US inflation unchanged; Wall Street up; US-China pursue mini-deal; World Bank sees China growth under 6%; EU tax haven list targets Pacific; UST 10yr yield at 1.65%; oil up and gold down; NZ$1 = 63.3 USc; TWI-5 = 68.7

US inflation unchanged; Wall Street up; US-China pursue mini-deal; World Bank sees China growth under 6%; EU tax haven list targets Pacific; UST 10yr yield at 1.65%; oil up and gold down; NZ$1 = 63.3 USc; TWI-5 = 68.7

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Here's our summary of key events overnight that affect New Zealand, with news markets are more comfortable with risk today.

Firstly in the US, consumer inflation was unchanged in September at +1.7% with the core measure without food and energy at +2.4%. Both were lower than expected and gave markets the view that this will encourage another Federal Reserve rate cut.

Wall Street is up again today by about +0.7% which reduces its October decline to just -1.3%. This follows rises closer to +1% in Europe overnight and Shanghai gains of +0.8% yesterday. Japan and Hong Kong weren't as positive however. And both the ASX200 and NZX50 fell yesterday.

But the underlying reason for the market rise, modest as it might be, is that senior Chinese officials have now joined the trade talks and the US President is respecting them with a planned meeting. Respect goes a long way with the Chinese. Now the goal in these talks has been reduced to a "mini-deal", some sort of resolution seems more likely.

And Apple is kowtowing to Chinese wishes, denying Hong Kong protesters access to an app they use in their protest activities.

In a new report, the World Bank says growth in developing East Asian and Pacific economies is expected to slow from 6.3% last year to just 5.8% this year and only 5.7% and 5.6% in 2020 and 2021, respectively, reflecting a broad-based decline in export growth and manufacturing activity. For the first time in thirty years, they say China's growth will be under 6% in 2020 and down from 6.1% this year.

In Europe, they have pared back their list of "non-cooperative tax havens" to just 11 countries, removing Switzerland and the UAE. Of the 11 still on it, six are Pacific Island, three are Caribbean islands, and two are in the Middle East. None are European so the "Dutch double sandwich" is safe. Being weak economically seems to be a key criteria for being on this list.

In the UK, hopes are rising that a resolution to the Irish border questions in Brexit may be available.

The UST 10yr yield is up another +7 bps to 1.65%. Their 2-10 curve is positive at +14 bps. Their negative 1-5 curve is much narrower at -14 bps. Their 3m-10yr curve has almost disappeared at just -5 bps. The Aussie Govt 10yr is up +7 bps at 0.97%. The China Govt 10yr is up +2 bps at 3.14%. The NZ Govt 10 yr is now at 1.07%, and a +3 bps rose this morning.

Gold is down -US$9 to US$1,496/oz.

US oil prices are slightly firmer today at now just over US$53/bbl. The Brent benchmark is over US$58.50.

The Kiwi dollar is firmer this morning, now at 63.3 USc and up the thick end of +½c from this time yesterday. On the cross rates we are unchanged at 93.5 AUc. Against the euro we are at 57.4 euro cents. That puts the TWI-5 at just on 68.7.

Bitcoin is unchanged at US$8,537. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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48 Comments

Comment Filter

Highlight new comments in the last hr(s).

"and only 5.7% and 5.6% in 2020 and 2021, respectively,"

Spare me; how long can those compound rates be maintained in anything at all? Of course they were unsustainable.

But there's another media question I have this morning - when will we make the connection between overpopulation, disenfranchisement, disenfranchised anger at 'others', and killing outbursts? When will we stop calling that 'terrorism' and start calling what Turkey, the US and Russia are doing/have done in the Middle East (and us, by association), 'terrorism' instead?

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The media choose to look at those issues through a straw PDK, or else they might end up doing something they haven't done for a long time - ask a deep and meaningful question that might create some serious and meaningful political debate that would require our politicians to act. Couldn't do that!

