Caterpillar in retreat; Canada wholesale trade drops; EU consumer confidence lower; China criminalises high interest rates; Aussie commercial property popular; UST 10yr yield at 1.75%; oil and gold up; NZ$1 = 64.2 USc; TWI-5 = 69.2

Caterpillar in retreat; Canada wholesale trade drops; EU consumer confidence lower; China criminalises high interest rates; Aussie commercial property popular; UST 10yr yield at 1.75%; oil and gold up; NZ$1 = 64.2 USc; TWI-5 = 69.2

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Here's our summary of key events overnight that affect New Zealand, with news of more subdued economic signals.

Giant equipment maker Caterpillar, an industrial bellwether, has sharply cut its forecasts saying the trade wars are hurting it. Sales in Asia-Pacific, its third biggest market, fell -13% as it faced falling demand in China and stiff competition from local rivals, while revenue in its main developed world market in North America fell -3%. This contrasts with China growth for them of +36% in the prior year, and North America growth of +15% on the same basis.

Equity markets also absorbed the news of a major profit fall at Boeing, although that isn't a big surprise given in 737MAX problems. So far today Wall Street is up a lacklustre +0.1% following mixed European markets. Shanghai and Hong Kong were lower yesterday, and the NZX50 has a terrible day, closing more than -2% lower.

In Canada, their wholesale trade slumped in September. It was expected to be lower, but not actually decline.

In the EU, consumer confidence survey data showed the same trend, coming in even worse than analysts were expecting and at the worst level of the year.

In China, their top judicial and police authorities have made lending at an­nualised rates above 36% a criminal offence as part of a crackdown on underground banking. Actually, the court ruling happened in July, but bringing the government agencies into line has taken a while and it multi-agency stance was only announced yesterday. This will have broad implications for many firms.

In Australia, they are reporting that foreign money, mainly Asian but not Chinese, is pouring in to commercial property investment there.

The UST 10yr yield is lower than this time yesterday, down -4 bps at 1.75%. Their 2-10 curve is positive but unchanged at +18 bps. Their negative 1-5 curve is -1 bp. Their 3m-10yr curve has is also now positive at +1 bp. The Aussie Govt 10yr is lower again at 1.09%, a fall of -5 bps. The China Govt 10yr is now at 3.24%, a -1 bp dip. The NZ Govt 10 yr is now at 1.28%, down -6 bps since this time yesterday.

Gold has recovered the ground it lost yesterday, up +US$8 to US$1,492/oz.

US oil prices are much firmer today, up more than +US$1, now just over US$55.50/bbl. The Brent benchmark is just over US$60.50.

The Kiwi dollar is still firm against the greenback, now at 64.2 USc. On the cross rates we are firm as well at 93.8 AUc. Against the euro we are at 57.7 euro cents. That puts the TWI-5 up at 69.2.

Bitcoin has taken a sudden drop this morning and is now at US$7,471 and that is more than +US$700 lower in a day and a -9% dive. Zuckerberg's Congressional testimony on Libra seems to have undermined it. 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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21 Comments

Would be good to get details of the foreign money, mainly Asian but not Chinese, which is pouring in to commercial property investment in Australia. I predicted a while ago that we may see the same thing that happened in property with Chinese money recently now coming from other emerging Asian economies. The link provided is pay walled.

Wonder if it's flight from Asia fearing a more dominant China?
Note that it is commercial property.

Who are Cushman and Wakefield. Are they commercial real estate agents or a concerned volunteer humanitarian agency . ?

This fire has cause a lot of disturbance to business and the huge number of residents in the CBD. Will be interesting to see the diagnosis of what caused it.

It did seem to burn rather too well, too.

Pure speculation, but early reports indicate workmen were sealing the roof with the bitumen based sealing materials. Heat is used to fuse these, usually using a gas torch of some sort. If too much heat is applied and it ignites (or ignites by accident, careless with the gas torch) the bitumen and it melts and becomes very liquid. This can then flow in to cavities and as it is already burning......

I'm grateful no one was injured or killed.
But what a pity it was the conference centre and not the flea-ridden casino that pathetic haunt
of human misery.
The cause almost certainly goes back to the death-blow dealt to the Ministry Of Works by the
Bolger National Government in the 1990s when for about 50 years up till then MOW had churned out hundreds
of perfectly trained tradesman each year. National, voraciously taking up the baton from Rogernomics said let the "market" train them.
So from that point on the building industry has been ridden with half trained or non-trained cowboys who have never been
properly taught safety procedures let alone building skills.

Low interest rates have fired up a chase for investment yield in the property market across the West. Rents in Dublin are reportedly 37% higher than when their housing market last peaked in 2008.
This time around, looks like we have a property yield bubble in the EU.

Blowtorch on bitcimum... even I could figure that one out.

yeah, but why did that happen, why was it allowed to happen, and why there wasn't the ability to snuff it out.

Behind schedule, cutting corners, low skillset, Architects working on a paperthin budget ..NZ way of building anything

blow torch has been standard practise to install bitumen membrane roofing for decades if not a century.

Jeez Lonewolf, hope you got out of Bitcon, or, you're playing the wiley long game.

Not a word on the repo-market. Very interesting situation developing there.

N Shore sales over $2m in year to end of August were 20.66% lower than previous 12m period
Albany Ward it was 36% down.
Why the difference?
What is demographic in them?

Stocks Surge As Fed Panics - Dramatically Increases Liquidity Provision Through Brexit Deadline

When policymakers talk about interest rate stimulus, they largely mean the mortgage space.

If interest rates are indeed responsible for this not-unexpected rebound (nothing goes in a straight line) then that’s more economic weakness embedded within bond market skepticism pushing rates down. In other words, an overall negative economic trend works out to help a small segment of the housing market.

Tesla just burnt the shorts. China coming online, Y released in the middle of next year, trucks to come...luckily big oil has deep pockets to cover their losses.

Wow! "Tesla just burned the shorts", apparently by being on the verge of launching its very expensive product on a saturated automobile market that is currently in a 15 consecutive month slide in a broader economy on an even deeper slide. Apparently there are some, i.e., our Treasury Department and bank economists, who still swallow official Chinese statistics.

The EV market is rather distinct from the ICE market... I can pretty much guarantee I'll never buy a new or near new ICE car (only if the current ICE dies, and EVs still aren't quite there will it be a possibility) , but a new EV is definitely on the cards in a few years once prices and choices improve.

VW sold over 3 million cars in China last year, Audi and BMW each sold over 600,000, I'm sure Tesla can take a bite of that.

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