US wholesale data weak; US give muddled signals on China trade; China trade better than expected; Canada data weakens, RBA downgrades growth; UST 10yr 1.93%; oil unchanged and gold down; NZ$1 = 63.2 USc; TWI-5 = 68.5

US wholesale data weak; US give muddled signals on China trade; China trade better than expected; Canada data weakens, RBA downgrades growth; UST 10yr 1.93%; oil unchanged and gold down; NZ$1 = 63.2 USc; TWI-5 = 68.5

Here's our summary of key events overnight that affect New Zealand, with news the long-sought trade deal between the US and China seems to have hit a bump in the road.

But first in the US, wholesale inventories continue to climb, up almost +5% in a year although the most recent data suggests the rise-and-rise may be easing.

In Washington, there are muddled messages coming from the US Administration. Officials have been talking up the imminent trade deal with the Chinese that includes tariff rollbacks. But the President has said he isn't considering such rollbacks. China is confused.

In China, their international trade activity in October came in much better than expected. Exports were down only marginally, and imports fell more than -6% year-on-year but that was a smaller decline than for September. As a result, their trade surplus swelled. The politically sensitive surplus with the US at +US$26.4 bln was little changed.

In Hong Kong, street demonstrations are ongoing and show no signs of ending. They have got a new impetus after the death of a student protester in questionable circumstances. Official warnings and threats by Beijing officials are being stared down as demonstrators continue to get tens of thousands of people on to the streets.

Globally, the wealthy got a little less so last year, according to a new report. Billionaires’ wealth fell by -4.3% globally to US$8.5 tln, with a sharp decline in Greater China, including Hong Kong, and the Asia-Pacific region more generally. But it is the first dip since 2015 and shifting currency values played a significant part. Companies controlled by billionaires continued to out perofrm general market returns by a substantial margin.

In Canada, a range of data came in weaker than expected. That included jobs growth, building permits and housing starts.

In Australia, the RBA has downgraded their economic growth forecasts for the fourth time this year to just 2.5% in 2019, saying persistently weak incomes from drought, higher taxes and a downturn in investments will cause consumption declines. Interestingly, they don't see their big election "tax cut" having a meaningful impact.

The UST 10yr yield is little-changed overnight 1.93% and holding its recent higher level. Their 2-10 curve is positive at +26 bps. Their 1-5 curve is firmer for the week at +15 bps. Their 3m-10yr curve is a positive +37 bps. The Aussie Govt 10yr is at 1.30%, a dip of -1 bp overnight. The China Govt 10yr is now at 3.30%, up +2 bps overnight. The NZ Govt 10 yr is now at 1.39%, up +7 bps overnight.

Gold is down another -US$3 overnight to US$1,462/oz. That is a -3.4% decline in just one week.

The VIX volatility index is just over 12, and lower than this time last week. Its average over the past year is 17. The Fear & Greed index we follow has moved further over to the 'extreme greed' side.

US oil prices are little changed at just over US$57/bbl. The Brent benchmark is just on US$62/bbl. The US rig count continues to fall away quite quickly. It actually hasn't been this low since March 2017 and is down by -25% since the start of 2019. The recent US oil boom is well and truly over.

The Kiwi dollar is down from where we left it last night, now at 63.2 USc. On the cross rates we are at 92.3 AUc. Against the euro we are unchanged overnight at 57.4 euro cents. That puts the TWI-5 at just on 68.5 and about -50 bps lower than where it was at this time last week.

Bitcoin is sharply lower this morning at US$8,776, a drop of -4.5% overnight. 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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In Washington, there are muddled messages coming from the US Administration. Officials have been talking up the imminent trade deal with the Chinese that includes tariff rollbacks. But the President has said he isn't considering such rollbacks. China is confused.

There’s the nontrivial possibility that what’s really behind the push toward a trade deal is the growing official and political concern that something’s really wrong with the US and not just China’s economy. And if there is, not knowing much of anything else about it, once you realize last year’s boom didn’t boom, at least didn’t carry over very much into this year, maybe Trump’s administration is starting to reconsider the costs of continuing the argument.

Nothing kills the election chances of any incumbent quite like the prospects for serious economic downturn. Just ask Bush 41.

In other words, the trade deals that are in the air may be due mostly to some desperation on both ends. The Chinese aren’t faring well at all, of course, but the Americans aren’t doing so hot, either. That’s because it wasn’t trade wars to begin with. Nobody wins during the squeeze, meaning both sides at least realize they are losing if they don’t really know why and how.