On that topic though, in a response to Jaffas demanding the Government pay for their infrastructure I was asked if I paid for my water in Wangavegas. I responded that the Auckland situation was evidence of your point that the population in Auckland is exceeding the capacity of the resources to support it. Barely got a murmur in response.

Absolutely agree Awk is exceeding its loading capacity. Respectfully the key point being, that overloading is the direct result of Central Govt immigration and foreign ownership policy v.s. anything set by local residents and council. Twenty years of foreign ownership surge resulting in 40k empty houses as at last census, and immigration up 700k up since 1990. Who voted for this..... Accordingly why shouldn't central Govt contribute to the mess they have created?

14
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Does Apple support democracy and individual freedom, or dictatorships? Interesting for an American company to take the position it is. Clearly money is the only deciding factor here. Ultimately this may come back to burn them.

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Nothing new for corporate America. Their oil corporations have been favouring dictators over democratic leaders in South America and Middle East for decades.
Tech is simply the new oil!

At what point do they stop being American companies too? "In 2017, Denmark became the first nation to formally create a diplomatic post to represent its interests before companies such as Facebook and Google. After Denmark determined that tech behemoths now have as much power as many governments"...

These companies have become globally owned and have been basing their tax headquarters in tax havens. So are they still American or any other national origin? They may still enjoy the benefits of societies in which they have large bases, but whether they represent the interests at all of such societies is another matter. If their one and only obligation is to their shareholders, then it shouldn't surprise us when they behave in line with their amoral mandate, and it's up to societies to consider how to ensure their own interests are also represented.

Including boycotts, regulation or other methods. It's up to societies.

Apple supports $$$

Yep the NBA did the same thing last week with the Houston Rockets apologising for their GM Daryl Morey's tweets in support of Hong Kongers... Tweets were subsequently deleted and the players all quoted off a script. Funny how South Park is the only one with nuts to support said democracy and individual freedom over money - https://www.theguardian.com/tv-and-radio/2019/oct/08/we-good-now-china-s...

Now some of the NBA players and coaches who have been so vocal about not visiting the WhiteHouse are now silent about China.Infact some of them will be playing in matches in China.

Nothing bad ever comes from appeasing a dictator who's also engaging in genocide, I suppose.

https://www.reuters.com/article/us-shell-carbon-offset-idUSKBN1WO2W0

"Shell said it would use carbon credits from conservation projects in Peru, Indonesia, the United States and Britain".

Maybe they could re-plant Brazil.... I wonder how many will believe Shell enough to absolve their consciences?

Not a squeak about using their profits to fund development of alternative fuels and networks such as hydrogen and roll them out at affordable levels. No vision, just greed.

It bothers me greatly that Greta Thurnberg and other eco terrorists are trying to destroy the planets life , by removing CO2 .... plants hoover it up ... they're total guts's , guzzlers of CO2 ...

. . leave the plants tucker alone you sods .. they're not campaigning to nick your lunch !

GBH (You do realise that also means Grievous Bodily Harm?) it's not about taking the plant food away, but living in a balanced way. A good point though as some of the more extreme views sound as though they'd like to outlaw humans because we exhale CO2!

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GBH could also mean Great Big Hugger ... cos I'm an old softie ...

... and rising CO2 levels could mean a greener planet ... as NASA had reported... we're considerably greener now , than we were 20 years ago ...

Is that an inconvenient truth for Al Gore and his eco terrorist acolytes ?

And dryer...California living without power..Telsa packs to the rescue? Glad Greta is still pissing off the old white 50s males...

Old white males love young white girls (of the useful idiot kind). "‘We get a tax credit if we build a lot of wind farms. That’s the only reason to build them,’ Warren Buffett said." "That means wind-energy producers are getting a subsidy of $6.76 per million Btu. The current spot price of natural gas is about $2.40 per million Btu. Thus, on an energy-equivalent basis, wind energy’s subsidy is nearly three times the current market price of natural gas."
https://www.nationalreview.com/2016/06/wind-energy-subsidies-billions/

? Warren Buffett prime example of old white guy nearing extinction. I assume he will take his super wealth with him to the grave - or maybe donate to some wind farm start ups?

