Here's a special holiday update of some key events and data you may want to know about today.
Firstly, in the US a rising exchange rate following the US presidential election brought a drop in exports which pushed the country's trade deficit in goods higher. Meanwhile, the number of Americans filing for unemployment benefits fell last week in a positive sign for their labour market.
A People's Bank of China official is reported saying that his country needs a real estate tax to control rising property prices and narrow the gap between rich and poor. But they are finding it hard to get such a tax in place because of resistance from vested interests and a lack of clarity on how a property tax will be handled between the central and local governments.
And China’s central bank is increasing the mix of currencies from 13 to 24 used in setting the yuan’s official daily value - a change that should help ease recent pressure weakening the Chinese currency. Their new basket includes the NZD at 0.4% along with the South Korean won, the South African rand, the United Arab Emirates’ dirham, Saudi Arabia’s riyal, Hungary’s forint, Poland’s zloty and Turkey’s lira. By doing this it will reduce the weighting given to the US dollar to 22.4% from 26.4%. Of course, this completely ignores that more than 80% of foreign trade transactions will be priced and valued in USD even if they are not settled that way..
Here's an interesting development: Amazon has filed for a patent to use airships to store products and serve as a base for delivery-drones. Drones launched from the so-called "airborne fulfillment centers" (AFCs) would use far less power than those launched from the ground. The AFCs would hover at about 14,000 meters and be restocked and resupplied by "shuttles or smaller airships."
In New York, the UST 10yr yield is down again today, now at 2.47%. And this trend is now being reflected in local swap markets, with all rates down -4 to -8 bps.
The US benchmark oil price is now just under US$54 a barrel, while the Brent benchmark is just on US$56. US crude stocks rose in the latest weekly review.
The gold price has jumped +US$17 and is now at US$1,156/oz.
The New Zealand dollar's small recovery trend is continuing and is now at 69.5 USc. On the cross rates it is stable at 96.5 AU¢, and 66.4 euro cents. The TWI-5 is now at 76.3.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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And China’s central bank is increasing the mix of currencies from 13 to 24 used in setting the yuan’s official daily value - a change that should help ease recent pressure weakening the Chinese currency.
Desperate?
Monetary policy in China has been since 2011 about one task only – to fill any created funding gaps created by what are called “capital outflows” in the mainstream but are really this unrelenting and variable “dollar shortage.” Read more
We Know How This Ends – Part 2
https://snbchf.com/2016/12/snider-dollar-currency-crisis/
Perhaps it’s just a function of cross-currents in Manhattan, but I can’t recall a year, even in the worst of the financial crisis, where so many businesses that I knew, either personally or by reputation, went under. And the part that bothers me is that a very high proportion were well established, as in they’d been around for more than ten years.
http://www.nakedcapitalism.com/2016/12/when-a-business-you-like-dies.ht…
But the data doesn't support the anecdote: http://www.abi.org/newsroom/bankruptcy-statistics
When things change, those it affects negatively have a stronger response than for those that it affects positively. Others have observed the impact as 70:30 (negative:positive). This tendancy to focus on the negative is deep within us. That is why the data is helpful. It avoids a primal bias.
"A People's Bank of China official is reported saying that his country needs a real estate tax to control rising property prices and narrow the gap between rich and poor. But they are finding it hard to get such a tax in place because of resistance from vested interests and a lack of clarity on how a property tax will be handled between the central and local governments."
Sounds very familiar.
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