Here's a special holiday update of some key events and data you may want to know about today.
First up, today's dairy auction has brought a second consecutive drop in prices. They are down -3.9% today in USD on top of the -0.5% we had on December 20. Worse, the key wholemilk powder price is down -7.7% and that comes after the -0.7% fall two weeks ago. None of this has had a noticeable effect on our exchange rate. In NZD, the overall prices are down -4.1%.
And then we have the results from the World Happiness Report for 2016. New Zealand ranks #8 out of the 157 countries surveyed, and that is a gain of one place this year as we pushed on up passed Sweden. Our slightly lower GDP-per-capita score is more than made up by our 'healthy life expectancy' score and our 'perceptions of corruption' score. In fact, we have managed to stay one place ahead of Australia for the second year in a row. (We were 13th in 2014 so our gain over tow years has been pretty impressive.) We are not a nation of grumpy people (despite what you may see in our comment section below).
In the US, and in what should not come as any surprise from a Trump election win, House Republicans, overriding their top leaders, voted to emasculate the power of an independent ethics office set up in 2008 in the aftermath of corruption scandals that sent three members of Congress to jail. The move to kill the effectiveness of the Office of Congressional Ethics was not made public until yesterday, when Representative Robert W. Goodlatte, Republican of Virginia and chairman of the House Judiciary Committee, announced that the House Republican Conference had approved the change. There was no advance notice or debate on the measure. But the backlash has been strong, and the move was cancelled this morning (even though Trump himself said the ethics rules were "unfair".)
It is not often you see data like this from China, but today's private PMI factory survey has come in more positive than the official one. It shows their manufacturing sector expanding to a 47-month high in December, with the index coming in at 51.9 in December, up from 50.9 in November. The American survey also came in very positive, up to 54.3, a 21 month high. (American construction spending is rising too.) Around the world, factory activity is trending up into a stronger expansion phase.
ANZ has sold its 20% stake in Shanghai Rural Commercial Bank for A$1.8 bln, as part of its broader retreat from its Mike Smith drive to own Asian assets. China COSCO Shipping and Shanghai Sino-Poland Enterprise Management Development were named as the purchasers in the deal. ANZ invested a total of A$568 million to acquire the stake in 2007.
Australian house values rose at their fastest pace in seven years in 2016. The average dwelling value in the state capitals rose 10.9% compared to 7.8% in 2015, according to data released by CoreLogic. That’s the biggest increase since 2009.
By the way, did you make a New year resolution to go off grid? Want to go all the way and delete yourself from the internet? Here one way to do this.
The English Telegraph website is quoting the OECD's chief economist Catherine Mann warning of house prices that are just too high. She is reported as saying that a “number of countries” had “very high” commercial and residential property prices that were “not consistent with a stable real estate market”. And the OECD chart that accompanied the story has New Zealand with the highest prices relative to 2002 of the seven countries surveyed.
In New York, after a brief push higher the UST 10yr yield has settled back to about the same level we saw yesterday, now at 2.46%.
The US benchmark oil price is now down more than -US$1/bbl and now at US$52.50 a barrel, while the Brent benchmark is just on US$55.50.
The gold price is higher, up +US$10 and is now at US$1,161/oz.
The New Zealand dollar is pretty much unchanged and still at 69.4 USc. On the cross rates it is stable at 95.9 AU¢, and 66.6 euro cents. The TWI-5 is still at 76.2.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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86 Comments
Interesting graphs of China FX Leakage increasing and debt increasing:
https://blog.variantperception.com/2016/12/31/china-the-capital-leak-gr…
The common factor among the happiest countries, also the most prosperous countries, is the prevalence of the English language.
All the top countries either speak English as a native language or are highly proficient in English. Most of the countries speak languages that are derived from the Proto-Germanic language which would make speaking English easier I imagine.
The Finns are different but they rate very highly (fourth) in English proficiency.
Up and coming economies such as India and China are aware of the importance of English.
If I were a dictator of a poor country I would insist that English be the official language if happiness and prosperity of my people was my objective. You are just wasting time and energy otherwise. Native languages should just be seen as hobbies.
English is the language of solving problems (and popular music).
There are strong correlations between
English profi ciency and income, quality of life,
ease of doing business, Internet usage, and
years of schooling. These correlations are
remarkably stable over time.
Well as all the most prosperous countries are proficient in English I would say knowing English is critical to financial success. Many immigrants choose NZ because we speak English.
