Here's my summary of the key events from over the long weekend that affect New Zealand, with news of large amounts of Chinese money, firstly going astray in Hong Kong, and separately other money being used to try and buy Aussie politics.
And we have some repeat news items from yesterday, in case you missed them.
Firstly, the US economy added just +138,000 net new non-farm payrolls in May, far lower than expected, and there were a large downward revisions to jobs growth in the previous two months. These figures, coupled with average hourly earnings which grew just +2.5% in the twelve months to May, may prompt the doves at the US Fed to reconsider voting for a rate increase in the middle of next week. But with their unemployment rate falling to 4.3% (which is down from 4.8% at the start of the year and the lowest since 2001), and other data from the report pointing to diminishing labour market slack, most still still expect the Fed to raise rates when they next meet on June 15, NZ time.
A closely-watched survey of the giant American services sector came out overnight and is still very bullish even though it slipped a bit from April. It recorded its 89th consecutive month of expansion with an index level of 60.7. Importantly, the new orders sub-index was strong, and even more importantly the employment sub-index was also strong, and up.
The American trade deficit widened in April as Americans stepped up purchases of foreign goods such as cell phones and equipment. It increased +5.2% from a month earlier to US$47.6 bln. Imports grew +0.8% from March while exports fell -0.3%.
That may have been why global airfreight (as measured by tonne kilometres) grew by +8.5% year-on-year in April, down from growth at the rate of +13.4% in March. The healthiest region was the Asia-Pacific, with North America a laggard.
Meanwhile, global passenger air travel grew by +10.7% year-on-year in April – the fastest pace in 6 years. But travellers aren't going to the USA in the numbers they once did - their US1.6 tln tourism industry is learning the downside of having a dopey President.
In China, activity in their services sector expanded at the fastest pace since January thanks to strong growth in new orders. It offset some recent unexpected weakness in manufacturing. Their services PMI rose to 52.8 in May from April's 51.5. A similar uptick, powered by new orders, was recorded in India.
And one of China's largest dairy companies says it is in trouble after someone senior absconded with most of its cash. This is a company with about NZ$6 bln in assets. About NZ$0.5 bln in cash is missing, as is Miss Ge Kun who was in charge of its treasury function. This crisis opens up a major realignment opportunity in the China dairy industry.
In Australia, first it was nib who are accused of changing product terms without first informing customers. Now it is Optus, a phone and broadband supplier admitting to the same behaviour.
Worse, the Aussie spy agency is warning its major political parties about taking donations from two high-profile Chinese businessmen because they may be a conduit for Chinese Communist Party interference in Australian politics. And a former Australian trade minister walked straight out of parliament last year and into an AU$880,000 a year job with a billionaire closely aligned to the Chinese Communist Party and its key trade policy. Democracy is under attack and subversion from everywhere.
In New York, the UST 10yr yield is lower at 2.18%.
The price of oil is a softer again today with the US crude benchmark is now just under US$47.50 a barrel, while the Brent benchmark is now under US$49.50.
The price of gold is higher and now at US$1,279/oz.
However, the Kiwi dollar is pretty much unchanged today at 71.4 USc. On the cross rates the Kiwi is at 95.4 AU¢, and 63.5 euro cents. Against the British pound, we are up to 55.3 pence. The TWI-5 index is now at 75.6 and that is still its highest since mid March.
If you want to catch up with all the changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
37 Comments
Jenny Shipley and Don Brash are now both "employed" by Chinese banking interests. Our MP (National, Mike Sabin) resigned a couple of years ago to join Chinese company Shanghai CRED as CEO of their Northland tourist interests and there is a question mark over Judith Collins regarding the connection through her husband to Chinese company Oravida. These are just some of the links we know of to our past and present MPs, not that there is anything intrinsically wrong with that but it does make you wonder.
But more surprisingly the survey found that when asked to choose between building closer bilateral relations with the US, the UK and China only 15.6 per cent chose the US. China came out tops, with 42.5 per cent backing, while 42 per cent said the United Kingdom. Read more
In theory, the police, SFO, the spooks.
In practice, the definitions of corruption in legislation are conveniently narrow and easily circumvented, and how much action is taken depends on things like how spineless the police commissioner is. Again, in theory the cops are independent so that they can't be co-opted by the government of the day, but in reality the top brass may just roll over and show their bellies.
There is a divide between the elites and the peasants
We are sharply divided between two classes of people: The powerful, the elites, the ultrarich on one side and the rest, the powerless peasants who live a hardscrabble existence
NZ's reputations are constructed by and constantly repeated by the elites. SFO and Police are starved of funds and can't investigate, don't chase paltry things like corruption, DoC and EPA can't and don't pursue pollution due to starvation of funds by the elitist purse-string-pullers
Hard-scrabble peasants trying to survive don't believe NZ is corruption free, and they know NZ is not 100% clean green and pure
I remember John Key lambasting John Campbell saying it wasn't his job to "hold the Government to account"
http://www.stuff.co.nz/entertainment/tv-radio/67740334/prime-minister-j…
Journalism is critical for communicating what the Government is doing, and in part holding the Government to account is the job of journalists. We have very few real journalists left in NZ that political parties are getting accustomed to getting away with whatever they want. Maybe they're all lining up high paying jobs after receiving enough back handers.