Found the reason to my above question: In #Germany, where the #CO2Tax is now reality, 2.000 #companies are exempt from paying CO2-Tax. So the big guys pay nothing, the small companies & taxpayers get ripped off! Link

That's an interesting point, forests were once believed to generators of rainfall, is that still the case? I seem to recall being told something along those lines at school? A warmer planet would suggest more evaporation and places like California being on their west cost should really get wetter considering the prevailing winds?

Not just trees. "The Great Plains of the central United States—the Corn Belt—is one of the most fertile regions on Earth, producing more than 10 billion bushels of corn each year. It’s also home to some mysterious weather: Whereas the rest of the world has warmed, the region’s summer temperatures have dropped as much as a full degree Celsius, and rainfall has increased up to 35%, the largest spike anywhere in the world. The culprit, according to a new study, isn’t greenhouse gas emissions or sea surface temperature—it’s the corn itself."
https://www.sciencemag.org/news/2018/02/america-s-corn-belt-making-its-o...

Blame those evil frackers for stealing the plant food Gummie. "In a comical irony, fracking may be reducing carbon emissions more than all the world’s climate policies put together. According to the Energy Information Administration, U.S. carbon emissions from energy production are down 11 percent from the historic peak of 2007, largely thanks to the displacement of coal by natural gas in electricity generation. By contrast, Europe’s draconian climate measures have reduced carbon emissions by only about 8 percent in that time, while in the Asia-Pacific region carbon emissions have jumped more than 40 percent."
https://www.nationalreview.com/magazine/2019/10/28/a-shale-gas-revolutio...

Fracking causing rise in methane emissions, study finds. The boom in the US shale gas and oil may have ignited a significant global spike in methane emissions blamed for accelerating the pace of the climate crisis, according to research.
https://www.theguardian.com/environment/2019/aug/14/fracking-causing-ris...

US CO2 dropping and CH4 flat. "Natural gas production in the United States has increased 46 percent since 2006, but there has been no significant increase of total US methane emissions and only a modest increase from oil and gas activity, according to a new NOAA study.
“We analyzed a decade’s worth of data and while we do find some increase in methane downwind of oil and gas activity, we do not find a statistically significant trend in the U.S. for total methane emissions,” said Lan. The study was published in Geophysical Research Letters."

https://research.noaa.gov/article/ArtMID/587/ArticleID/2453/US-methane-e...

Latest data released by a US institution, the NOAA Earth System Research Laboratory (ESRL), sounds afresh alarm bells for the Artic and climate change. It adds further evidence corroborating an earlier hypothesis that predicts a catastrophic release of methane in the coming decades due to thawing Arctic permafrost.
https://eandt.theiet.org/content/articles/2019/09/arctic-methane-levels-...

So not fracking then. Have you forwarded this to James Shaw and Fed Farmers? From your link."The problem is to accurately pinpoint the sources of methane. “It is easy to know how much methane is in the atmosphere, but it is very difficult to work out what the source is,” he said."

And then there is the abiotic methane... "But for some hydrocarbons, especially methane — the colorless, odorless main ingredient in natural gas — it is now known that nature has many recipes, some of which are “abiotic” — derived not from the decay of prehistoric life, but created inorganically by geological and chemical processes deep within the Earth."
https://deepcarbon.net/rewriting-textbook-fossil-fuels

Give me your address - I will start fracking in your back yard - I am sure you won't mind.

GBH has been around here longer than me - reminds me of an old-timer called Wally. One hopes he/she/it is ex-site.

https://www.theguardian.com/environment/climate-consensus-97-per-cent/20...

https://www.nationalgeographic.com/environment/global-warming/deforestat...

And for those new here, Profile does a good imitation of a paid indusry hack. It's always easy to identify spin - it is always untrue, which is a bit of a disadvantage. In this case, a reduction in the rate of CO2 emitting per work done, is masqueraded as a total reduction. It isn't.
https://www.scientificamerican.com/article/co2-emissions-reached-an-all-...

