Here's our summary of key events overnight that affect New Zealand, with news China is lashing out at criticisms by democracies.
But first on Wall Street, the Fed puchased more than US$½ tln in US Treasuries from banks last week alone to keep banking system liquidity up, as the usual sources in the repo market pulled back. While a US$½ tln level in a week isn't unprecedented, it is still very high and a third higher than the prior week. Exactly why the Fed needs to step in at these levels to keep the bank liquidity system functioning is a little unclear but it may just be a timing issue - or it may indicate the usual suppliers, fund managers, are tiring of very low returns and wary of rising US Federal government systemic risk. Certainly something to keep an eye on.
And another thing to keep an eye on; in Canada, the Chinese government warned them not to follow the American lead and formally back protesters in Hong Kong, saying such a move would cause "very bad damage" to already poor ties with Beijing. China is scrambling to ensure democracies know there will be a high economic price if they stand up for democratic openness. China is very sensitive to criticisims in the Canadian press and wants them suppressed by insisting on "right thoughts" and is backing that up with economic pressure.
And Australian democracy is under specific attack.
A record number of Hong Kongers turned out to vote yesterday in peaceful district elections that are seen as a referendum on the increasingly violent protests that have gripped the city for nearly six months. Early results show that pro-Beijing candidates are losing to pro-democracy candidates. If this trend is widespread, Beijing will be furious and more critical of the power of democracy.
In the US, their manufacturing PMI is marginally firmer but still quite low at 52.2. Their services PMI is also up a little but still even lower at 51.6. A reading of 50 is stagnation.
In Europe, these levels are even lower again, with the factory PMI at 47.1 (contracting) and their sevices PMI at 51.5. The combined picture is a stagnating 50.3. In Japan, they are also stagnating with a manufacturing PMI at 48.6, a services PMI at 50.4 and combined at 49.9. In Australia, their PMI has slipped from stagnation to contraction. And that applies to both their factories and service sector. (Just for the record, the New Zealand factory PMI is expanding at 52.6. while our services PMI is expanding at 55.4.)
There has been more, probably pointless posturing by the presidents of the United States and China on their desire to sign an initial trade deal and defuse the tariff war. But scepticism abounds now. Certainly markets are ignoring this official talk and the S&P500 had a small loss for last week.
In the US, Bridgewater Associates, the world’s largest hedge fund, has bet more than US$1 bln that stock markets around the world will fall by March, according to a Wall Street Journal report.
In China, they have revised the size of their economy higher with a one-off Census adjustment that adds more than 2% to previous data. It is a revision that adds more than the entire NZ GDP to their data. Most of that was because their services sector was larger, now accounting for 53.3% of their economy (compared to 52.2% previously). That pegs the size of the Chinese economy at US$13.1 tln in 2018, second only to the US at US$20.5 tln at the same date. (On a PPP basis is may be much closer, however.)
The UST 10yr yield is unchanged at 1.77% which is a -6 bps decline over the past week. Their 2-10 curve is less positive at +14 bps. Their 1-5 curve is weaker for the week at +7 bps. Their 3m-10yr curve is also less positive +18 bps. The Aussie Govt 10yr is at 1.09%, a fall of -7 bps over the last week. The China Govt 10yr is now at 3.20%, and -7 bps lower a week. The NZ Govt 10 yr is now at 1.35%, down -6 bps for the week.
Gold was down -US$2 at the end of trading last week and will open this week at US$1,461, a -US$7 fall for the week.
US oil prices are lower at just under US$58/bbl. The Brent benchmark is just under US$63.50/bbl. These are very similar levels to a week ago.
The Kiwi dollar has been remarkably stable over the past week, now still at 64.1 USc. On the cross rates we are now at 94.5 AUc and a +½c gain in a week. Against the euro we are little-changed at 58.1 euro cents. That puts the TWI-5 at just on 69.4.
The same can't be said for Bitcoin which is lower yet again this morning at US$7,038 and a drop of -17% for the week after China launched a fresh crackdown on cryptocurrencies, warning of the risks entailed in issuing or trading them. 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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Hot off the press from BBC; Hong Kong elections: Pro-democracy group 'makes big gains'. "Hong Kong's opposition pro-democracy movement has made strong gains in the Chinese territory's district council elections, local media reports say. It took 196 of the first 235 seats declared, according to the South China Morning Post newspaper. Pro-Beijing candidates took just 27".
https://www.bbc.com/news/world-asia-china-50531408
Yes Billionaries really know how it is on main street? How will he fix growing inequality in the USA - fasinated to see what he promises. Mean while in NZ,
Labour is ahead and its coalition partners are safe while National dips below 40 (poll done prior to NZF donations issues)
https://www.stuff.co.nz/national/politics/117662933/labour-ahead-while-…
The self-proclaimed champions of sound economic management, Simon and team Nats, have wandered very far away from reality. They talk the big game of productivity growth but have absolutely zero policies to deliver on any such promise.
