Trade deal benefits questioned; US farm bankruptcies jump; Canada inflation up; China infrastructure surge; UK audit review released; UST 10yr yield at 1.97%; oil and gold unchanged; NZ$1 = 65.8 USc; TWI-5 = 70.9

Trade deal benefits questioned; US farm bankruptcies jump; Canada inflation up; China infrastructure surge; UK audit review released; UST 10yr yield at 1.97%; oil and gold unchanged; NZ$1 = 65.8 USc; TWI-5 = 70.9

Here's our summary of key events overnight that affect New Zealand, with news the role of auditors is being questioned fundamentally.

But first in the US, it is becoming increasingly clear that China isn't going to buy American ag products at the levels touted by the Administration. That aspect of the phase one deal has been completely oversold, and besides it looks like China will divert existing purchases through Hong Kong directly to Chinese ports, thereby counting those in the modest increase promised.

American farmers have taken a hit. The number of farms filing for bankruptcy is up +24% in 2019 from the previous year. It's the steepest rise the farming industry has seen in years, and the total farm debt for 2019 is expected to hit NZ$630 bln and a new a record high. Trade tensions and weather pressures are the key reasons.

In Canada, inflation is rising, up to +2.2% in November, a rise from +1.9% in the year to October. Meat and fuel prices drove the rise.

In China, local government infrastructure projects approved in December now exceed +NZ$200 bln so far, and it is a rush that is causing raw material prices to rise quickly, things like cement, coal and iron ore. China's new infrastructure surge will have an outsized impact on greenhouse gas emissions.

In the UK, a new review of their troubled audit industry has called for a redefinition of auditing and its purpose, reinforcing its role as a public interest function. It says auditing should be separated away from the accounting firms who now control it. It wants auditors to be “suspicious and sceptical” in their work, focusing on detecting material fraud in a forensic way, and ensuring companies can afford shareholder dividends. It also wants them to widen their remit to work in the interests of everyone who relies on a company staying in business, including staff.

Equity markets are in a switched-off mood. The S&P500 is marking time as it has done for a few days now. Europe is similar although the German DAX gave up a -0.4% fall overnight. Yesterday Asian markets yawned as well. But at least the NZX50 did post a notable +0.6% gain.

The UST 10yr yield is at 1.93% and up +5 bps since this time yesterday. Financing the rising US budget deficit underpins these rises. Their 2-10 curve is firmer at +29 bps. Their 1-5 curve is also firmer at +21 bps. Their 3m-10yr curve is up as well at +36 bps. The Aussie Govt 10yr is back up +8 bps since yesterday at 1.25%. The China Govt 10yr is up another +2 bps at 3.26%. The NZ Govt 10 yr is now at 1.57% and up +1 bp from this time yesterday.

Gold is at US$1,475/oz and virtually unchanged overnight.

US oil prices are firm but little-changed at just over US$61/bbl and the Brent benchmark is still just over US$66/bbl.

The Kiwi dollar will start today marginally firmer at just under 65.8 USc. On the cross rates we are holding at 95.9 AUc. Against the euro we are back up to 59.2 euro cents. That puts our TWI-5 at just over 70.9.

Bitcoin is now at US$6,894 with a +2.5% recovery after the recent sharp falls. The bitcoin rate is charted in the exchange rate set below.

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Mates in Mid west say a huge cow kill is happening 115k a week.

Andrewj - This link worked yesterday..currently down, wondered what your thoughts on the headline were?

China imported meat market in turmoil, as buyers seek to renegotiate deals after prices plummet-
Reports of Chinese buyers reneging on contracts on beef and other imported proteins have emerged this week, as imported meat prices in the country continue to plummet…
Read More

What are the chinese going to eat then? They loooove meat, and pig is in short supply as large portion of world supply is dying of African swine flu.
USA had a terrible cold-affected growing season with late spring and early autumn snows which will show up in crop prices.

probaby chicken or what they are told to, suspect there is political pressure to get food inflation down and fast.

Tofu and Seitan

beggard if i know, I managed to read the article yesterday and it's at odds with everything else out there. Won't open today, but the main link is still on their trade page.

I missed that, China is so dominant it can turn the meat industry into the wool one anytime it wants to. Someone in the industry did tell me lamb contracts to China will be renegotiated in the new year but very second hand.

