Wall Street slips on trade uncertainty. Shanghai falls sharply on bad Chinese data; Australia struggles with climate-change bushfires; UST 10yr yield at 1.95%; oil and gold down; NZ$1 = 63.6 USc; TWI-5 = 68.8

Wall Street slips on trade uncertainty. Shanghai falls sharply on bad Chinese data; Australia struggles with climate-change bushfires; UST 10yr yield at 1.95%; oil and gold down; NZ$1 = 63.6 USc; TWI-5 = 68.8

Here's our summary of key events overnight that affect New Zealand, with news China's official stimulus actions as their economy slows are proving inadequate.

But first up we should note that today is a public holiday in the US (Veterans Day) and parts of Europe (Armistice Day) so markets are either closed or on restricted trading. Data releases are few.

Wall Street equity markets are open but their bond markets are closed. So far the S&P500 is lower, down -0.2% on the day and off its highs. The trade deal uncertainty is weighing on this market. This follows flat markets in Europe overnight although London fell more than most, down -0.4% because the UK Q3 GDP result came in below expectations at just +1.0% pa.

Yesterday, Shanghai recorded a very bad day, down -1.8%, while Hong Kong was down worse, down -2.6% and the bad scene on the streets got even worse as police shot a protester. Tokyo was down a more restrained -0.3%.

Markets were more positive locally, with the ASX200 up +0.6% and the NZX50 up +0.4% and near its record high.

In China, bank credit growth slowed sharply in October, with new bank loans falling to the lowest level in two years in spite of a raft of measures in the past year to boost lending. Chinese banks extended 661.3 bln yuan in new yuan loans in October, and sharply down from the 1.69 tln yuan in September. These results show that authorities don't have a handle on the monetary implications of their slowdown.

China’s car-market continued to feel the chill in October as the traditional post-holiday demand peak failed to materialise, leaving automakers with few easy answers to attract buyers back to showrooms. Car sales declined -6% in October from a year earlier to 1.87 mln units, falling for the fourth consecutive month after a -6.6% fall in September. 

In bad news for coal exporters, China says it will cap coal imports this year, meaning deliveries will slow sharply for the rest of the year. International thermal coal prices are expected to fall now. They are relying more on natural gas and they say that have ample supply for the coming winter.

In Australia, they are preparing for 'catastrophic' fire danger conditions today. The climate situation is dealing them a very bad hand and it has opened up bitter recriminations, in part fueled by the Murdoch news organisation.

The UST 10yr yield is unchanged at 1.95% due in part to the US holiday. Their 2-10 curve is positive at +27 bps. Their 1-5 curve is firmer for the week at +16 bps. Their 3m-10yr curve is a positive +39 bps. The Aussie Govt 10yr is still at 1.30%. The China Govt 10yr is now at 3.27% which is down -3 bps. The NZ Govt 10 yr is now at 1.39% which is also unchanged.

Gold is down another -US$4 to US$1,455/oz.

US oil prices are a little softer at just under US$57/bbl. The Brent benchmark is just over US$62/bbl.

The Kiwi dollar will start today at 63.6 USc and marginally firmer that this time yesterday. On the cross rates we are up at 92.9 AUc and a gain of +½c in a day. Against the euro we are firmer too at 57.7 euro cents. That puts the TWI-5 at just on 68.8.

Bitcoin is down sharply this morning at US$8,730 and a fall of -3.3% and ending the recent period of price gains. 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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46 Comments

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Iran has found a new oil field with an estimated capacity in the vicinity of 53 billion barrels. With the sanctions this won't have much impact, but even if it did and the Iranians could sell it openly i wonder how much of the wealth would filter down to the people?

I also note the Yanks and Brits were totally correct on the destination of the tanker they impounded but was later released by the the European court.

There was I thinking oil would run out, in 1975....

. . ahhhh , there's been a slight change of date ...
2035 ! ...

It's called the " Malthusian re-set "

hehe.
Another change in date, GBH?! Surely not..

https://www.gizmodo.com.au/2014/12/weve-been-incorrectly-predicting-peak...