Vocabulary is critical to success. The more English words you know the more prosperous and happy you will be according to the data. Knowing English will open many doors worldwide.
(Did you not see the quote above about the strong correlations? - I linked to my references too)
Reading the books on the Prosperity of nations, and the history of the English language is quite interesting from an economic point of view.
Shakespeare and the early Bible were of course the transmitters of the language globally. And Tyndale was the forerunner of the freedom of the press, & freedom of religion (bearing in mind that possessing a bible in english was punishable by death). Really the Gutenberg press etc was the forerunner of free speech, the Internet, and democratic thinking, which has led to prosperity for most of those countries associated with this.
So really, Zach is onto something, with some actual causations! !
Thanks MortgageBelt. I didn't think it would be that controversial. From one of my links:
English is increasingly considered a core competency in a globalized economy..
It's hard to argue with that surely? The Internet is also having a huge influence.
Late last year I did a bit of travelling around and I was astonished how easy it was knowing only English. I solved all my problems using this language.
It is controversial because you are essentially discriminating against 50% of the world's population by saying that the reason Western cultures are prosperous is because they speak English.
Essentially you are comparing Western nations to Third World nations and saying the reason they aren't successful is because they don't speak English. You propose that teaching them all English will miraculously bring them up to our privileged level of living. And, you disregard the myriad of other economic factors that build prosperity and happiness.
If the world is dominated by one culture then the language of that culture will be of critical importance. Indeed you may not be able to quite understand the world unless you are intimate with that language. Understanding the English language gives you a more useful mental image of the world especially in regard to technology and we live in a technological world (All aircraft manuals are written in English). Your mindscape will correspond more accurately with reality. In a very real sense the English language has the ability to expand the consciousness and broaden the horizon of a non English speaking person much more than an English speaking person learning a foreign language.
Yea, nah..
English is the most confusing language around, both phonetically and grammatically. Again, it is only the lingua franca as a result of the British Empire.
Obviously you have never read Germanic or romantic literature in it's original guise if you think English is the most descriptive and transcending of the languages.
Sure, aircraft manuals are translated to English. That doesn't mean it is the best language; only the lingua franca.
If you wanted to have the most comprehensive understanding of the majority of cutting edge western technology, you'd learn German. How does that fit into your anglophile ideology?
English is the most widespread of all other languages, partly due to its ability to incorporate and accommodAte other languages within it. Rather than purist languages like French who try to quarantine their language.
Interestingly, many German companies operate their business functions and communications in English, and many interns and graduates who work apply to work there have an advantage if they are fluent or have English as a first language.
Apparently in Germany for every ten scientific journals published nine are published in English. In the Netherlands the ratio is an astonishing 40:1.
"English is the most widespread of all other languages, partly due to its ability to incorporate and accommodate other languages within it. Rather than purist languages like French who try to quarantine their language."
Ha..
So you are saying that all those West African French speaking nations don't develop slang?
Latin America doesn't corrupt Spanish or Portuguese (or even Dutch)?
Yes, many German companies operate day to day in English. My point was that the majority of technical discourse within those companies is still undertaken in German. Why would they not switch to English if it was, as implied, far superior in such a context?
I only wish that NZ kids learnt English to a higher level and fluency, learning the roots of words and grammar etc. NZ young people limit their options in careers, study ability, business communication and life-long learning due to many of them having a low English language fluency and understanding. This also limits their ability to learn German and Mandarin etc which I agree with you is also very useful for personal and career development.
English skill = good earning potential.
Zachary,
Doubt is not a pleasant position,but certainty is an absurd one-Voltaire. Your certainty that people can only be fluent in one language is just that,absurd.
My uncle,whom I knew well,was fluent in all the Romance languages and worked for the UK government during and after the war.
Tenuous at best. English is a means of communication ( and so is French, Latin, Aramaic and sign language) , and while English is frequently used in business communication it does not of itself imply or ensure success. I'm sure neither the German nor the Chinese use English in their own internal communication.
I think you are trying to imply something that does not exist.
You still haven't answered my question about how this relates to "Helping you make financial decisions".
I don't have to answer stupid questions. But in this case I will. I believe NZ should leverage its expertise in English to make money. It gives us an advantage. Also every local has an advantage over a non English speaking immigrant - if only they realised it.