“[Current] energy and climate policies are not sufficient to overcome the growth in economic activity or energy-use growth,”

Better we stick to truths, methinks.

... the truth is fantastic good news , that the earth has increased green coverage of 5 % over the past 2 decades ... much of this from gigantic reforestation projects in China and India ...

This leaf coverage equates to the entire Amazon rainforest ... we've gained an extra " Amazon " in 20 years ...

... cowabunga , that is good news indeed , is it not Mr PDK !

hehe
But that's not the narrative of 'resilience.org' (insert any other 'consensus based' enlightenment site)! It cannot possibly be a truth!

Plus, planting new forests sounds a lot like exponential growth in biomass - PDK hates exponential growth!

https://www.earth.com/news/tree-planting-programs-greenery/

'The downside: All that extra greenery in Asia isn’t nearly enough to offset deforestation".

Seedlings start out small. Deforestation culls mature trees, not to mention wiping out biodiversity. Satellite photos are planform/2D, not biomass. And the carbon you apologists seek to keep emitting, has been under the ground longer than our species has been around. Again I suggest we stick to truths.

How are animal extinctions tracking?

https://www.poetryfoundation.org/poems/43914/the-walrus-and-the-carpente...

But answer came there none —
And this was scarcely odd, because
They'd eaten every one."

David, I don't know how many years you have been doing your morning report, it's out early so I think you must be a very early riser. Anyway thanks from me for the effort, it's much appreciated.

my Friday book

Money's Prophets

https://www.amazon.com/House-Rothschild-Niall-Ferguson/dp/0140240845/ref...

Agreed Andrewj
I have always wondered as to what time David's alarm goes off.
From originally being at 9am, after David took over the report, it has become well before 8am. No doubt much better for most as they arrive at the office.
While there was a name change to "Breakfast Briefing", it would seem that the "90 seconds at 9am" by-title has become redundant.

Just remember US markets do not close until 9.00am and very soon 10.00am, when New York goes off daylight saving time.

Hi Audaxes
It is a case of preference and balance;
reading the wide-ranging summary of events early in the morning over breakfast is really great, but if last couple of hours of trading on US markets is really significant to one, then there are plenty of sites and apps that one can get this quite quickly and easily.

. . thanks Henry ... that Merchants of Despair looks like a cracking good read ...

Its Friday ... well named methinks , cos the Gummmster is gonna head to the fish & chippery to do a little fat checking .... hmmm .... tender crispy hoki .... NICE !!!!!

Nice.
What you doing Saturday, here a mate Bill needs a hand finding a spot for his shed.
The great thing is that Bill is cashed up. $ sorted!

I am thinking a spot between K-town & Woodend.

https://www.popularmechanics.com/science/energy/amp25728221/terrapower-c...

"Nuclear is ideal for dealing with climate change," Gates says in his letter, "because it is the only carbon-free, scalable energy source that’s available 24 hours a day." He adds that "problems with today’s reactors, such as the risk of accidents, can be solved through innovation."

Investors more comfortable with risk assets
Yes, for some European governments, not so sure about private investors and banks:
For The First Time Ever, Greece Issues Negative Yielding Debt
Have to hand it to the ECB when it comes to recognising and rewarding risk. Not.

"Respect goes a long way with the Chinese" - a pity the Chinese don't respect us.

They dont need our respect because we cant afford to bite the hand that feeds

One has to question whether respect means respect and allows disagreement, or whether it means falling in line and accepting the CCP's wishes.

The trade talks with the USA are important to China, thats why they have not intervened in Hong Kong yet,
they do not want the talks cancelled at the moment,

Hong Kong protesters are on borrowed time, if a deal is reached between the USA & China, and if the protests continue and get worse, China will make its move soon, the protesters have NO hope of winning, so it does not to other cities in China. hopefully the protesters realize this.