It's more about the type of oil and cost of extraction.

How many days supply is that at current consumption? Is that enough to boost the supply for another half century? What has been the rate of new discoveries over the last 20 years in relation to consumption? EROI on the new discovery versus existing fields. Check the numbers before getting too excited.

11
up

Despite what some say, the trade war is clearly hurting China

Filter down......like Iraq, Libya' Syria?

Show me anywhere it filters down? USA, UK, Canada...

It all just goes into corporate accounts.

Norway

That's right. Also, the Lower Gulf countries (Saudi, UAE, Qatar, Bahrain) have been able to provide its people with a lavish lifestyle from its easy oil-money.

Governments that were smart enough to adopt a hybrid structure for its extractive industries are reaping its dividends to date (literally with $3.8 trillion in wealth fund holdings). Unlike in Australia, where the system socialises costs and losses of its booming gas industry but privatises profits .

Is Trump heading towards a pyrrhic victory in the trade war?

Isn't it ironic that the words " pyrrhic " and " prick " sound so similar ... especially when the word " trump " is lurking nearby ....

11
up

Re the "climate change " bushfires .........I can recall my grandfather , who was born in 1899 telling me about Aussie bushfires , so can someone explain to me why they are now attributable to "climate change "

Also , if these bushfires in Aussie are a result of climate change , then how is it that native animals are so adept at surviving bushfires .

This adeptation would be evolutionary , it would take thousands of years to evolve , which would imply that bushfires and a natural phenomenon

Please go read some science based research and then comment please...next thing you will be sending thoughts and prayers?
Already this year, bushfires have burnt more than 850,000 hectares across NSW – an area more than five times the size of Greater London – and three times as much as burnt all of last fire season.

I think vulnerability and severity is increasing.
It's just like flood events. Natural events, but increasing in frequency and /or severity.

12
up

I am not denying its a big problem , its just that its an annual event and nothing new for Australia . This year I watched how Al Jazeera was reporting locals in India saying the Monsoons were the worst ever , and when the data was analysed it was practically no different to prior years.

I am also not denying or challenging the empirical evidence that the climate is subject to long term change , I am still not convinced that it would not happen anyway.

Of more concern to me is physical pollution such as plastics and other non-biodegradables and their effects on the planet

No one is saying bushfires have been caused by climate change. However, if a place is vulnerable to bushfires because of heat and dryness, folk have pointed out that increasing that heat over time will exacerbate the situation. Whereas making Australia colder and wetter would have the opposite effect.

Agree with you that physical pollution is a massive problem we need to be dealing with.

I am not jejune ( now there's a new word for you Jock Silver ) as to the effects of a changing climate, but I am somewhat perplexed as to how the whole debate has been hijacked by the lunatic fringe , including dope smoking blokes seemingly without work ( how else do they find time to protest during working hours ?) , and hippy girls with long skirts who dont shave their legs or armpits, and use the word "cool" in every sentence

I struggle to take this ragtag rabble seriously.

Ok Boomer ..seriously what era are you living in--Woodstock finished years ago?

I stayed at Woodstock ... just 3 weeks ago ... met McMurray the owner and brewer ... the Blonde beer is good , the Ruby Red is very good , and the Black Diamond stout is a real West Coaster to warm you up on a cold and wet Hokitika day ..

Oh dear! Uses a millennial phrase and loses all credibility....

but I am somewhat perplexed as to how the whole debate has been hijacked by the lunatic fringe

Turn off the talkback radio and walk around outside and things will look different. People are asking for the scientific community to be listened to, but instead the usual newsletters rant against hippies and dope smokers.

Yep. Time for quality science.

https://www.amazon.com/Green-Tyranny-Exposing-Totalitarian-Industrial/dp...

And this is remarkable
https://genless.govt.nz/
Embrace a lifestyle that uses less energy, to help halt climate change.

Must be flat where these folk live.