Doha reportedly paid al-Qaeda affiliate and Iran to win release of royal hunting party
https://www.ft.com/content/dd033082-49e9-11e7-a3f4-c742b9791d43
But critics accuse it of seeking to punch above its weight diplomatically, meddling in regional affairs and using the Arabic channel of Al Jazeera, the satellite television network it set up, as a propaganda tool.
A situation which is apparently of no concern to New Zealand authorities.
China Debts and Layoffs and Hostage Situations
http://www.chinalawblog.com/2017/06/china-debts-and-layoffs-and-hostage…
China and dodgy money, have we suddenly woke up and smelt the coffee this morning? Hasn't this been going on for years, isn't this the same type of money that has fulled the gateway cities around the world including Auckland.
You'll probably find that the Dairy industry money has absconded to Vancouver which seems to be the other favorite money laundering capital second only to Auckland.
A Real Estate House of Cards
https://www.youtube.com/watch?v=d9GRENUsHjA
Twas the same for a long time in Vancouver. In fact, it took the emergence of young ethnic Chinese but born in Vancouver folk raising concerns with the money flooding in before they could manage to get some of those "xenophobe!" yellers to actually discuss things rationally.
Despite weaker growth than the preliminary 3.0% print, Unit Labor Costs rebounded in Q1 (from Q4 -4.6% QoQ to +2.2% QoQ in Q1), but we note that for the second consecutive quarter real compensation fell (-0.3% QoQ). Read more
The market has priced out all but a mere half a hike for the rest of 2017 and 2018, meaning that the consensus has shifted toward a “June and done” narrative when it comes to the Fed. Read more
I have been expressing concern about the goings-on in China for years on this forum .
Its time China started behaving like a responsible economic super-power , and stopped its rogue behavior .
China is not the elephant in the room , its a whole herd of 200 rogue bull elephants .
Yes. And don't confuse the ones being discriminated against! ( "I don't want any Asians buying my house")
https://www.youtube.com/watch?v=0YM9Ereg2Zo
Such balance ...
Meanwhile ... while you are not looking ... the USA owned and controlled multinationals who enjoy financial privileges and protection beyond compare are sucking the life-blood out of western civilisation are given sacred-cow status and no-one can or will touch them
I don't disagree, but while many different nationalities own property and operate businesses within our borders not all are quite so aggressively expansionist, intentionally corrupt, politically manipulative and willing to profit at a loss to the host. That is not to mention what occurs near and within their own borders.
But Kiwis absolutely were up in arms and out protesting against American corporate influence. I saw thousands of them marching down Queen Street, for example. Remember the TPP, Disney Corporation driving the extension of NZ's copyright law from 50 to 70 years, and American pharmaceutical companies trying to undermine Pharmac?
We're likely deceiving ourselves should we regard China as having less imperialistic ambition than the USA, however.
Since August 15, 1971, the U.S. has gradually stopped its real economy and moved into a virtual economy. It has become an “empty” economy state. Today’s U.S. Gross Domestic Product (GDP) has reached US$18 trillion, but only $5 trillion is from the real economy.
By issuing debt, the U.S. brings a large amount of dollars from overseas back to the U.S.’s three big markets: the commodity market, the Treasury Bills market, and the stock market. The U.S. repeats this cycle to make money: printing money, exporting money overseas, and bringing money back. The U.S. has thus become a financial empire. Read more
Which is what their so called war on terrorism is all about. They attack the countries that don't want to trade oil and rare metals with US dollars. The countries setting up the gold based currency are the ones being attacked. Not the Saudi's who the CIA identified as the twin towers attackers. As they say, follow the money.
Iran next. I prefer Chinese foreign policy to that of US. I hope our next government cuts them loose. They are gone rogue. It would be good if our media actually wrote about what is going on on the world stage, calling the US president dopey doesn't quit cut it.
10yr UST at 2.18%, US deficit widening & US jobs revised downwards, do you really think the Fed will be able to keep raising rates throughout 2017 & 2018 as they said they would ? I certainly don't, they will probably hike by 0.25% next week because they committed to do so but I STILL don't buy significantly higher interest rates
http://m.scmp.com/business/companies/article/2096933/chinas-huishan-dai…
$360m hole.
Huishan made global headlines in late March after its shares mysteriously plunged 85 per cent within 90 minutes, just days following the disappearance of the company’s finance chief and four months after US short-seller Muddy Waters declared the stock was worth close to zero.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.