Here's our summary of key events overnight that affect New Zealand, with news global food markets are in focus today.
But first up, financial markets are awaiting signals from the US Fed's release of the minutes from its last meeting, and that will happen after 8 am this morning (NZT).
In Canada, consumer inflation remains stable at 1.9% in October.
China’s central bank announced lower interest rates for new benchmarks used by lenders to price their loans, marking the third time this month that borrowing costs have come down as Beijing shores up flagging economic growth. Their one year prime rate is now 4.15% and their five year prime rate is now 4.80%, both -5 bps cuts.
Japan's trade balance shifted into surplus in October, but in a much weaker way than expected. Exports fell -9.2% and imports fell -14.8% from the same month a year ago.
In the Philippines, the state electricity boss has admitted that due to the previous sale of the national grid to a Chinese company, they could be plunged into darkness remotely by a Chinese engineer as the core controls have moved out of the country.
And a report, jointly prepared by PwC, Rabobank and Temasek, it has been pointed out that without a massive $800 bln investment over ten year in agriculture, Asia will struggle for food security and self sufficiency.
India is suffering a severe shortage of onions and has just approved a massive import program to help stabilise prices and supply. It may disrupt world onion prices in a similar way that China's pork crisis has done.
And the US has reported its lowest trade surplus in agricultural products in more than 13 years, with imports almost matching exports (which are stalled or declining). It is a sharp turnaround in their ag trade.
In Europe, the ECB's latest Financial Stability Report warns of excessive financial risk-taking, including by non-banks, highly leveraged corporates and real estate sectors, as a consequence of their very low interest rate policies.
Wall Street is lower today after a few days of treading water. Despite some positive signals from some retailers, the S&P500 is down -0.3% in mid-day trading today. That follows European markets that were down a similar amount overnight. And yesterday, Tokyo, Hong Kong and Shanghai all fell more, down about -0.7% on the day. The ASX200 was particularly hard hit yesterday, down -1.4% and led by sharp retreats by banks, especially Westpac. In complete contrast, the NZX50 rose +0.8% yesterday.
The UST 10yr yield is down another -4 bps today and now at 1.74% and softening. Their 2-10 curve is positive but tightening at +17 bps. Their 1-5 curve is also tighter at +7 bps. Their 3m-10yr curve is also less positive +19 bps. The Aussie Govt 10yr is down -5 bps at 1.08%. The China Govt 10yr is now at 3.20% and a -2 bps overnight dip. The NZ Govt 10 yr is now at 1.36%, down -3 bps.
Gold is down -US$5 at US$1,468/oz.
US oil prices are sharply higher today and reversing yesterday's fall, now just over US$57/bbl. The Brent benchmark is just over US$62.50/bbl.
The Kiwi dollar is a little softer this morning at 64.1 USc. On the cross rates we are firmer at just over 94.3 AUc and that is the highest in nearly three months. Against the euro we are under 58 euro cents. That leaves the TWI-5 at just on 69.4.
Bitcoin is little-changed this morning at US$8,114. These are starting to accumulate; since the beginning of the month the bitcoin price has fallen -11%. 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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67 Comments
Now here's some good confirmational bias ( to pick up on last night's topic de jour) for anyone interested!
....the narrative of a strong property rebound represents a “pattern of unusual and fishy behaviour” whereby “the establishment has sought to kill the counter-narrative that the market is falling”.
https://www.youtube.com/watch?time_continue=103&v=IX0iTPh-bdU&feature=e…
Yes, very much the same narrative here... Buy buy buy, no issues, plain sailing, 7% plus increase in the next year.
It's all people clutching at straws to keep the $'s rolling along to line their pockets / keep them afloat.
Count me out.
Gold and Silver are going to go higher than 7% in anyone's book.
Good to see NZ Mint advertising on here.
Any deals to be had?
The hype is saying jump in. Orr has wanted everyone to get out and spend as well.
You are welcome to jump in and put your money where your mouth is, someone has to loose for other to make a win. Fill your boots!
7% increase is a give in... Who's making their own conclusions now?
Two camps on the houseing market situation.
1. It's not flash better to stay put and play the wait and see game because I can.
2. The ones who are positive about an increase because they are ruined if it collapses.
In my book the smart money is on waiting if you can.
