US politics gets very ropey; Canadian retail rises; China household debt risks rise; China presses its advantages; Japan stumbles, Taiwan rises; EU is depressed; UST 10y at 0.83%; oil and gold up; NZ$1 = 69.4 USc; TWI-5 = 72.1

US politics gets very ropey; Canadian retail rises; China household debt risks rise; China presses its advantages; Japan stumbles, Taiwan rises; EU is depressed; UST 10y at 0.83%; oil and gold up; NZ$1 = 69.4 USc; TWI-5 = 72.1
From Mt Maunganui, Western Bay of Plenty, with Tauranga hidden

Here's our summary of key economic events overnight that affect New Zealand, with news that as the US seems to be imploding, China is moving quickly to take advantage of the vacuum.

In the US, officials who are about to lose their positions after the election result are sabotaging the US Federal Government programs ahead of the handover. The Treasury Secretary is canceling pandemic support programs (to the horror of the Fed), regulators are suddenly ending Federal oversight protections, and there is a push to sell off public resources in protected areas. It is getting very unseemly, childish and very third-worldish. And the upshot is that millions of Americans are going to face a harder winter economically, already severely stressed by the pandemic.

Over the northern border however, Canadian retail sales for October came in surprisingly strong, up +4.6% year-on-year and well above the September +3.7% gain. It was the fifth consecutive monthly increase since the record decline in April and the best rise so far.

In China and in an article on the official RBoC website, their central bank governor noted that "nearly 70%" of China's household net worth is represented by housing. That is a stunningly high level, and brings with it very high risks. In New Zealand where we think we have a problem with excessive investment in housing, ours is 'only' just on 50%. Perhaps they are insulated because their industrial and commercial sector is such a larger proportion of their economy. But all the same, the risks posed by their household reliance on housing wealth could turn toxic at any moment.

And the Chinese leader has apparently said they are open to joining the TPP. It would be a real humiliation for the Americans if that should happen. The TPP was their construct to try to block expanding Chinese influence. But Trump's ill-advised exit has opened this door.

But there are other things to worry about coming from China. They are apparently pushing to have their domestic law apply internationally. 习近平法治思想. The idea is to promote "the rule of law" in so far as it furthers Chinese aims and controls.

In China, iron ore and coking coal prices are on the move higher again as economic activity moves back to boom conditions. The recent softness in shipping costs looks like it is turning back up again.

Japan's deflation rate worsened in October, now running at -0.4% is a very disappointing result. And their factory PMI for November doesn't actually inspire any confidence their are moving in the right direction.

But Taiwan does seem to be making progress, especially with its exports. Export orders by Taiwanese companies were up +9.1% in October, continuing a strong run that started in June.

In India, bank loan growth is picking up in a sign they may have turned a corner from their pandemic funk.

But in Europe, consumer sentiment, which was already quite negative, has gotten much worse in November. They are not heading for a happy festive season.

In Australia, their bank regulator has reversed much of its limits on CBA's 2018 capital penalties. This should enable it to restore its it generous dividends, and that in turn will enhance its share price. CBA has been the standout bank during the pandemic cycle.

In New York, the S&P500 is down -0.3% in early afternoon trade today and they are heading for a weekly retreat of a little more than that. Their recent rising trend based on vaccine optimism looks like it has run out of steam. Overnight, European markets were up +0.4%. The Frankfurt/DAX30 and London/FTSE100 ended their weeks unchanged although the Paris/CAC40 did manage a +2.2% rise. Yesterday, Tokyo ended its Friday session down -0.4%on the day for a weekly +0.6% gain, Hong Kong was up +0.4% capping a weekly rise of +1.2%, and Shanghai also closed up +0.4% for a weekly rise of +2.0%. The ASX200 was down a marginal -0.1% yesterday but managed a +2.1% weekly rise. The NZX50 Capital Index however closed sharply lower, down -0.9% to end its week down -2.0%.

The latest global compilation of COVID-19 data is here. The global tally is 57,205,000 and a +707,000 rise from yesterday. It is still very grim in France, Russia, the UK, Spain and central and southern Italy with even greater stress on their hospital systems. It is even worse in Belgium where they are doing wartime triaging. Global deaths reported now exceed 1,366,000 and up +12,000 from yesterday. 

