Here's my summary of the key events overnight that affect New Zealand, with news of trouble in Hong Kong; a surprising number of the city's residents want to leave.
But first, the number of Americans filing for unemployment benefits was at 43-year low last week, pointing to sustained labour market strength.
But how long will the current economic expansion in the US last? They rarely run more than a decade straight and we are approaching that. So the odds are another downturn will occur in the next few years. Either that, or the expansion will become an all-time record, which does seem unlikely.
There is trouble brewing in Hong Kong. A quarter of the representatives elected to their Legislative Council want more independence from China, something Beijing is not happy about. And these renegades are getting more aggressive, poking the bear. This restlessness is showing up on the street; 40% of them want to leave. That is a lot of people; Hong Kong has a population of more than 7 mln, so potentially almost 3 mln people could be on the move if things deteriorate.
China's September exports fell -10% from a year earlier in US dollar terms, far worse than expected, while imports unexpectedly shrank - by -1.9% - after picking up in August, suggesting signs of steadying in the world's second-largest economy may be short-lived. This is a worry for many emerging economies heavily dependent on China.
In India, a good monsoon is putting downward pressure on prices, especially food prices. And that opens up the opportunity for them to cut their high official interest rate, currently sitting at 5.75%.
The Reserve Bank of Australia released its Annual Report yesterday and the most eye-catching element was the dividend they paid to the Aussie government - AU$3.2 bln, their largest ever. (See p 126.) For comparison, the RBNZ paid Wellington a NZ$ 140 mln dividend, down from NZ$ 510 mln the previous year.
In New York, the UST 10yr yield is down sharply, now at 1.74% following the release of the Fed minutes yesterday.
The US benchmark oil price is a little higher today, now just under US$50.50 a barrel, while the Brent benchmark is now just under US$52 a barrel. And this comes after it was reported that US crude oil stocks have risen more than expected.
The gold price is higher as well, up +US$4 and now at US$1,256/oz.
The New Zealand dollar has held yesterday's levels overnight, opening today at the same level as this time yesterday. That leaves it at 70.9 US¢, and on the cross rates it is at 93.7 AU¢, and it's at 64.2 euro cents. The NZ TWI-5 index is now at 74.9. However, against the UK pound, we are at a new all-time record high of 57.9 British pence. Tough Brexit consequence are certainly starting to bite there, even though on the streets, denial is still evident.
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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23 Comments
Russia is flexing it's muscle in the Middle East,China doing the same in the South China Sea,meanwhile the Americans are telling everybody they are the greatest nation on earth,have the best supplied military in the world but it all adds up to nothing because the American people are sick of young lives being lost over things that in the end don't matter.
A form of communism is rising again.
Yes, America is indeed war weary, despite their armaments industry relying heavily on global conflict. Russia's current influence in the Middle East is staggering. Israel might just be getting a little nervous despite the Arabs appetite for killing each other with Iran's newly installed status of respectability and ISIS isn't going away anytime soon. The only effective solution will require a lot of American boots on the ground.
Call me old fashioned but instead of dancing and singing in the White House, Obama may have been better employed applying the vast resources at his disposal to tidy up the catastrophic mess that Dubbya caused in 2003.
If (and I say if, as it is not as foregone a conclusion as some might think) Trump looses, expect him to blame voter fraud and conspiracy (with an element of truth). He is of a character/personality type that will refuse to accept defeat and will rile up the disenchanted supporters. Thus all hell may well break out after the elections. If so, I imgaine this will be seen as prime time for Putin and others to make their move....
America is not war weary. Ultimately, they are interested in the resources, not in democratic ideals. The resources appear to be ticking over fine - there has been no reports of disrupted Oil supply etc.
The drying up of Saudi resources (they are laughably talking about diversifying away from Oil!) ... also explains a softening stance towards Iran ...
You are misinformed. Saudi resources are in no way 'drying up'. The interest in diversification of their economy is more in the mode of an entertaining financial experiment for them. They control the global oil price and could let it go back up to 75+ a barrel in the blink of an eye, they simply choose not to because a). They don't need to, they have enough foreign reserves to outlast nearly anyone and b). They want to make sure the Canadian oil sand and American fracking industries are so dead that they cannot come back to life. There has been NO softening of Saudi stance to Iran, in the MENA region they are head to head vying for political dominance and this will continue into the foreseeable future no matter what the USA thinks. What you will now witness is the increasing influence of Russia in the arena starting with appeasement of the Turks and the easing out of NATO.