... yessss .... we're so focused on " climate change " that we're ignoring the plastification of the planet... the gross pollution that's easy to see ... and the nano particles which are the hidden danger ...

Betting that science is wrong and oil companies are right sounds like the dumbest experiment in history.

"adeptation" - hehe, fun new word Boatie :)

Well it was intended............. and when you see it in a future edition of the Oxford English dictionary dont forget to credit me with it

All the planes normally used in Australia's fire season are still fighting fires in California

Flying jets of Water around would be a better bet, than flying billion dollar fighter jets.....these days. Putting out the real fires in the Short Term, may become more important.

OK Boomer.

I'm with boatman on this. Attributing this and flooding (frazz) to climate change is pretty premature. So far only the models predict more of anything and everything bad. The actual analysis by science and the figures from insurance suggest a rather more benign climate with the temperature rise so far.

The models are not science.

For what it's worth....

Ratings agency Moody’s has issued a debt downgrade warning to the entire world ...It cut its global sovereign outlook to “negative” from “stable” for 2020
https://www.telegraph.co.uk/business/2019/11/11/moodys-issues-debt-downg...

Who instructed them? Politicians or bankers.

Also with China: World Bank scales back $50m training project in Xinjiang. Beijing faces criticism over claims of human rights abuses in the western region.
Financial Times article: https://www.ft.com/content/4be2a2d8-04a2-11ea-a984-fbbacad9e7dd

In other news:
China says it will cap coal imports this year. Presumably a spokesman didn't say something like this:
"China is desperately short of US dollars, so we will stop buying high grade Aussie coal cos it's cheap and buy the dirty Mongolian stuff instead. Or buy gas, cos the Russians take yuan too.
Hopefully this won't last too long as that stupid Trump fellow thinks it's his tariffs, when really it's the high USD. When their stock market crashes we will do a deal as the boot will be on our foot then."

....and the spokesman further added a PS : " and don't worry. We will be able to outwait that stupid Trump, even if it takes another 5 years..."

A US official didn't comment:
"The US has become increasingly divided over the last 20 years. This is because we have an outsized military that needs a conflict to justify its budget and because Wall St have exported our industry to China to disguise the true cost. What America needs is a real enemy so we can all pull together. China is that enemy, politically, militarily and economically."

China holds over a trillion in US Treasury bills, notes, and bonds and is running over a $20B monthly trade surplus with the US. Where is your source for them running out of US dollars?

If PBOC liquidates the USD assets, an equal and opposite reduction of bank liabilities (extinguished) has to be undertaken - smaller balance sheet = smaller domestic economy.

Okay , here's some cud to chew on, and may cause a major argument on this forum ...........

30 tonnes of CO2 per forested hectare were emitted by the Black Saturday Fires in 2009.( according to Snr Lecturer Phillip Gibbons of the Australian National University )

Now according to Frazz some 850,000 hectares of forest have burned in a short space of time in NSW alone .

Now that amount of CO2 is likely to dwarf the CO2 emissions of ALL Aussie coal -fired power stations for the entire year by at least twofold , and maybe even threefold

So is CO2 produced by humans really the cause climate change , or do natural events cause way more damage ?

Or is it a self -feeding loop of some kind ?

Quite simple difference. That coal was sequestered carbon released to the atmosphere that otherwise wouldn't have been there. The trees that burnt will be replaced in the next 0-50 years by regrowth in the same areas which will sequester the carbon released by those trees burning. The carbon released by burning coal/oil/gas will not be re-sequestered in any useful time horizon.

Chew on this : Coal-fired power plants account for 81 percent of the electric power industry's greenhouse gas emissions, including carbon dioxide. These plants also release smaller amounts of methane and nitrogen oxides. Coal-fired power plants also emit: Cadmium.
Cadmium and its compounds are highly toxic and exposure to this metal is known to cause cancer and targets the body's cardiovascular, renal, gastrointestinal, neurological, reproductive, and respiratory systems

"It's more about the type of oil and cost of extraction."

Always was.