Here's my summary of the key events overnight that affect New Zealand.
The UN has lowered its growth forecast for the world economy, saying economic activity "remains lacklustre, with little prospect for a turnaround in 2016". It's downgraded its 2016 global growth forecast from 2.9% to 2.4% - the same level as last year. The UN cites significant downward revisions of growth for countries in Africa, the Eastern Bloc, Latin America and the Caribbean. It says weakening demand in developed countries also continues to be a drag on global growth.
The Bank of England has given its starkest warning yet that a UK vote to leave the European Union could hit the economy. The Bank's governor, Mark Carney, has warned that the risks of leaving "could possibly include a technical recession". The bank kept interest rates on hold at 0.5% as expected. It's cut its 2016 GDP forecast to 2.0%, from 2.2%, meanwhile its inflation forecasts remain pretty much unchanged.
Two voting Fed presidents are speaking out in support of the US central bank hiking rates. Boston Fed President Eric Rosengren says the Fed should raise interest rates again if data from the second quarter confirms the labour market is near full strength and inflation is on track to accelerate. Meanwhile Cleveland Fed President Loretta Mester says interest rates are currently "too low for today's economic conditions".
US import prices rose for the second month in a row in April, largely off the back of petrol prices increasing and the US dollar depreciating. While import prices were still 5.7% lower than April last year, the 0.3% rise suggests inflation could start firming in the months ahead. US export prices rose 0.5% - their first monthly gain in nearly a year.
The number of Americans filing for unemployment benefits rose last week to a more than one-year high. However economists say the data's been skewed by striking telecommunications workers and doesn't signal a deterioration in the labour market overall.
In New York the benchmark UST 10yr yield is slightly higher today at 1.75%.
The oil price is up, with the US benchmark now just under $47/barrel and the Brent benchmark just at US$48/barrel.
The gold price is stable at US$1,271/oz.
The New Zealand dollar has weakened slightly since this time yesterday to 68.2 US¢. However it's made decent agains to 93.1 AU¢ and 60.0 euro cents. The TWI-5 index higher at 71.7.
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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16 Comments
It might be better for Britain to bite the bullet now and face a recession, than be completely exsanguinated along with most of Europe. The EU structure has several deep flaws that means its demise is inevitable unless they are addressed, and there doesn't any appetite for that.
Interesting comments from Winston on this.
http://www.stuff.co.nz/national/politics/79953876/winston-peters-backs-…
Another day in a world gone insane.
One division of the UN (UNIPPC) tells us we are on a path to absolute catastrophe via CO2 emissions and that we must curb them whilst another division of the UN (DESA) notes that we are on a path to disaster:
'The already bleak growth prospects have been compounded by severe weather-related shocks'.
but nevertheless laments lack of growth in emissions (economic growth being dependent on increased consumption of fossil fuels).
Paraphrasing Einstein: Two things are infinite -the universe and human stupidity.
Daily CO2
May 11, 2016: 407.7 ppm
May 11, 2015: 403.58 ppm
Why do people want to move from current Generation to Nuclear?
General reasoning seems to be for environmental factors. i.e reduce carbon, dependence on fossil fuels, protect the future of the planet etc....
So why would you then look at nuclear?
Mining for Uranium/plutonium is as bad if not worse than drilling for oil.
The waste is horrendous, their is no way known to dispose of it, there is already more of it than anyone ever expected. The best option anyone has, is literally dig a hole and bury it, then never go near that area again. Hardly a sound basis for environmental protection/future human habitation of the planet.
Then in terms of a meltdown, when they happen (and they do happen - 3 mile Island, Chernobyl, Fukushima all within the last 35 years) it is not like a dam burst where people die, but you can go back and start again. You are talking decades, centuries, even millenia of uninhabitable/unusable land and ongoing health concerns for anyone within miles of the reactor.
How is that better for the continued habitation of this planet?
Some leaders are not as stupid as we think:
A case for optimism
https://www.ted.com/talks/al_gore_the_case_for_optimism_on_climate_chan…
The Bad
"The insurance industry has certainly noticed, the losses have been mounting up"
"The climate-related historic drought that started in Syria in 2006 destroyed 60 percent of the farms in Syria, killed 80 percent of the livestock, and drove 1.5 million climate refugees into the cities of Syria, where they collided with another 1.5 million refugees from the Iraq War. And along with other factors, that opened the gates of Hell that people are trying to close now. The US Defense Department has long warned of consequences from the climate crisis, including refugees, food and water shortages and pandemic disease."
"And there were fish from the ocean swimming in some of the streets of Miami Beach and Fort Lauderdale and Del Rey. And this happens regularly during the highest-tide tides now. Not with rain -- they call it "sunny-day flooding." It comes up through the storm sewers."