I said in my reply that English is used in business communication - I don't disagree with that. But sufficient command of the English language is not in itself sufficient to create or guarantee success - there are many other factors in play.. As has already been pointed out you are confusing correlation with causation.
That doesn't explain the Nordic countries and Switzerland.
You are basically saying that these countries are happy and prosperous because they have systems which make them happy and prosperous.
I am proposing that they have a language that creates a mindscape that makes these things possible.
Germanic languages = the languages of freedom.
Adopt the language and become free.
Of course Latin and Greek play an important role too. Combined with a Germanic language we have a Super-Language.
Haha.
Please.
Happiness is a function of culture.
Prosperity is a relic of colonialism/imperialism. Sure, Lingua Franca is correlated with this but wouldn't be the primary causation factor.
The cases of Arabic, Greek and Latin, all highlight this. If they were the defining factor of intellect, happiness and prosperity then why did their civilisations all collapse?
Given low corruption, cultural freedom and industrialism 300 years ago, all the low proficiency countries would have relatively the same level of happiness and prosperity as western countries currently.
The cases of Arabic, Greek and Latin, all highlight this. If they were the defining factor of intellect, happiness and prosperity then why did their civilisations all collapse?
These civilizations didn't collapse. They still exist today. They were surpassed by Germanic culture. Almost everything you see around you today, from clothing, music, architecture, engineering and so on. Go to China, look at what they wear, how they build things now, it's all Western.
Hmm,
I wouldn't agree with that.
The Arabic, Greek and Roman Empires didn't collapse? Interesting..
I think your assertion that everything became Germanicised is a bit inaccurate, too... France (Gaul) would probably disagree.. Spain would probably be of a similar disposition..
Even the British Isles would disagree. Sure they were ruled by Normans and Germans, but the predominant culture was not Saxon. The English language shows this definitively.
On your point of China - Sure, they aspire to Western culture but why by your very own data is their English Index so low, then? If you are saying language and culture are synonymous, then why does this not correspond?
All these people stem from an original Neolithic folk that spoke a common proto-Indo-European language. They later populated all of North Western Europe and became somewhat isolated from the Eastern regions. We could use the term Indo-European although I think that is too broad. Maybe Celtic-Germanic would be more acceptable?
The point I have been making is that as well as the English speaking countries who are happiest (and prosperous) it also includes those that are the most proficient in English as a second language.
Denmark + Iceland - #1 Very High Proficiency in English
Switzerland - High Proficiency in English (Also mostly German which is next best thing!)
Norway #5 Very High Proficiency in English
Finland #4 Very High Proficiency in English
In answer to your question about how many languages I speak, being an Englishman, of course I only need English, however when in France and I first meet a Frenchman I always say bonjour or bonsoir depending on the time of day.
Speaking English well can be very handy for dictators. Both Gaddafi and Saddam Hussein appeared to not have been able to speak English however Syrian leader Bashar al-Assad speaks English very well. This is an important factor in his survival I believe.
Some how I don't think he'll get much support form the working classes, as they're still banking on Trump to bring their old jobs back.
Ford cancels plans for Mexican plant as Trump blasts General Motors
http://www.telegraph.co.uk/business/2017/01/03/ford-cancels-plans-mexic…
Obama and Kerry still have some tricks up their sleeve before they exit. The working class won't have much say once a state of emergency is called.
In addition, Kerry will be trying to pass the new state of Palestine in Paris on the 16th at the UN/'Peace' meeting. Which may set up the scene for major conflict in the Middle East.
Many would've been Foreign fighters who joined ISIS & other terrorist groups in Syria.
In Iraq it's more of a sectarian conflict between Sunni & Shia Muslims. Sunni in Iraq today feel oppressed under the Shia Government just as the Shia once did under Saddam Hussein who was Sunni.
But most people forget about Yemen & Ukraine when speaking about conflicts.
Obama can't deliberately stop an incoming elected President. People just have to accept the results stop acting like immature brats & move on. Trump went through election recounts in several states he still won.
Trump lost only 2 Electoral votes in the vote recount while Hillary lost 4 Electoral votes. Jill Stein only requested the recount for filling up the coffers of her own Green Party.
The Celebrities,Politicians,Media,Democrats,Elites all tried to destroy Trump but failed. Donald Trump will be the 45th President of the United States of America whether the Leftards like it or not.
Trump lost only 2 Electoral votes in the vote recount while Hillary lost 4 Electoral votes.
Not the result of the recounts but the outcome of the vote by the electors.
