at the airport. But we should note that infant formula is not affected; it is on the list.
Websites selling non-listed products directly to consumers have pulled them from their services and that includes dairy products. The situation is a bit chaotic at present. The new law is specifically designed to tax cross-border trade to the advantage of local manufacturers.
However wholesale channels are unaffected, neither is using the official China Post channel, apparently. You do wonder how this ban works with our FTA agreements, in the way it has shut down the e-commerce retail channel for affected products cold. There will no doubt be behind-the-scenes activity going on at a diplomatic level, but much more than New Zealand's 'retail' milk trade is affected so how quickly and sympathetically things will get resolved is very unclear. The perils of dealing with an all-powerful, one-party state where the 'rule of law' means something different to what we imagine. China denies there is any problem.
Staying in China, consumer inflation held at +2.3% year-on-year in March, and unchanged from the rate in February. But eyes will be drawn to the +7.6% rise in food prices nested within the overall data, which is an unexpected jump. A shortage of pork is behind the rise. On the other hand, producer prices fell -4.3% year-on-year - but that is its lowest decline in a long time. Month-on-month China's producer prices actually rose +0.5%, their biggest climb in over two years.
And in Australia, Moody's is warning that because yields have fallen so low for residential investment properties in both Melbourne and Sydney, there is rising risk in these investor markets. The deteriorating affordability of servicing investment properties makes residential property investors more vulnerable to risks such as loss of income, interest-rate increases, vacancies or rent reductions, and therefore increases their probability of default, they say. Yields in New Zealand, especially Auckland, exhibit very similar vulnerabilities.
In New York the benchmark UST 10yr yield is unchanged at 1.72%.
The oil price is still rising. It is now over US$40/barrel in the US, while Brent is now just under US$43/barrel.
The gold price is also up, with a $14 rise today to US$1,256/oz.
And finally, the NZ dollar starts today at the upper end of its range having risen overnight to 68.6 US¢ on a weaker greenback, at 90.3 AU¢, and at 60.1 euro cents. The TWI-5 index is now at 71.5.
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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11 Comments
Moody's is warning that because yields have fallen so low for residential investment properties in both Melbourne and Sydney, there is rising risk in these investor markets.
Yes indeed - regulatory authorities are all over it until they are not.
A leading analyst has suggested the banking regulator might toughen its stance on how much capital banks must hold against housing investor mortgages, after recent comments from the Australian Prudential Regulation Authority.
CLSA's Brian Johnson highlighted on Wednesday what he described as "buried" remarks, in which APRA said it would review its approach towards the capital treatment of housing investor loans after the international club of regulators, known as Basel, has completed its current round of work.
The Switzerland-based Basel Committee on Banking Supervision is looking into the risk models banks use to determine how much capital lenders hold against home loans as part of its work program in 2016, often referred to as Basel IV.
APRA noted this week Australia was one of several countries where housing investor loans received the same capital treatment as owner-occupier loans, and that this would be the subject of future review. Read more HT Henry_Tull
Moody's and APRA should stay the heck out of the way.....apart from being extremely poor at policy advice they are terrible organisations which fail in recognising individual rights.......their continued lump everyone together guidance provides no recognition for any individuals ability or circumstances and enforces a one glove fits all which stifles and distorts all economic activity and direction.
You do wonder how this ban works with our FTA agreements, in the way it has shut down the e-commerce retail channel for affected products cold. There will no doubt be behind-the-scenes activity going on at a diplomatic level, but much more than New Zealand's 'retail' milk trade is affected so how quickly and sympathetically things will get resolved is very unclear.
The FTA that was overwritten by TPPA, specifically excluding China and as Obama claimed .. TPP would give the United States an advantage over other leading economies - namely China.
"TPP allows America - and not countries like China - to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific," Read more
Payback time?
Payback is about right
The first trickle of poison in the TPPA poisoned chalice squeezes out
Some time ago, 6 or 7 years, while dicussing foreign investment in Aukland property, particularly funds flowing out of China and into AKL property, much ado was made by Government that NZ was hamstrung by the FTA with China, in that it could not introduce changes or restrictions, or change tax rules, without breaching the FTA
China doesn't seem to have the same concerns or regard for the China-NZ FTA
and
Did the clowns negotiating the TPPA think China would remain inert when USA was "invited" in
It's definitely payback time, though not in the sense you suggested.
The mainstream economic narrative of (amongst other things) expansion of trade and economic development is incompatible with the geochemistry of the planet we are living on, since all industrial activity is ultimately dependent on burning fossil fuels. The mainstream narrative is ultimately incompatible with continuation of life on this planet.
The daily atmospheric CO2 just hit a new highest-ever concentration of 409.34 ppm. And it won't stop there.
https://www.co2.earth/daily-co2
All-time high levels of atmospheric CO2 correspond with a series of hottest-ever years, and now hottest-ever months. Every piece of recent evidence indicates industrial activity has pushed planetary overheating into a runaway phase. Thus, the Earth is 'paying back' industrial humans for the centuries of abuse which went into 'overdrive' in recent decades..
The implications of rapidly increasing atmospheric CO2 in terms of climate instability, food production, sea level rise and wiping out all current economic-social arrangements over coming decades are horrific, which is probably why governments totally ignore the issue of burgeoning CO2 levels and keep pretending the next generation has a bright future when it doesn't.
But where is your daily, panic ridden, NSICD Arctic sea ice chart? Have you lost the link? Or working out some hair splits as to why daily sea ice charts don't matter now?
http://nsidc.org/arcticseaicenews/charctic-interactive-sea-ice-graph/
It's still there, profile, with the following note:
'Daily images showing spurious data
April 11, 2016
The daily sea ice extent images are sporadically displaying erroneous data. NSIDC is investigating with our satellite data providers.'
All will be revealed soon.
In the meantime:
http://robinwestenra.blogspot.co.nz/2016/04/heatwave-in-greenland.html
Yeah I'm really worried about the above average SMB Greenland.
http://www.dmi.dk/uploads/tx_dmidatastore/webservice/b/m/s/y/a/todaysmb…
http://www.dmi.dk/uploads/tx_dmidatastore/webservice/b/m/s/d/e/accumula…
Don't forget, it's not only about melting ice and sea level rise. Acidification of the oceans and higher temperatures (both due to excessive amounts of CO2) lead to death of organisms at the base of the food chain.
'Two weeks ago, the Great Barrier Reef Marine Park Authority reported half the coral in the northern parts of the reef were dead. Hughes said that was consistent with reports from divers north of Port Douglas.
Hughes said this was by far the worst bleaching event to have hit the Great Barrier Reef. He said it was three to four times worse than in 1998 or the second great bleaching in 2002.'
http://www.theguardian.com/environment/2016/apr/11/mass-coral-bleaching…
I sent the independent link yesterday for an easier to read news source..
Here is the more serious link; and written by the people studying the pole(s).
https://nsidc.org/arcticseaicenews/
Low Arctic sea ice extent for March caps a highly unusual winter in the Arctic, characterized by persistent warmth in the atmosphere that helped to limit ice growth. Above-average influx of ocean heat from the Atlantic and southerly winds helped to keep ice extent especially low in the Barents and Kara seas. Northern Hemisphere snow cover for both February and March was also unusually low
I strongly suggest you read this.
http://nsidc.org/icelights/2016/03/24/antarctic-sea-ice-an-update/
BUT a man convinced against his will; is of the same opinion still
so please take the time to read all this yourself.
More evidence of industrial money laundering emerges by the day:
http://news.asiaone.com/news/malaysia/mystery-deepens-over-471-billion-…
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