Dairy prices drop hard; US housing improves; Wall Street flat; Boeing ceases 737MAX production; China growth firms up; ASIC hits NAB very hard; UST 10yr yield at 1.88%; oil and gold up; NZ$1 = 65.7 USc; TWI-5 = 70.8

Dairy prices drop hard; US housing improves; Wall Street flat; Boeing ceases 737MAX production; China growth firms up; ASIC hits NAB very hard; UST 10yr yield at 1.88%; oil and gold up; NZ$1 = 65.7 USc; TWI-5 = 70.8

Here's our summary of key events overnight that affect New Zealand, with news the stopping of Boeing 737MAX production has upended market optimism.

But first up today, there has been a surprise drop in dairy prices at the overnight auction. Overall prices are down -5.1% in US dollars and -5.8% in New Zealand dollars as the Kiwi dollar has also fallen overnight. The retreat was led by WMP prices which were down -6.7% and SMP which were down -6.3%. This is the biggest fall since March 2017 which came after a string of declines and was followed by a string of rises. Today's result will come as a complete surprise to most analysts who were becoming increasingly bullish about farmgate returns this season. But this bump in the road could wipe off as much as -70c from some current season payout forecasts.

In the US, housing starts recovered in November and are now +13% higher than the same month a year ago. Building permits are up +11% on the same basis which is a notable 12 year high. These increases were above analyst forecasts.

The Fed also recorded a small rise in industrial production in November, reversing two straight months of declines.

Data for American job openings which is for October, came in on the positive side as well.

All this data pre-dates the phase one trade deal, but together you would think it would be juicing up Wall Street. But not so; it is flat in mid-day trade with the S&P500 up just +0.1%.

Perhaps one reason is that their major exporter, Boeing, has shut its 737MAX production and this will have a significant ripple effect on the economy going forward. In Europe, Airbus can't make jets fast enough now.

In Canada, their manufacturing sector sales are dragging the chain, and the Boeing news won't help there either.

In China, the IMF has firmed up its 2020 growth forecast to +6% and confirming Beijing's own target is quite feasible.

Perhaps that added to optimism because the Shanghai equity market rose another strong +1.3% yesterday.

But there is continuing trouble with excessive office space in the top tier cities with vacancy rates over 10% and rising, more in second tier cities. And this is complicating the plans of many companies to sell off property to bolster balance sheets, in a number of high profile cases an action necessary to retain their listing status. In the residential scene, the high-end Beijing property market is bouncing back strongly.

In Europe, Brexit fears are returning as the hard-line positions taken by the British are dousing optimism the split could be amicable.

In Australia, regulator ASIC is accusing NAB of a major fees-for-no-service violation, one that may involve a penalty of up to AU$10 bln because there may be more than 10,000 clients affected and the penalty is substantial in each case.

The UST 10yr yield is at 1.88% and down -1 bp since this time yesterday. Their 2-10 curve is firmer at +25 bps. Their 1-5 curve is unchanged at +17 bps. Their 3m-10yr curve is also little-changed at +32 bps. The Aussie Govt 10yr is down -4 bps since yesterday at 1.17%. The China Govt 10yr is up +2 bps at 3.24%. The NZ Govt 10 yr is now at 1.56% and up +2 bps from this time yesterday.

Gold is at US$1,476/oz and up +US$2 overnight.

US oil prices are higher at just under US$61/bbl and the Brent benchmark is just over US$66/bbl.

The Kiwi dollar will start today more than -¼c lower at just under 65.7 USc. On the cross rates we are holding at 95.9 AUc. Against the euro we are noticeably lower too at 58.9 euro cents. That puts our TWI-5 at just on 70.8.

Bitcoin is now at US$6,728 and down -5% from this time yesterday. News of ponzi fraud is sweeping Chinese markets where most bitcoin trading takes place. 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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if you are wondering why Trump is a shoe in for another four years - keep studying the data ! jobs massively up investment in infrastructure - housing roads rail power - massively up -- productivity up getting rid of crappy trading deals - replacing them with better deals -- share markets through the roof -

= working class Americans - working again
= middle class Americans in better housing - better travel and better investments - their 402's in particular
= wealthy Americans - business booming share market through the roof

for all the hyperbole -- moronic tweeting - and democrat / musicos and actors lambasting him -- he is doing what he said he would and the same people that voted last time for him -are going to do exactly the same this time!

What a great big pile of fake news. Too much Fox I think.

