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Wall Street banks get their wishlist; US jobless claims fall; China moves to replace the US in TPP; China bank loans jump; UST 10yr yield at 2.10%; oil lower, gold lower; NZ$1 = 72.1 US¢, TWI-5 = 76.5

Wall Street banks get their wishlist; US jobless claims fall; China moves to replace the US in TPP; China bank loans jump; UST 10yr yield at 2.10%; oil lower, gold lower; NZ$1 = 72.1 US¢, TWI-5 = 76.5

Here's my summary of the key events overnight that affect New Zealand, with news China is moving quickly now that the US has withdrawn from the Trans Pacific Partnership.

But first, in the US, Trump advisers are considering appointing JPMorgan chief executive Jamie Dimon as Treasury Secretary. Wall Street's influence on US fiscal policy seems set to be enhanced. The official response to the GFC excesses are to be 'dismantled' with a repeal of the Dodd-Frank laws. And Russia has admitted to was in contact with the Trump election team during the campaign.

The number of Americans filing for jobless benefits fell more than expected last week, underscoring the strength of their labour markets.

China is moving quickly to fill the void left by a likely Trump refusal to ratify the TPP. The void has offered Beijing an opportunity to argue for faster adoption of a broader Free Trade Area of the Asia-Pacific. Given New Zealand has ratified the TPP, we will be in a prime position to take advantage of this revised opportunity. The only likely changes will be the weakening of the investment and labour protections built into the US-based Agreement. You can see the detail of the already negotiated TPP in our 21-part analysis series here. It is not hard to see how it could transition to a China-led one. In fact, China wanted to join the TPP but were rebuffed around the labour and investment protection issues.

China reported that lending by banks rose +15.7% in the year to September, reaching US$32.8 tln. For an economy that is supposed to be growing at even the official +6.7% annual rate, clearly this pace can't continue. Perhaps a sign of stress is that this same data release shows profit growth at just +2.8%. Leverage is getting extreme.

Wall Street equity indexes are pushing higher, as markets get to understand the likely large level of debt spending and fiscal stimulus to come from the new Administration. It will be fun to watch the explanatory gymnastics from the Republican Congress as the US Federal deficit swells and borrowing levels require new debt ceiling authorisations.

And the price of money is now rising quickly as investors want to be compensated for the new risks.

In New York, the UST 10yr yield will start today much higher again, now at 2.10%, and nearing a new one year high. Our wholesale rates rose sharply yesterday as well, but will get pushed higher again today with this latest US benchmark spurt.

The US benchmark oil price is lower, and is now just under US$45 a barrel, while the Brent benchmark is under US$46 a barrel.

The gold price is lower too, now under US$1,265/oz. All the run-up in the past 2 weeks has now been lost.

The New Zealand dollar will start today lower than this time yesterday, at 72.1 US¢. On the cross rates it is now at 94.8 AU¢, and against the euro at 66.3 euro cents. The NZ TWI-5 index is at 76.5.

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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25 Comments

changed my opinion now FED will raise in December now, a lot of good feeling as the republicans undo a lot of obamas laws

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Cameron gone... Obama gone... Hillary gone... TPPA ? governments that sell out their own people will not be elected. How long can JK last?

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And all the anti-Trump tough guys are bending the knee. Even that dopey Saudi Prince Al-wal-whatever has "set aside differences" to kiss butt work with Trump.

Funny stuff.

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Apparently, according to sources...Russia and Trump are old friends. May account for Putin glad handing the victory, openly.

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when somethings 8 years past its use by date, you tend to throw it out.

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Obama is only gone due to 2 term limit. If he had run again he would have easily won.

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Hi Tim...JK can last long enough to snuggle up to our new best friends.......in the TPP....long enough to host some visiting Chinese warships.....we had better get really really good at Tourism.

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In New York, the UST 10yr yield will start today much higher again, now at 2.10%, and nearing a new one year high.

Irrational exuberance?

Or do markets truly believe Trump will ignite a growth cycle?

A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Read more

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Definitely a growth in CO2 emissions and ocean acidification.

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There's a certain irony, or perhaps hypocrisy, that it's a Republican government tipped to blow out the federal deficit. How fickle politicians are.

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ah er, "how fickle politicians are" perhaps should be "how blind some voters can be".

"The news media" ran stories that this sort of stuff would happen - it was blatantly obvious - but the wilfully blind ignored it. They can hardly now blame-shift to someone else. The 47.5% who voted for Trump were told. Actually more people (47.7%) voted against his cynical dog-whistle sloganeering.

However, if you don't use critical thinking in the first place, you can hardly try and label others with hypocracy.

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Bit too much grapefruit juice this morning David! At such early days any conclusions are naive at best. Love him or hate him, Trump deserves an opportunity to put up or shut up. He has a mandate. The popular vote was not the objective and if the outcomes had been reversed....

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Well he either blows out the deficit or he has lied about his policies. You cant massively drop taxes and increase spending and not borrow can you?

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I guess we'll see. There was an internal divide amongst the GOP almost as soon as Trump was running in the primaries. He still has to get everything passed and whether Congress and the senate are willing to play ball remains to be seen.

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You can if you recover money from other places such as Obamacare.

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Voting a process arising from critical thinking? Yeah right.

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Voters are not so much blind as blinded

A Stunning Failure of the Media and the Polls
http://www.nytimes.com/2016/11/10/opinion/a-stunning-failure-of-the-med…

.... most journalists were blind to their own “bigotry against conservative religion, bigotry against rural folks, and bigotry against working class and poor white people

and

.... you’re going to hear a lot from news executives about how they need to send their reporters out into the heart of the country, to better understand its citizenry
http://www.nytimes.com/2016/11/09/business/media/media-trump-clinton.ht…

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There is a smug style in American liberalism. It has been growing these past decades. It is a way of conducting politics, predicated on the belief that American life is not divided by moral difference or policy divergence — not really — but by the failure of half the country to know what's good for them. Read more

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No David it would be deaf ,not blind as all they..... heard.... was a better America for Americans and decision making that would be biased to" American" interests and to hell with Foreign détente policy that has displaced so much of middle America from the work force. They also heard that in "making America great again" they may resign as sheriff of the globe or invite those who benefit from such protection to contribute to same.
The Funny thing is I think it was a Democrat who said "hearts and minds" is what it takes to win....well well eh?

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Seems like Lobotomy, must have been nearly 50% part of the Obama Health Systems work in the good ole US of A.

And I do believe sour grapes is par for the course....American whine is no where as good as a New Zealand...Cab Sav.

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The Republicans have effectively held the purse strings for 16 years now.

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111th Congress was Dem super majority - 2009
https://en.wikipedia.org/wiki/111th_United_States_Congress

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BC now to impose vacancy tax for Vancouver properties , with heavy penalties for misinformation.

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Jaime Dimon would seem an odd choice.He financially supported the Democrat Party (barely..his words) and at
one stage was being being considered for the position of Sec of Treasury before Tim Geithner got the job.
He was also accused of misleading investors and regulators when J P Morgan was investigated for a massive 6.2 billion dollars loss by Hugo Iskil.

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