The largest number of reported cases globally are still in the US, which rose +222,000 since this time yesterday to 12,125,000 which is a sharp rise in pace. The US remains the global epicenter of the virus with its leadership in denial and resisting any proper response. The number of active cases is surging at 4,610,000 and that level is up +136,000 in one day, so many more new cases more than recoveries. Hospitalisations are up very sharply especially in the Mid-West. Their death total now exceeds 259,000 and now rising by almost +2000 a day. The US now has a COVID death rate matching Bolivia, Mexico, the UK and Italy of 780/mln. The Center for Disease Control urged Americans not to travel home for their Thanksgiving holiday, in an attempt to head off what promises to a nationwide superspreader event akin to the Memorial Day and Labor Day weekends earlier in the year.

In Australia, they are not getting any major resurgence. There have now been 27,789 COVID-19 cases reported, and that is just +5 more cases. Now 93 of their cases are 'active' (-1). Reported deaths remain unchanged at 907.

The UST 10yr yield will start today down -1 bp at 0.83%. Their 2-10 rate curve is little-changed at +68 bps, their 1-5 curve is marginally flatter at +27 bps, with their 3m-10 year curve also flatter +76 bps. The Australian Govt 10 year yield is down -2 bps at 0.87%. The China Govt 10 year yield is marginally softer by -1 bp at 3.35%. And the New Zealand Govt 10 year yield is down another -2 bps at 0.81%.

The price of gold has risen today after a string of declines. It is up +US$12 from this time yesterday and now at US$1871/oz.

Oil prices are slightly higher today at just under US$42/bbl in the US, while the international price is now just on US$44.50/bbl.

And the Kiwi dollar is stronger today against a weakening US dollar and now at 69.4 USc. Against the Australian dollar we have stayed firm at 95 AUc. Against the euro we have moved up to 58.6 euro cents. That means our TWI-5 is at 72.1.

The bitcoin price is going ever higher, up another +3.7% this morning from this time yesterday, now at US$18,675. And just a reminder; it's record high was US$19,343 in December 2017. 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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49 Comments

19
up

"It is getting very unseemly, childish and very third-worldish."

I would suggest this process started 4 years ago. Putting a narcisistic, autocrat with a fragile ego in the White House was never going to end well. His craven Republican enablers are completely complicit and should be held to account for this unfolding disaster.

10
up

Just a symptom of an empire well past it's peak, that happened on the lead up to coming off the gold standard.

Most are busy discussing the symptoms, & manner of decline, rather than the cause.

I would say most of the country are doing quite well - the democratic states and the likes of Texas. They still have the best tech and companies like apple, Microsoft, Amazon, etc, they still have oil, they are still the dominant military force by a long way. Not sure why they want to risk all that; no one is going to end up any better off from trade wars, civil war, etc. They remind me of spoiled rich kids complaining about their lives not knowing how good they have it.

JJ how do you explain California?
Take away the coastal elites (gated community tech gazillionaires) and the middle class are exiting the state.
- see Joe Rogans comments.

Think I found the Joe Rogan you mentioned - from 5/8/20:
Warning: Contains swearing: https://www.youtube.com/watch?v=9VRmsQl_lSg

my daughter worked part time at Barnes and Noble while studying and got less than $10 an hour after tax, good old California.

NZ must definitely emulate Californications energy policy. Climate change policies in full swing there. A descent to screwing up the economy.

Yeah I agree with you Jimbo even though having traveled through the states and seeing the poverty. I think your analogy is more appropriate to NZ. Meaning "They remind me of spoiled rich kids etc". We in NZ have an incredible range of opportunity many just choose not to participate

11
up

From the start of his Presidency the Democrats have waged a war on Trump like nothing seen before. They have been obstructive, mounted unfounded Russian collusion allegations and proceeded with a reckless act of impeachment. They are now reaping the ill will they fostered. But hey you probably can’t see that even though I agree some of the Republican recent actions are indeed childish.

Obstructive opposition is simply the way things are done in the US at the moment - both sides act this way. Fingers crossed Biden can bring back a little bipartisanship.

It's also worth remembering that Trump failed to get much done even with a Republican controlled Congress and Senate - that was not the Dem's fault. If they could have agreed amongst themselves they could done something concrete about the Affordable Care Act, for example. Too busy cutting taxes and increasing the deficit instead I guess...