The monetary policies enacted by the world’s leading central banks are a predominant mechanism for doling out differential financial rewards—exacerbating income inequality in the process. The Federal Reserve’s ultralow interest rates, intended to stimulate economic growth, have flooded wealthy investors and corporate borrowers with cheap money, while savers with ordinary bank accounts have been obliged to accept next-to-nothing returns.
Yet unconventional monetary policy has failed to deliver the anticipated boost to growth. Worse, the Fed’s large-scale interventions in credit and investment markets have created significant distortions that threaten financial stability. We can’t expect Main Street to passively absorb the costs of a future Wall Street bailout; there is a limit to public patience with monetary policy that not only smacks of favoritism but might also be causing more harm than good. Read more
It's a great shame that Trump's appalling behaviour and comments may have discouraged US voters. If ever the world (economically and politically) needed a circuit breaker, it's now. We will no doubt regret the DNC opting for Mrs Clinton. Sanders would have been the brave choice.
The 'elite' continue to express denial that the 99% actually matter. To them, the concept of democracy is anathema.
You would vote for a man who has been bankrupt at least once even after being born with a silver spoon in his month and who has not paid tax for years because of huge losses. Do you seriously think he is a man capable of leading the western world from an economic point of view. He cannot even keep his own house in order.
Yes agreed and when I comes to views on Trumps the consequences of his behavior, I also agree with Robert on this one: Robert De Niro Statement Trashing Donald Trump
https://www.youtube.com/watch?v=-Q-ZyW9bz5c
The only problem i have with De Niro is when he mentions punching Trump in the face.I would have thought that by now Americans would have learn't,that violence doesn't solve much,after all look at the failed campaigns the US have been in.
On another issue it was sickening to hear a Democrat slagging off on Russia for their alledged hacking and releasing Clintons emails..He went on to say that Russia should not be trying to influence another countries election results.
Say Whaaaaaaaat.
Yes normally the middle class Brit inside me would agree with you on De Niro statement. But I can see why he chose to take a stand on a more base level; since it's really the only language that Donald seems to understand and use, when face with rational arguments he tends to drag the conversation down to his basic level.
Why in the world would anyone want Trump for President is beyond me, he's a disaster waiting to happen.
Yes so many people in the public eye are speaking out about Trump; Here's Tom Hanks http://www.bbc.com/news/world-us-canada-37644370
Though best of all is Michelle Obama (To be honest I wish Obama could stay as US President), though I do think Clinton would be a far better option to Trump.
US election 2016: Trump says groping claims 'absolutely false'
http://www.bbc.com/news/election-us-2016-37650500
https://www.theguardian.com/business/2016/oct/13/properties-seized-asse…
The criminal finances bill, published on Thursday, is designed to close a loophole which has left the authorities powerless to seize property from overseas criminals unless the individuals are first convicted in their country of origin.
'It will introduce the concept of “unexplained wealth orders”. The Serious Fraud Office, HM Revenue and Customs and other agencies will be able to apply to the high court for an order forcing the owner of an asset to explain how they obtained the funds to purchase it.'
I wonder if National would The criminal finances bill, published on Thursday, is designed to close a loophole which has left the authorities powerless to seize property from overseas criminals unless the individuals are first convicted in their country of origin.
It will introduce the concept of “unexplained wealth orders”. The Serious Fraud Office, HM Revenue and Customs and other agencies will be able to apply to the high court for an order forcing the owner of an asset to explain how they obtained the funds to purchase it.
I wonder of National could ever bring in such a law here , or is it simply best that we do not know where the money comes from.
Excellent and yes NZ will need to bring in a similar law provision to protect us when the property crash happens. I don't know if you noticed what's been happening to Vancouver property since their market slowdown?
Chinese bank is trying to seize Vancouver homes of former citizen accused of fleeing country with millions
http://business.financialpost.com/personal-finance/mortgages-real-estat…
You need to read my morning reports more closely ;)
I had this news yesterday !
http://www.interest.co.nz/news/84068/fed-struggles-decide-when-hike-us-…
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