'Minister Han first visited a plant-breeding lab and greenhouse at a Beijing research center operated by Syngenta, the Swiss seed and agrochemical giant acquired by the State-owned China National Chemical Corporation, aka ChemChina in 2016--China's biggest-ever overseas acquisition. According to the article, Syngenta's resources have been integrated into Chinese agriculture since it was acquired by ChemChina. Han hoped the company's investments in R&D and hoped would play a role in high-quality agricultural development, attack key problems and bottlenecks, and render technical assistance to farmers.There was no mention of the $12-billion debt load taken on in the Syngenta acquisition that has reportedly held up a planned merger of ChemChina with Sinochem. China's ambassador to Switzerland reportedly labeled the deal a "mistake" and suggested the Swiss could have their company back if they wanted it. Nor was there discussion of how ChemChina--the country's largest pesticide and fungicide producer--would be affected by the Ministry's initiative to curb pesticide use.'

getting some feedback

"REPORTS of Chinese buyers reneging on contracts on beef and other imported proteins have emerged this week, as imported meat prices in the country continue to plummet.”

"China remains a ‘very immature, higher-risk market’ for Australian beef.""‘vast numbers’ of South American exporter companies that had been forced to renegotiate prices in shipments to China recently, that had fallen dramatically in value since shipment. In one Brazilian company’s case, some hundreds of containers were involved."
Uruguay started complaining a week or 2 about this as well. we heard about this firsthand a couple of weeks ago but were asked to keep quiet.

..yep that was the guts of the article. Page is still down I note....conspiracy theory stuff!


I see that an unusually cold winter in North America is merely "weather pressures", not yet the beginning of "the next ice age is coming" mass hysteria. Is this the start of a cluster of very cold winters? Has the cycle turned? Can we please turn our attention to real dangers like plastic pollution and nuclear waste leaking into our seas, and away from teenage "climate change" hysteria and media "it's all his fault" hysteria.

Brazil is where it's happening , ontrack to export 100 MMT of Soy to China.

"Global warming' is about extreme heat in the atmosphere. Heat is energy and is manifested through weather events. Increased heat means increased moisture, and increased energy means increased extremes including storms and other weather events. Thus the 'unusually cold winter' is not out of sync with the 'Global Warming' scenario. The counter Global Warming scenario will not change until the entire global picture reverts to a cooling outcome, not just a local event.

It's desperate over-reach by scare profiteers to try blaming cold weather on global warming. There is no data that backs up assertion that 'extreme weather' is increasing. Hurricanes, tornados, cold-snaps and snow-storms are random weather events.

In fact, we've got more densely-populated settlements due to increasing urbanisation around the world. That makes commentators think that more people are being affected by 'extreme' weather events, therefore more frequency and intensity of such events.

Face palm!

UHIE : the " urban heat island effect " ... definitely , the science is not settled on this ...

Double facepalm - might be something to do with population?

Global warming means average temperature worldwide goes up. So far depending on the chosen base line say 1 degree since our industrial age started burning fossil fuels. If the average temperature goes up so does the energy contained by the atmosphere but starting at absolute zero means that one degree rise is roughly 0.3% increased energy. So it is unlikely that such a small change has changed our weather. The evidence for global warming is solid - there have just been too many record highs worldwide - but the evidence that increase energy is causing exteme weather events is poor and using extreme weather events as proof of global warming is counter productive. For example after the record-breaking 2005 Atlantic hurricane season which included three of the top ten most intense Atlantic hurricanes ever recorded and hurricane Katrina destroyed New Orleans we were promised it was the future but the next decade had the fewest carribbean hurricanes. No wonder skeptics exist.
The recent bad winters in North America were predicted in an article in New Scientist decades ago - the theory being the Artic ice cap melting would result in the centre of cold air moving from the pole to above the contintal land mass. Same article predicted the reduction in the flow of the gulf stream and that causing severe winter weather in western Europe (more like Moscow). So I interpret bad weather in winter for the USA as support for climate change theory but for a different reason than you.

Please sit down Roger - you had your turn now let the experts take charge,

Tuesday’s average maximum 0f 40.9C was Australia’s hottest ever and follows the driest and second warmest spring on record

Update - NSW state of Emergency declared

RW - learn a bit about weather.

