Giant Saudi IPO launched; trade war phase one deal limps ahead; US GDP growth evaporates; China house price growth reverses, China bans Aussie pollies; UST 10yr yield at 1.84%; oil and gold up; NZ$1 = 64 USc; TWI-5 = 69.2

Giant Saudi IPO launched; trade war phase one deal limps ahead; US GDP growth evaporates; China house price growth reverses, China bans Aussie pollies; UST 10yr yield at 1.84%; oil and gold up; NZ$1 = 64 USc; TWI-5 = 69.2

Here's our summary of key events over the weekend that affect New Zealand, with news there are indications the giant American economy may be quickly running out of momentum.

But first up today, the world's largest IPO has been launched with Saudi Arabia listing its state-owned oil company in a US$1.7 tln float. But that is seriously lower than their target US$2 tln, and demand from outside the Kingdom is reported to be underwhelming.

Both the Chinese and Americans say their trade talks are moving forward, but most are now expecting a very watered-down "phase one" agreement that probably doesn't involve the Presidents of either country.

In a sharp adjustment, the Atlanta Fed's realtime tracking of American GDP fell to just +0.3% for Q4-2019 and that is the annual rate. Their previous estimate for Q4 was an annual rate of just 1.0%. Most other current estimates are closer to 2.0%. But the Atlanta Fed has an uncannily good recent track record.

American October retail sales came in marginally better than expected, and are now +3.1% higher than the same month a year ago. Even though the monthly gain is actually tiny, because it was unexpected, it is being called "a rebound". (For comparison, China recorded a +7.2% gain recently and New Zealand recorded a +3.4% rise on the same basis.)

American industrial production data wasn't so flash however, declining -1.1% over the year to October, and more than doubling the monthly drop from September. Inconsistently, this is not being called "a slump". Another Fed region reported overnight and business activity was expanding only very modestly.

In Japan, industrial production may have bottomed out and the latest data for September shows it rising again and a little faster than expected.

In China, new data out for October shows that house price growth is now falling away in most Chinese cities. Officially, they are "stabilising" but in many more cities we are noticing small declines, and that includes for Beijing.

In Hong Kong, official data shows a sharp turn in their economy, and into recession. For all of 2019 they expect their economy to shrink -1.1%, but for the September quarter it shrank at a rate of more than -3% pa. New street violence has flared again overnight, and the Government is threatening its employees who support the protests, and indication of how widespread the support is for the demonstrators, who can still bring tens of thousands on to the streets.

Hundreds of PLA troops have appeared on Hong Kong streets, helping to clear protester barricades, a development that wasn't requested by the Hong Kong government. They were sent in by Beijing.

In Australia, China’s embassy called on two Australian parliamentarians who have been vocal critics of the government in Beijing to “genuinely repent” and demonstrate greater respect, and they blocked the pair from visiting China. China's reach to try and stifle free speech in this part of the world is now direct and public.

At the WTO, New Zealand and fourteen other countries have taken action against the UK and the EU over Brexit, seeking trade compensation for the disruption. The claim is focused mainly on agricultural products including lamb and beef. Among the others joining the action are Australia, India, Brazil and the US.

The UST 10yr yield is little-changed at 1.84%. Their 2-10 curve is positive at +22 bps. Their 1-5 curve is weaker for the week at +11 bps. Their 3m-10yr curve is also less positive +24 bps. The Aussie Govt 10yr is unchanged at 1.16%, but that is a fall of -14 bps over the last week. The China Govt 10yr is now at 3.27%, also unchanged overnight and little changed in a week. The NZ Govt 10 yr is now at 1.41%, unchanged too and up +2 bps for the week.

Gold will start the week at US$1,468/oz which is a small +US$9 gain over the past week.

US oil prices are higher today to just over US$57.50/bbl. The Brent benchmark is just under US$63.50/bbl. US investment in 2020 for exploration is reportedly being slashed by drlllers.

The Kiwi dollar is holding at 64 USc and that is a +1.0% gain in a week. On the cross rates we are now at 93.9 AUc and an even bigger gain at +1.5%. Against the euro we are at 57.9 euro cents. That puts the TWI-5 at just on 69.2 and +90 bps higher than this time last week.

Bitcoin is firmer this morning at US$8,542. 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 the cab and the taxi driver is listening to Mike Hosking. I’ve never felt so stupid. Mike was telling us his nine rules that include house prices will go up high single to double digits in the next year and ignore overseas ideas like bubbles because they don’t apply to NZ.

Apparently Nzers will ‘bleed for their mortgages’ so prices can go up for ever.

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"(I was) listening to Mike Hosking"
Ah, well there's your first mistake! Next, you'll be telling us that you listen to Mark Richardson....
(And, yes, it's infuriating that some New Zealanders swear by the word of such people. I guess that's the public face of Consumerism though...)

Both of them want their house prices to carry on increasing.

13
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The hubris is loudest just before the crash.

bw could not have agreed with you more :)

Mike Hosking is a polarising character but in the big picture I think he is correct in what he is saying, particilarly around the political involvement in the housing debate. Supply and demand.

17
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Credit expansion - not supply and demand.

