Here's my summary of the key issues from overnight that affect New Zealand, with news Greece has defied its international creditors, refusing to cut pensions or ease layoffs to meet their demands. This has dimmed Greece's prospect of moving towards securing desperately needed financial aid.
Chinese investors and immigrants are throwing money at houses across the ditch. A Credit Suisse report shows they spent nearly $9 billion on residential property in Australia last year. This is 60% more than the previous year and is worth 15% of national housing supply. The Chinese are expected to pump another $60 billion into the market over the next six years.
As for Chinese stocks, Morgan Stanley has downgraded their value for the first time in more than seven years, saying the market has become expensive.
The number of Americans filing new claims for unemployment benefits has held near a 15-year low; a sign the labour market is strengthening despite moderate economic growth.
Overnight, all eyes will be on the US Non-Farm Payrolls Report, which is also expected to show good employment growth.
The outlook's similar in Europe. The employment rate among 20 to 64-year-olds increased for the first time since the financial crisis in 2014. At 69.2%, the employment rate is inching closer to its 2008 peak of 70.3%.
Polling in the UK general election has closed. It's neck in neck, but Telegraph's latest poll puts Labour slightly ahead of the Conservatives.
In New York, the UST 10yr benchmark remains at 2.21%.
After spiking earlier this week, the US oil price has fallen to US$59/barrel, while Brent crude has dropped to US$65/barrel.
The gold price has dipped to US$1,182/oz.
The New Zealand dollar starts today slightly lower than yesterday. It's fallen to 74.4 US¢, inched up to 94.2 AU¢, and dropped slightly to 66.0 euro cents. The TWI-5 is down to 77.8.
Over the last three weeks, the NZD's fallen -3.3% against the USD, -4.5% against the AUD, and -7.4% against the Euro. The TWI-5 is -4.7% lower.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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17 Comments
I will paste this as some tell me it won't open for them
n Sydney, over 80 per cent of inner city apartment buyers are Chinese or Asian investors. In Melbourne’s CBD the figure is even higher.
The Chinese buyers are not big institutions but rather they are mums and dads that have made some money in their home country and see Australia as a good place to invest. Often they have been driven by a herd mentality in communities where families inspire each other to buy Sydney or Melbourne apartments -- it’s similar to what happens at suburban barbecues in Australia.
In any market, when a herd gets frightened it can turn viciously in the other direction. And that's the real danger we face.
The situations in the two capitals are different but they are also linked. Let’s start with Sydney.
In recent months, Sydney apartment rents have been edging up partly because more people are living in each apartment but, in contrast, the actual prices of inner Sydney apartments has started to fall. Yes fall. No one has heard about falling apartment values in Sydney for a long time.
The good news about Chinese investment in Sydney is that the biggest developer, Meriton, insisted that the Chinese families who bought apartments rent the apartments so there is no big vacancy overhang.
In Melbourne it has been a different market. The biggest developers are Chinese institutions often supported by Chinese banks. Some 20,000 apartments have been approved in the CBD, almost all are Chinese/ Asian backed developments and the number of apartments in the inner suburbs is of a similar magnitude, also with a high level of Chinese buying.
These are massive figures and the current and planned construction is underpinning the Victorian economy.
In most developments, Chinese and Asian investors pay a deposit (10 per cent is normal but it may be lower in Chinese bank funded projects) and on that basis the apartments are built -- it’s a straight ‘off the plan’ property development system. But, unlike Sydney, many of the apartments that have been completed have not been leased. So there is a vacancy overhang which makes the market more vulnerable than Sydney.
http://www.businessspectator.com.au/article/2015/5/5/australian-news/ch…
German Government Bond Slump Enters Eighth Day
http://www.bloomberg.com/news/articles/2015-05-07/german-bonds-fall-bef…
The closing bell realised a miraculous save - I wonder who and how other than hedges being reset at the high yield earlier in the day? . Graphic view
As they say don't try this at home.