"In the Philippines, the state electricity boss has admitted that due to the previous sale of the national grid to a Chinese company, they could be plunged into darkness remotely by a Chinese engineer as the core controls have moved out of the country." and therein lies the core issue with globalisation and the sale of national assets to foreign entities. Many Governments across the world will be significantly guilty of wilful neglect by allowing the sale of national assets to overseas buyers in the search for easy money. Our own Governments will be guilty of this too.
This is a part of a problem of hubris among political elites. These people think themselves superior, that they are smarter, and more clever than others. Yet they get duped daily, or are exposed for their self serving corruption. They seem reluctant to demonstrate loyalty to their constituencies while they suck up to international players.
Across the world they demonstrate unequalled corruption, and a belief that somehow national laws, and natural laws do not apply to them. After the 1940's who would have believed a nation would enter into a pogrom against a religious minority in the 21st century? Who would believe that after the population had had a gutsfull of corrupt politicians and elected a left (or right) field president, that the mainstream political elites would remain in denial of the reasons and causes, and become even more overt at demonstrating their corruption and lust for power? Or that even that nation's judiciary, after claim it is a nation of laws, are unable to hold that president to account for his actions while he sits in power? There is much, much more - what a mess!
Bloody scary and totally believable once you realise that political leaders are mainly concerned with their own self interest.... just like bankers only being interested in their profits and bonuses. It doesn’t matter how you achieve your objectives as long as you’ve got a nice healthy balance sheet/bank account. When it turns to custard just walk away and let it be someone else’s problem.
Who are you writing about here? Trump?
"even that nation's judiciary, after claim it is a nation of laws, are unable to hold that president to account for his actions while he sits in power?"
In which case how does that fit in with your earlier thought :
"Who would believe that after the population had had a gutsfull of corrupt politicians and elected a left (or right) field president, that the mainstream political elites would remain in denial of the reasons and causes, and become even more overt at demonstrating their corruption and lust for power?
I'm confused. I agree with that second thought, but isn't' Trump a 'solution' to that it rather than not?
The problem is global, not national. the examples are just China and the US, but there are examples from all over the world of Governments and politicians acting to serve their own power and greed before that of the people. And finally that as a world we have not learnt from our history.
I am surprised i have to spell it out, but it is all part of a big picture. Too much detail can swamp you, so you need to be able to step back and look at the big picture too.
Do you really think the Chinese actions against the HK protesters, the Uyghurs, Trumps election and actions, Putins actions, are any different UPDATE; and the riot suppression in Iran? And don't forget the other political leaders and governments. But this situation largely began in the 60s and 70s and earlier. What we need to be asking is how do we change this? How do we make our politicians more accountable? Only yesterday on this site there was a call to extend the electoral cycle to four years. How does that help? Don't forget we have no way to kick out our Government if it turns out we don't like what they are doing, and they can rewrite the law any time.
I sense your frustration. "What we need to be asking is how do we change this?" I doubt 'we' can.
The period between, say, 1945 and 1965 was exceptional. Societies have always been ruled an elite of one form or another, and that 20 years I just noted was a time when we thought "we'd changed that!". In reality, we were just in a holding pattern whilst normal service was resumed.
I guess the trick is to become one of the elite, and there's evidence all around us ( those politicians you note; reality TV people; senior financiers etc) of those who are doing just that. As for the rest of us? We'll take what we are given...one way or another.
Join the club you reckon. Thing is that the club will start shrinking, lots who think they are in the club will end up outside it because they never really were. I've seen it in my lifetime, particularly around 1989-90 when the RE market and jobs were absent. People that have levered up to keep up appearances are suddenly in trouble. Heck my first Amway meeting invite was from someone is such a position. Ten years back I saw their names mentioned in "Wheres the Gold" by Ray Smith, they really were swinging in the good circles for a bit.
Just keep in mind the battle for unearned income, it is starting to make its presence felt.
Here's a classic case of Club joining! Whatever it takes.... and ALWAYS deny everything!
https://www.theage.com.au/national/victoria/developer-admits-15k-in-sec…
Also central to the inquiry has been the bid to rezone a large property from industrial to residential which, if it had been successful, could have led to a $100 million windfall.
“We” on our own can do little but “we” as a group can do much more. Look at the backlash Scott Morrisons govt is receiving on the cash ban. Over 3600 submissions received with voters calling their local MP’s and Senators arranging meetings where several constituents are meeting with their MP and the MP’s themselves being clueless as to the cash ban implications and in many cases not even realising that they had voted in favour of the ban! As individuals we can often believe we can not fight those in power but collectively it can be quite a different story.