Chance here to make some cash Rastus. You're welcome.
https://twitter.com/LadPolitics/status/1206534739198431234

16/1 ... my munnies on Bloomberg : cheers !

Mick is being me tooed outskied as we speak.

... he has a history of crude sexist comments ... that wouldnt trump his chances of becoming the Prez , .. if he was a Republican !

Rastus, what USA economic data are you seeing?

Try debt levels for some initial reading.

Why is debt a problem for USA. They are presently global reserve currency. They can run the presses,
Why do you think it, debt, is important?

I saw one commentator say he worried less about debt and more about the fact that the government does not have a budget :-).

So he's going to lose the popular vote again but win because of their screwy electoral college which favours certain states?

We are nobody to judge when our electoral system that puts the likes of Winston Peters in a Kingmaker position because a handful of regional rednecks decide to vote for him regardless of all his broken promises for decades.

Both major parties had the option of having principles and telling him to sod off and going for a minority govt without him. Neither did of course. Our system isn't perfect, but at least it's representative of the overall vote, once you eliminate the also rans. (The 5% threshold is too high, needs to be halved)

... yup . . MMP was meant to give us better representation ... but , many of the smaller parties have fallen by the wayside .... or not made the 5 % , as per TOP .... so its come down to just the COL vs Gnat/Act ... BORING !!!

Still better than Social Democrats getting 21% of the vote and 3 seats under FPP. There would be no Greens or ACT, or Maori party under FPP.

After the non delivery and craziness of the last two years you want more parties that would maddy the waters even further... The Greens get 5% but their ideas are largely pie in the sky and they fail to deliver almost everything anyway. Going below 5% would let a lot more crazies with weaker ideas and leadership into play.

Yes, more smaller parties and we would see the major parties actually having to negotiate a proper coalition. Imagine if Labour or National could have played Winston off against another minor party or two. A lot of us don't wan't Nat or Labour, but the stupidly high 5% hurdle means its near impossible to get a new party in.

... I dont think that more parties would maddy the waters .... ooooh , it spins my nipples when the waters are maddied ... makes me mud , that does ...

Prag, how do small parties help?
Small parties seem by their nature to not have policies or people that are popular/what people want (the majority of the people).

Why have a govt, with a small party included, and then implement a policy the majority of the population do not favour.

How is that consensus of the people?

How is that good governance. Good policy formation.

We don't vote for policies, we vote for parties, there is no list of policies on the voting paper. If a major party chooses to team up with a smaller party, and reaches mutually acceptable compromises on their policies then how is that not representative of the voters that voted for that major party?

I'd love to see a direct democracy where people vote for policies instead of representatives, but I don't think that'll ever happen.

Greens have been pretty productive in the COL actually.

Wins so far:
Cannabis referendum in the next election
Zero Carbon Bill
Ended new offshore oil and gas exploration
boosted the Department of Conservation - largest increase in DOC funding for 16 years

Greens have been pretty productive in the COL actually.

Wins so far:
Cannabis referendum in the next election
Zero Carbon Bill
Ended new offshore oil and gas exploration
boosted the Department of Conservation - largest increase in DOC funding for 16 years

You nailed it there Pragamatist. I often point this out..that it's only due to the decisions of Lab and Nat that allow Winston to be KM. The major parties are calling it, not the minor - a bit of inconvenient truth the media and critics of MMP wish to ignore

Prag, how can you have such a name and then accuse/assume political parties of having principles?

I'm not allowed to be an optimist?

Sure employment is up, it's been tracking up the same trend line for the past 5 years well before he was elected.

But that means he has been maintaining employment growth, when it has been slowing in many other places.

Would you like to tell us what has happened to employment growth in NZ since the CoL came to power?

Unemployment appears to have fallen under Col. Does that mean they get your vote?

https://www.stats.govt.nz/indicators/unemployment-rate

Also doing a better job controlling debt than National did while also paying teachers and nurses more than National did when it was running those services into the ground.

https://www.interest.co.nz/news/99828/government-give-itself-more-wiggle...

NZ unemployment has been on a downward trend since early 2013.

As for controlling debt, the CoL inherited a growing surplus, but we heard only last week that it is going to disappear next year (and that's before accounting for the debt they took off the government books).