Stronger storm events, driven by wamer surface temperatures (indicating more potential energy available to generate them). They in turn, pull polar air harder, delivering cold blasts. Don't confudge that phenomenon with global cooling - it can't happen. We are releasing a billion years worth of stored carbon - it's a one off event. And rather than denying the impact of the released gases on the environment we evolved in (all that time it was locked in-ground) try worrying about the sheer scale of our energy-use which is causing it. There is no equivalent replacement - not by several orders of magnitude.

And watch for systems linkages; if the Gulf Stream stops, Europe will indeed get colder......

... ahhh . . So , this explains the " mini ice age " for 600 years from 1300 - 1900 , approx . ..

And now , the planet is naturally reverting to a warmer state ... back in line with long term averages ... over the last 500 million years or so ... when CO2 was 10 or 20 times more concentrated in the air than it is now .. .

.. got it ! .. cheers , thanks for that , I am now informed ...

Sit down GBH on the rocking chair - lets leave it to the experts (Sir Richard Attenborough comes to mind).

Is that the same Richard Attenborough who made that scandalous and misleading documentary about the dying walruses around the arctic?

Check it out:

Yeah, nah. The beat up of David Attenborough looks to have been quite wrong on the part of climate change deniers too.

Seemed to be primarily one zoologist who came out with a different idea, which was then latched on to and rabidly shaken back and forth by the frothy deniers.

Ultimately, climate change deniers have sought to undermine Attenborough based on one comment they latched on to, and it's been a bit silly.

Read Jim Flynn's 'No hiding place' for an explanation of which range of years makes most sense for climate change predictions. Short book (<90 pages) and easily the politest book ever written by a believer in climate change.

Still the best pictorial explanation IMHO

Wow, it being cold in winter in a particular geography has now disproved climate science's findings.

Great news, everyone.

NASA's link for kids (and codgers):

All the Whitehouse announcements about the trade deal are just for Wallstreeters who are just idiots that believe Trump tells the truth even though there is clear evidence to the contrary.

I think they are for the "faithful" so they can believe Trump is actually achieving something.

... it is 3:50 PM in Capitol Hill , Washington ... and the House is debating the Articles of Impeachment against Donald Trump .. what fun ! ...

Geez , that Nancy Pelosi is an angry lady ... still hasn't forgotten nor forgiven Trumpy for beating her mate Hilary Clinton in 2016 ...

Such a relief the President has his emotions in check...


I curious how it is an assault on America - the Republican Party yes, but with the partisan politics that is so prevalent in the US is it surprise anymore. If Trump is not careful he may blow a gasket......

EDIT spelling

Lets wait for the evidence but if true how the mighty have fallen.

No trial, no conviction but named. Trial by righteous media as per Cliff Richard's house being searched by police with accompanying media in helicopters - Cliff said if they had been asked he would have flown in from Spain and unlocked the doors. Whereas Grace Millane's killer found guilty and still anonymous.

... yes , appaling that Brierley has been outed by the media ... whatever happened to " innocent until proven guilty " ....

Perhaps the volume of what he was found in possession of (in his laptop, and potentially in his house) led the court to decide that name suppression is not justifiable? Sounds like his house was raided too as part of a wider operation, not just a random search in an airport.

. . a guy murders 51 people in Christchurch , and his name is suppressed until after he is convicted ...

" innocent until proven guilty " ought to mean that for everyone ....

Brierley was arrested in Australia - they have different laws to us, hence the different treatment.

Police were tipped off in August. It's pretty clear that the Police waited for an ideal opportunity to catch him red handed bring the media into the country. The Police have stated that there were 200,000 images and 512 videos on his laptop. It will be interesting to see the extent of evidence.

Separately I have seen suggestions from an older journalist that this may have been an issue for Sir Ron back in the 1980s. I wonder if there will be more details that will emerge after February.

They may have been tipped off in August but I would suggest they would look for some supporting evidence before moving. It would look a bit embarrassing to raid such a high profile person , find nothing and then find out it was a disgruntled person making a malicious claim.

Think they found 200,000 pieces of supporting evidence

True - but what if they had found nothing or adult material. They would still need something more than just an allegation. Don't forget in the UK a deceased politician was named as a perpetrator and after extensive an inquiry it was found that the accuser was a liar and had made it all up.