Any changes will be small, but they start at political engagement. Asking politicians questions, and not accepting unsatisfactory answers. Deny them the right to extend electoral cycles or do other things to undermine democracy, such as become a republic by breaking ties with the UK royalty. Vote in every election, be vocal, express an opinion and most of all - don't be afraid to learn!
Does the detail matter that much Henry? What I suggest are the worst, someone else will say are nothing. Or is this just a strategy to undermine the argument to keep the status quo where an elite are protected at the cost of everyone else?
How much more detail do you need than the Uighur oppression, the suppression of calls for democracy in Hong Kong, Trumps blatant lies to protect his position and the Republican refusal to hold their president to account, or Putin's support of a despotic regime in Syria and the oppression of anything that looks like an effective opposition in Russia. Lets not consider places like South America or the African continent. Don't forget the removal of the Privy Council from our justice system, and the calls to extend the electoral cycle - all just methods to undermine basic democracy in this country.
Detail does matter, you are grouping one that is conducting holocaust(s), one that's a thug and one that hurts people's feelings all together.
Appreciate your assumption, in that you have not seen any of my posts then.
Just for you.
https://youtu.be/FEXL5USuDGI
Sorry Henry, i can't access You Tube here, I'll look tonight. But the big picture is that all these areas, no matter what shape they take are about preserving power and privilege. the CCP feel threatened by religions and people calling for democracy, Trump thinks he's entitled, Putin comes from the KGB. the shape of their actions doesn't really matter the end goal does.
""Do you really think the Chinese actions against the HK protesters, the Uyghurs, Trumps election and actions, Putins actions, are any different? "" Yes I do - the current deliberate methodical represssion of the Uyghurs is in a class of its own. Why: the numbers involved and the methodical way it is being carried out and the way it is being stage-managed - I mean kept quiet. The other issues are troubling but could be described as over-reactions or grabbing chance opportunities.
Lapun these are all moves to preserve power and privilege, suppress any challenges and control populations. Trump wants to do all that stuff - he has openly admitted admiration for Putin and Xi, and there are many reports from the US about what he has wanted to do but been unable because it is simply illegal. The image of the US as a democracy is a very shallow, superficial one. Even many American academics admit their electoral college system corrupts an election, and led to George W getting in and starting a war in the middle east which will be almost impossible to stop the fallout from - worldwide, and this same system ultimately gave Trump the presidency.
Murray without disagreeing with a single sentence of your comment I still put the treatment of the Uyghurs in a class of its own. I can find moves to preserve power and privilege in Auckland Transport but they have not sent the adult men in my household for indefinite 're-education' in buildings behind barbed wire with watchtowers; Auckland Transport have not sent junior AT officials to live in my house and record any remarks I might make about using cars. The treatment of Uyghurs it best compared with Germany's treatment of its minority Jewish population when they were sent to concentration camps prior to the opening of the death camps - that would be late 1930s. back then very few outiders complained and most governments were happy to have dealings with Mr Hitler. I'm certainly pro-China and just against the current leadership of the Communist Party of China. So I seriously hope I am wrong but still waiting for a trustworthy source to prove it.
Does the severity of the act really change the perspective Lapun? I work in the Government sector and petty bureaucrats are everywhere. I am a pilot and one of the worst departments for exercising power and privilege is the CAA. Training petty bureaucrats is a lot easier than going to war, but just because they are minor functionaries, and their deeds are less harmful, does not make them any less wrong.
Frankly this is about philosophy. How we accept and treat our fellow man. Understanding that irrespective of our culture, we all belong to the human race. How to suppress base urges from the neanderthal parts of us that seek to find some level of superiority over others. Understanding that we are strongest as communities not tribes or individuals. This is about integrity. if you dislike or hate someone, understanding that that is more about you not the other. If you treat people badly, nothing can justify it. As a species too few of us realise these things.
It's true that the Democrats are politically motivated in their impeachment attempt, and would've tried it on regardless of what Trump actually did.
It's also true that Trump is deeply, obviously corrupt and unfit to be President.
It's also apparently true that he can't be unseated despite this obvious corruption. His staying in power has nothing to do with his conduct; it's just a Dems vs. Repubs numbers game.
