China cuts wholesale gas price by 25%; US manufacturing perks up; labour market nears full employment; Republicans push for Fed to set rates using set formula; UST 10yr yield 2.25%; oil low; NZ$1 = 65.6 US¢, TWI-5 = 71.3

China cuts wholesale gas price by 25%; US manufacturing perks up; labour market nears full employment; Republicans push for Fed to set rates using set formula; UST 10yr yield 2.25%; oil low; NZ$1 = 65.6 US¢, TWI-5 = 71.3

Here's my summary of the key events overnight that affect New Zealand, with news there are signs the worst of the US's manufacturing rout is probably over.

The latest Philadelphia Federal Reserve report shows factory activity in the region rose more than expected in November, after two straight declines in September and October. The report came on the heels of data on Tuesday showing a healthy increase in manufacturing output across the US last month.

The US labour market is continuing to strengthen, as it approaches full employment. Claims for unemployment benefits slipped to a seasonally adjusted 271,000 last week, with economists saying there's little scope for them to drop further. 

The US Republicans have advanced their call for more transparency and oversight in the way the Fed sets interest rates. The House of Representatives has approved a bill that would make the Fed set rates using a mathematical rule based on economic indicators like employment and inflation. 

While it's likely the White House will veto the proposal, the bill highlights the suspicion conservative lawmakers have of the bank's policies. Fed Chair Janet Yellen says the bill would hamper the Fed's independence, while President Obama says the proposal will prevent the Fed's ability to fight recessions. 

China is cutting its price of wholesale natural gas by nearly 25% in a bid to boost slowing growth in demand for the clean fuel. China's cooling economy has seen demand for gas slump, forcing energy giants to resell or renegotiate long-term global supplies. This is the second time authorities have intervened by cutting the 'city gate' price, which local distributors or gas firms pay to pipeline operators. 

In New York, the UST 10yr yield benchmark has slipped to 2.25%. 

The US benchmark oil price remains in a slump at US$40/barrel, while the Brent benchmark is at US$44/barrel. US stockpiles have risen to their highest level for this time of year in 75 years.

The price of gold has picked up a little overnight, reaching US$1,082/oz.

The New Zealand dollar has risen a cent against the US overnight, to 65.6 US¢. The dollar's up to 91.3 AU¢ and has jumped to 61.2 euro cents. The TWI-5 is up 100bp to 71.3.

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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The US benchmark oil price remains in a slump at US$40/barrel, while the Brent benchmark is at US$44/barrel. US stockpiles have risen to their highest level for this time of year in 75 years.

And yet:-

Revolving credit has just surged this year, particularly starting in March. The numbers are staggering, as revolving credit balances, estimated and reported by the Federal Reserve itself, have jumped by more than $39 billion in the seven months ending with the update for September. By comparison, from the start of 2012 until February 2015, revolving credit balances expanded by about $44 billion; in just seven months this year consumers have indebted themselves by almost as much as they had in the more than three years before March.

Economists are, as you would expect, nearly ecstatic over the impoverishment. To them, it signals the final capitulation of consumers to that which Janet Yellen has been professing since her term began. But there is a huge problem with that view; if consumers are borrowing, what are they doing with the balances? Read more

The American Medical Association on Tuesday called for a ban on direct-to-consumer ads for prescription drugs and implantable medical devices, saying they contribute to rising costs and patients' demands for inappropriate treatment.

http://bigstory.ap.org/article/645dff9967b04f12b863a9229b724d97/american...

I reckon it should be banned here too.
NZ and the USA are the only 2 countries in the world to allow these ads.
I'm tired of hearing those ads that say "ask for it by name" rather than getting a cheaper generic drug.
It just makes our health bill more expensive.

There are always two sides to an argument.

Beware of unintended consequences....

Drugs cost billions to get to market. This R&D and significant RISK is done by companies that have to reply on selling the drugs... and hope that governments honor the patents etc...

The UN should be doing something useful and either underwriting this R&D and taxing all countries to create a pool of money to fun the R&D for the good of the United Nations.

Yes we all would like cheaper drugs... but an expensive drug is better than NO drug at all.