More than four years TJ. Would suggest the devaluing and degeneration of the historical values and sovereignty of the presidency, in a modern sense, commenced with the administration of Clinton.

Clinton, a gangster?

But to sanctify its bombing campaign, the Clinton administration waved a magic wand and made the KLA’s atrocities disappear. British professor Philip Hammond noted that the 78-day bombing campaign “was not a purely military operation: NATO also destroyed what it called ‘dual-use’ targets, such as factories, city bridges, and even the main television building in downtown Belgrade, in an attempt to terrorize the country into surrender.”

NATO repeatedly dropped cluster bombs into marketplaces, hospitals, and other civilian areas. Cluster bombs are anti-personnel devices designed to be scattered across enemy troop formations. NATO dropped more than 1,300 cluster bombs on Serbia and Kosovo and each bomb contained 208 separate bomblets that floated to earth by parachute. Bomb experts estimated that more than 10,000 unexploded bomblets were scattered around the landscape when the bombing ended and maimed children long after the ceasefire. Link

Trump, an assassin?

From Wikipedia 'Nato's bombing of Yugoslavia' - ""The bombing killed about 1,000 members of the Yugoslav security forces in addition to between 489 and 528 civilians."" Compare that to the deaths caused by the civil war: ""According to the International Center for Transitional Justice, the Yugoslav Wars resulted in the death of 140,000 people.""
Sometimes a policeman has to use force to stop people fighting. The bigger complaint about America was it's refusal to admit the Rwandan genocide which would have obliged the UN to use force. ""In just 100 days in 1994, about 800,000 people were slaughtered in Rwanda by ethnic Hutu extremists.""

Not to worry Tom, they'll get their own comeuppance. BBC US election 2020: Biden certified Georgia winner after hand recount. "US President-elect Joe Biden's narrow victory in Georgia has been officially certified by Republican Secretary of State Brad Raffensperger. The Democrat beat his Republican rival in Georgia by 12,670 votes, according to the audit required by state law." https://www.bbc.com/news/election-us-2020-55006188

BBC Donald Trump Jr tests positive for coronavirus. "Donald Trump Jr, 42, was diagnosed at the start of this week and has been quarantining at his hunting cabin since the result, the spokesman said." https://www.bbc.com/news/election-us-2020-55024888

In his hunting cabin! Don’t suppose Hunter Biden gets an invite?

Tomjoad..Could never support either Biden or Trump but feel pretty certain had the result gone the other way there would have looting, rioting and violence on the streets of American cities like we have never seen before. Don't kid yrself. Some lunatic Democrat supporters are, at best, no better than the worst Trump crazies.

Its hard to see democracy lasting in the US with this kind of behaviour. Trump and the Republicans are acting like a bunch of kids and spoiling their democracy. That would be the end of a party in this country if they acted like that (and any other first world country), but the Americans seem to have very blinkered vision. For such staunch supporters of democracy I really can’t see why they are trying to throw it all away. If they have proper evidence of election rigging it needs to be sorted through the courts not the media. (The media could be a last resort if the courts are rigged too)

JimJo, do you think fake votes should be counted and included in totals?

Some places it looks like there were more votes than voters, how does that work?

20
up

Henry
"Some places it looks like there were more votes than voters, how does that work?"
How does it work? For a start by believing in Trump's lies and falsehoods.

First question first.
Do you think there are no fake votes, everything is clean as a whistle.

And/or if there are fake votes, they should be counted and added to totals?

15
up

Until they find some we can assume there are none
You can be assured that when they do find some you will know about it
Let us know when they do

15
up

You're right to be suspicious - those Republicans can be downright dirty.

https://en.wikipedia.org/wiki/2018_North_Carolina%27s_9th_congressional_...

I do find it suspicious that Trump got 10 million more votes than 4 years ago despite everything he's done - I hope the Dems are investigating and not resting on their laurels.

It would be extremely on-brand for Trump to attempt to orchestrate massive voter fraud and still lose.

There are fake votes in every election and every country. trump and his minions have gone through multiple court cases with absolutely no evidence of fraud and ALL cases have been thrown out of court with no merit because they have presented no evidence. The 'baby in chief' is just that.
On the currency side of things I am waiting for a major constitutional crisis to devalue the US$ over the next few weeks and cash in accordingly. Fingers crossed that trump continues down this incredibly childish road I will at least get a monetary windfall out of it all. However, besides the majority of uneducated white trash trump supporters I do feel sorry for the rest of America to have to put up with someone with such low character in such a position of power, able to do so much damage in such a short time.