The Census Bureau reported today more evidence indicating as much. The trade wars are certainly real and they are having real effects. Chinese imports into the United States plummeted by almost 20% year-over-year in September, among the worst results in the entire series. Link

Most of Wall Street is insane. The way they responded to the original tax cuts for the rich was in the wrong direction. This week there's been huge optimism about a trade deal. However even if the best case rollback occurred there is already massive economic damage to the US. There are going to be a lot of bad results next year no matter the outcome.

The potential trade deal also led to farmers producing a lot of pork. Now all the pork belly storage is full with no opportunity to sell it to China on the horizon. I'll be interested to see how many farmer votes Trump has lost at the next election.

Trump may not make it to the next election they're looking to wrap up his impeachment before the end of this year. Here's the funny version: https://www.youtube.com/watch?v=efnrXdphKA4

What these idiots don't get is they are ridiculing someone who got a lot of votes, he won an election , those voters are bing pushed to more extreme positions. They should show some respect to those voters before the wheels come off , they won't like that at all.

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

So they should show some respect to Trump supporters .who worship a man who shows little or no respect to anybody but his ego? Spare me

16
up

yes he was elected and is the President, he got the votes and he could get more next election. Many in the USA see the democrat party as rotten to the core.
It's not my job to tell people who to vote for, but I respect the outcome of an election like it or not.

Hilary got 3 million more votes than Trump ... that's not chump change ...

... the Don worked the collegiate voting " gerrymander " better than she did ....

And he didn't stick his foot in his mouth as badly as she did with her labelling of his supporters as a " basket of deplorables " ....

12
up

Na he just won in the heartland, all those people who had their jobs outsourced to China.

I wonder how many farmers will vote for him again, especillay the bankrupt ones?

good question, just talking to a friend in mid West, mega dairy down the road just went under.

Yes, exported by multinational corporations whom of course Trump hates eh?

Yep I remember this too, Seem that Donald shot himself in the foot with his Trade War: article from The Guardian: Trump 'working' with Xi Jinping to save jobs at Chinese company hit by US ban. "In a surprise policy reversal, Donald Trump said on Sunday he had instructed his commerce department to help get a Chinese telecommunications company “back into business”, after his government cut off access to its US suppliers".
“Too many jobs in China lost,” the president wrote. “Commerce department has been instructed to get it done!”
https://www.theguardian.com/world/2018/may/13/trump-xi-jinping-jobs-chin...

A candidate could safely say 'anyone who votes for Trump a second time is deplorable'.

. .. misguided maybe .. but a " deplorable " .. NO ! ..
Save that rhetoric for Concentration Camp commanders and their 2ICs ...

Yes, from the beginning those who protested, chanting "Not My President" did a real disservice to their democracy.

... coming into the 2020 elections... do Americans have any less confusion in who to support than we do ... Trump vs a Wall St / big bank puppet...

Taxcindas field of broken dreams & promises... Winston and loose lips Jonesy ... vs Soyman , Sell your soul Collins , and the rest of the Motley Gnats ...

... any which way you vote ... you lose...

I've always liked Elizabeth Warren - so will await that Dem nomination.

Here, it is an odd one. Labour haven't delivered on welfare reform (probably due to NZF) and then NZF haven't delivered on immigration (probably due to Labour). Then you get the Gnats voting for (what I think is 'window dressing') CC legislation, which won't go down well at all with their traditional cohort.

So, the disgruntled will likely move to ACT or Greens. Both those parties might get a lot more seats.

. . the mood of the country is ripe for a Gareth Morgan backed TOP .... but , he cleared off after just one attempt...

No guts , no glory , Cat Man !

Umm yes Trump is a real honest guy. Err... Nope! BBC Judge orders Trump to pay $2m for misusing Trump Foundation funds.
"A New York judge has ordered President Donald Trump to pay $2m (£1.6m) for misusing funds from his charity to finance his 2016 political campaign".
https://www.bbc.com/news/world-us-canada-50338231

Yeats has long been a favourite. Indeed, I read some lines of his at my late wife's funeral almost exactly 10 years ago.

'The centre cannot hold'. Politically,that is sadly all too true. When Blair came to power,there was in truth,little to chose between labour and Conservative. The big parties fought FOR the centre ground. I recently spent almost 2 months back in the UK-mostly in Scotland-and the country is in the process of tearing itself apart, figuratively and literally. It is much worse in the US. However much we may bitch about our politicians-and I do so regularly-we are an oasis of calm and long may it continue.

