Here's my summary of the key events overnight that affect New Zealand, with news Chinese demand for Aussie property is holding up.
Firstly, Wall Street is off to a poor start today because Alcoa's results, which are the traditional signal for earnings season, have come in below expectations. The nasty election campaign and the rising acceptance a rate hike will come soon is adding to the poor tone. The S&P500 is down more than -1% in early afternoon trading.
New American research shows that warmer weather is good for the jobs market, and cooler weather holds it back. This study 'explains' why surprises one way or the other in the number of new jobs being created are explained by temperature, more that storms or other factors.
And other research is suggesting that the 'new normal' growth for the US economy has slipped quite some way. The analysis says to expect +1½% to +1¾% growth as the regular baseline. If they are right, the latest GDP report of +1.4% is slightly below what has become its 'normal' expansion.
In Singapore, their authorities have ordered a Swiss merchant bank to close and fined two other banks for breaching anti-money laundering controls. The action follows an investigation into money flows linked to the Malaysian state investment fund 1MDB.
In Japan, their parliament has approved a new US$32 bln increase in fiscal stimulus measures. These will be funded by new government bonds, and the Bank of Japan has its new policy to buy such bonds at essentially zero interest. By issuing perpetual bonds, the Government can fund fiscal stimulus at zero interest without ever having to pay them back. It is likely to "do more" under such arrangements. It is hard to see how QE could get any more open-ended.
In China, there has been a rare and unusual burst of civil unrest over pension levels. More than 1,000 ex-army personnel gathered in Beijing in a demonstration that was unusual in its length and its location.
In Australia, HSBC is saying that demand for Aussie property from Chinese buyers is 'holding up' after a brief blip lower earlier in the year. Aussie tax disincentives don't seem to have made much impact there, from HSBC's point-of-view.
In New York, the UST 10yr yield is higher today, now up to 1.76%. The New Zealand wholesale yield curve steepened overnight. The short end fell in response to the McDermott speech.
The US benchmark oil price is a little lower, now just under US$51 a barrel, while the Brent benchmark is now just under US$52.50 a barrel. The signals out of Russia and their supposed support for an output cap to support OPEC became confusing overnight with their largest driller refusing to comply.
The gold price is lower as well, down -US$3 and now at US$1,254/oz.
The New Zealand dollar has slipped quite a lot overnight against all-comers - except the British pound. It is now at 70.5 US¢, and on the cross rates it is also lower against the Aussie at 93.5 AU¢, and it's at 63.7 euro cents. The NZ TWI-5 index is now at 74.5. Against the UK pound however, it is up to a record 58.2 UKp.
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
Perpetual SLOW motion machine...
Trillions of QE dollars for zero growth, seems to be the japanese way - economy in a zombie state
Shame the rest of the world is now following suit and some central bankers even entertain negative interest rates as a way of spurring growth (um... what??)
ZIRP and QE distort markets, misprice risk and de-stablise economies through unsustainable increases in asset prices fueled by cheap debt which eventually become devoid of sustainable fundamentals leading to even bigger boom-bust cycles... Its a whole new world....
Central banker academics are horrific at judging economies, using vague and ambiguous 'data dependencies' to justify their actions or lack thereof...and frequently put their foot in their mouth
All of them are devaluing their currencies, destroying fiat money the "store of value" that billions of people work for while also funding govt deficits indefinitely through 0% bond buying with newly created fiat money at the expense of billions of savers and lower to middle class people (i.e. the 90%)
Lets hope they know what they are doing...
In Australia, HSBC is saying that demand for Aussie property from Chinese buyers is 'holding up' after a brief blip lower earlier in the year. Aussie tax disincentives don't seem to have made much impact there, from HSBC's point-of-view.
Hmmmm...
Bubble trouble. Whether we label them bubbles, the Australian economy has experienced a series of developments that potentially could have the economy lurching from boom to bust and back. In recent years these have included:
the record run up in commodity prices and subsequent correction;
the associated boom in mining investment and current reversal;
record low bond yields;
the boom in housing construction, specifically apartments, that was spurred by the low interest rates.
Housing indicators in the bubble meter are at record highs but interest rates remain at record lows. Typically monetary policy is well into tightening mode at this stage in the housing cycle. A destabilizing housing burst (both in activity and prices) is a clear risk, particularly the longer the upswing runs. Read more
I guess New Zealand has much the same issues and yet the RBNZ remains in ideological denial.
Add to that question one about the US Retirement funds and their projected returns for the future. In the past they've exhibited some predatory practices to deliver on promised returns that have been fairly destructive (Dick Smith is one example). How will they survive in a world of low returns? As others have identified the same issues face our people who are saving for retirement.
Indeed!
See John Mauldin's excellent article from the other day:
http://www.interest.co.nz/opinion/84028/john-mauldin-argues-global-cent…
It is possible, if there is a Government which has no particular interest in getting itself re-elected, that publicly-funded pensions will cease to exist at some point in the future.
But that is not at all the same thing as saying that retirement will not exist. It's not up to the Government to decide whether and when people can retire. The Government can only decide whether it's going to provide them with money .
Anybody can retire whenever they like, as long as they are able to support themselves financially. Start soon, plan carefully and save accordingly; and that will give you choices later that you won't have if you take ham n eggs' advice above.
i think you have misinterpreted. Im saying there wont be a system where "old" people can sit round and cash coupons in return for stuff. ie You are assuming some sort of financial system exists where this is the case.
Retirement is a last 100 year idea only. From wikipedia
"Previously, low life expectancy and the absence of pension arrangements meant that most workers continued to work until death. Germany was the first country to introduce retirement, in 1889.[5]"
Things look to be getting very messy in parts of Australia - Investors Dig for Distressed Debt in Australia - WSJ
www.wsj.com/articles/investors-dig-for-distressed-debt-in-australia-147…
Indeed it does Colin:
Australian property bubble on a scale like no other
http://www.acting-man.com/?p=47174
Yesterday Citi produced a new index which pinned the Australian property bubble at 16 year highs:
Bubble trouble. Whether we label them bubbles, the Australian economy has experienced a series of developments that potentially could have the economy lurching from boom to bust and back. In recent years these have included:
the record run up in commodity prices and subsequent correction;
the associated boom in mining investment and current reversal;
record low bond yields;
the boom in housing construction, specifically apartments, that was spurred by the low interest rates.
"Australia’s foreign debt has hit “extreme” levels that match the worst in the world, according to a startling warning from ratings agency Standard & Poor’s that will intensify the dispute over budget repair after years of political deadlock on major savings...
John Chambers, the chairman of the firm’s sovereign ratings committee, suggested the federal government risked losing the AAA rating if it continued to miss its fiscal targets...
The nation’s net foreign debt liabilities rose from $976 billion to $1.045 trillion over the 12 months to June — including federal, state and private sector borrowings — while net foreign equity fell from $70.1bn to $8.6bn over the same period, according to the Australian Bureau of Statistics."
The Chinese will soon be able to live on Mars if Obama has his way'.
I suspect that the Martians will be quite excited about being conquered by the Americans with their type of democracy.You know the type that gives you gun violence,drugs,porn,missing kids.prostitution,politicians that have forked tongues,the raping of minerals etc,.
Please Martians reject their attempt to establish life there.
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