I'm sure if evidence of that is presented it will be taken seriously. I'm not aware of any just yet - please enlighten us.

As I asked yesterday - do you think the Dems rigged the down-ballot elections too? Why did they do so poorly in Congress and the Senate? For me the answer is obvious - most of the population dislikes Trump more than they dislike the Republicans as a whole.

Heard of Occam's Razor? Why posit the existence of a huge organised vote rigging system over several states when a simpler explanation is staring you in the face?

The Democrats will be hopping mad because there was no blue wave.
Don't recall polls suggested a republic split up/down ticket.
Several democrat cities have history of rigging.
Its probably too earlier to know. It would be a surprise if there were no rigging activities, evidience affidavits say there was.
At the moment the equation has several answers.

10
up

As I posted above, the republicans have a history of vote rigging too, to say nothing of the institutional voter suppression.

I am not in a position to say there has been absolutely no fraud in this election. But the chance of it being purely driven by democrats, and to the extent of hundreds of thousands of votes in at least three different states, and to have forgotten to rig the down ballot races? Virtually inconceivable.

Extraordinary claims require extraordinary evidence. Trump and his followers should put up or shut up rather than continue to degrade and attack the democratic process as they are.

Probably Republican votes

No I don’t think fake votes should be counted. Like I say I’m sure the courts will sort it, especially with evidence like more votes than voters (although to date none of their court cases seem to have such evidence). In the unlikely case that the courts are in on it too then sure Trump can go to the media. In fact I’m sure the media would be following the court case and report on any ridiculous decisions. The chance that the dems could rig that many states and get away with it seem incredibly low, don’t you think? In the realms of conspiracy theory to me but happy to be proved wrong.

What happened to policy.
Maybe look to the flip flop PM and her view of the world.

https://www.nzherald.co.nz/nz/nine-tweets-jacinda-ardern-probably-regret...

Read this, its hilarious.

Shows up that its her own base, her own constituency that is turning on her...

What's interesting about this recent online excavation movement is that most of the tweet diggers are on the left. Not exclusively, though: David Seymour's in on the game, too.

I would suggest the PM stop hanging out with US Democrats, get rid of Obama related people she has, pull down selfies of her & Hillary, and absolutely forget Jeremy Corbyn or anything Tony Blair, forget she ever went to the UK.

Henry Says
"this recent online excavation movement is that most of the tweet diggers are on the left"

Must be true - he spends his day counting them - how he knows they are "lefties" goodness only knows - enlighten us

Yes, interesting that is whats written in the Auckland Herald, although the reporter is noted as Stewart Sowman-Lund, with the item first in The Spinoff.

The screen grab views of the tweets are very funny.

Icon, If the link to the Herald seems tiresome, here is the deeper dive for you.

https://youtu.be/UzdpzuEkL74
Phenomenology etc.
Its one of a couple that you can binge watch.

In China and in an article on the official RBoC website, their central bank governor noted that "nearly 70%" of China's household net worth is represented by housing. That is a stunningly high level, and brings with it very high risks.

Bundesbank has noted residential real estate accounts for 80% of total fixed asset valuations in Germany - a country once noted for it's prodigious industrial output.
https://www.bundesbank.de/en/publications/reports/financial-stability-re...

Germany's economy is belatedly suffering the same fate as other counties where excessively low rates create fixed asset bubbles.

Why would any country in the TPP want China to join the mix when it is obvious that they have never had any intention of following rules on trade? This is an incredibly childish and manipulative country. countries need to acknowledge the huge risks of exposing their economies, companies and livelihoods to their attempted blackmail if you trade with them in any meaningful way. They will manipulate the world into agreeing with whatever they decide their screwed up ideology is on the day and if you don’t they will block you and try to destroy you. I guess this is STILL the plan to grow us out of this mess huh?!

We could put things in perspective and realise China is enduring, along with many other nations war like imposts executed by the US and her allies which would bring New Zealand to it's knees. Thankfully, China's retaliation in this form is not yet evident here.