Two more factors impacting Germany:
European Central Bank
The Berlin Wall

Difficult to say, as even with these policies, you have to look at overall COL. Here's the comparison between AKL and Berlin;

https://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=New+Ze...

Scroll down for utilities. Utilities higher but overall COL much lower in Berlin.

Auckland's COL is higher than most cities in the world.
Real RIP off.
Only reason I am here is for family reasons.

Sydney is worse...

You would need around 8,220.02NZ$ (7,601.33A$) in Sydney to maintain the same standard of life that you can have with 7,100.00NZ$ in Auckland (assuming you rent in both cities).

But their av salary is a lot, lot higher.

Yeah so they are better off once salaries accounted for.
I tell my kids they will almost certainly be better off if they leave NZ.

That's how I read that comparison too.

The Saturday Rant: The political/ideological, urban/rural & cultural/racist splits inside most western democracies, including ours, are almost complete. We are now so divided, from almost every quarter, that it's hard to see any compromise from anywhere forthcoming. What we see happening around us & by us (us being multiples) has now advanced so far down the ultra/urban-liberal pathway, that the only thing keeping us in the same country is space. Particularly space away from one another. And lots of it.
The urban-rural divide can now be measured in centuries if not planets. This is true in all so-called western societies with the only real upside i can see is the opportunities in rural NZ are there for the taking for anyone wanting to work hard. IE: A million bucks & a good idea still goes a very long way in the countryside.
The political-ideological divide I describe is liberal to the left & conservative to the right. This is a view from within the so-called Neo-Liberal societies (nations) & represents about a third of all the people we call New Zealanders, & is a similar % in other western cultures (give or take). The UL's (urban liberals) are out there & very noisy & in your face on the media every night & just about drive the other two-thirds of us up the wall with their gender bending agenda's that, if I can keep up with it (which is very hard) changes by the day, if not the hour. Yes, the rest of us are pretty boring in comparison, but mostly we work in real jobs, pay our taxes, support our local communities & stay out of trouble most of the time. Some of us even run charities & organisations & foundations for the so-called useless & oppressed, which are generally not appreciated as much as they could be, rather expected, & in some cases demanded, by those with their hands out.
The cultural- racist divides are now so many & so loud & so expensive to run (read running on guilt) that's it's a wonder that these people aren't the richest people in the country. We now have so many ways to redress perceived racism in this country, that it directly employs almost 100,000 New Zealanders at last count (see any NZ Govt Stats report of recent vintage). In fact, we have friends earning 6 figure salaries involved directly in doing this. Racism is a growing industry in this land but can only be capitalised by the first nation growing minority continually claiming injustices against the fast disappearing majority (now only 56% of the population) whilst continuing to have their hands out through other state apparatus & thus having a double-dipped tax-sponsored breeding programme, alongside the grievence processes, unprecedented within their own culture & history, & which from the outside has the others (the majority, or the rest of us, remember) shaking our heads in continual disbelief at the new ways of screwing a system that is almost screwed to the max already. For those (these) beneficiaries I have a suggestion. Why don't you take your successful newfound industry on the road, overseas. Yes, that's right, export it. I'm sure there are minorities in in almost every nation on this planet that would love to have your expertise to screw their current governments & redress their multitudes of grievances going back hundreds if not thousands of years. At least then perhaps back in little ol' NZ Inc might be able to say that there was actually something good to come out of 50 years of going through the now massive & locally grown guilt & grievance industry. I'm sure the other nations you could target would welcome you with open arms.

Beater still why don't you move across the ditch..they would love this rant.

This would be a better rant if it had shorter paragraphs and line spaces between paragraphs.

Some specific examples of this racism "industry" would be good too.

From my own perspective things seem pretty good. NZ is in the top 25 richest countries and I am looking forward to becoming a "beneficiary" myself in a few years time. I get the impression that you have done alright too.

high living costs in NZ negate our relatively high gdp per capita

Sustainable NZ has launched : a new political party , Vernon Tava has announced the arrival of the Blue Greens .... YAY !!!!

... SNZs first policy is to take $ 1000 million out of the Shane Jones slush fund and spend it across 4 years in the prevention of extinction of endangered NZ native flora & fauna ....