14
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Do the Saudis see the writing on the wall, and their IPO is the first signal of the beginning of the end? Between global warming and the suggested run down of oil reserves, are the Saudis trying to manage a last squeeze of profits from their oil industry before they run out of reserves completely and it all collapses? Given the nature of the Governments there, not to mention the religious based competition for control, surely it cant be seen as a good investment?

a last step in the leverage / financialise the future game we are playing. Load more promises into the system about future returns
And there will be something in the prospectus about how they wish to diversify away from Oil .... which is akin to diversifying away from oxygen

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Trying to silence the world. BBC article: Australian politicians banned from China 'will not repent' for criticism
"The two politicians have been outspoken critics of China - singling out its human rights record, and its alleged interference in Australian politics.". https://www.bbc.com/news/world-australia-50452829

I support NZ over Australia at everything: cricket, netball, rugby, league, soccer. Seems they are leading 2 - 0 at politics. Do we have a politician capable of speaking the truth to the strong?

“Silence becomes cowardice when occasion demands speaking out the whole truth and acting accordingly.” ― Mahatma Gandhi

“Silence becomes cowardice when occasion demands speaking out the whole truth and acting accordingly.” ― Mahatma Gandhi

The contempt I harbour in respect of our allies actions has no limit either.

1- US government officials attempted to pressure OPCW investigators into believing that the Assad government was responsible for the Douma incident. The officials were placed in the same room as the investigators by the OPCW's then-cabinet chief Bob Fairweather, which the investigators of course felt was a grossly inappropriate breach of the OPCW's commitment to impartiality. For the record the US government already has a known history of bullying the OPCW, an ostensibly independent and international body, to force it to allow the advancement of pre-existing regime change agendas. Link

I have to sustain these injustices in silence as does MSM and make out it's OK.

Your link is published by a site that asks for donations to QFG, Inc. / 295 Scratch Branch Road / Otto, NC 28763 / USA

Try to find similar condemnations of China in a publication published from a chinese address. For example something to do with Anne-Marie Brady or search internet for "Violent Paternalism: On the Banality of Uyghur Unfreedom".
You are correct that large powerful countries are dangerous and like bullies everywhere try to get away with injustice. However while the USA is still publishing its critics and China is not then I will worry more about China. Possibly I'm also influenced by the fact that China is a colonialist empire and America with the minor exceptions of Hawaii and Puerto Rica isn't.

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Atrocious behaviour from the incredibly thin-skinned Chinese Communist Party. They really need to conduct themselves with a bit more grace.

(As well as not engaging in genocide, obviously.)

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Slowly and seadily now China will come out in open. They have already peneterated the system in many countries (Control policies behind doors) and now being in posistion to dominate can afford to do it openly.

How many politicans line up to them is open secret.

And the NYTimes has released the following article exposing the human rights abuses by the Chinese Govt

https://www.nytimes.com/interactive/2019/11/16/world/asia/china-xinjiang...

Frightening. There must be some very brave Chinese bureaucrats to release this information.

Fake news?

USA heading for 2020 recession. China house price growth evaporating. japan in 30 year gdp recession and Eu stalled. But NZ gdp is immune and demand will push up house prices again. Ignoramus city

Did anyone listen to "Two Cents Worth" (repeat) yesterday around 12 noon?
I found it very upsetting listening to how the banks treat their customers, or did in the past.

The Banks, the Swaps and the Suicide Box

https://www.rnz.co.nz/programmes/two-cents-worth/story/2018722089/the-ba...

The disastrous impact of banks selling risky financial derivatives to farmers is still being felt in rural communities more than a decade later. How did it happen and how can we stop banks doing it again?

Rural advocate Janette Walker has a storage box at her house. She calls it her “suicide box.”

In it are letters from farmers - mostly men, mostly in late middle age - who tell her about the impact on their lives of the events surrounding the global financial crisis [GFC] back in 2007-2008.

The letters came to Walker as part of a research project she worked on in 2010 with Massey University banking specialist Dr Claire Matthews.

The farmers talk about being forced to sell their animals and their farms. About their humiliation and sense of failure. About feeling they had let down their fathers and their children. About depression and attempted suicide.

And they talk about being betrayed by the bank managers they thought were there to look after them.

But time and again, Walker says, the farmers wrote about one particular catastrophic event - the interest rate swaps crisis.

I feel like this when i look at my kids and compare it to the country i grew up in. No wonder our suicide rates are so high.

China's intentions in the Pacific Islands warrant a look .

China has for years been hell -bent on controlling not only minerals of impoverished nations , but also the ability to efficiently extract those minerals .

In 1970 ( thats almost 50 years ago ) China funded and built the longest railway in Africa ............. from Dar es Salaam to the Zambian copperbelt

Called the TAZARA railway , the Africans call it UHURU or freedom railway, and thats a misnomer if ever there was one , there was simply no altruistc reason for doing this whatsoever .

China was looking at its self-interest only , it was purely to enable China to get copper to an East African seaport

Boatman - China always have ulterior motive. Look to Pacific Islands!!! You really think PRC wants to help them??
Tazara rail line is same - to serve PRC and Communist Party.

Here's something .......... Auckland Transport just spent about $20 million on planting some trees ...........in a garden .

This kind of fruitless and wasteful expenditure has to stop .

$20 million would have been better spent on building 60 houses south of Pokeno for the homeless families in Auckland

Something HAS to be done with these basically answer-to- no-one departments within Council who have about as much commercial savvy as a troupe of monkeys rampaging through a banana plantation .

Its a disgrace , and in the real world of business , someone would get fired .

Not likely at AT

Farcical

did you hear that from Mike Hosking?

Dp