I'll mention just one more, because the World Economic Forum last month in Davos, after their annual survey of 750 economists, said the climate crisis is now the number one risk to the global economy. So you get central bankers like Mark Carney, the head of the UK Central Bank, saying the vast majority of the carbon reserves are unburnable.
The Good
"The best projections 14 years ago were that we would install one gigawatt per year by 2010. When 2010 came around, we beat that mark by 17 times over. Last year, we beat it by 58 times over. This year, we're on track to beat it 68 times over."
"Now, the business community has certainly noticed this, because it's crossing the grid parity point. Cheaper solar penetration rates are beginning to rise. Grid parity is understood as that line, that threshold, below which renewable electricity is cheaper than electricity from burning fossil fuels."
"Paris really was a breakthrough, some of the provisions are binding and the regular reviews will matter a lot. But nations aren't waiting, they're going ahead. China has already announced that starting next year, they're adopting a nationwide cap and trade system. They will likely link up with the European Union. The United States has already been changing. All of these coal plants were proposed in the next 10 years and canceled. All of these existing coal plants were retired. All of these coal plants have had their retirement announced. All of them -- canceled. We are moving forward. Last year -- if you look at all of the investment in new electricity generation in the United States, almost three-quarters was from renewable energy, mostly wind and solar."
--
Also this guys asks... will economist be seen as the "big evil" that stopped the world from saving itself; and offers a solution
https://www.ted.com/talks/michael_metcalfe_a_provocative_way_to_finance…
The problems with so-called renewables that are almost never acknowledged are:
1. It is necessary to burn fossil fuels to make the various devices -all are made from metal, glass, ceramic etc. and the mining, processing, construction and installation are achieved using fossil fuels.
2. All 'renewables' have a limited life and require maintenance and replacement which are dependent on fossil fuels.
3. The infrastructure that permits industrial society to function -the roads, bridges, electricity pylons, concrete structures etc.- cannot be made using electricity.
4. Most of the food supply is generated, processed and distributed using fossil fuels.
5. The increase in global population is overtaking the installation of renewables.
6. Critical environmental thresholds have already been breached and unstoppable positive feedbacks have been triggered.
What is very disturbing is that, despite all the talk about increasing adoption of 'renewables' and some action, the concentration of CO2 in the atmospheric-oceanic system increases by a greater amount every year, and the current rate of annual increase of atmospheric CO2
May 11, 2016: 407.7 ppm
May 11, 2015: 403.58 ppm
Up 4.12 ppm per annum
is around twice that of the 2005 - 2014 period of 2.11 ppm per annum.
https://www.co2.earth/co2-acceleration
This clearly indicates we are losing the 'battle' to maintain the habitability of the Earth at an ever faster rate, which is not surprising, since most people are not even trying to protect the future and believe they have an irrevocable right to squander fossil fuels.
No one understands the actual use of oil - it is almost as integral to current society as Food and air.
I once attended a public forum on drilling. As expected it was predominately anti-oil. However one speaker raised some very valid points. He was neither pro/nor anti oil. He simply asked some questions and then set a challenge.
His speech started roughly like this.
Everybody stand up. Now I will ask three questions, if you answer yes to any of them sit down. After three questions if anyone is still standing then they can definitively say they oppose drilling for oil.
Question 1: How did you get here?
Answer: Unless you walked - sit down.
Question 2: What did you walk in?
Answer - unless your footwear is 100% natural or bare feet - sit down.
Question 3: What did you walk on?
Answer - unless you floated - sit down.
After each question he took queries from the audience. Mostly after question 1, when a few people stated that they rode bikes. He asked them if their bikes were made of metal, contained plastic, used man made lubricants, were painted, had stickers, or had a non-natural seat covering. He then detailed the oil used in each process and all they all eventually sat down.
After question 2, it was only him and 3 other people standing (Out of maybe 40).
He sat down on Question 3 along with one other person, while the other two looked confused. He mentioned that the asphalt, concrete, and even the lino in the hall were all possible only because of oil.
Once everyone was seated, he got back up and asked if anyone thought that they could truly go through life without oil.
He then explained a great deal on how and why oil is used.
He finished his speech with a simple challenge to the audience
Companies only drill for oil because you want it. If you want them to stop drilling then you need to use less oil.
The whole mood of the forum changed after that. You could actually see everyone get off their high horse and think clearly.
If you truly understand the importance of oil, it becomes a lot harder to find a solution to the problem. Reduction in consumption is really the only option until some incredible new discovery is made.
Electricity generation can change all it wants, but oil is still involved in nearly every single man made item on earth
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