The whole system is failing to work as it should because the cynicism has become so deeply embedded in both parties.
-Appointing his utterly unqualified family members to senior positions, international negotiations etc. (Corrupt)
-Hosting government and diplomatic events at his own failing resorts. (Corrupt)
-Personally guilty of fraud (Trump University, Trump Foundation) and refuses to make public his own finances. (Corrupt and unfit.)
It really was a struggle to keep it to just three.
Trump won, yes. He might win again, I suspect not. Hillary was a uniquely terrible candidate, that was a big advantage to Trump. The fact that Americans had two such appalling choices is the problem really.
None of this excuses Trump's corruption. He is also an incompetent businessman (inherits a billion yet manages to go bankrupt three times, loses money *running a casino*) and a terrible human being (gropes women, rips off subbies, tells petty lies to boost his ego, brags to other men about how sexually attractive his daughter is).
There were two choices. Trump won, no one can do anything about the past. If we could we would go back and remove Bill Clinton, G. W. Bush and Obama from existence.
The whole lot of them are crooks we all know that. Why should we expect Trump be squeaky clean when we know all the others are crooks? Obama knew Hillary is a crook and Biden as well.
In NZ we have much the same call next year.
A person who spent the last three years showing she is not a leader v a person who we suspect is not a leader.
This morning's headlines in Aussie newspapers:
Westpac faces fines over 'serious and systemic' anti-money laundering breaches
ASIC chair vows to intervene as AMP continues to charge customers after death
NAB, MLC to compensate CCI customers after settling class action over credit card, loan repayment insurance
Our regulators still believe these financial companies are operating within legal and ethical confines in NZ.
Add to that mix that NZ still does not have any Bank Deposit Protection Scheme to protect their customers! It would be really interesting to know what is actually happening about whether NZ is going to be introducing a "Savings Deposit Protection Scheme" which every other Western country has except NZ! Apparently if a bank fails here or offshore parent/owner. The RBNZ can temporarily close a failing bank. Then determine what capital is required to keep the failing bank functioning. The RBNZ would then “haircut” all depositors by this amount to “bail in” the bank (Take your savings money). Then reopen the bank and allow depositors access to their remaining funds. Doesn't seem fair does it!
For more info: https://goldsurvivalguide.co.nz/new-zealand-bank-deposit-protection-sch…
I think the problem in Agriculture has more to do with government meddling in what should be the ultimate free market.
Without market signals to growers it's hard to know what to grow. I can grow 20 acres of onions if India needs them, so can thousands of other farmers.
The USA is an agricultural powerhouse. They have massive export potential and fantastic farmer knowledge base, yet 30% of corn goes to ethanol, Brazil is worse.
With Gm crops we can now grow Soy and Maize in Manitoba, these are frost sensitive plants but now have a short enough growing season for Canada, that more than doubles production vs Wheat.
Russian just produced 127 million tonnes of grain, thats a hell of a lot of seed and they can land it in the Mediterranean at half the price the USA can. Russia has a lot more land still to come into production yet Brazil has more under-utilised land than Russia and Nth America combined. Russia just sold a Million tonnes of Wheat to Brazil, China is developing river systems and ports in Sth America to allow large ships access to huge areas of land far from ports with poor infrastructure. Same as in Eastern Europe where large western companies bought land along side large rivers with barge access to circumnavigate corruption and poor transport systems. I have been thinking about exploring Russian Agriculture.
https://www.youtube.com/watch?v=JP9YK0mMiuQ
Is ag globally in trouble? 40% ($33billion) of projected 2019 USA farm income comes from direct government aid. https://www.axios.com/farmers-income-insurance-federal-aid-bankruptcies…
Iowa is considered to be in the greatest recession since the great depression. Record rain there left nearly 464,000 acres unplanted. The autumn harvest has been slowed by rain, subfreezing temperatures and snow. Similar situation due to weather, is in the arable belt of Canada.
The majority of EU farm income is also via direct subsidies. https://capx.co/the-cap-doesnt-fit-why-the-eus-farm-subsidies-are-ripe-…
Meanwhile Canadian grain is reportedly going to be used by NZ McDonald's for their buns, not NZ grown grain. https://farmersweekly.co.nz/section/arable/view/grain-growers-down-in-t…
Interesting that the ECB are actually admitting in public that their policies have "not worked as intended", ie have failed miserably. That is most unusual.