But they found something. So your hypothetical situation doesnt apply

Perhaps you are living up to your name. The point I am trying to make is that they wouldn't search his electronic equipment on a tip off only they would need to have some reasonable ground for believing the tip off was true. I am talking about the process leading up to the searching of his electronic device not what was found.

Thats purely at the discretion of border security. Even your occupation can trigger electronics search. So no they can search your stuff and if you refuse, turn you back to where you came. Given he's an 82 year old boomer he probably doesnt even know how to delete his search history. So your point is moot


.The UST 10yr yield is at 1.93% and up +5 bps since this time yesterday. Financing the rising US budget deficit underpins these rises.

In other words, what’s really driving asset growth for the entire banking system in the US in 2019 are holdings of those risk-free assets, especially those of US Treasuries.

During the third quarter of 2019, US banks added almost as much as they did during that tumultuous fourth quarter of 2018 (landmine), which remains the biggest increase on record. And Q3 nearly equaled it.

There are some who will still claim that banks are being forced into this, meaning the dealer banks included at the top of this list of all depositories. But, as you can see above, the ebbs and flows in bank holdings of UST’s doesn’t correlate at all with the ebbs and flows of the federal government’s fiscal deficits.

They do correlate very, very closely with the facts – they are indeed very stubborn things – in this case meaning market prices and therefore liquidity indications spread all throughout the various corners of the bond markets. To put it simply, when banks perceive a general increase in liquidity risks they have added, and will continue to add, Treasuries (and agencies). Link

Treasuries (and agencies) accumulation H8 evidence

There are 2.2 million farms in the US .... 74 times the number in NZ , 30 000 ...

... and yet , their total farm debt is only 10 times ours ...

Someone enlighten me , please !


Look at the lenders.

NAB tried to ag lending USA.
Massive fail, the achievemed.

♡ Merry Xmas ! ♡


Have a great holiday all -- lovers or haters.

Best wishes Mr X : hoping your new political party is successful in 2020 : cheers !

You too X - heading home for Xmas or enjoying our free democratic Islands with no State oversight?

Merry Christmas, Xingmowang! Have a great holiday.

You too Xing. I have enjoyed your contributions to our debates, keep them coming!

It will be a good holiday. Once I clear out the last of the work for the year.

The Labour-led government has openly chastised our dairy farming industry for degrading our 'pristine' environment and have been been arguing that all future volume growth in output is damaging towards the environment.

Now that the polluting industry in question is one where their leftie-liberal voters thrive: international tourism , watch how the government is contradicting itself on volume growth and sustainability claims.

In fact, hundreds of millions of dollars out of the PGF fund are going into tourism initiatives and our PM is doing guest appearances on American talk shows to promote international tourism.

So you want to turn Tourism off? I remember Jonkey (and little Jonkey Junior) playing Golf at Kauri cliffs with Obama. Should such things be banned or only when you are against the current Government?

I remember Jonkey (and little Jonkey Junior) playing Golf at Kauri cliffs with Obama. Should such things be banned or only when you are against the current Government?

So the pro-crony capital PM not caring about the climate gives a free pass to the current one claiming to be pro-climate action.

Nobody is going to turn tourism off, it's not O&G offshore exploration where the industry just has to suck it up. However, I'd at least expect the government to acknowledge the elephant in the room with an additional 1.4 million tourists expected to come to NZ annually by 2024 (up 37.1% from 2018 arrivals).

Unless all these tourists all arrive on our shores on solar-powered yachts and ride around the country on our extensive public transport network instead of gas-guzzling campervans and SUVs, we have a big problem.

Encourage tourists to use the same mode of transport that Greta Thunberg used in August 2019 to attend climate conferences in New York City and Chile.

... sadly , not everyone has mega rich parents who can freely gift their multi million $$$ yacht ... as Greta does ...

?? She was given a lift..but nice spin yet again GBH (sigh). You really dont like this young female teenager do you...rankles your cankles (laughable really). Just like Greta I hitched a ride or was paid for my time..paid to travel - brilliant.
Having sailed to Sydney, Tonga, New Caledonia, is the best way to travel and is increasing in popularity. There is an increasing sailing world that is generally under the radar.. they have checked out and just sail the world.
Once you arrive customs come to you and no queues or Xray machines. Everyone generally has a rum instead.

On the one hand I am peeing my Gummy nappies , laughing fulsomely at Greta's temper tantrums and screaming ...