This is a joint statement from the party's finance spokesperson “What Grant Robertson fails to mention is that about three quarters of New Zealand’s economic growth is driven by population growth, not productivity improvements. That's rich coming from the 'one-trick pony' bunch!
You have to wonder why anyone would want to be POTUS. The constant sniping, digging up dirt, chaos and the real possibility of disgrace and even imprisonment if you make a misstep. Surrounded by enemies, foreign agents, complete idiots and back stabbers in the White House, FBI, CIA and the Pentagon. Modern democracies appear to be designed for maximum chaos and stopping anything important from getting done. Why would you bother?
Snipping and digging up dirt: I agree. You need a tough skin, that is for sure. But I'd love to know whether you were making the same arguments when Obama was the target of the right's wraith and racism. I could not think of a more wholesome family to occupy the Whitehouse, yet it did not stop the religious right from their attacks.
As for the risk of imprisonment: Well, just don't run for office if you intend to do something illegal. As for your comment about getting important stuff done: The most important thing for Congress and the American people to do is to boot the Traitor Trump out of office.
Between Guliani and Bloomberg with their policies of "broken windows" and "stop and search "they very nearly made New York a safe city.The current Mayor has walked back from those policies and New York is fast going down hill.
Bloomberg has since come out and said sorry for introducing his "stop and search"policy.
This guy is weak and only standing for POTUS because he doesn't like Trump.
Now he has to back it up with policies,something imo he won't be able to do.Having money won't win him this election.He is part of the swamp.
First murray86, the net total TOMO Fed purchases of US Treasury, Agency and MBS securities for the calendar week ending Friday 22/11/19 was a reduction of $0.88 billion to $199.23 billion outstanding compared to $200.11 billion outstanding at the week ending 15/11/19.
POMO outright Treasury security purchases for settlement over the same period amounted to $27.706 billion.
Furthermore, the Fed reduced it's SOMA position of mortgage backed securities by $12.892 billion for the week ending Wednesday 20/11/19.
Hence the net change in Fed security purchases was $13.934 billion over this period.
This can be fact checked at the following locations with the proviso that the Fed weekly settlement window is Wednesday.
https://www.federalreserve.gov/releases/h41/current/
https://www.newyorkfed.org/markets/pomo/operations/priorTwoWeeks.html
https://apps.newyorkfed.org/markets/autorates/tomo-results-display?SHOW…
And to answer your second question, the Fed prints, out of thin air, the reserve funds it credits each financial institution that successfully offers securities for purchase in open market operations. Fed reserves can never leave the FRBNY balance sheet since they are the liabilities offsetting (balancing) the newly purchased assets, until they mature or are QTed. But individual institutions can sell and buy them to and from each other over the interim period.
Trying to avoid the Great fall and longer one manipulates and delay - more harder will be fall.
Either the ecnomy has to continue for next number of years or decade on zero or low interest or face the consequence (Which has to happen) and than let ir recover by own on fundamental.
If we make it that far..
As mentioned above one step forward, two backwards. Bad news emerging day by day and it's not going to take much of a downward motion to set it all off. If those people pension funds take a portion of their funds out shes one way from there on..
There is good reason to avoid & delay
We seeing the inevitable end game of our ability to collectively service more debt ... Hence interest rates track to zero
All debt is just a promise that we will produce MORE resources in the future ... so more promises requires more environmental leverage
Zero interest confirms growth is dead ... ie growth in our ability to service more debt
If we cant add more debt, capitalism is dead. There can be no return on capital
Money = debt = wealth = free and worthless
So any recovery has to be preceded by a massive wealth writeoff and deflationary spiral
To somehow come out with a renewed ability to service debt even though the pie is then officially far smaller appears impossible ... a majority are no longer part of the game but somehow economies to scale/supply chains need to stay in place...