It seems emergency action became long term policy as it removed the impulse for reform. Europe seems balanced on an economic cliff edge with a buggered banking system and a deeply flawed currency system, all held together with rapidly fraying baler twine. Expect civil unrest and political instability, angst and argueing, as the stagnation and decline gather pace.
Rumours are that the US repo rate crisis is because European banks will not lend US-Ts to each other. Consequently the Fed has lent out $300 billion or so in a sort of hidden QE to provide short term support to the Eurodollar banking system. They have just reversed 40% or so of their QT selling of $700 billion of US-Ts. This is the stuff of central banker nightmares.
https://www.armstrongeconomics.com/world-news/banking-crisis/understand…
https://www.armstrongeconomics.com/world-news/banking-crisis/mother-of-…
A review of bank cross border flows, including referenced links can be read here - TIC for September: Not Repo But ‘Further Flaws’
There has been notable demand for UST collateral via the Fed's Reverse Repo facility, over the last three days - view data
In Europe, the ECB's latest Financial Stability Report warns of excessive financial risk-taking, including by non-banks, highly leveraged corporates and real estate sectors, as a consequence of their very low interest rate policies.
In recent years some policymakers regularly call for the financial system to "serve the real economy", their way of saying that credit expansion isn't helping the economy, even as they've been forced to expand credit further.
http://www.xinhuanet.com/english/2019-11/19/c_138567622.htm#0-twi-1-474… … Link
Thanks, Michael Pettis is always good. I enjoyed this Richard Werner link from there:
https://www.res.org.uk/resources-page/july-2013-newsletter-quantitative…
I presented the Quantity Theory of Credit in April 1993, at the RES Annual Conference at York. The central argument is a dichotomous equation of exchange distinguishing between money used for GDP-transactions (determining nominal GDP) and money used for non-GDP transactions (determining the value of asset transactions). Money is not defined as bank deposits or other aggregates of private sector savings. Banks are recognised as not being financial intermediaries that lend existing money, but creators of new money through the process of lending. Growth requires increased transactions that are part of GDP, which in turn requires a larger amount of money to be used for such transactions. The amount of money used for transactions can only rise if banks create more credit. Banks newly invent the money that they lend by pretending that the borrowers have deposited it and thus crediting their accounts without transferring any money from elsewhere. This expands the money supply and it suggests that the accurate way to measure this money is by bank credit.3 It can be disaggregated into credit for GDP transactions (CR) and credit for non-GDP (i.e. asset) transactions (CF). The former drives nominal GDP and the latter asset transaction values.
Ah, the Consumer Economy is looking good!
“It’s weeks before Christmas and I have been left without a job.”.. staff were sacked on the spot on Tuesday and were told five other restaurants from the more than 15-year-old business would also be closing for good....Forensic Accountants have been tasked with handling the administration of the restaurant group which comprises 40 companies involved in the operation of venues across Sydney, Melbourne, Perth and Brisbane...the latest hospitality institution to fall victim to the weak economy and crippled consumer spending.
https://tinyurl.com/wzlgo52
There are a lot of companies in trouble and cutting staff in Australia. Some have almost be celebratory with their staff cuts, where they seem to value shareholders highly and don't mind publicly crapping on the hundreds of employees that have just lost their jobs.
The consumer spending isn't there, people are losing their jobs and they expect this to be the environment where people will buy houses to pump money into the financial system. With news like this many won't want to spend now.
Yep wage theft is a big problem in Ozz, even the Celeb's are doing it too.
https://amp.theguardian.com/media/2019/jul/31/george-calombaris-former-…
Cold food to your door!
Often late.
https://www.google.com/amp/s/thespinoff.co.nz/food/03-09-2019/not-a-lev…
Cold food to your door!
The US Food issue is down to a single issue - weather/climate. The mid-West floods earlier in the year, and then the recent very early cold snap, have drastically shortened the effective growing season for some crops. Combined with the failures of this year's early plantings, and the likelihood that there will be much less late planting this year, the crop failures will extend well into next year. The USDA survey, reformatted by Chiefio (E.M.Smith) is sobering.....definitely a Climate Emergency.....
India gets tough on Monsanto
https://wolfstreet.com/2019/11/20/fear-of-reversal-rates-sets-in-says-t…
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