The Chinese way of investing is more akin to gambling they are counting on more following to boost prices and they see there huge pop as a driver to price increases. Trouble is like any herd once it starts to turn it becomes a stampede. There share market is a classic for this prices going through the roof not supported by figures and is being driven by retail investors.
Cracking US perspective on the TPP:
http://www.huffingtonpost.com/dave-pruett/a-multinational-trojan-ho_b_7…
''So, who, if anyone, benefits by so-called "free trade?" Only the multinational corporations set "free" to scour the earth for the hottest sweatshops and the cheapest labor. Free trade is a global race to the bottom.
''Packaged as a gift to the American people that will renew industry and make us more competitive, the Trans-Pacific Partnership is a Trojan horse. It's a coup by multinational corporations who want global subservience to their agenda. Buyer beware. Citizens beware.''
Just as the effects of our free trade deal with China develop.
http://www.stuff.co.nz/business/better-business/67846434/mbie-clears-ch…
http://www.stuff.co.nz/business/industries/68131192/rail-union-plans-le…
http://www.stuff.co.nz/national/politics/68261074/crackdown-on-short-te…
The key Stephen is to use slave offsets. I released three slaves in Africa so I can continue to enjoy the use of my two slaves at home guilt free. In fact you can feel kinda smug/superior because you have personally done a lot more to reduce slavery than your neighbours who haven't released any slaves at all. I feel triple smugness if I use my organic slaves to clean the Prius. Have a look at slaveneutral.com, slavetrust.com and zeroslavehub.com to slave offsetting options and trading. Every little bit helps.
Listen to the Chatter
All students of the Auckland property market should watch the latest video on Business Spectator narrated by their resident Chinese Spectator columnist Peter Cai - listen carefully to what he has to say
Video towards the bottom of the landing page
http://www.businessspectator.com.au/
The Chinese investment wave hasn't crested yet
You have to ask yourself is this happening here
Last year Hong Kong and Singapore introduced Stamp Duties of 15% and immediately Chinese investment in Australian property doubles
Australia already has existing obstacles to foreign investment, however as Peter Cai says how do you jail a foreign investor, and as for the $5000 application fee and Victorian State 3% stamp duty he dismisses them as mere pocket-fluff. He says it has to go to 15%
How much is pouring into New Zealand - nobody knows - everybody says it's of no consequence
John Key is on the record as repeatedly saying the Auckland explosion is un-sustainable which can only be interpreted as "it can't hold up here forever and therefore will come down (deflate) so there is no reason to panic" plus a majority of spectators here talk about a coming event when things turn sour and the foreign speculators stampede for the exits
China’s GDP has grown by $10 trillion dollars during this century alone—that is, there has been a boom across the land that makes the California gold rush appear pastoral by comparison. Yet in all that frenzied prospecting there have been almost no mistakes, busted camps, empty pans or even personal bankruptcies. When something has occasionally gone wrong with an “investment” the prospectors have gathered in noisy crowds on the streets and pounded their pans for relief—-a courtesy that the regime has invariably granted.
So in two short decades, China has erected a monumental Ponzi economy that is economically rotten to the core. It has 1.5 billion tons of steel capacity, but “sell-through” demand of less than half that amount— that is, on-going demand for sheet steel to go into cars and appliances and rebar into replacement construction once the current pyramid building binge finally expires. The same is true for its cement industry, ship-building, solar and aluminum industries—to say nothing of 70 million empty luxury apartments and vast stretches of over-built highways, fast rail, airports, shopping mails and new cities.
In short, the flip-side of the China’s giant credit bubble is the most massive malinvesment of real economic resources—-labor, raw materials and capital goods—ever known. Effectively, the country-side pig sties have been piled high with copper inventories and the urban neighborhoods with glass, cement and rebar erections that can’t possibly earn an economic return, but all of which has become “collateral” for even more “loans” under the Chinese Ponzi.
http://davidstockmanscontracorner.com/chinas-monumental-ponzi-heres-how…
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