Here's my summary of the key events overnight that affect New Zealand, with news there are some signs commodity prices are stirring.
The latest dairy auction overnight has seen rising prices, especially for wholemilk powder. That jumped +7.5% but only to US$2,156/tonne and still far below where it needs to be to shift the milk payout meaningfully.
Overall, prices only rose +3.8% in US dollar terms, held back by cheese prices. And unfortunately the Kiwi dollar is strengthening at the same time which wipes out most of this gain; in NZ dollars prices were only up a miserly +0.2%.
In the US the pace of home building in the fell in March to its lowest level since October, another sign momentum in the housing market is slowing after a strong 2015. Building consents and housing starts were lower than for February, but still well above the same month a year ago. Completions were up on both measures.
According to one respected research group, an interesting situation is developing in the US. It is fast approaching full employment, they say, and they see few signs the population of working-age Americans will growing enough to fill the ranks left by retirees and rising demand from employers. In fact, they see a "prolonged period of tight labour markets around the globe". This is certainly a different perspective from all the recent talk of robots taking all the jobs.
China reported overnight that its urbanisation rate had reached 56% in 2015. That is more than 750 mln people living in their 653 cities. They aim to add another 100 mln by 2020 with an urbanisation rate goal of 60%. That represents a lot of development to come. Just for comparison's sake, New Zealand has an urbanisation rate of over 86% and a rise of over +1% in the past five years.
In a speech in New York overnight, the governor of the RBA noted that ultra-low interest rates create big problems for savers. "The issue is when long rates are very low for a long time" he said. "In such a world, the whole set of assumptions embodied in retirement income plans will be called into question." He would rather see policy accepting low growth than low rates.
In New York the benchmark UST 10yr yield is marginally higher today at 1.79%.
The oil price rose slightly overnight to just over US$41/barrel in the US, while Brent is now just over US$44/barrel. The Kuwaiti oil strike is now in its third day and that is affecting output from this Gulf producer. And Iran is struggling to find enough ships to deliver its new big supply flows. Many tankers are already full, being used as storage.
The price of iron ore jumped another +4% yesterday, on top of a +3% jump a few days ago. That brings the 2016 price rises to more than +44%.
The gold price is up US$19 to US$1,252/oz. China is challenging London and New York as a gold centre. It has started issuing an 'official' twice-daily fix price in yuan. It makes sense I suppose because China is both the world's largest consumer and producer of gold. (It overtook India recently.)
And finally today, the NZ dollar opens at 70.4 US¢ up a whole cent from this time yesterday and its highest level since mid June last year, at 90.1 AU¢, and at 61.9 euro cents. The TWI-5 index is now at 73, its high for the year.
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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In a speech in New York overnight, the governor of the RBA noted that ultra-low interest rates create big problems for savers. "The issue is when long rates are very low for a long time" he said. "In such a world, the whole set of assumptions embodied in retirement income plans will be called into question." He would rather see policy accepting low growth than low rates.
I think he's got it - finally? Read more
Yes, SH, we need leaders able to plan for, and welcome, low growth. Low rates are merely another means of sacrificing future planning - exampled in savers - for the perceived needs of a failing growth model. It is failing because we are moving inexorably from consumer economies to conserver economies, meaning from 'investment' in ever greater consumption to investment in a liveable future.
And as this model fails - overwhelmed with debt that will never be redeemed - it has become destructive not merely of savers but of all those who look and plan ahead. Unable to find growth in economic activities today, it has come to depend on stealing from the future. In this model, savers are no different from the environment - everything available is to be exploited to the point of ruin.
Low growth policies are essential, but political leadership - which requires commitment to social integrity - has been almost wholly captured by narrow, self-serving financial interests.
I think he only means a very small number of the assumptions embodied in retirement income plans, actually talking about all the assumptions embodied in said plans, is something beyond most people.
Such assumptions as infinite growth on a finite planet, a benign climate, technological progress, appreciating capital values. In reality there is only one assumption he considers slightly flawed (the expected growth rate).
No he has not. We have both, low rates is a reaction to low growth. If rates are too high that low growth becomes zero and even negative. So its not low interest rates being the problem but low real growth.
this explains our problem very well IMHO.
https://www.youtube.com/watch?v=iAORiJxeTeo
Fekete is a typical Austrian nutjob IMHO hell bent on accelerating us into a Second Great Depression.
But borrowers will only demand more credit if they have optimistic expectations of future income—and banks will only supply it if they deem them creditworthy. Interest rates, which is [sic] all ECB policy can affect, are less important than economic expectations. Read more
"Tight labour markets" maybe means "tight wallet employers."
Meanwhile in New Zealand the trucking industry says we need immigrant employees because they can't attract staff. They have been running a whole PR and lobbyist campaign about that.
I wonder why they didn't think of the option of offering just $5 an hour more. That would work, but they don't want to do it.
Who cares, WINZ will pick up the slack anyway, as it has been doing for quite some time. Long gone are the days when one job could feed and house a family, today if your average house only has one job it can't survive without taxpayer support. I think it's pretty obvious who has gotten the raw deal under this arrangement. Wage earners wages need to rise a heck of a lot in order for them to be better off without WINZ/WFF support.
Tight labour markets = more third world immigrants = falling wages, falling standards, less tax paid, overcrowded rat hole accommodation and Kiwi society falling apart.
I see the Government are lowering the licence requirements for truck drivers. A bleat about "labour shortages" from an industry group and the answer is lower standards and more immigration - same as we're seeing in building, farm and horticulture etc.
This is "our" government, is this what we want or need?
Uh no. So you have a fewer number of people earning a bit more but more OAPs now earning less and the cost to the govn of paying the pension doubling means those few with rising wages will be taxed heavier to pay for it.
That means silly margins of 3% on property will in many areas get smaller not bigger IMHO ie at best rents will be going no where overall.
A fascinating video on just why globally we are in the poo,
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