Here, I shall only focus on Trump’s actions as they concern Russia and China. In an attempt to stem the accelerating exsanguination of the American empire, Trump declared a total war on Russia and China that has thus far involved: propaganda and psychological warfare, sanctions, threats, assassinations, mass arrests of Russian and Chinese citizens, sabotage, theft of diplomatic property, bombing Russia’s allies, commandeering of commercial assets and wealth, tariffs, support for coloured revolutions, McCarthyite witch hunts, an offensive against the Russian Orthodox Church and its allies, abrogation of all important international treaties regulating the deployment and monitoring of nuclear weapons, moving nuclear-capable missile bases close to Russian border, using India, Japan, Vietnam et al. as tools against China, weaponizing fascist fiefdoms in Eastern Europe and giving the Ukrainian zhidobandera (Judaeo-banderite) regime hundreds of millions of pounds of military aid, provoking China and Russia with large-scale military exercises and all kinds of military brinkmanship, trade war, weaponizing Hindu nationalism against China, approving extra funding for anti-Russian activities, expanding NATO, boosting Israel’s right-wing regime, strangling Venezuela, Bolivia and Cuba and almost provoking a war with Iran. Oh, fresh off the press—moving 10000 soldiers and dozens of aircraft from Germany to Poland. Did I miss anything? Link

An inconvenient truth Audaxes, one which many people are wilfully blind to. The US has been at war in some capacity somewhere in the world continuously since 1945.

I thought Trump was in bed with the Russians at least according to Democrats?

Asia prefers Trump
https://www.bbc.com/news/world-asia-54097609
Japan, Vietnam, Taiwan, HongKong, SK, etc prefer a Trump to stand up to the CCP

swingtrader, NZ, in case you missed it, has been an overall beneficiary of its FTA with China. Bringing China into the TPP adds pressure to the US to join, which is the big prize. You could substitute the US for China in your statement and it would be just as relevant - probably more so.

Hook, in case you missed it, Australia blindly put all their eggs in one basket with China just like NZ, and all because they asked for a full investigation into the origins of the pandemic, China pulls the rug out from under them “for hurting their feelings”. Supposed you think China was warranted in acting like a big baby? It’s all fine while it’s happening to someone else, label them as stupid for opening their mouths and thinking we’re smarter than that. But just wait for that to happen to us and see how we like it? You don’t need China to bring in the US, you just need Trump gone. Fortunately the US doesn’t have leaders for life.
I really find it incredible that you think US is worse than a country that *currently* has at least a Million people in concentration camps because of their religion! Really!? Wow.

NZ actually doesn't have all it's eggs in the China basket, far from it. Australia has been acting like a proxy "US" in the Pacific recently, complete with sending warships into the South China Sea area. NZ has acted maturely and with restraint rather than throwing its weight around (not that we have much) There is more to China's response than Australia's comments regarding C19.
As for the US - I didn't say they were worse, I said the issues you brought up about China could just as easily be slated home to the US.. nothing more.

NZ hides behind Australia & the US, who do all the dirty work while we cede our sovereignty slowly with partnerships and selling IP, Agtech, herds etc.

The possible Biden admin is already making warlike noises.

You mean discuss bombing Iran? Sorry wait that was Trump last week.. he still has time to let of a nuck or 2..just saying.

Nah, Trump looks inward, lost jobs due to Chinese slave wages etc. There is always a lot of money to be made in times of war

'In Smedley Butler’s famous essay “War is a Racket”, he asserts that 21,000 new millionaires and billionaires were made over the course of WWI'

“ Biden has reinforced his position on staring down China's expansionist claims in Asia Pacific since becoming President-elect. In a phone call with Japanese Prime Minister Suga Yoshihide on Thursday, Biden committed to defending the contested Senkaku Islands in the East China Sea, which are claimed by both Japan and China.”

https://edition.cnn.com/2020/11/15/asia/biden-china-policy-trump-us-intl...

And his new foreign sec has issued a military warning to China already.
.
Trump started no new wars and has secured peace in the Middle East between Israel & other countries.
The Houses of The Clintons, Bush’s & Obama’s are the warmongers.

Jamie Metzl on The Future Of Human Genetic Engineering

https://www.youtube.com/watch?v=HAiTgbnXl9Q

anyone want to have a conversation about Mauldins latest?

https://email.mauldineconomics.com/ss/c/VAnio6QOMjjuyZBmiauY6lPpyKdHrnPv...