National were about to offer a bribe/tax cut which would've slashed that surplus while at the same time leaving behind $45B in new debt amassed over their 3 terms.

https://tradingeconomics.com/new-zealand/government-debt

Unemployment may look better on paper, but under-employment is worse. We follow unemployment as a stat, but fail to think about why we follow this statistic. We follow it because it gives an indication of work force participation. But when the measure was created there was an assumption/norm that employed people were 'fully employed'. Times have changed since then. Focusing on the output figure of statistics, and not the reason for having them, can be dangerous. Nat initiatives/ideologies like training wages, zero hour contracts and reducing union powers create higher under employment. This impact doesn't show up in Unemployment stats, but workforce participation is still worse.

Love or hate him he dose what he says and delivers despite all the obsticals put in his way and still he is being knocked for it. Something sadly lacking here and she gets international acclaim.

What Trumps big game is isn't clear but it is happening. Hopefully the gold standard that he has talked about. If the gold / part gold standard dose play out as Trump has stated many times, where dose NZ sit with zero in stock??? Sold to the highest bidder as usual I'm guessing.
When the world's Reserve Banks and a lot of countries are buying up large, NZ is not.

Trump Sept 2012. "QE3 is going to further sink the dollar into oblivion. Creates artificial numbers for short term market gains"

yep he was onto it.

Trump Dec 2019 (today) "Would be great if the Fed would further lower interest rates and quantitative ease. The dollar is very strong against other currencies ....."

There are hundreds of examples of him doing the opposite he campaigned on.
He has not delivered on anything. Lots of words, self adulation/praise and lies. Taking the US into a big black hole.

Tell us about how he's brought back coal jobs, Kezza.

Also,

- "Repeal and replace - day one!" (Obamacare)?
- Balance the federal budget?
- Build a wall, and have Mexico pay for it?
- Enact term limits on congress?
- Invest $550 billion in infrastructure?

Great, now we have folk praising misogynistic, racist egotistical prats like Trump on this site.
I notice that no figures were given for any of the assertions.
Note also that small matter of adding a trillion dollars to USA deficit on spending by undermining the tax base (Republican speciality - see Reagan & Bush) is ignored.
A little adult politics is in order for world: things have to be paid for - meaning more tax or more debt.
Whenever NZ government tires to do either, the Right squeals about it not being in "National" interest and its bad for business and the country.
This is ideological garbage.
Debt in NZ in annual borrowing, is equivalent to 21% of GDP.
In USA it is 104%. OECD average is over 70%
Hair shirts not required. But, if we need infrastructure for growth, it has to be started and finished. Not dithered over for years. Which is Labour's major fault here.

Mike, what's your basis for calling Trump a racist?

Some so called 'liberals' are pretty egotistical prats and have demonstrated racist tendencies. One of them lives not too far away from Mr Trump.

..do your own googling.

Murderers and Rapists

Most likely Trump's own statements and actions, one would presume.

https://en.wikipedia.org/wiki/Racial_views_of_Donald_Trump

Jacinda and Simon $5 T "zero carbon" virtue signal vs the real world - "The adoption of the Kyoto Protocol in 1997 coincided with a three-year decline in global coal consumption (1997-99), and the imminent end of coal was heralded. But the decline turned out to be the result of some specific circumstances such as the Asian financial crisis and did not last. Between 2000 and 2013, global coal use rebounded spectacularly. It soared 75%, more than it had done over the entirety of the previous nine decades.
...The report finds that the rebound in global coal demand continued in 2018, driven by growth in coal power generation, which reached an all-time high. Although coal power generation is estimated to have declined in 2019, this appears to have resulted from particular circumstances in some specific regions and is unlikely to be the start of a lasting trend."
IEA (2019), "Coal 2019", IEA, Paris https://www.iea.org/reports/coal-2019

Thanks for the weekly update from inside the denialist bubble. Whatever we are paying you is far too much.

... I was more than a little confused by this government when they shut down our offshore natural gas exploration ... an industry providing many well paid jobs and export earnings ... and will now be importing coal from Indonesia to make up the shortfall ....

... nat gas is a transition fuel , the cleanest of the fossil fuel family ... coal is the dirtiest energy source .. someone enlighten me ?

It is what we get when an unelected party like the Greens gets taken along for the ride. Pie in the sky but the reality of the bigger implementation is lacking. Someone above wants to drop the 5% threashhold rule lower so we would have more great ideas like this.

Wow, thanks for the right wing spin.. Unelected party like the Greens? The Greens got 6.3% of the vote.. More than 10 times what Act did. But i'm sure Act doesn't count as an "unelected" party right?

