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Dow at record but US data unimpressive; China tackles stats corruption; Malaysia defaults on 1MDB payment; EU growth up; Aussies think high CEO pay unethical; UST 10yr yield at 2.25%; oil down, gold up; NZ$1 = 74.8 US¢, TWI-5 = 77.1

Dow at record but US data unimpressive; China tackles stats corruption; Malaysia defaults on 1MDB payment; EU growth up; Aussies think high CEO pay unethical; UST 10yr yield at 2.25%; oil down, gold up; NZ$1 = 74.8 US¢, TWI-5 = 77.1

Here's my summary of the key events overnight that affect New Zealand, with news of a new Aussie survey that tackles the ethics of high corporate pay levels.

But first, the Dow has hit a new record high in New York this morning on a positive set of corporate earnings reports.

That comes even though a widely respected factory survey failed to impress, and data on consumer spending rose only marginally.

The factory data may be because car makers are struggling to increase sales, even if the missing volumes are due to a new reluctance to dump cars into rental fleets.

In China, they are starting to make some effort to clean up the corruption of their official statistics which goes on at the local level. Only time will tell whether this is just window-dressing however.

In Malaysia, they have defaulted on a payment as part of their agreement with the United Arab Emirates to resolve their dispute over the 1MDB scandal. The missed payment was for US$629 mln. They now have five days to pay or the dispute escalates. Things are getting messier in this scandal. Unfortunately, a New Zealand court is playing a part in protecting one of the parties from being brought to account.

In Europe, growth is picking up. The latest data for the June quarter shows an annual growth rate among the euro area at +2.1%, up from +1.9% on the same basis in the March quarter. This is something that will raise expectations the ECB will begin to phase out its stimulus measures next year.

In Australia, their central bank has held its official interest rate at 1.75%. In their review however, they are starting to fret over the likely impact of the high Aussie dollar.

And staying in Australia, a new survey is focusing a light on the ethics of high executive pay. Apparently, 77% of Australians believing a CEO salary of AU$3 mln a year is unethical, and 55% of them believe an annual CEO pay packet of AU$600,000 is unethical. But most believe a AU$300,000 salary package is ethical.

Update: In New Zealand, the latest dairy auction brought a drop of -1.6% in prices in USD and that is a -3.2% fall in NZD. Prices for dairy fats like butter and cheese were notably weaker. Prices for WMP were down as well, by -1.3%. The derivatives markets did not signal this overall decline.

In New York, the UST 10yr yield is down to 2.25%.

The price of oil is also lower today, down US$1 and is now at just on US$49 a barrel, while the Brent benchmark is now just over US$51.50.

The price of gold is up by US$4 to US$1,272/oz.

And the Kiwi dollar will start just slightly softer again today at 74.8 USc. On the cross rates we marginally lower as well at 93.7 AU¢, and at 63.3 euro cents. As a result the TWI-5 index will start today at 77.1.

If you want to catch up with all the 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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4 Comments

The ethical Aussie survey steered clear of actor and sports salaries. The salary of Thor is up there with any top Aussie CEO. Though I spose he does save the Universe.

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I have no problems with high CEO pay and bonus shares etc provided we have a punitive tax for income above $200k. Maybe 70% would be appropriate.

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Should we really be (literally) punishing people simply for having high income? That seems slightly counter intuitive.

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Counter-intuitively I would see it as punishing the employers for being stupid enough to overpay their CEOs.

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