Here's a special holiday update of some key events and data you may want to know about today.
On Wall Street, markets have opened strongly higher, up over +1% in most indexes. Driving the relief mood is that the protectionist hard right has probably been seen off in France. And combined with the recent Dutch vote, the core EU is 'safe'.
Across the Atlantic, the story is the same. And the euro has risen. And as an aside, the French election, like the Dutch one, was accurately 'predicted' by professional polling.
Success at the May 7 run-off poll by the centerist, pro-EU candidate will likely steel the EU negotiators to be tougher in their negotiations over Brexit.
In the US, a government shutdown looms as their debt ceiling limits are reached. The Trump administration is approaching its 100 days in office with little to show, despite the bluster. And a shutdown will compound its problems and perception it can't get anything done - even though it controls both houses of Congress.
President Trump has ordered White House aides to accelerate efforts to draft a tax plan that slashes the corporate rate to 15% and prioritises cuts in tax rates over an attempt to not increase the deficit. It seems markets will reject the wisdom of this "for the rich" strategy.
The relationship between Malaysia and Abu Dhabi over the corruption scandal that Malaysia dragged Abu Dhabi into is about be would up. Malaysia has reached an agreement to pay Abu Dhabi about US$1.2 bln as settlement over the debt of embattled government fund 1MDB. Abu Dhabi sovereign wealth fund International Petroleum Investment company will get half the amount by the end of July and the rest by the end of this year. Corruption is expensive. And an election is due soon.
In New York, the UST 10yr yield is up today, now at 2.27%. Risk premiums for investment grade corporate debt, especially in Europe, have tumbled today.
The US benchmark oil price is lower today and now just under US$49.50 a barrel, while the Brent benchmark is just on US$51.50.
The gold price is lower as well, down by -US$14 to US$1,274/oz.
The New Zealand dollar is little marginally lower and now at 70.1 USc. On the cross rates it holding at 92.7 AU¢, and a lot lower at 64.6 euro cents. The TWI-5 is now at 74.8.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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The so-called neutral U.S. interest rate fell in the final three months of 2016, according to a widely-cited estimate produced by Fed economist Thomas Laubach and San Francisco Fed President John Williams. The theoretical rate -- which is adjusted for inflation and would neither stimulate nor restrict an economy growing on trend -- declined to roughly zero from 0.2 percent. The drop, which reverses a slightly rising trend in the last three quarters, suggests the Fed may not be providing as much stimulus as officials previously thought. Its benchmark rate, adjusted for core inflation, is currently -0.8 percent. Read more
Hmmmmm....
“Although economic theory provides insights into the various factors affecting the natural rate of interest, measurement of the natural rate of interest has proven more challenging. This arises because the natural rate, like other latent variables, must be inferred from the data rather than directly observed.”
In other words, they don’t really know. What they do know is that interest rates all around the world have fallen to extremely low levels, sometimes hugely negative levels, and therefore there must be “some” reason for it. Trying to reconcile how such massive “stimulus” failed to stimulate anything, they come up with a very low R* that, again, preserves monetary policy as “stimulus” while recognizing this reality where by public perception at the very least the world hasn’t turned out the way it was supposed to when subprime was contained. Read more
15% corporate Tax .. interesting
and in Auckland "How the Auckland housing crisis is hitting small and medium businesses"
http://www.nzherald.co.nz/small-business-sme/news/article.cfm?c_id=85&o…
"Auckland's housing squeeze is hitting small and medium businesses and driving staff from New Zealand's biggest city, according to a new survey.
The overheated property market is being blamed for firms' inability to recruit and retain the required amount of staff.
One third of the firms in MYOB's latest Business Monitor survey say the housing market has sent current and prospective employees packing from Auckland."
"Westpac Group continue to pile on the pain for property buyers with a new round of rate rises by up to 30 basis points and tougher terms and conditions....But savers are also being squeezed with cuts in some fixed term rates, despite the after-tax return for most accounts already being negligible. "We are reducing some of our fixed rates for customers who make principal and interest repayments, to encourage customers to pay down their home loan in this low interest rate environment," a Westpac spokesman said.
For an aging population repaying loans could be problem. It might make mathematically sense, but keep in mind that if you ever need to borrow from your bank again, you may not be able to (age!).
As many have observed over the experiences of a lifetime "NEVER 'voluntarily' give the bank back it's money"
http://www.afr.com/personal-finance/lenders-use-regulatory-clampdown-to…
The Government's propaganda "paid for" news machine continues on regardless
Headlines in NBR
Immigration is not the cause of Auckland's woes - though it will be part of the solution
Read more: https://www.nbr.co.nz/subscribe/202126
Is immigration the cause of Auckland's woes?
Read more: https://www.nbr.co.nz/subscribe/202207
Over 40% of Auckland's population are First tier migrants born overseas
Who is the propaganda machine trying to blame?
... easy solution .... we just need to import two otherguys ... or perhaps , 2000 otherguys , to construct new dwellings for Auckland's First tier migrants born overseas ...
And then , a few more immigrant construction workers .... to build accommodation for the 2000 otherguys we had to import to get busy building doss-houses and swamp flats for the First tier mob ...
... and then ...
Well ... I think you get the picture ( neatly framed and hung on your brand new fibre-cement wall ) ...
Gosh ... if this continues in perpetuity , the nation's GDP growth rate will soar to infinity and beyond ...
... clever buggers , Wild Bill & the Gnats ... too clever by half !
Watched a doco on Duke channel last night regarding the problems of subprime mortgages and derivatives.
Most of the heavy weights involved are still operating in the financial areas today.
Most notable was that many of Clintons,Bushes and Obamas people are now working at Ivy League varsities in the business education.
Of course they all denied doin anything wrong.
Doco was called INSIDE OUT narrated by Matt Damon,made around 2012.
China's Banking system has some serious issues that we can neither fathom or measure.
It feels a bit like the year before the subprime crisis (2007) , we knew something was wrong .but we had no understanding of the extent of the rot that had set in ,
Its made worse because we cannot rely on what info comes out of China because there is no free press and the State regulates what info is available , so we are in the dark .
Either way you look at it , there is something quite rotten in the state of China's banking system ............
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