Last week from The Institute of International Finance (IIF) (a summary from a members-only report): “Global debt has topped $250 billion – 320% of GDP: emerging market debt hits a new record of $71.4 trillion (220% of GDP); With limited room for further easing, debt service costs will be an increasing constraint on fiscal policy… USD hovering at record highs despite Fed rate cuts this year: persistent growth in demand for U.S. liquidity as dollar debt across EM and mature markets hits record highs. Non-U.S. banks are increasingly reliant on USD funding.”
Bridgewater Associates HAVE NOT shorted equities. Please see Ray Dalios tweet. This misinformation has been spread by interest twice now. This is supposed to be top level financial journalism (and usually is). Bridgewater got in direct contact with Wall Street Journal to correct them.
I'm confused?
The bet is made up of put options, contracts that give investors the right to sell stocks at a specific price by a certain date. The options expire in March and currently represent one of the largest bearish bets against the market, the report added.
“To convey us having a bearish view of the stock market would be misleading,” Dalio said in a statement.
https://www.reuters.com/article/us-bridgewater-associates-markets/bridg…
However, Dow Jones, the publisher of Wall Street Journal, said the article is based on interviews with multiple sources.
Here you go, straight from Ray - The Wall Street Journal wrote an article that said “Bridgewater Bets Big on Market Drop.” It’s wrong. I want to make clear that we don’t have any such net bet that the stock market will fall. We explained to Juliet Chung, the author of the article, that to convey us having a bearish view of the stock market would be misleading, but it was done anyway.I believe that we are now living in a world in which sensationalistic headlines are what many writers want above all else, even if the facts don’t square w/ the headlines. You can believe me or you can believe The WSJ writer. I hope you have come to know that you can believe me.
"China attacks democracies"
Is anyone surprised ?
After penetrating many countries and their parliment are now in a posistion. Earlier was doing behind closed door but now the dependence (Money and Muscle Power) and peneteration is so deep that can do it openly.
Countries like NZ are so smal that China can buy it number of times and this is exactly what has happened and happening.
When travelling in NZ have seen signs in English and...........Chinesse and not in any other language. No harm in it but does it not reflect a bigger picture ???
A view from Aussie, and a comment notes:
"1.3 million (Chineses immigrants) are in just Sydney or Melbourne.
Living in exact replica slums of what you see in China.
As fake ‘students’ on very long stay pretext courses, up to 9 years stay with COe & visa churn.
Or as ‘sponsored’, ‘spousal’, ‘family reunion’, ‘investment visa’, ‘regional & rural’, or ‘NZ SCV’ all of it totally broken & corrupted."
And we wonder why Australia is cracking down on Kiwis living there on the Special Category Visas (SCV's)
https://www.macrobusiness.com.au/2019/11/china-is-marching-on-australia…
And in the meantime the ABC are reporting a Chinese spy is seeking asylum and in the process is making some pretty interesting claims. Some at least of which, give even more credence to Anne-Marie Brady's claims and should make our security agencies sit up and pay attention.
Some at least of which, give even more credence to Anne-Marie Brady's claims and should make our security agencies sit up and pay attention..
The only serious buyer of our agricultural exports has been deemed an enemy of NATO, by none other than the US.
Mission update: NATO’s new enemy is ‘Chinese Communist Party,’ Pompeo tells Alliance
re above comment "Living in exact replica slums of what you see in China."
please give them a break. they just landed in a foreign land, ready, and willing to do hard work. will not surprise they will never go on dole and likely do very well-- just give them a break and some time.
This also reported in today's BBC: Data leak reveals how China 'brainwashes' Uighurs in prison camps.
"About a million people - mostly from the Muslim Uighur community - are thought to have been detained without trial. The instructions make it clear that the camps should be run as high security prisons, with strict discipline, punishments and no escapes. The memo includes orders to:-
"Never allow escapes"
"Increase discipline and punishment of behavioural violations"
"Promote repentance and confession"
"Make remedial Mandarin studies the top priority"
"Encourage students to truly transform"
"[Ensure] full video surveillance coverage of dormitories and classrooms free of blind spots"
https://www.academia.edu/37794456/20181108_Anthropology_China_Torture_G…
and
https://anthropology.washington.edu/research/publications/violent-pater…
leading to a 15 page pdf that uses China's own media to prove the cultural genocide.
I was one of the rare non-National party supporters who quite liked Simon Bridges until this September he placidly met and shook hands with Guo Shengkun who has served as Minister of Public Security.
As Anne-Marie Brady says: ""Bridges, leader of NZ's main opposition party; Brownlee, spokeperson on NZSIS; Yang, who worked for 15 years in China's military intelligence; have just met with the leader in charge of China's secret police.""
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