Here's my summary of the key events overnight that affect New Zealand, with news that the New York trading sessions have had little reaction to the Paris attacks.
In fact, equities are higher today by more than a half percent. But there is one sector not doing well: airline stocks.
Across the Pacific, Japan slipped into its fourth technical recession in five years between July and September - highlighting how the government's "Abenomics" policies have struggled to drag the economy out of chronic stagnation. The core issue for Japan is that it is suffering from the Chinese transition away from heavy industry investment to a more consumer-based economy.
China, on the other hand, is still attracting investors. FDI flows in October rose +4.2% year-on-year in October, China's Ministry of Commerce has reported. But that is down from a +7.1% rise in September.
Also changing direction is Brazil. The country is struggling with corruption and ballooning debt from years of left-leaning policies, and coalition parties within the Government have tabled a plan to shift to a more liberal approach.
European inflation data was out overnight and there were no surprises here, nor any reason to think they are emerging from very low levels. Most of the small nations are in deflation, and the larger northern members have low to moderate inflation.
In the US there was some regional factory data out overnight that was pretty soft.
In New York, the UST 10yr yield benchmark has held in mid-afternoon trading, now at 2.26%. Futures-market positions on rising American interest rates have reached a six-month high. Yet, few analysts and traders expect to see rates continue to rise for long.
The US benchmark oil price is also unchanged, now just over US$41/barrel, while the Brent benchmark is at US$44/barrel.
And believe it or not, the gold price is only marginally higher at US$1,085/oz, which you have to say indicates a very restrained response by risk investors. Copper on the other hand has fallen to more than a six year low.
The New Zealand dollar starts today lower at 64.9 US¢, but is not much-changed against other currencies. It is at 91.6 AU¢, and at 60.6 euro cents. The TWI-5 is at 70.7, a level it has hovered around before the Paris shocks.
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
Strange things happening in the debt markets with comments that increased regulation is turning swap spreads negative.
http://www.bloomberg.com/news/articles/2015-11-15/debt-market-distortio…
Japan stagnated so arguably they avoided a depression with "QE".
The counterfactual is without evidence - stick to the facts
Not true, lets look at some evidence/success,
a) I'd like to see a claim that the opposite, austerity boosts an economy when wherever it has been done eg UK it has contracted the economy.
b) Ditto raising rates, when Sweden did it and then NZ the economy suffered dis-inflation.
So when the opposite clearly has the expected effect I cannot see how you can argue the other side of the coin gives the same result as austerity that on the face of it makes no sense.
c) Also lots of ppl (such as yourself?) argue that low(er) interest rates should cause CPI and core inflation? and then
more govn spending, printing or stimulus has a pretty solid cause and effect of inflation (ignoring the zero bound trap).
So then what we really mean by the spending increasing inflation is relative, in an all else being equal situation, ie we have to consider NET. As an example if we dont get inflation from the BoE say dropping the OCR because the UK Govn went on an austerity drive that had a bigger impact, well the NET effect is a recession.
There you go again, if the evidence doesnt support your point of view attack the messenger. Like I have said before there is a difference between financial trading which it seems is parasitic in nature and the real economy. So being a successful parasite means yeah sure the parasite does well, the host however? well no, maybe even killing it.
Now this is really interesting.
David says this about Brazil
"ballooning debt from years of left-leaning policies"
So we can take from this that all the capitalist run countries like America dont have any debt
Boy oh boy, what can one say to that - dare i mention one eye?
How many ppl go bankrupt in the US when they become ill and cannot afford medical care? or find that their policy is voided on a pretext? quite a lot. Whatever you say about the left policies can equally be said about the right ones if either is extreme enough IMHO.
What dominates is the ethos, pathos and logos that is perpetuated on a populace from those in society who obtain media coverage for their causes!! Democracy doesn't have to align with the constitutional arrangement and so is left to opinion which is more readily swayed !!
As long as you have competent and capable people using the status quo you will never ever have a real capitalist system......
Copper on the other hand has fallen to more than a six year low.
To have commodities selling off, dramatically, under such condition is no surprise. Almost every feature of the money markets is showing highly negative. Swap spreads continue to confound, indicating unrelenting destabilization across the deep dark leverage of bank balance sheet factors available as comprehensive “dollar” supply. Thus, copper trading soundly to a new low around $2.11 is fully unsurprising – a price not seen since the worst of 2009. Read more
Demand for copper is probably one of the bell weathers on the global economy. The Q these days however is what is real demand increasing price and what is speculation, and then when teh speculators exit...aka oil in 2008.
The other one is the BDI,
http://investmenttools.com/futures/bdi_baltic_dry_index.htm
So from 11000 in 2008 to 850 today....some drop.
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