GBH, it's simply the ratio of C to H in the fuel. H is what delivers the joules, btu, etc, C produces plant food and provokes XR types into another bout of Gluing. Nat gas has the fewest C's to it's H's of easily deliverable fuels.

Of course, nuclear could deliver zero carbon tomorrow (assuming that the concrete, steel etc are roughly equivalent in a nuke plant, a dam, or a buncha Windmills), but we can't go there because Shut Up.

... similarly with GE / GM : we are falling behind the rest of the world .. even though there may be applications to control kauri die back / methane emissions / possums , stoats , weasels , European wasp .... because SHUT UP !!!

Depends on how you burn the coal. Back in England in 1973 we had it for central heating. I believe the large chunks of coal were crushed post hopper and blown into a furnace with the right air/fuel ratio so it burns more efficiently, not that I really cared at the time, having fun playing in the empty coal bunker and also didn't have to worry about doing the laundry either.

This may be a more measured assessment of coals future.
https://oilprice.com/Latest-Energy-News/World-News/IEA-Asia-Keeps-Global...

These two articles caught my attention. Why the haste to invoke the heavy hand of the law, if what Israel is doing is indeed unlawful?

https://www.middleeastmonitor.com/20191216-uks-new-tory-government-to-ta...

https://www.unz.com/pgiraldi/trump-creates-a-new-nation/

Ouch:
Bannon explains that nationalism is about protecting the working class from both illegal and legal immigration - which disproportionately hurts minorities.

"Look, this is what drives me nuts about the left. All immigration is to flood the zone with cheap labour, and the reason is because the elites don’t give a fuck about African Americans and the Hispanic working class. They don’t care about the white working class either. You’re just a commodity".

" That’s why, when I took over the campaign, it was let’s get back to some basics: stop mass illegal immigration, limit legal immigration, protect your workers. Why do you think Trump today is at 34% approval rating in the Emerson polls among blacks and 36% among Hispanics? He’s going to get 20% of the black vote and here’s why: everybody’s working," said Bannon.

Love his point about "casting" - hadn't ever thought about it that way, but there is merit in it.

The US electoral college was set up for a reasonable purpose. To limit the power of the larger states. I would imagine quite a few blue states would not want to be dominated by California.
Hillary knew the rules but was just less effective than Trump where it mattered. As for our system it's not so great as it rewards the less principled.

so you approve of the undemocratic nature? Should we also give every voter in Gore twice the voting power of a Wellingtonian?

Maybe check with your meaning of Republic.

The system you describe/imply was never promised USAwise.

Maybe don't dodge the question. Do you think the undemocratic method of electing the President of the USA is a good thing? Yes or No?

So, China growth has not "firmed up." It is forecast to do so.
China's 6% GDP forecasts are metronomic and acknowledged by practically all serious commentators to be fictional. Much of the GDP is due to useless projects like empty cities and roads to nowhere and official bribery, corruption and multiple leveraging of non-existent collateral is common and been reported on many times. Yet parts of Western media continue to repeat what CCP says like it is gospel.

My standard comment: Chinese "data"

A beautiful Chinese bar hostess — who romanced Richard Nixon and ignited an FBI spy probe — is now 95 and hiding out in a sun-splashed Los Angeles suburb, a special RadarOnline.com investigation has discovered.

https://radaronline.com/exclusives/2018/08/former-president-nixon-chines...

"ANZ Bank New Zealand has announced that Antonia Watson has been appointed as the company's chief executive officer."
Poor move. Unless the bank is looking for someone who was in the wheelhouse when the ship hit the rocks and is looking for someone to blame if the ship goes down? Or she's so caught up in past behaviour that she will not 'rock the boat' as perhaps a new captain would?
(Why is it a poor move? She has been brought up in, and infected with, a culture so ingrained in ANZ management that we get practices like this, seen as 'normal'. ( reported elsewhere on this site) "Former ANZ NZ chairman John Judge, who oversaw house sale to ex-CEO David Hisco's wife, says the house arrangements were a 'very typical' corporate scenario")

ICYMI: The ATO has revealed a surprising tax crackdown – and if you own any of these five household items, they could land you in hot water https://www.news.com.au/finance/money/tax/ato-reveals-fresh-crackdown-on...

So, National Australia Bank is being taken to Court by ASIC for unconscionable conduct and has set aside $2b for remediation. This is because they were caught out at the Royal Commission in public and could not explain why they were charging for stuff they did not do and calling it a service charge and not a fee. This could end up with a fine of much more than they seem to have provisioned for. Which NZ bank does NAB own?

BNZ.