The meeting of the electors takes place on the first Monday after the second Wednesday in December after the presidential election. The electors meet in their respective states, where they cast their votes for President and Vice President on separate ballots.
I heard one fake news item say Trump lost all six when in fact Hillary lost four.
Around the world, factory activity is trending up into a stronger expansion phase. Yeah we can tell from the smog: Time-Lapse Video Shows Beijing Swamped by a Tide of Smog
http://www.nytimes.com/2017/01/03/world/asia/beijing-smog-video.html?_r…
The madness continues. Public water for private profit. 800,000 tonnes per month in fact. http://www.alpinepure.com/pdf/Alpine_Pure_Water.pdf
They've been trying to do that for decades, there is a huge issue with the possibility (maybe probability) that ballast water in ships could contaminate the area with some hideous nasties. There is also a huge issue of the area not being on the national grid for electricity, relying on a small turbine in the Turnbull River that as I recall is not capable of much more than a 1,000kw per day. There has been much development since I was last there and it was under a fair bit of strain and prone to breakdowns when the river was in flood and debris would block the turbine.
I reckon it will be no more of a goer now than it was then, and hopefully, the same with the Haast-Hollyford highway. Mind you I think the same people involved in this idea may have established a mussel spat farm in Jackson Bay/Neils Beach
the Arawhata River, from the bridge you can see the tuning forks creek is one of my favourite places in NZ and I would hate to see that vista ruined by a few greedies, and they are.
European banks have won a reprieve from new post-crisis reforms they fear will disproportionately hit their balance sheets.
A meeting of the world’s top bank supervisors and central bankers scheduled for this weekend to consider a contentious reforms package has now been postponed, the Basel Committee on Banking Supervision said on Tuesday.
The long-awaited meeting was expected to sign off a series of reforms intended to make it harder for banks to avoid the higher Basel III capital requirements that were put in place after the financial crisis.
The main sticking point between supervisors in the US and their European counterparts is the so-called output floor that limits the extent to which banks can use their own models to calculate the riskiness of their lending. The floor in effect prevents them from using risk estimates that are too far below the outputs of a standardised model devised by regulators. Read more
Well the Daily Telegraph says we have relatively low rents and house prices!! Not sure where they got that one from. Also the average wage is now higher in NZ than the UK thanks to BREXIT.
http://www.telegraph.co.uk/travel/family-holidays/uk-vs-australia-vs-ne…
Going viral
"Appalled" One Nation senator Malcolm Roberts seeks punitive stance against Kiwi "settlements" in Australia
"At the very least, we should look at further cutting benefits for New Zealanders living in Australia"
"Tougher immigration policy aimed at NZ would stop Kiwis from establishing settlements in Australia"
http://www.theage.com.au/federal-politics/political-news/appalled-one-n…
This speech makes a reasonable link between the modern West and Israel, including showing that countries like the US, Germany, NZ etc have quite a shared economic and values history.
.
https://www.american.edu/cas/israelstudies/upload/Amichai-Magen.pdf
.
Perhaps though you are right, Israel actually has a higher set of values now than the West, while operating under huge adversity.
Does NZ and Australia still have a stance against terrorism? This is having a real economic effect on all countries now. Israel contends with this deadly force daily while still maintaining democratic systems and technical/economic innovation. Take a look at your satellite dish, sophisticated routers, hi-tech Hort equipment, IT security etc - chances are it was designed and made in Israel.
Easy to be the big hero from the far side of the world and toss all sorts of wisdom out there - especially when we are so removed and unaffected by it. But we are a joke really, we go into a state of panic when Maori raise their (placid) concerns over a grevance - god knows how we'd cope with real agression.
I think patriotic political parties like Australia's One Nation and the Dutch Party for Freedom are sympathetic toward Israel because they would like to implement similar policies such as immigration based on certain criteria, stern treatment of illegal immigrants and having robust defence forces. I don't think it is an issue that Nationalists should fall out with each other over.
I've been saying for years that Australia needs tougher immigration policy aimed at NZ but not for that reason. A tight population cap should have been put on the Trans-Tasman border back in 2001 with the changes that John Howard announced.
15% of the NZ population lives in Australia (650,000+). Deport NZ gangs in Australia such as the Black Power & Mongrel Mob back to New Zealand.
Also deport Kiwi terrorist fighters back to New Zealand who try to get to Syria to fight for Terrorist groups like ISIS.
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