We are running out of Antibiotics and entering a post antibiotic era... so be very very careful what you wish for.

Of course Americans are , as usual, unbelievably stupid as they are wiping out the few working antibiotics left to Humanity so their cattle etc. can gain 1-5% more meat; but what to do you really expect from a country that openly allows their politicians to be bought... They are just puppets to the banks and corporations...

Don't get me started on WHY we won't cure the common cold (as its better to sell the drugs to make you feel better than to cure it)...

“The world is a dangerous place to live; not because of the people who are evil, but because of the people who don’t do anything about it.” - Albert Einstein

November 19, 2015

A new gene that makes bacteria highly resistant to a last-resort class of antibiotics has been found in people and pigs in China - including in samples of bacteria with epidemic potential, researchers said on Wednesday.

http://www.scientificamerican.com/article/new-superbug-gene-found-in-ani...

The sales pitches to doctors is even more insidious and we dont see it so kind of a bit rich really coming from doctors.

Sales pitches to doctors....

Watch this very good clip by John Oliver, it's funny and so true:

https://www.youtube.com/watch?v=YQZ2UeOTO3I

Fear is spreading around Europe, my daughter is studying in Stockholm and said that on Monday security was up, police everywhere. She just wrote me this.

So we are on high alert. They believe an IS militant leader with a Swedish passport/residency has returned to Sweden. It feels very edgy. .

There were 5 police men at the very small tube station I got off at.
Sara's father in law (a police man) has warned her to avoid central town, rush hour and the tubes ..

With every backstory I read on the youth involved in these horrific acts - I get a sense more of socio-economic, as opposed to religious, divide;

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=1154835...

Amin Abou said she had no real friends and lots of family issues. "She grew up in Saint-Denis a very bad area. And when you don't have family - it's easier to get into bad things."

The stories are not unfamiliar here for many of our young adults.

Inequality is the enemy from within.

Sadly; you have to be able to actually BE unequal to know what its like.

You ask someone born into privileged about equality and they really don't "know"... as they have never really experienced it.

  • Try a week being poor (really poor).
  • Try a week being female.
  • Try a week being colored.
  • Try a week being gay.
  • Try a week being Muslim.
  • Try a week being an immigrant.

etc.

To really understand discrimination, and inequality and sexism you can only understand it if you have lived it.

I can only hope to really understand what it really means...

Of course the "standard" response is trotted out whenever needed (Kids in USA shooting bullies onwards)...

  • He/She was a Loner
  • He/She had no Friends
  • He/She was from a bad home/area/croud
  • Parent too Soft/Hard

...
Its hard to report the as, generally, people don't "know" as they have not lived a day in those shoes...

Take all opinion, like this, with a huge pinch of salt...

"Qu'ils mangent de la brioche"

Inequality may play a role but it is not the main ingredient - the ringleader in the Paris attacks came from a 'good' middle class background:

''Abaaoud disappeared from his Brussels home in late 2013 or early 2014, long after becoming estranged from his middle-class Belgian-Moroccan family. He had been sent to a well-regarded Catholic school in 1999, when he was 12, but dropped out after a year to live on the streets of the district of Molenbeek, where he was drawn to increasingly violent crime.''

http://www.theguardian.com/world/2015/nov/19/abdelhamid-abaaoud-dead-par...

The common ingredient is not inequality, it is belief and conversion to Islamofascism.

Hard to say how 'middle class' is defined. This from another article;

Growing up in a dilapidated Brussels cul-de-sac dubbed ‘International Street’ — because almost every family who lived there had come from a different country — the boy in the navy-blue baseball cap stood out as a beacon of hope. The son of an enterprising Moroccan, who had bought a dirt-cheap house in the canal-side slums and turned its front-parlour into a thriving secondhand clothes shop, Abdelhamid Abaaoud was sharp and engaging, and his flint-black eyes flashed with zest.

http://www.dailymail.co.uk/news/article-3324589/Even-family-wanted-dead-...

It seems that he was radicalised during his time of imprisonment for petty crimes. As they say here, prison is the recruitment/training ground for gang membership/culture.