... on the other , I'm annoyed that a very important message for us to clean up our act is being subverted by her hysterics ....

A measured , considered approach , step by step with science leading us is needed ... to not scare off , or to anger the audience ... Greta's behaviour is very divisive ... not helping the debate ...

Wait, who is exhibiting hysterics...? Greta or you?

I thought it was Trump and the others who were worried the world might listen to her.

Action over talk - thats the point, sorry her Generation are over the talky talky (your generation make an art of) and mor doey doey.
And who is scared off - just some grumpy old white guys?

Now, now Grumpy Bear, are you spreading lies about that yacht voyage?

. . Ban freedom camping ! ... no more free loading off us ... it was an idiotic idea from the get go ... we want tourists who can pay their way ...

Yeah, seems like farming, tourism and immigration are some of the worst sources of pollution. To address tourism it's probably going to need an increase to John Key's tourist levy (locally) and more taxation of fossil fuels internationally to put the cost of the pollution on the source of it.

The difference being that farming produces something people need i.e. food, whereas tourism is just the wealthiest 20% of the world amusing themselves while burning fossil fuels.

Agree. Doesn't mean that any particular one or other should be allowed to have others paying the cost of their polluting activity - ratepayers, business owners, airlines, farmers, tourists...

Tourism (and farming) both produce something people need - income.

Promoting tourism, at this stage in the game, is stupidity. Not only will the need to address CC curtail travel, but the energy available to underwrite economic activity will dwindle. Tourism is icing, not cake, and not even bread; totally discretionary. There is an outside chance the elite manage to keep the financial system intact, reducing the total planetary consumption-demand while keeping hold od the reins. If so, maybe they also travel - but the airline industry is built for current passenger scale and it's hard to see all that stay operational.

Our PM would be better telling the truth about there being very real Limits to Growth, and that she/her Party has/have a plan to de-grow towards a level known as sustainable.

You keep nailing it PDK. A voice of science, fact and reason.

"Tourism is icing, not cake, and not even bread; totally discretionary."
Well put, and it's the "totally discretionary" bit that could impact first. Who is going to spend their hard-earned; diminishing real value dollars to go to the Ends of the Earth, when there are fjords next to their European door; indigenous peoples' next to their American one and Disneyland has been built in their Chineses one?
Not as many as today....

I don't see Limits to Growth entering into the manifesto of any incumbent political party.

What you need is a Power Down Party.

Lest do this - slowly

Lets undo this.

Don't you know Jacinda has a huge Ctrl+Z in her office?

Anyone promoting growth and sustainability inevitably ends up tieing themselves up in knots ... its simply too late for that

"... We still concluded that you simple cannot support seven or eight or nine billion people with a material and energy flow anything like what is currently experienced in the West or aspired to in the third world.

... Well, in the last 15 years, there's been such an acceleration in demand for energy and materials, the natural resources of the earth have deteriorated sufficiently, and the population has grown to the point where I no longer see ways realistically of changing the model to produce a so-called sustainable development scenario.

And it’s caused me, in my own thinking, to shift from this notion of sustainable development, which is actually a kind of an oxymoron anyway, over to the concept of resilience. How do you structure a system, a personal system, your family, your firm, your household, your town, your nation, so that it will absorb the shocks which are coming and continue to afford a basis for a humane existence?

The core question: 'Sustainability' at what level of comfort?
Historical choices have included:

  1. A peasant's life under feudalism - highly sustainable especially where the Feudal Lord has a compliant army
  2. Subsistence farming - slash, burn, farm and move on when the soil gives out - 25% chance (as per the Yamomani) of violent death
  3. A Kulak's life under Stalin - comfortable, but only for a little while....
  4. An artisan's life in a medieval city - as long as the patronage keeps up

Choices, choices, least worst is the winner, maybe?

yes indeed
i think most people who talk about sustainability only imagine some sort of sustained lifestyle as per the one they have now with minor tweaks... in other words theyre delusional
As far as choices it may not be ours to make ... there is no plan apart from more of the same until it breaks

the hotter it gets in Australia the wetter it gets in New Zealand - as the heat off the Eastern Seaboard comes out over the Tasman Sea & hits the moist air coming up off the southern ocean it dumps it on NZ

Climate Change in New Zealand

Red Glaciers in 2009
Pink glaciers in 2019