Here's my summary of the key events overnight that affect New Zealand, with news of how much rural land "the Chinese" own in Australia.
But first, the US Federal Reserve fined HSBC US$175 mln on Friday for "unsafe and unsound practices" in its foreign exchange trading business, the latest in a series of fines for banks that failed to prevent market manipulation. (HSBC made a tax-paid profit of US$11.5 bln in the year to June, 2017, so this fine represents 1.5% of that.) In a separate settlement, Deutsche Bank agreed to pay US$190 mln to settle US litigation accusing it of rigging prices in the same roughly US$5 tln-a-day foreign exchange market. (A judge still needs to confirm this second deal.)
And staying in China, their government is actively encouraging banks to make fewer real estate loans, and more personal loans. The drive is on to bolster consumer spending, and their economy, rather than real estate gambling. But it is not working. Savvy Chinese borrowers are taking on more personal loan debt - but they are using those funds to make housing loan deposits, undermining both government objectives. Estimates are that at least one third of all short-term consumer loans issued since March have gone toward property purchases.
And the Chinese central bank is going further, easing capital requirements for lending to SMEs, a boost it hopes will support their economy without aggravating already high corporate debt. Basically, they want to reduce the amount of cash lenders must hold as reserves from next year, with the size of the cut linked to the flow of funding to parts of the economy where credit is scarce. A lot of action is coming now, hard on the heals of S&P's recent credit rating downgrade, which must have stung.
It is Golden Week in China, so news and data out of there will be limited until next week.
In Germany, their unemployment rate reached 5.5% in September, the lowest rate since German reunification in 1990. (New Zealand's equivalent unemployment rate is 4.8%.) The growth in German retail sales was also a strong +4.7%.
Volkswagen is taking another US$3 bln charge to fix diesel engines in the United States, lifting the total bill for its emissions-test cheating scandal to around US$30 bln. A senior manager has been arrested in Germany. The technical fixes for this scandal are proving much harder in implement.
Don't forget that today is a public holiday in Australia (Labour Day).
However, we should report that an official survey of foreign ownership of agricultural land in Australia shows the Chinese own 2.5% of it. The largest holders are British at 2.6%, and these two are followed by the Americans who own 0.7% and similar holding by the Dutch. All up, foreigners own less than 15% of their agricultural land. But just like in New Zealand, it is only 'news' and generates political angst in some quarters when people notice the Chinese ownership. And actually foreign ownership went down in Australia in 2017 from 2016. Go figure. Still, that won't stop those will willful blindness continuing their rage. (That "3%" number there sounds familiar here when we did our own official surveys.)
And, for the record, Tesla's Elon Musk signed his deal with South Australia over the weekend to install 100 megawattt/129 MWh system of battery storage in 100 days for US$50 mln, or the installation is free. It looks like he will easily meet that, because he got a jump on it while the bureaucrats prepared the paperwork and half of it is installed already. The system is part of the state's wider AU$550 million plan to power South Australia which suffered blackouts earlier in the year because baseload capacity was taken offline before new capacity was ready.
In New York, the UST 10yr yield is rising again and is now at 2.34%.
The price of crude oil is will start the week unchanged at US$51.50 a barrel, while the Brent benchmark is just over US$56.50.
The price of gold is lower again, down -US$3 to US$1,283/oz.
And the Kiwi dollar is also marginally softer starting the new week at 72.1 US. On the cross rates we are at 92 AU¢, and 61 euro cents. And the TWI-5 index is now at 74.7.
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 ».